Cover Story

Critically Speaking

ICU is one of the most cost-intensive as well as profit generating avenues. Nancy Singh tries to find out as to how to maintain the fine balance

Imagining a hospital without critical care facility is next to impossible. The demand for critical care is rising and how. "Owing to lack of adequate data, it is difficult to look at Indian critical care market separately from the Indian healthcare market and the metric of beds per 1,000 population seems to be a reasonable indicator. India has 0.9 beds per 1,000 population against 2.9 in Sri Lanka, 2.6 in Brazil, 2.2 in China and the world average of 2.6," replies Murali Nair, Partner, Lifesciences, Business Advisory Services, Ernst & Young. This potential will be further augmented with the projected shift in diseases profile towards non-communicable diseases which require a higher degree of support from critical care and addressing the opportunities in trauma care. Informs Dr BD Bande, Senior Consultant, Critical Care, Anaesthesiology and Medicine, KEM Hospital, Pune and Former National Vice President, Indian Society of Critical Care Medicine (ISCCM), "With trauma, cardio vascular/ cerebro vascular diseases, HIV and diabetes now becoming the morbidity and mortality leaders, the need of intensive care is all time high." ICUs are coming up at district and block levels as the trained manpower is disseminating to those levels. "For instance, 10 years back, Pune had about 150-200 intensive care beds. In 2009, the same number is over 500 and it seems to be still short," he adds.

Studies have documented high rates of refusal to admit in ICUs, because of shortage of beds. To add to it, the need to serve the 'greying' population is likely to increase the demand for ICU beds further, intensifying the current strain on ICU capacities. In such a scenario, it indeed becomes all the more important to deploy cost-effective strategies to run an ICU successfully.

Costly Matters

Hospitals spend a significant section of their budget on ICUs. But on the other hand, they are one of the most revenue generating areas as well. Says Dr N Ramakrishnan, Senior Consultant, Apollo Hospital, Chennai, "ICUs contribute to at least 30-50 per cent of profit earnings, depending on the number of ICU beds. At lease 10 per cent of the budget is allocated to ICU, while setting up a new hospital. So, I think, as far as management aspect goes, cost-effectiveness of ICU is extremely important."

Moreover, technology does not come cheap. Hence, the corporates who are looking out for the high-tech models of ICU have to indeed shell out large amount of moolah. "ICUs in private tertiary care hospitals are usually well equipped and thus form the most major contributor to the critical care facilities in the country. Albeit, this automatically translates to a higher cost to the patient," states Dr Shirish Prayag, Chief Intensivist, Critical Care Centre, Shree Medical Foundation, Prayag Hospital, Pune.

Besides, with the emergence of newer treatment methods, costs are expected to escalate. The only way to resolve these problems is apparently to improve the efficiency with which the available ICU and operating room capacity is used or in other words to optimise patient planning.

Critical Care Dynamics in India

There is no latest estimate over the number of ICUs currently, but according to an expert there are around 1,80,000 ICUs in the country today. In a National Accounts Statistics 2001: Mckinsey Analysis, dating back 2001, it was noted that there were 70,000 ICU beds available including all types and across all hospitals and small time nursing homes in India. India's healthcare investment is projected to grow to Rs 2,83,000 crore by 2012. However, Government and international agencies will only be able to spend Rs 30,000 crore over the next 10 years on healthcare infrastructure.

"Therefore, almost 80 per cent of investment will have to come from the for-profit private and charitable sector where critical care accounts for 20 to 30 per cent of a hospital's budget," says Dr Ramakrishnan. Without any comprehensive insurance cover, more than 80 per cent patients have to pay out of their pocket for healthcare services. "Despite growth in economy and development of a middle class population with purchasing power, it is well accepted that one episode of hospitalisation is enough to account for 58 per cent of per capita expenditure pushing 2.2 per cent below the poverty line. Unfortunately, the common man perceives that miracles regularly happen in ICU and lacks a realistic expectation of critical care outcome," adds he.

Expensive Price Tag: Medical Equipment

Like any other field advances, technology has had an immense role in making the intensive care efficient and highly precise. Equipment like vital parameter monitors, ventilators, ultra sound and Echocardiography are the soul of the intensive care today and we can't imagine the care as intensive care without them. It not only spares the manpower but makes the intensive care heavily efficient and precise. "Continuous ventilation of the patient for weeks and months in an accurate manner is impossible without a ventilator. Similarly, no monitoring is possible for human abilities the way multi para monitors do. But the fact of the matter is that this technology comes at a price tag and that too, a heavy one!" says Dr Mohan Mathew, Chief of Critical Care, Lakeshore Hospital, Kochi. The major players include Siemens, Drager, Maquet and since the medical technology is imported, this becomes the most cost-intensive area for a hospital. It is estimated that over 85 per cent of medical devices and equipment are imported and the market is primarily dominated by MNCs. "Added to this is the fact that maintenance of costly equipment requires biomedical engineers available 24-7," says Dr Bande from KEM.

A research carried out by Parikh and Karnad (Parikh C, Karnad DR. Quality, cost and outcome of intensive care in a public hospital in Bombay, India. Crit Care Med 1999; 27:1754-9) state that most equipment and disposable items are imported from the US or Europe. "Though prima facie it might appear that this will increase the cost, practices such as re-use of some disposable materials after re-sterilisation may decrease the cost of care," feels Dr Ramakrishnan. However, on a positive note, lesser import of medical equipment may be quite a reality in the future as the Indian medical technology market which was billed to be worth about $2.7 billion in 2006 s likely to cross $10 billion by 2012, with a growth rate of over 20 per cent. Most MNCs currently source their products from China through OEM arrangements, joint ventures or own manufacturing facilities. With the Indian software and hardware strengths and the overall increase in prices in China, India could become a potential alternate sourcing centre for such MNCs.

Added to this is the fact that the market for medical supplies and disposables is dominated by the indigenous manufacturers. At the same time, major international medical equipment giants are lining up their investments in India for setting up a local base. Most of the imported equipment are well subsidised for the Indian market compared to their international price. "ISCCM guidelines in this context promotes that the intensivist should have a clearly defined role in the choice of equipment and commends that he/she should firmly veto the purchase and use of substandard products in an attempt at cost saving or profit maximising," notifies Dr Mathew.

Consumables

In India, consumables are the major determining factors towards the total cost. With an estimated 815 blood banks in the country, there is a colossal supply and demand disparity making blood and blood related products an expensive commodity. Even in ICUs of Government hospitals, limited amount of drugs and consumables are provided by the hospital and the rest have to be purchased by the family. Additionally, the costs of drugs have increased enormously.

"In a study of factors affecting drug use, cost of therapy, association between pattern of drug use and survival in a tertiary care ICU, it was found that although the mean number of drugs at the time of admission to the intensive care unit was 5.3, it increased to 12.9 on the first day and 22.2 during the entire stay," informs Dr Ramakrishnan. More than 50 per cent of the expenditure on drugs was accounted by antibiotics. Hence, there is a huge impact of antibiotic use on the cost of therapy in the ICU setting in India.

On the other hand, inapt use of antimicrobials, especially in the ICU framework and the increasing cases of antibiotic resistance even to newer generation of antibiotics pose greater concern. Agrees Dr JV Divatia,President, Indian Society of Critical Care Medicine (ISCCM), "The huge magnitude of antibiotic resistance is largely due to absence of regulation and rampant misuse of antibiotics at all levels, starting from patient self-medication to GPs and consultants in nursing homes, hospitals and ICUs. This has made simple bugs into super-bugs that cause life-threatening infections that are either difficult or nearly impossible to treat, even with expensive antibiotics." Adds Dr Ramakrishnan, "Considering the fact that the cost of using an antibiotic such as Meropenem is Rs 6,000 per day, negative trends like this will add to the overall ICU costs substantially. Expensive drugs such as Activated protein C and Recombinant factor VIIa, which are used exclusively in the ICU context, are also available for use in India." Their use has increased considerably in recent years and the absence of any cost-benefit analysis study carries the predilection to escalate cost of ICU care further. Sums up Dr Divatia, "Greater penetration of health insurance is required. Indigenous technology and reduction in duties on drugs, equipment and consumables can help to reduce costs."

The Right Location

Experts unanimously opine that choosing the right location is an extremely important and determining factor, while setting up an ICU. "The cost depends on beds / part of the country where the ICU is being set up. Besides, the construction and land cost, it costs at Rs 10 lakh per bed," states Dr Prayag. On similar lines says Dr Mathew, "There needs to be a proper local assessing of the population and demand, apart from keeping the cost-factor and escalating real-estate prices in mind."

The land costs approximately around 20 per cent of establishment costs, varying widely depending on geographic position. Says Dr Ramakrishnan, "The establishment cost of a 28-bed NICU reported the cost as Rs 80 lakh in 1990. To extrapolate this to 2009 is difficult due to unprecedented growth and fluctuations in the real estate market and inflation rates."

Various Model of Delivery

One of the important cost drivers in cost-effectiveness will be the model of ICU care delivery.

Closed Vs Open ICUs: "There is rising evidence that closed or transitional models have better outcome and resource utilisation, than open ICUs, which in turn may translate into better cost control," says Dr Bande. Though ISCCM endorses closed model in general medical-surgical as well as speciality ICUs, there are only few bigger units in the country functioning in this manner.

Traditional way, in a closed ICU, the hospital employs its critical care doctors. But off-late, there has been a shift to open ICU/ semi-closed ICU, whereby any doctor or consultant can admit the patient in the ICU irrespective of the speciality. Apollo Hospital, Chennai though incidentally has a very interesting model of 'fee-for-service model,' whereby it has rather 'outsourced' its critical care services to a field of specialists. Though, this model is not a new concept in the US, it indeed is a unique one in India. Founded by Dr Ramakrishnan, his 'company' caters its services to around six hospitals in and around Chennai. "When we started, everyone shunned it as a loss-making venture, but today I'm proud to say that from 100 beds, when we started out, today we are handling 600 beds. In spite of a team of almost 150, I'm running short of people," beams Dr Ramakrishnan.

This model has many advantages over the traditional ICUs. Firstly, it is always very difficult to retain talented doctors to confine to one hospital and then getting a team together who have their own ego issues becomes extremely difficult. Hence, here the clinician gets freedom to practice as per his requirements. Secondly, this also solves the huge manpower crunch that exists today in healthcare system. As per a CII report, currently there are around 8,50,000 hospital beds in the country. Indian healthcare needs to increase this by 1,00,000 every year for the next 10 years. The present number of 7,00,000 doctors should be doubled and 8,00,000 nurses be tripled. Many studies in the west quote a high percentage (almost 50 per cent) of the total costs of ICU to be attributed to manpower costs.

Increasing the number of clinical support services will be adding to the overall costs. In Government-sponsored tertiary care centre ICUs, laboratory and supplementary services may be subsidised and fixed randomly, without any motive of profit or recovery of running costs. But this aspect is a major profit-creating area in private healthcare. On the other hand, due to low staff wages, support services are unlikely to add to the cost of care significantly, if such services form part of the care delivery in the unit concerned. Hence, such a model helps these doctors to effectively serve a larger population base with minimum manpower, facilitating timely critical care.

e_ICUs: As a next step to the overall healthcare delivery in critical care, Dr Ramakrishnan plans to set-up 'e-ICUs,' whereby through telemedicine and mobile units critical care would be able to reach even the rural population. With the second largest populated country in the world, the suburban and rural market for healthcare is huge and critical care market in these regions is still untapped. Corresponds Satish Menon, Manager- Healthcare Vertical, KPMG, "The growing Indian economy, growing infrastructure such as roadways and mass transport systems, expanding foreign funding and investments and the revolution in telephony and broadband internet have opened the market in all sectors. All these have contributed to better mass awareness of healthcare in general and critical and trauma care in particular. Hence, the new hospitals as well as old hospitals under expansion plan now incorporate critical care facilities."

Equipment Pool: Another innovative strategy towards cost containment is sharing a common pool of equipment between ICUs in a common geographical location or leasing the equipment. Technologically, too, in last few years the demands of networking and connectivity has been growing steadily. "All equipment needs to be networked with each other with wired or latest demand being wireless networks. Also, growing is the demand of linking up several ICUs in various centres together so there can be command centre ICU with all high-end clinical doctors and several ICUs in small cities or centres can be connected to this for remote critical care service," says Jitesh Mathur, General Manager, PMCC, Philips Healthcare.

Well-Planned

Affordability to access critical care services becomes an important factor and from a service provider's angle, payments may become a problem. In a for profit model, perceived financial gains may not be materialised, in turn, pushing the organisation to re-engineer capital budgeting with its potential impact on service delivery. On the other hand, several Government-run ICUs where costs of care may exceed available funding, are noted to have limited resources, lack of infrastructure, trained intensivists and support staff. Thus, routine hospital care is dependent on some form of formal or informal cost-sharing process and when the cost of intensive care is added to this burden, the clinician is faced with the dilemma of overall sustainability of the unit.

Nevertheless, in appropriately selected patients, the prospects for survival in ICU are much greater than care in the general ward. It is, therefore, essential to analyse the accurate cost of intensive care and translate it appropriately for better resource allocation to benefit the critically ill. Patient planning depends importantly on reliable and adequate management information.

Market or Service?

Any cost depreciating strategy has to be internally customised than externally imposed to optimise results, feel experts. Simultaneously, the quality of care will suffer if cost cutting is the sole determinant of care. Hence a balance is required and a proper cost-benefit analysis determines the ideal model of delivery. Moreover, optimising various other factors such as reducing of errors/ critical incidents, constant audits/ staff training, practicing preventive intensive care/ application of telemedicine can significantly help in bringing down the total ICU costs. Apart from this, experts feel that most doctors have very little or no interest in matters pertaining to finance and accounts. There are still hardliners who would rather view it as a 'service' instead of looking ways to optimise costs.

True to this belief, says Dr Prayag, "As a senior medical consultant in critical care, who began his practice of critical care more than 25 years ago, I don't see it as a market, but as a 'service." He is not the only one who shares this feeling. Hence, the minority clan of physicians who have an interest in this line are forced to look outside the realm of medical education and depend on other educational organisation and bodies to pursue training and accreditation in this track.

"Despite this unhappy marriage of finance and medicine, it is going to stay and assume growing importance. Hence, it is imperative that ICU director is trained in financial decision-making. This, in turn, allows the intensivist to execute appropriate accounting methods, capital budgeting and resource management. Also, acquiring negotiation skills will be useful in dealing with financial directors, hospital managers and other personnel funding the ICU. All these invariably translate into cost containment," Dr Ramakrishnan concludes.

nancy.singh@expressindia.com