Industry Voice

Physician Practice in India's Emerging Healthcare Environment

There are tremendous opportunities for physicians as healthcare in India continues to evolve, but there are also risks

"Physicians, who recognise and understand the coming changes in healthcare and insurance and position themselves to capitalise on these changes, will not only survive in this new environment, but will thrive" - Lou Pavia President CareCompanion McLean, VA, USA

Healthcare is changing rapidly, creating both new opportunities and threats for physicians. The population is becoming more health conscious and better informed about the benefits and value of primary and preventive and well as specialised care. As the middle class expands, health becomes a higher priority and health-related spending increases. Lifestyle-related diseases are also becoming more prevalent than traditional infectious diseases. While there is a shortage of trained healthcare professionals, physicians are already concentrated in urban areas and are not well organised or differentiated from the myriad of less qualified providers. Patients are becoming better informed and more sophisticated consumers of healthcare, but they do not know where to turn for high quality care.

Over one million additional hospital beds will be required by 2012 just to attain a ratio of 1.85 beds per thousand people (comparable countries like China, Thailand, and Korea have a ratio of over 4 per 1,000). In response, hospitals are becoming larger and more corporate. Corporate hospital companies are also developing narrowly focused specialty hospitals, competing with traditional physician owned nursing homes.

The Clinical Establishments Bill will give further impetus to the institutionalisation of standards and clinical protocols. Emerging clinical management, patient billing and reporting requirements are driving the need for administrative infrastructure in the physician practice. Medical technology is an increasingly important part of the diagnostic process and is moving out of the hospital and clinic to stand alone and retail centers. Apollo has created over 60 franchised physician clinics offering facilities for specialist consultation, diagnostics (e.g. lab, imaging, radiology, and nuclear medicine), preventive health checks, telemedicine and 24-hour pharmacy, all under one roof.

Health insurance is reaching a critical mass already covering 10 per cent of healthcare expenditures and growing at more than 20 per cent per year. This is increasing awareness about the importance of healthcare and providing a vehicle to help finance these services. Corporations are recognising the importance of healthcare for their employees and offering programmes for them. The Government strategy is shifting from providing care to offering insurance. State and local Governments are instituting a variety of schemes to improve access to healthcare for the lower income population. Rashtriya Swasthya Bima Yojana (RSBY) is expected to cover 60 million BPL families by 2020 and other jurisdictions are copying and improving on this concept.

We are beginning to see the inevitable next steps in the evolution of healthcare and insurance in India. With claims exceeding revenues, insurers are beginning to negotiate or dictate payment rates for services by hospitals and physicians, analyse healthcare costs, expand coverage to lower cost non-hospital settings, promote preventive care and early detection and institute administrative requirements in order for providers to collect reimbursement. Governments and independent third parties are collecting information on quality and cost. Large corporate hospitals are positioned to effectively balance the inevitable power of the insurance companies and meet the growing administrative requirements, but independent physicians are at high risk of losing access to patients and their ability to set prices.

One strategy to strengthen and grow the private medical practice is to create an 'Organised Physician Association' (OPA) that balances the flexibility and control of an independent practice with the leverage and efficiency of an organised group. This strategy has proven successful in the US as the insurance market evolved through a similar phase. These organisations should be owned and governed by physicians and have professional management to capitalise on opportunities, respond to market requirements and remove barriers to success. This enables independent physicians to build the critical mass necessary to compete effectively for patients and protect their income from erosion by larger and better organised hospitals and insurance companies without losing control of their individual practices.

OPAs are owned and governed by physicians, have a sustainable business model and provide services and support to the owners and participating physicians to strengthen and expand their medical practices. They are likely to include a cross section of well trained and qualified primary and specialty care physicians in close geographic proximity interested in expanding and improving their practices. The power of the group would be used to gain the economies and efficiencies necessary to attract and treat more patients and improving the health of the patients and increasing the income of the physicians.

Physicians that recognise and understand the coming changes in healthcare and insurance and position themselves to capitalise on these changes will not only survive in this new environment, but will thrive. Change is scary and difficult but the status quo is doomed to decline. Effective change must not only address the changes in the market but also consider the objectives and requirements of the physician. Requirements for success of an OPA include:

Vision: An understanding of both how the market is changing and where you need to be positioned in the near future to be successful in that environment.

Balance: Equilibrium between physician autonomy and organisational effectiveness.

Leadership: Physicians willing to help shape the vision, passionate about achieving it, effective at communicating it to other physicians and able to motivate others to participate.

Market Sensitivity. Research-based definition of customer expectations and requirements and competitive conditions.

Differentiation: Set apart from competitors in terms of clinical quality, service, convenience and efficiency.

Strategy: A well-defined plan of action to achieve the vision based on an evaluation of options.

Measurement: Clear and measurable objectives that are monitored and reported regularly to leadership.

Continuous Improvement: Regular adjustments to strategy and enhancement to differentiation.

This process for creating the organisation would include the following steps:

• Identify core group of physicians interested in the OPA concept.
• Define the vision and purpose for the organisation.
• Delineate potential features and characteristics of the business through a series of expert lead, information based brainstorming sessions.
• Delineate the business model and value proposition. lInvite additional primary and specialty physicians to join.
• Devise a strategy and detailed business plan.
• Structure the organisation.
• Implement the plan.

There are tremendous opportunities for physicians as healthcare in India continues to evolve, but there are also risks. Those physicians that capitalise on the lessons from other markets and adapt them to the unique environment in India will not only advance their own practice, but also the quality of care in their community. Solo and small groups of physicians will be at a significant disadvantage in access to space and patients as larger and better organised groups improve efficiencies in business and medical practices. Organised physician groups enable physicians to maintain the autonomy of their own practice while capitalising on the advantages of a large group.

(The article is co-authored by Ajit Dhavle, Associate)
ajit.dhavle@carecompanion.com