Perspectives on Indian Private Healthcare from Investors, Healthcare Reformers and Health Program Implementers

Left: A program manager at Ziquiza Healthcare Limited, an ambulance service that operates in a number of provinces throughout India, poses in front of an ambulance.

As an attendee to the Aspada/SONG early stage investing conference at The Indian School of Business on July 11, 2013 with a special panel on healthcare, it was extremely interesting to have a diverse set of panelists from the health care industry talk about the key issues facing Indian system. Before getting into the essence of the discussion, I will introduce Aspada and the panelists briefly.

Aspada invests in driven enterprises with an explicit focus on improving livelihoods and creating job opportunities for people in underserved communities. As I see it, Aspada aims to promote the profitable enterprises that aim to provide good quality products and services to a bottom of the pyramid market that can pay but most often do not necessarily get value for what they pay. Improving market dynamics in such markets in key areas such as healthcare, education and other critical sectors is of utmost importance to improve the quality of services provided.

The healthcare panel at the conference comprised of Mr. Rajat Goel, CEO of Eye Q Vision, Dr. V.J Vetrievel, CEO, Be Well Hospitals, Zeena Johar, President, IKP Center for Technologies in Public Health and Mr. V.T Bharadwaj, MD, Sequoia Capital.

The focus of the discussion was steered towards addressing two important aspects plaguing not only the Indian Health system but also the intellects of research organisations, academic institutions, investors and the community at large. It is well known that despite an impressive public healthcare system on paper, the communities are largely served by private healthcare set-ups (both organized and unorganized) and about 70% of healthcare spending is out-of-pocket expenditure. This is largely due to the perception that private healthcare is usually more responsive to the people and has a higher quality of care compared to its public counter parts. However, this is only a notion and the issue of monitoring the quality of services provided by the private players and placing measures of accountability is critical.

Will the market dynamics naturally weed out the poor performers from the market or will the market forces fail to create such a system and foster the need for external intervention in maintaining quality and accountability? The panelists addressed this issue from the point of view of external accreditations, consumer behavior and suggested ways forward.

Most panelists seem to agree that in the absence of comprehensive guidelines for quality and accountability suited towards the Indian consumers, most organized private players borrow International accreditation standards such as US FDA or JCI. While these accreditations lend more legitimacy to the organisations and help them position themselves in the market, they are extremely process oriented and input oriented, which is cumbersome in terms of time and resource. This deters small or mid sized organisations from getting these accreditations.

The panelists feel that more outcome-based indicators (clinical outcomes, other outcomes like waiting times, infection control outcomes and so on) would be a better way of accrediting performance. In addition, hospitals must be proactive in innovating auditing systems, which focus on improving their clinical outcomes as opposed to the inputs.

The burgeoning Government Sponsored Health Insurance Schemes (GSHISs) such as RSBY, Rajiv Aarogyasri in Andhra Pradesh and many more state initiated programs are imposing some measures of quality on the hospitals or clinics that want to be impaneled under the schemes. Largely, these are focused on the presence of suitable infrastructural elements, essential medical staff in the facility and to a limited extent on the infection control policies and practices of the facilities.

However, as the GSHISs expand in volume and value, the government has a better leverage to institutionalize quality in private providers. The panelists feel that this will be the way of the future if government insists on taking the insurance route to cover the healthcare continuum for its population. Insurance companies are incentivized to maintain quality in the facilities which are visited by its beneficiaries to keep the healthcare costs low and keep a check on the overall health burden.

What about the role of market forces- Can they naturally weed out the practitioners that are not providing good quality services? This maybe true in case of bigger districts where the population density is much higher and there are a plethora of options for primary and secondary care. Competition may act as a quality check. However, in rural and remote areas, where such a competition may not exist, this assumption doesn’t apply. Moreover, determining the quality of healthcare services is often subjective and to a poorly educated rural resident no treatment is effective unless he is given an injection!

Clearly, there is a requirement for quality control and governing systems to standardize quality of care. The big question, however, is that who is mandated to maintain such a quality? Is it the healthcare providers themselves, government or other third party organization?

The panelists feel that organized secondary and tertiary care providers must innovate and establish quality standards which is in the interests of improving their own market share. What about mom and pop private setups and private providers in rural areas where availability of care is more crucial than quality of care? Incentivizing these private set-ups to enhance quality of services at the primary care level is a question everyone has been pondering over.

I have recently participated in a webinar on ‘Clinical Social Franchising’ where the key speaker Dr. Dominic Montagu is the lead of the Private Sector Health Initiative at the UCSF Global Health Group. He explains the concept of clinical social franchising to club several ad-hoc private set ups and bring them under the umbrella of a brand and standardize the quality of care provided. Each of the individual clinics will be autonomous as before but are regulated by a set of quality rules.

Social franchising can be undertaken by organized secondary or tertiary private players to reach out to the rural parts and enhance their referral system and expand their market share. Social Franchisors can also be not-for profit institutions or even government funded.

Some of the key ways through which private clinics benefit from signing up into a social franchise are increased market share, continuous training to enhance quality of services, add more services provided, cost effectiveness through increased range of services and increased health impact of the serving population.

Social Franchising is a very broad concept whose underlying essence is to bring the private healthcare providers under a common gambit to improve quality of care. This could happen through Voucher schemes, Health Insurance, government reimbursements, Conditional Cash Transfers or even Public Private Partnerships. Shaping up the idea of clinical social franchising may seem important to improve quality at the primary and last mile level. It also helps in avoiding duplication of efforts but improve impact factor with existing health infrastructure.

The concept of social franchising may also address the issue of how organized hospitals or clinics integrate primary care or front line healthcare delivery into their agenda. There is currently a large gap in the continuum of healthcare services provided. Without the presence of a strong primary, preventive and promotive care set up, the cost of healthcare to both the beneficiaries and the government will increase.

Having taken all the relevant factors into consideration, I am of the opinion that organized private healthcare set ups have a huge role to play in providing good quality primary health care in both rural and urban settings. There is a need for increased experimentation and piloting in this area to come up with optimal solutions.