Business Accent

The Complexity of Healthcare Business

It is a both labour and capital-intensive business. Most businesses are either dependent on manpower or money. Healthcare delivery is dependent on both

"What is required for the hospital promoters is that they need to widen their horizons of thinking and question the obvious" - Vivek Shukla Principal- Healthcare Business Consulting Vivek Shukla & Associates

When Peter Drucker remarked- 'Hospitals are perhaps the most complicated business enterprise ever created by mankind', he was bang on target. There are other businesses and there is healthcare delivery business. Both are not the same thing.

The complexities are many. Here are some factors that make healthcare delivery a complicated business to be in.

lNo one is unilaterally responsible for the consumer experience. Everyone plays a part in serving the customer and you cannot pin point as to who is actually responsible for the over-all service delivery. The patient and his family go through a lot of interactions at various levels. One bad moment at any of the numerous 'touch-points' will cast a shadow on the good work done by others. Unlike a restaurant or air-travel, which have fewer touch-points, a patient will visit, the parking attendant, the reception desk, doctors, laboratory, radio-diagnostics, canteen and pharmacy in one visit.

To make matter worse, the management control is limited on the service delivery. The people who run and manage hospitals are usually dependent on these numerous departments to deliver the desired experience and results. This adds to the complexity.

• Consumers are not equipped to judge the quality of the service being provided. How will a patient know during and after the surgery that the theatre in-charge had sterilised one instrument less for the surgery? As a result, the surgeon was not able to give his 100 per cent skill to the surgery. How will an OPD patient come to know that if the doctor had prescribed another anti-biotic, it would have been better for him?
  Consumers judge the service quality through a very limited perspective. Cold food served to a patient will outweigh the precision of the surgeon which may be otherwise elusive. An accurate diagnosis of a rare medical condition gets overlooked if the receptionist did not smile to the liking of the patient.
• Healthcare delivery is a service that no one wants to buy. Going to a hospital is not akin to going for a vacation. No one is looking forward his or her next surgery. People go to the hospital not out of willingness but out of necessity. The tricky question is- 'How do you make them willing to buy from you?' The services of a private hospital are for general good of human beings and yet they are paid for. So it becomes a complex contradiction when your objective to make everyone healthy and yet you want people to come to you in sickness.
• The management of large variety of workforce makes things intricate. From a highly-skilled super specialist surgeon to a janitor, the cross section of the work force in a hospital is huge. There is a lot of variety in both the clinical and non clinical staff. The best part is that the diversity has to integrate and every member of the myriad workforces has to work towards a common goal. The system has to work like a well-oiled machine in spite of all variance. Not an easy thing to ensure.
• Decider, user and payer may not be the same people. Consider this —an old man going for his prostate surgery may not be paying for it himself. His son may pay for it. However, the son is not the one who decides which hospital the old man will go to. That decision may be taken by the wife of the gentleman.
  Now put the insurance and TPAs in the picture which pays up for many patients that a hospital treats today. In short, multiple people may be involved in decision making and paying process. None of these people may be using the service. Sometimes the ones paying for the treatment would not even know the user personally. Complex indeed!
• Revenue cycles constitute a difficult challenge. The expenses of a hospital happen before the hospital earns money. Salaries, electricity bills and other overheads are to be dispensed with this month. A big chunk of money nowadays comes after a couple of months or more. How does a hospital meet its day to day expenses? Another complicated twist to an already complicated scenario!
• Technology keeps changing every passing year. Equipment is expensive. Moreover, it gets upgraded before you have learnt how to use the existing version fully. Even if the cash-strapped hospital does not want to buy the new 'white elephant' it is forced to. The competitor may somehow manage to buy the new version and the hospital may lose out on market share. Buying upgraded equipment even when you don't need it becomes a necessary evil.
• It is a both labour and capital-intensive business. Most businesses are either dependent on manpower or money. Healthcare delivery is dependent on both. Not only it requires a huge amount of investment to set up hospitals, it also requires lot of skilled people to be able to run it. Add to this the global shortage of such professionals. Demand for doctors and nurses is far more than the supply.

Business of healthcare is evolving with every passing day. Healthcare providers are learning to cope with these complexities. The riddles may never be cracked fully, but the incremental progress is being made.

The pace of learning will perhaps determine which player will survive in the long term. What is required for the hospital promoters is that they need to widen their horizons of thinking and question the obvious.

mail@vivekshukla.com