‘Medical Outsourcing’ – a fast evolving area in the healthcare space with high business potential.

Medical outsourcing is an evolving area in the global healthcare space. It can offer immense opportunity to India, if explored appropriatly with a carefully worked out strategic game plan from the very nascent stage of its evolution process. This sector could indeed be a high potential one in terms of its significant financial attractiveness by 2015.
Key components of medical outsourcing:

The following four basic components constitute the medical outsourcing industry:

• Healthcare providers: Hospitals, mainly corporate hospitals and doctors

• Payer: Medical/ Health insurance companies

• Pharmaceutical Companies

• IT companies operating in the healthcare space

So far as payers are concerned, currently they are primarily involved in the data entry work, the present market of which in India is estimated to be around U.S$ 100 million.

Key drivers and barriers for growth:

The world class cost-effective private sector healthcare services are expected to drive the growth of the medical outsourcing sector in India. However, shortages in the talent pool and inadequate infrastructure like roads, airports and power could pose to be the major barriers to growth.

At present, majority of medical outsourcing is done by the US followed by the UK and the Gulf countries.

How is this market growing?

Medical Tourism, by itself, is not a very recent phenomenon all over the world. Not so long ago for various types of non-essential interventions like, cosmetic surgeries, people from the developed world used to look for cheaper destinations with relatively decent healthcare facilities like, India, Thailand etc.

Now with the spiraling increase in the cost of healthcare, many people from the developed world, besides those who are underinsured or uninsured have started looking for similar destinations for even very essential medical treatments like cardiac bypass surgery, knee replacement, heap bone replacements, liver and kidney transplants, to name just a few.

Significant cost advantage in India with world class care:

It has been reported that for a cardiac bypass surgery, a patient from abroad will require to pay just around U.S$ 10,000 in India, when the same will cost not less than around U.S$ 130,000 in the US. These patients not only get world class healthcare services, but also are offered to stay in high-end ‘luxury’ hospitals fully equipped with the latest television set, refrigerator and even in some cases a personal computer. All these are specially designed to cater to the needs of such groups of patients.

Recently ‘The Washington Post’ reported that the mortality rate after a cardiac bypass surgery is better in Indian private hospitals than their equivalents in the USA.

An irony:

It is indeed an irony that while such private hospitals in India are equipped to provide world class healthcare facilities for their medical outsourcing business and also to the rich and super rich Indians, around 65 percent of Indian population still does not have access to affordable modern medicines in the country.

Is the government indirectly funding the private medical outsourcing services in India?

In India, from around 1990, the government, to a great extent, changed its role from ‘healthcare provider’ to ‘healthcare facilitator’. As a result private healthcare facilities started receiving various types of government support and incentives (Sengupta, Amit and Samiran Nundy, “The Private Health Sector in India,” The British Journal of Medical Ethics 331 (2005): 1157-58).

While availing medical outsourcing services in India, the overseas patients although are paying for the services that they are availing from the private hospitals, such payments, it has been reported, only partially fund the private hospitals. If such is the case, then the question that we need to answer: Are these medical tourists also sharing the resources and benefits earmarked for the Indian nationals?

Conclusion:

Due to global economic meltdown many business houses in the developed world are under a serious cost containment pressure, which includes the medical expenses for their employees. Such cost pressure prompts them to send their employees to low cost destinations for treatment, without compromising on the quality of their healthcare needs.

Other countries in quite close proximity to ours like, Thailand, Singapore and Malaysia are offering tough competition to India in the medical outsourcing space. However, superior healthcare services with a significant cost advantage at world class and internationally accredited facilities, treated by foreign qualified doctors, supported by English speaking support staff and equipped with better healthcare related IT services, will only accelerate this trend in favor of India. In this ball game it surely is, ‘Advantage India’.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

‘Prescription-brand’ loyalty and engaged field force – exploring the direct relationship.

Well known English writer and one of the most prominent members of the famous ‘Huxley family’, Aldous Huxley once said in the context of nature, “Everything has a cause and the same cause usually produces same effect. The law of cause and effect is fixed.”
‘Cause and effect’ relationship between ‘employee satisfaction’ and ‘customer satisfaction’:Following such ‘cause and effect’ relationship, there are many studies, which establish a direct correlation between ‘customers satisfaction’ and ‘satisfied employees’. Within the pharmaceutical industry, it has now been well established that there is a cause-and-effectrelationship between Doctors’ prescription-brand loyalty and a satisfied or properly engaged sales & marketing staff.

For most organizations, the objective of improving the satisfaction level or increasing the degree of engagement of an employee in the organization is an article of faith. Research studies on this subject indicate that building customer loyalty has a significant impact on profitability of the organization. A study based on 46,000 business-to-business surveys reports that a “totally satisfied” customer contributes 2.6 times more revenue than a “somewhat satisfied” customer.

‘Walking the talk’ is the name of the game:

It is extremely difficult if not impossible to create a critical mass of loyal doctors’ base for a brand or brands without a creating a team of satisfied, engaged or loyal sales & marketing team. The best employees usually prefer to work for companies where managers ‘walk the talk’, set examples and deliver superior values.

Acid test of leadership:

A work environment of such kind helps to create employee satisfaction, loyalty and engagement, which ultimately gets translated into building customer loyalty. Ensuring employee loyalty and creating employee satisfaction is, therefore, considered widely as the acid test of leadership.

Creating a positive psyche within employees is important, usual skill training is just not enough:

To create employee loyalty the organization will need to understand the mind of its employee and always try to have a positive influence on their psyche. Usual skill training will not help to achieve it.
Just as sowing a seed is no guarantee that it will grow into a plant, a highly skilled sales person is no guarantee that it will contribute to the growth of the organization. Just as one will need to create an environment for the seed grow into a plant, the organization will need to create an environment for employee satisfaction to enable them contributing towards the growth of the organization.

In HR invest resources where the mouth is:

It is very important for the managers to devote more resources both in terms of money and time to play the role of a mentor to each one of his or her direct reports to improve their satisfaction level with the organization. These satisfied employees will in turn help create a core group of prescription brand loyal doctors for the organization.

‘Charity begins at home’:

However, ironically most of these managers do not realize that attempts at their end towards this objective, many a times, are just cosmetic in nature. As the saying goes, “charity begins at home”…real enhancement in the level of customer services, indeed starts from extending superior services, support and satisfaction level to the sales force, the bedrock for generation of prescription demands for the prescription brands.

Facing the ‘moments of truths’ of every day positively:

Pursuit of an organization in providing great services to the patients through doctors ultimately depends on the people who provide those services…the sales force. It can only happen through one’s willingness to go beyond what is required of people who serve on the front lines.

Excellence in organizational performance takes place through efforts of frontline employees who make up their minds to face the “moments of truth” of every day, as positively as they possibly can. Such enthusiasm, loyalty, or devotion none will be able to impose on any one. These ordinary people are transformed into ‘brave hearts’ and highly satisfied top performers only through well articulated “shared values”, which take their deep roots within the organizational environment. In a situation like this one can easily make out the visible passion and pride of the frontline staff, emanating from deep within, of each one of them.

Some research findings:

Following are some examples from various research findings, which reinforce the hypotheses that there is a ‘cause and effect’ relationship between ‘customers satisfaction’ and ‘satisfied employees’:

• “For every one percent increase in internal service climate there is a two percent increase in
revenue”.

• “In cardiac care units where nurses’ moods were depressed, patient death rates were four times
higher than in comparable units”.

• Emotional commitment of the sales force and sense of identity with the company are key factors in
providing excellent service to the doctors.

• The reason of poor prescription demand of a company’s products is related to the degree of its sales
staff turnover.

Conclusion:

Therefore, one tends to believe that “a company’s external customer service is only as strong as the company’s internal leadership and the culture of commitment that this leadership creates”.

To transform one’s organization from “Good to Great” it is of utmost importance to build a team of loyal and satisfied ‘internal customers’ by creating a commensurate organizational culture, work environment, ethics and values. Various training & development programs or seminars, aiming only at employee ‘skill development’, are just not enough.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

65% of Indians do not have access to affordable modern medical treatment – why?

India is indeed a country of many paradoxes. Not just peaceful co-existence of luxurious sky scrapers and dilapidated shanties side by side. In the healthcare sector as well, we witness on one side booming medical tourism of foreign nationals to get various types of ailments treated with the best possible medical amenities, just when on the other side common diseases like, malaria and tuberculosis are taking the common man on a rampage. Is India, therefore, ignoring the crying need to strike a balance between extending cost competitive healthcare benefits to the ‘haves’ of the world without neglecting the domestic ‘have nots’?Another paradox, when India caters significantly to the growing needs of the world for low cost generic medicines, 65% of Indian population cannot afford the same and do not have access even to a doctor.In a situation like this, what sort of equitable distribution of healthcare benefits are we then talking about? Isolated attempts of opening low cost generic medicine shops, enforcing rigorous non-transparent price control, attempt to divert the debate on the price of patented medicines which contribute miniscule decimal points on the total pharma market in India, can at best be termed as populist measures, instead of trying to look at the macro picture to address the pressing healthcare issues of the country.

When we talk about affordability, why do we not talk about affordability of medical treatment as a whole and not just affordability of medicine, for one or many ailments that the common man suffers from? Will our government try to address this bigger issue in a holistic way?

What could possibly be the reasons for such inaction? Is it because improper co-ordination, if not lack of co-ordination, between various Government departments, the ultimate victim of which is the common man?

Such a situation reminds me of an old story of three blind men and an elephant. After touching the trunk of the elephant, one blind man describes the elephant as a large Python, touching a leg of the elephant, the other blind man describes it as a pillar. The third blind man while touching the body of the elephant describes it as a strong wall. Unfortunately no one could describe the elephant as it really is and no one in this particular case was helping them to do so, either.

Could it be that various departments of our Governments are acting like these blind men and are not seeing the big picture – the elephant of the above story? It appears that the Pharmaceutical department of the Ministry of Chemicals and Fertilizers believes that only the price of medicines is the key issue for an ailing patient while going for a medical treatment and not the cost of total treatment. Thus, they seem to be working full time to drive down only the price of medicines.

The Ministry of Health is also trying to do a little bit of something in some not so known areas. The Ministry possibly believes that they are effectively helping everybody to address the pressing healthcare issues. It does not so appear that the Ministry realizes that majority of our population does not have access to affordable modern treatment for the ailments that they are suffering from. Number of doctors, nurses, hospital beds etc. per 1000 of Indian population is still abysmally low even compared to some developing nations. Cost of getting a disease diagnosed even before any medicine is prescribed is sky rocketing, at a break neck speed. Which Government department is trying to address the cost of disease burden and trying to alleviate it for all of us, in a holistic way?

Here comes another paradox. While the Pharmaceutical Department intends to bring down the price to make the drug affordable, the Finance Ministry keeps the transaction cost of medicines at a high level by levying various taxes to improve its revenue collection, ultimately making the same medicine less affordable.

In the developed nations and also in many emerging markets healthcare financing or health insurance for all strata of the society is being successfully implemented to address the key issue of improving access to affordable modern treatment to a vast majority of the population. Even after 61 years of independence we have not been able to address this critical healthcare financing issue effectively.

Piece meal approach of our Government has not succeeded much to address this important issue of the country. Taking one-off populist measures of various types and creating media hype may not help sorting out this issue, at all.

The way forward, very broadly speaking, is to bring the entire healthcare policy making and implementation functions under one ministry. If that is not possible, the concerned ministries should work in unison, with effective procedural interfaces being put in place for proper co-ordination with a clear goal of improving access to affordable modern treatment to all.

Is it not a shame on us that even today, 65% of Indian population does not have access to affordable modern medical treatment?

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.