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What ails Indian Healthcare Sector

The Indian healthcare is afflicted by “Economic Viability” syndrome. The healthcare industry is like a middle aged woman who is trying to reinvent herself so as to be able to compete with younger females. Similarly hospitals are competing with younger industries and chasing “sexy after-tax profit margins”. The doctors want to earn as much as investment bankers. A study of 100 big hospitals concluded that while after-tax profit in US is around 6-8%, the figure is around 10-15% for Indian hospitals. In US, only the very efficient hospitals earn 8%.

The strategy for Indian Hospitals to maximise their profits has been to build doctors as brands. Just like fund managers, TV Anchors and RJs, the doctors and hospitals are realizing virtues of branding. Just like TVs flaunt their star presenters, hospitals advertise their star doctors and just like movie actors boast about business ( in crores) their movies do, the doctors boast of surgeries/ procedures they have conducted.

I am told a reputed hospital in Delhi NCR has a target of Rs. 54.0 crores over three years with one of its star doctors. Assuming 300 working days, he has to earn hospital Rs. 6,0 lakhs ( Rs. Six lakhs only) per day. This leads to some of the unhealthy practices that we see in healthcare today. The branding of specialists and necessity to earn higher money has led to elimination of family doctors. This has its own implications on quality of care (https://rajneeshrastogi.wordpress.com/2015/10/13/why-we-need-to-bring-family-doctor-back/) . Some of the other implications are
1. Increased cost of health care
a. Increased reliance on procedures and diagnostics for treatment. I had taken my son to an ENT specialist who diagnosed his condition as sinusitis and insisted on an X Ray. I checked his record for that day and he had got X Rays done for 33% of his patients. That’s a very high number of X Rays for an ENT specialist.

b. Very high cost of implants like stents with abnormally high profit margins for hospitals

2. Corporatization of healthcare
Modern hospitals are run like corporates with targets for all aspects of treatment such as pharmacy, diagnostics etc. The doctors are more keen to convert OPDs to inpatients.

3. Practice of referral commissions
The doctors have developed an institutionalised system of referral commissions. I remember a conversation with a radiologist. She mentioned that initially she had decided not to give referral commissions but would provide better services and offer discount to people. Her practice did not pick up. Two years later, she decided to give commissions and her practice took off like anything.

4. Management attention diverted from improving quality of services to ensuring profit.

The biggest impact of rise in remuneration and fees in big hospitals in India is its impact on public health. The increasing fees of specialists in cities lead to higher fees for other practitioners in cities, towns and rural areas. Increased reliance on diagnostics such as laboratory tests and radiology is leading to loss of skills in physical examinations and diagnosis from physical symptoms. All this has led to change in Doctor-patient relationship. The public is losing faith in doctors. There was a time when doctors were provided lot of respect and were treated like gods, however today they are seen as service providers. Increasingly more number of doctors and hospitals are getting sued. The doctors, to protect themselves, are depending more on clinical diagnosis leading to a vicious circle of rising costs and trust deficit.

We need an Indian Obama to pick up gauntlet for Indian consumers and to create a public infra-structure to compete with private players or bring in regulations to moderate healthcare industry. The medical fraternity may also look at its ow associations to strengthen peer review and raise the bar on standards of ethics.