The Institute of Management Consultants of India

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The Institute of Management Consultants of India

• Healthcare Challenges Opportunities
• March 2006

Tilak Shankar Management Solutions
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Healthcare Industry

• Largest in the world with revenues over 3
  trillion
• Indian healthcare industry is worth about
  Rs.100,000 crores, accounting 5 of GDP
• Fastest growing industry in India with CAGR of
  about 30
• Employs about 80 lakh people directly and
  indirectly (IT industry employs only about 5
  lakh)

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Total Turnover Rs. 100,000 Cr. p.a.
Others 7
Labs Diagnostics 12
Hospitals NH 40
Pharma Supplies 20
Allopathic Doctors 22
Two thirds of beds in Govt. local authorities
(Total 630,000 beds)
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HEALTHCARE VARIOUS SEGMENTS
STATE/ GOI
MEDICAL SOFTWARE INDUSTRY
PHARMA
MEDICAL TOURISM
MEDICAL/ HEALTH INSURANCE
HOSPITALS, NURSING HOMES, CLINICS, LABS
NUTRITION INDUSTRY
TPA
MEDICAL EQUIPMENT
POPULATION GERAITRIC , PAEDIATRIC
MEDICAL, NURSING, DENTAL, PHARMA COLLEGES
TRANSPORT
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Hospitals

• Govt, Corporate, not-for-profit, others
• Not-for-profit Sec 80G, Sec. 35AC,
• Sec. 35(1)(2) of Income Tax Act,
• Section 25 Company
• Hospital Management
• Marketing
• Strategic Planning
• Finance Administration
• IT
• HR
• Materials
• Quality
• New Project planning execution (India
  Overseas)

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Emerging trends In Healthcare

• Secondary Tertiary Care requires large
  investment, viable bed size, technological
  obsolescence
• Increasing corporatization
• Venture capital funding
• Slow, but emerging private health insurance/TPA
• Global alliances
• Listing of companies
• Felt need for professional management
• Sick hospitals
• Marketing of services
• MA, Brand buying, Brand extension, franchising

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Emerging Trends (Contd.)

• Rating of hospitals (CRISIL, ICRA)
• Accreditation by TPAs
• Recertification of Doctors (in future)
• Spiraling hospitalization costs
• Epidemiology
• 500,000 cancer patients added p.a.
• 40 million diabetics
• 60 million patients
• 70-80 million senior citizens
• Obesity, psychiatric patients.
• IRDA, Private Insurance
• Tele-medicine

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Emerging Trends (Contd.)

• Quality standards
• Medical audit, accreditation other standards
• Waste disposal (State Government)
• ISO
• JCAHO (USA Standard)
• NABL
• Blood Banking (GOI standards)
• Licensing inspection (under consideration)
• Protocols for clinical trials
• Consumer protection act (private hospitals)

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India - an Epidemiological Transition
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Tertiary Hospital

• Capital Intensive
• Long gestation period
• Doctor-oriented
• Frequent up-gradation of technology
• Service organization
• Patient focus
• Employee focus
• Location is key
• Also needs
• Teaching (Post-grad.)
• Research publication
• Community/epidemiology work
• Global alliances

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Medical Tourism

• Emerging opportunity
• Hospitals
• Travel agents
• Airlines
• Hotels
• Rs. 1500 Cr. Revenue in 2004
• McKinsey projection Rs. 5000 to
• 10,000 cr. In 5 years
• Major Corporates
• Tatas Fortis
• Max Wockhardt
• Piramol Apollo gearing up
• Coordinated program Airline tie up, pick-up,
  visa etc. subsequently general tourismpp

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Pharmaceutical Industry

• Bulk drugs, drug intermediates, formulations,
  generic branded, OTC
• Bio-technology, Bio-informatics, neutraceuticals
• Annual turnover Rs. 23,000 cr. (5-6 growth
  p.a.)
• Employment Direct - 50 lakhs
• Indirect - 25 lakhs
• 20,000 units (300 in the organized sector)
• No. of hospitals 16,000
• Retail chemists 6 lakhs
• 4th in the world (volume)
• 12th in the world (value)
• Significant exports from India

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Pharma - Key challenges

• Many drugs off patent (30-40 billion in the next
  5 yrs) strategic marketing alliances
• Good manufacturing practices quality
• Industry research collaboration
• Ayurvedic drugs
• Bio-technology
• Only a small number of items under DPCO (40 or
  so)
• Spurious drugs in India
• Global RD 18 year patent
• Upto 15 years from molecule to marketing

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Medical equipment suppliers

• Expensive capital expenditure
• CT Scan, MRI, Cath lab, Laser, Theatre equipment,
  X-ray
• Siemens, Philips, Hitachi etc.
• New hospitals, modernization (technological
  obsolescence)
• Each new bed total capex Rs. 20-100 lakhs
• Equipment sales, AMC, Spare parts, training
• Rs. 8,000 to 9,000 crores p.a.

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Health Insurance TPA

• Public Sector
• General insurance of India
• 4 subsidiaries
• Private Sector
• Royal Sundaram, ICICI-Lombard, Bajaj Alliance
  etc.
• TPA - TTK, Heritage, Family Health Plan
• Estimated premium income
• About Rs. 5000 crores
• Potential 25,000 cr in 5-7 years
• Present coverage only about 3-4 of the
• population
• Govt. likely to allow separate health insurance
• co (Rs. 25 crores equity)

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Insurance by NGOs/Community based health insurance

• Members pre-pay a set amount (flat rate)
• Voluntary health insurance (VHS-Chennai)
• Co-operative, SEWA, Foundations
• Narayana Hrudayala
• Universal Health plan of the four
• insurance companies
• About 50 million covered
• In addition
• ESI
• CGHS (Retired employees)
• Mediclaim

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IT IndustryHealthcare Vertical

• TCS, Wipro, Infosys, Cognizant, iSoft, Covansys
  etc.
• US, Europe, Australia clients, Govts. and private
  hospitals
• Global healthcare spend 5 trillion, US 1.7
  trillion (15 of GDP)
• USA IT spend 25-30 billion
• Europe 800 billion
• Healthcare spend 12 to 15 of GDP (India about
  5-6)
• iSoft Healthcare 260 million, 4000 employees
  (950 application specialists)
• Cognizant
• 600 million
• Of the above, 22 from healthcare and life
  sciences
• 3000 domain technology experts

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IT in Healthcare

• Medical
• Picture Archival Communication System (PACS)
• DICOM (Digital Imaging Communications in
  Medicine)
• Telemedicine
• Electronic Medical Records
• Clinical Decision Support Systems
• HL7 protocol
• Epidemic prevention software
• Non-medical
• Integrated hospital information system
• Web-enabled Appointment Scheduling
• Web-enabled applications for relatives to obtain
  conditions of the critical patients
• Multi-media applications for patient education
• Medical equipment management software
• Web-enabled CRM applications

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IT (Healthcare) Projects

• Mainframe, client-server based, web-based
• End to end product linking with provider, payer,
  patient HIPAA compliance
• Data warehousing and decision support systems
• Electronic Medical Records
• Healthcare CRM
• Maintenance of systems

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BPO

• Areas
• Medical Transcription
• Claims processing
• Billing by Doctors (on insurance companies)
• Clinical documentation
• Clinical trials
• Advantages of Indian Companies
• English language
• Cost arbitrage
• Time difference
• High quality (e.g. gt99.5)
• Multi-disciplinary teams

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Clinical Research Organization (CRO)

• Clinical Trials
• Revenue Rs. 300-400 crores
• CII Projection Rs. Cr.
• 2007 800
• 2010 4000
• Large population
• Medical, Lab manpower

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Healthcare Consulting

• Major areas
• Hospital feasibility studies
• Funding of new projects
• Efficiency improvement
• Market survey marketing of services
• Organization review
• Strategic planning
• Insurance products
• IT ERP, EMR, system integration

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Healthcare Consulting

• Clients
• GOI, State Governments.
• UNICEF, World Bank, ADB, DANIDA
• Corporate not-for-profit hospitals
• Insurance Company
• Strategic investors
• IT Companies

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Challenges Ahead

• Structure and financing of healthcare is changing
  rapidly
• Future managers in healthcare sector to be
  prepared to deal with
• evolving integrated healthcare delivery systems
• technological innovations
• an increasingly complex regulatory environment
• restructuring of work
• increased focus on preventive care
• improving efficiency in healthcare facilities and
  the quality of the healthcare provided
• managing finances including modernization,
  expansion plans and brand extensions
• optimizing efficiency of a variety of
  interrelated services (e.g. those ranging from
  inpatient care to outpatient follow-up care)
• managing the growing aspirations of doctors
  (compensation, revenue sharing, high-end
  equipment, specialized courses etc.)
• High turnover of para medical staff including
  nurses
• Social Marketing

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To sum up

• Wide ranging career opportunities in India and
  elsewhere
• Domain expertise healthcare management essential
• Growing sector
• Job satisfaction
• Socially relevant jobs