The Big Healthcare Challenges in FY 19

As the present financial year draws to a close, I am left reflecting on the challenges the private healthcare services organizations in the country face in the coming year. The present year has been a pretty tumultuous one. The regulatory environment threw up several challenges. The NPPA orders on price controls of devices such as stents and joints impacted the profitability of most private healthcare companies adversely. The DPCO’s orders on price controls on key drugs too are also likely to dent the bottom line of private hospitals. The media brouhaha triggered by two cases one at Fortis Hospital Gurgaon and one at Max Hospital, Shalimar Bagh, New Delhi created consumer distrust of an unprecedented nature. The private sector hospitals were called names and their doctors were addressed in the vilest of terms leading to all around despondency. Private hospitals are now limping back from this assault. The government of Delhi also announced a half-baked scheme for its citizens, which allows them access to private hospitals if the government-owned hospitals put them on a wait-list of more than a month. Finally, in the budget, the union government announced the path-breaking ”Ayushman Bharat”, which is supposed to provide a cover of INR 500000 to a million families across the country.

All these are expected to lead to some fresh challenges for the private healthcare providers in the next financial year.

Regaining Patient’s Trust 

If there is one thing, which ranks higher than any financial matrix of revenue, costs, and profits it has to be the effort to regain the patient trust. The reasons for the loss of trust are many, some genuine and some purely trumped-up, however, most private hospitals see the urgent need to regain the customer trust. Significant investments will have to be made to improve transparency, patient communication, and organizational culture, which will lead to patients trusting their hospitals. This too is a difficult task and will involve a lot of senior management time and effort.


The government and the media have quite successively sold a narrative to ordinary citizens of the country that the private sector hospitals are profiteering and that they are out to cheat patients by over-prescribing, over-billing or worse. Thus, they have ascribed themselves the role of the guardians of the ordinary citizens against the rapacious, profit-hungry hospitals. The truth is far more prosaic and indeed worrying for the private sector hospitals. Most of them have seen a shrinkage in their profits, which to begin with were meager. The biggest challenge that private sector hospitals face in the coming year is clearly of ensuring reasonable returns for their shareholders. In an environment, driven by complete distrust between patients and the hospitals, with power-hungry politicians seemingly baying for their blood in what might be an election year, most private sector hospitals are staring at a bleak year ahead. The EBITDA margins are likely to contract. The hospitals will have to thus figure out a way of reining in costs, without compromising on patient care, safety, and outcomes. This is obviously easier said than done and will probably consume most of the bandwidth of the top management of the hospitals.

Managing the Changing Regulatory Environment

Healthcare is finally getting some attention from the government, which in itself is not a bad thing at all.  However, the controls being put on pricing and the schemes like the Ayushman Bharat and similar programs are not at all well thought through. The private sector, however, has no choice but to adapt to the changing situation. The National Health Protection Scheme (NHPS), will be rolled out this year. One is hopeful that it will be backed by suitable technology, which allows private hospitals to handle patients covered under NHPS. The hospitals will need to usher in change to be able to accommodate the large number of NHPS beneficiaries, which may flow into private hospitals. These changes may include modifying the bed configurations in the existing hospital, tweaking systems and processes and creating special areas to handle NHPS patients and create low-cost models, which allows the private hospitals to manage the NHPS patients in high volumes. Other regulatory changes in drug price controls, devices pricing controls and guidelines on re-usage will all lead to significant tweaks in hospital processes.

Managing Media and Consumer Activism

Consumer and media activism is here to stay. An unexpected outcome, a perfectly explainable error of judgment and sometimes a perceived lack of attention can trigger a media avalanche. Much as the hospitals may crib about being unfairly targeted, they will have to learn to live and cope with it. However, this does not mean that hospitals will not take a stand or push-back particularly when they are in the clear. They will have to learn to work with a partisan media and try their best to put out their side of the story. Speed will be of the essence and the communication teams of the hospitals will have to be beefed-up. Social Media too will throw up new challenges and the hospitals will have to learn to respond quickly and have a ready base of loyal supporters who will help defend them against motivated tirades.

These are all unique and new challenges. I am sure something good and lasting will emerge from these as well.

The views expressed are personal













The Uncertain Bill

One of the biggest problems that foreign patients face in India is the uncertainty regarding their final hospital bills. From a hospital’s point of view, it is almost impossible to provide an accurate estimate of likely expenses before the patient arrives at their doors. The variables involved in estimating the costs are quite complex and unpredictable. Often, the hospitals are required to respond based on old medical scans and reports of dubious quality sent by the patient over email. Sometimes because of different languages, translated reports do not accurately capture the patient’s present condition. Even if all this goes well, hospitals often discover at the time of patient’s admission undisclosed and hidden co-morbid conditions that require management before the patient can be taken up for a planned surgery. These situations are quite inevitable and an inaccurate estimate is really no one’s fault.

To make things infinitely worse, surgical complications, infections, and completely unanticipated medical exigencies also lead to prolonged stay and medical bills shooting up. These situations are a part and parcel of an episode of hospitalization. International patients usually travel for complex tertiary care needs and the variables involved are far more than those who require simple straightforward surgeries. This makes the likelihood of the bills going up even more.

From the point of view of a patient, who is in a strange country not knowing how much he may be required to pay for his treatment is always worrisome. Once, the nightmare of a complication starts unfolding, on one hand, the family of the patient worries about his prognosis and recovery, on the other hand, they live in the fear of the consequences of not being able to settle their bills. The patient’s family also worries about being fleeced by unscrupulous healthcare facilitator hanging around in the lobbies of most of our hospitals. They simply don’t know whom to trust with the limited financial resources that they have at their disposal.

All this leads to ugly uncalled-for situations. The hospitals feel that they are not getting their rightful due, the patients feel cheated as they believe that the bill escalation is not their problem and the hospitals should charge them no more than the estimate provided to them at the time of admission. Complaints fly thick and fast, embassies get involved, the HCF’s find themselves in the middle, unable to assuage either the patient or the hospital. The matters usually get resolved only after a lot of acrimony, ill-will and nobody really feels good about all this.

Here are some suggestions to handle this. These have been in circulation for some time but have not been implemented in any hospital in India that I know of.

The hospitals can possibly look at creating a fund that can be used to pay for patients whose bills unexpectedly run high and are not fully settled. The fund can be created by the hospitals charging a small sum from all international patients they handle and by contributing some amount themselves. This would mean that each international patient pays a little bit to help a fellow foreign patient, who might be facing financial difficulties. The hospital too contributes by reducing the bill by a pre-defined amount in all such cases. A suitable mechanism can be evolved to ensure that these funds are used judiciously and not squandered away. This will avoid the nasty situation that almost always presents itself when an international patient is unable to settle his bills.

Another way to manage this could be a ‘’Complications Insurance Cover’’ that a patient can buy from a general insurance company. On a visit to Dubai recently, I learned that they have now put in place a system of mandatory ‘’Complications Insurance’’, which a patient must buy before undergoing treatment at a hospital. Essentially, this means that the patient covers the risk of a complication through an insurance cover designed for this purpose. The product seems to be in its early life-cycle yet and is being offered by a few insurance companies, I am hopeful that Indian insurance companies would also look at it favorably. Maybe, the government can mandate that all patients traveling to India on a medical visa must buy a cover of a minimum value before they go under the knife in an Indian hospital.

I do realize that it requires a lot of work in developing a viable product of this nature by the insurance companies. However, with MVT into India growing at a CAGR of 15-20%, with patient arrivals already in the region of 200000 plus per annum, maybe there is an opportunity for the insurance companies to get into this. Assuming a minimum premium of USD 300 per patient (roughly 5% of the average bill value of the patient), this translates into a minimum USD 60mn opportunity per annum and growing handsomely. The calculations here are simplistic; however, it is undeniable that an opportunity exists for the insurance companies.

Let us hope that some of these remedies find favor with hospitals in India. These can go a long way in removing a thorny irritant, which often causes bad blood, even when the medical outcome and the general patient experience in the hospital have been good.