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The Institute of Management Consultants of India

The Institute of Management Consultants of India. Healthcare Challenges & Opportunities March 2006. Tilak Shankar Management Solutions. 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

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The Institute of Management Consultants of India

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  1. The Institute of Management Consultants of India Healthcare Challenges & Opportunities March 2006 Tilak Shankar Management Solutions

  2. 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)

  3. 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)

  4. 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

  5. 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)

  6. 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 • M&A, Brand buying, Brand extension, franchising

  7. 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

  8. 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)

  9. India - an Epidemiological Transition

  10. 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

  11. 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

  12. 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

  13. 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 R&D – 18 year patent • Upto 15 years from molecule to marketing

  14. 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.

  15. 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)

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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. >99.5%) • Multi-disciplinary teams

  21. Clinical Research Organization (CRO) • Clinical Trials • Revenue Rs. 300-400 crores • CII Projection : Rs. Cr. 2007 800 2010 4000 • Large population • Medical, Lab manpower

  22. 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

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

  24. 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’

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

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