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| Jagruti Bhatia |
While the Indian healthcare system continues to score low on metrics of penetration, affordability, doctor and nurse density, number of hospital beds, and double disease burden, it would be fair to say that the country’s health sector has made significant strides in many areas over the past decade.
- Healthcare is the fifth-largest employer among all sectors today, and the Government of India (GoI) is now considering a skills programme across levels and vocations.
- India is home to one of the largest telemedicine networks in the world.
- Healthcare in the country witnessed over a billion in private venture and equity capital across more than 40 deals last year. Since 2005, PE funds have invested $2.53 billion in 216 healthcare deals, clearly reflecting the sector’s high growth potential.
- Entrepreneurs have created many new formats to address skill and real estate shortage. India is home to one of the largest eye-care chains in the world; dialysis centres; day care, primary care, and diabetes clinics; and low-cost hospitals — indicating clear innovation across business and delivery models.
- Foreign players have sought opportunities in India, while Indian healthcare majors have gone global.
- The government has taken several measures like tax holiday upto five years for more than 100 bed hospitals in rural areas, lowering of land norms for medical and nursing colleges, to name a few.
Thus, the stage is set for rapid growth in the next few years. This article is an attempt at ‘crystal gazing’ into 2013 to discuss five key themes that could define the healthcare scenario in the near future.
Theme 1: Affordable care — more for less?
As healthcare struggles through the dimensions of cost, quality and access across the globe — and as developed health systems increasingly look to the state exchequer to save costs while managing social expectations — India looks to build out affordable care models of delivery and services. Innovation is being achieved through models such as Vatsalya and Glocal, aimed at low-cost, affordable healthcare facilities in semi-urban areas (where penetration is abysmally low); Nayarana Hrudayalaya, which offers cardiac procedures at a fraction of the cost of its competitors; or by Thyrocare, which aims to install more than 100 PET scans across the country and make expensive diagnostics accessible for the middle class. In any case, creating affordable and effective healthcare solutions is one theme that will likely continue in India for times to come.
However, enterprises may want to consider deliberating carefully on creating scalable, low-cost yet effective processes and leveraging technology to create models that are economically viable for patients. Only then can businesses build sustainable foundations on which to scale up and survive in the long term.
Theme 2: Professional management across healthcare providers, stand-alone clinics and small chains
While businesses in other industries are built on strong service delivery, innovation, distribution networks, or scaled up manufacturing assets, healthcare is a mix of all of these. This makes the business relatively complicated to operate and manage and eventually scale up. The standardisation of processes, the centralisation of procurement, the leveraging of systems and technology to drive clinical intelligence and protocols, and training are some of the measures that organised players are adopting to differentiate themselves from competition and make their ventures potentially profitable. At the same time, like any other growing sector, there exists a long tail of unorganised, stand-alone players, clinics,proprietors/ partnerships and single establishments. In this context, 2013 is likely to see increased activity from both entrepreneurial talent and established players toward building management models, focused on the increased ownership of existing assets to streamline and consolidate them under unified brands. Stand-alone nursing homes, community hospitals and secondary care centres have already begun to witness such alliances and acquisitions. Continued activity in different formats on this front can be, thus, expected. This may not be an easy ride, considering the distinct characteristic of each opportunity and deal, as well as the difficulties that are likely to emerge in seeing such opportunities through; the need for improved operations, branding, and standardisation can be expected to drive this change.
Theme 3: Health at home and on the phone!
As India reels under the title of the world’s diabetes and cardiac capital, increased incidence of oncology, heightened focus on chronic care, pain management and home care in 2013 and beyond will be the need of the hour. By 2050, the country’s population of those aged 60 and above is expected to total 323 million, a number far greater than the entire US population in 2012. This reflects the need for care models focussed on remote monitoring technology, home care professionals and extended step-down care following discharge, delivered by existing and emerging players. A recent study by the National Health Service (NHS) in the UK states that effective home care could save the NHS £300–390 million by reducing avoidable hospital re-admissions. As we struggle with overcrowded hospitals and a growing healthcare bill, home care will be critical for easing our burden.
Theme 4: Enter the GP and health check-ups
Our health system is distinctive in more ways than one. The private sector accounts for 70 per cent of our total spend – one of the categorical outcomes of this is the slow build out of primary and secondary healthcare models. Our insurance system is largely untapped, and the GoI is devising various programmes to make universal healthcare a reality. The need of the hour is to construct a value chain that gives the underprivileged access to affordable care and simultaneously helps payers scale up their influence to increasingly provide for universal coverage. This can be achieved by front-end family clinics and GPs, who play a key role in preventive care; they have, across the world, demonstrated that they are integral to the ecosystem. The year 2012 witnessed the entry of half-a-dozen models of GP clinics and family medicine, and 2013 is likely to witness the emergence of such models on an even larger scale. Large players such as Fortis and Apollo are also thinking about how to build out more ’retail–centric’ models of care that feed into their overall ecosystem. On the other hand, corporate players, global healthcare institutions forging alliances with India-based chains, and returning GPs are attempting to build out this part of the value chain.
The market for health check-ups stood at approximately Rs 1, 200 crores as of 2011 and is expected to grow at a CAGR of 20 per cent in the next five years. Primarily driven by the need for, and awareness around preventive check-ups, the space provides opportunities for not only providers such as Max but also for facilitators such as Indus. Activity in this segment is likely to increase by at least 20 per cent in 2013.
Theme 5: Technology and tablets
Various other sub-segments within the healthcare space are expected to emerge as major opportunity areas in 2013 and beyond.
- Telemedicine: While telemedicine as a technology has not reached its due potential in India, it is witnessing remarkable growth. Poised to grow at a CAGR of 20 per cent in the next five years, telemedicine as a segment is estimated to have potential worth $500 million by 2015.
- Teleradiology: Driven primarily by innovation, evolving technology, increased healthcare penetration and the interest of investors in remote healthcare delivery – the teleradiology sector is witnessing consistent traction. The market in India has been estimated at $43 million in 2012 and is forecast to grow at a CAGR of about 15 per cent.
- Hospital management information systems: This is a relatively untapped area in India, but it holds with significant growth potential. Rising healthcare costs, coupled with evolving demographics and technological enhancements, are expected to drive this space.
- Screening devices: As the government rolls out screening for the masses for diabetes, blood pressure, COPD, and various types of cancer, companies may be expected to devise innovative solutions and technologies to facilitate such pilots and projects. In this context, tablets are likely to play an integral role in capturing and analysing sample data; further, with the advent of low-cost gadgets, activity on this front across 2013 and beyond is probable.
Can 2013 drive the change?
All eyes are on India as it prepares to revamp its health system. We cannot afford to create an expensive set-up, which is essential. Innovation in technology, hardware and delivery models will, thus, be key. Private capital can be expected to continue evaluating and supporting economically viable and scalable business models, as well as different formats to meet the dynamic needs of different classes and geographies. The government must continue pushing the agenda toward creating an increasingly robust platform for delivery and working with private payers and providers to develop a cost-effective model of healthcare. Therefore, 2013 will likely move the needle in the right direction; it is hoped that some of the themes discussed in this paper can effectively address the three-pronged challenge of cost, quality and access to health for all.
About the authors
Amit Mookim is a Partner with KPMG in India’s strategy practice and also heads the Healthcare vertical for India.
Jagruti Bhatia is a Director with the Healthcare Advisory vertical for KPMG in India.
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