Thursday, July 30, 2009

MassGen Hospital to enter India?

This recent story carried by Economic Times caught my attention.

http://economictimes.indiatimes.com/News-by-Industry/Hindujas-scout-for-hospital-JV-partner/articleshow/4835610.cms

To me this is a sign of the times ahead. As the purchasing power of the Indian middle class improves and insurance penetration increases, we will see more US based healthcare players look at India as a destination for expansion.

For these players the revenues from operations in India may not a huge impact on the top line in dollar terms. However this could be seen as a medical tourism play and/or a pilot project to test out the Indian market. Though several US based payers have started to push medical tourism packages in India, the perception of quality has been an obstacle to adoption of India as a healthcare destination by employee unions,thus slowing the momentum. Mass Gen may be able to break those perception barriers and channel patients to its Indian venture. The other possibility is for MassGen to recruit high value patients for its centers in the US.


For the Indian healthcare industry, this could be turn to be an inflection point. Indian healthcare providers deliver some of the best quality care in the region. However there is potential to adopt better management practices and technology in the hospitals.

The arrival of competition would definitely change the healthcare delivery model in India.

4 comments:

anil said...

Dear Dr. Saji,

Read ur comments...I also read the story in ET about the imminent entry of this hospital in India...about Indian healthcare markets there are few important points:
* Nearly 80-85% spending on healthcare spending is through private pockets (self spending)
* Healthcare / medical insurance spread is hardly 2%
* Virtually negligible trust in government run / managed hospitals...so even poor people are forced to go to private hospitals...and the pricing of healthcare is such that quite a few of them end up in huge debt...due to this, there is huge proliferationb of private standalone, single-city nursing homes (which can be referred as secondary healthcare centres)...there is a wide variation in the quality of the healthcare delivered at these centres.

today in India the quality of treatment, availability of the latest technology and the world class doctors is not an issue...issue is absence of adequate supply of allof these and at a price which helps in expanding the market...so if you have money, then you can get world class treatment in India...

Today competition in the domain of private healthcare is quite strong (with chains like Apollo, escorts, Max, Fortis etc.)...everybody seems to be targetting the ubiquitious middle class...

Other aspects is that hospital administration / management in India is at a pretty nascent stage...due to this there is quite a bit of revenue leakage...which impacts the net profitability...today hospitals are working in the range of 15% PAT margins...which can improve profitability which may encourage them to review pricing of the services

Regarding medical tourism, there is huge scope...here the issue is of 'tourism more than 'medical'...a patient from US would come to India not only to get treated but also to do sight-seeing...for this the treatment needs to happen in a place which is closer to popular tourist destination...for example, somebody gets treated in Mumbai and for post treatment recuperation, he goes to Goa and something happens there to him...how it will be handled...or if he gets treated in Delhi and goes to Agra...

these are few of my thoughts...but one thing is sure there is huge huge scope for growth provided somebody is willing to play a disurptive game...such kind of game has been played by some players in pathlab business...resulting in huge benefit to consumers and benefits to the category per se

Cheers!

Anil

Saji Salam's Healthcare Blog said...

Anil:

I agree.

One aspect I would pay analyze carefully is the 2% spending on health insurance. Numbers can sometimes be deceptive.

If you look at the spending on on health insurance, in urban areas it is far more than the 2%. I do not have a number perse, but I guess almost all corporates now provide health insurance as part of the compensation package.

Health Insuarnce in rural markets is yet to take of in a big way.

Another impending challenge to the industry is the time/cost of claims proceesing.

Refer to my article written in 2002

http://www.expresshealthcaremgmt.com/20021015/medtech1.shtml

Arvind said...

India has some of the finest healthcare facilities. Take the example of The Apollo Group. It has 23 hospitals and 60 Apollo Clinics across India.

Currently patients form US, UK, Burma, Nepal, Bangladesh, and the Middle East are being served very successfully.

I dont think the entry of Mass General will create an inflection point.

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