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Ratan Jalan who is CEO of Medium HealthCare speaks on VTrac Clinics ...to know more Visit : https://www.mediumhealthcare.com/our-services/

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Separating the men from the boys in Indian healthcare

For hospitals in India, the last few months may not have meant exactly a bloodbath, but have certainly come as a rude awakening. As Bhavdeep Singh, CEO at Fortis Healthcare, unequivocally pronounced during the earnings conference call last month, “To put it very bluntly and very simply, the industry has just gotten its butt kicked in the last six to eight months.”

There have been numerous factors contributing to the dismal state of hospitals: starting from demonetisation and the government’s move to put a cap on price for high-price items such as stents and implants, to growing trust deficit among various stakeholders. We have also had knee-jerk reaction from various regulatory agencies to certain episodes at some of the leading hospitals in the country.

It has taken an unprecedented toll on the financial performance of most hospitals, pushing several of them into a state requiring ‘intensive care’.

Heydays for Indian hospitals, marked by demand-supply gap, when managerial competence had little premium, may have come to an end. It simply cannot be business as usual at any hospital operating in the country today. The model will need to change dramatically, going forward. And in my view, the thrust for change should focus on the following four levers.

Four paths to survival

Age-old ways of generating revenue, be it through incentivising physicians for referrals or filling beds with low-margin patients through government-funded insurance schemes, will no longer work. Hospitals will have no option but to focus on doing marketing the right way – define their core target audience and create a strong competitive edge, which would need to be communicated effectively. They will need to adopt a smart pricing strategy and make effective use of weapons such as digital marketing and public relations.

Payment to physicians typically accounts for almost 30 per cent of a hospital’s revenue. Given the dramatically reduced scope for margins on consumables and medicines, a hospital will need to focus on containing this cost. Paying exorbitantly high sums of monies to ‘celebrity’ physicians, who can bring in business, will cease to be a worthwhile proposition. Hospitals will have to invest in building the institutional brand and rely on a team of adequately competent, though not necessarily famous, team of physicians. Such an approach will help rationalise the cost structure without compromising on clinical outcomes and also make it less challenging to ensure adherence to the institutional values.

To address the threat of mounting trust deficit among not just patients, but society at large, hospitals will need to look beyond the promise of clinical outcomes. “Treat the person, not just the disease”, as they say. Delivering a good holistic patient experience shall become an immediate imperative. Lack of communication, inordinate delays at various stages in a hospital and lack of transparency in billing are some of the major culprits. And they will need to be tackled they in a systemic and sustained manner.

Finally, hospitals will need to be ruthlessly cost-efficient. They will need to arrive at the core attributes that patients value. Replicating a hotel-like ambience may mean sheer wastage unless one is targeting only the affluent, who would be willing to pay a price premium. Achieving process efficiencies not only saves on manpower costs and improve asset utilisation, but also reduces delays. An expensive resource like the operation theatre complex, for example, is rarely viewed with the lens of productivity and hence suffers from suboptimal utilisation.

If the hospitals choose to curse under their breath and persist with old habits, the existential crisis will only deepen. It would be a pity, if we let this crisis go to waste. The year will be crucial to separate the men from the boys — in terms of those who not only survive the challenges but create a recipe to stay relevant in future.

Source : Medium HealthcareBranding