Healthcare Industry

Healthcare Industry:

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)

Total Turnover Rs. 100,000 Cr. p.a.:

Total Turnover Rs. 100,000 Cr. p.a. Hospitals & NH 40% Others 7% Labs & Diagnostics 12% Pharma & Supplies 20% Allopathic Doctors 22% Two thirds of beds in Govt. & local authorities (Total 630,000 beds)

HEALTHCARE – VARIOUS SEGMENTS:

HEALTHCARE – VARIOUS SEGMENTS HOSPITALS, NURSING HOMES, CLINICS, LABS PHARMA STATE/ GOI MEDICAL SOFTWARE INDUSTRY MEDICAL TOURISM MEDICAL/ HEALTH INSURANCE NUTRITION INDUSTRY TRANSPORT POPULATION GERAITRIC , PAEDIATRIC MEDICAL, NURSING, DENTAL, PHARMA COLLEGES TPA MEDICAL EQUIPMENT

Hospitals :

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)

Emerging trends In Healthcare:

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

Emerging Trends (Contd.):

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

Emerging Trends (Contd.):

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 )

India - an Epidemiological Transition:

India - an Epidemiological Transition Geriatric (7 – 8 % of population) Cataract, prostate, depression, cardio-vascular, arthritis, adult on-set diabetes Life style Obesity, hypertension, stress, tooth decay, cardiovascular Environmental Allergic asthma, water-borne diseases (typhoid, jaundice, Leptospirosis) Elective Cosmetic surgery, tooth correction, infertility treatment

Tertiary Hospital:

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

Medical Tourism:

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

Pharmaceutical Industry:

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 4 th in the world (volume) 12 th in the world (value) Significant exports from India

Pharma - Key challenges:

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

Medical equipment suppliers:

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.

Health Insurance & TPA:

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)

Insurance by NGOs/Community based health insurance:

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

IT Industry Healthcare Vertical:

IT Industry Healthcare 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

IT in Healthcare :

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

IT (Healthcare) Projects:

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

BPO:

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

Clinical Research Organization (CRO):

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

Healthcare Consulting:

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

Healthcare Consulting:

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

Challenges Ahead…:

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’

To sum up:

To sum up Wide ranging career opportunities in India and elsewhere Domain expertise healthcare management essential Growing sector Job satisfaction Socially relevant jobs Recession Free Industry