In last 200 years several world leaders have pushed for Universal Health Coverage(UHC), from Bismarck in Germany in 1880s to Attlee in 1948 in Uk to Modi in India in 2014. In all so far 77 countries have adopted UHC of which 32 have claimed success.
The healthcare roundtable held on 22nd July 2019 evaluated how the healthcare stakeholders- providers, suppliers & partners, investors and patients are faring under Ayushman Bharat(AB) and government induced price control.
Distinguished Panelists: Dr. Harsh Mahajan(MD, MAHAJAN IMAGING), Navneet Bali(Director-North Region, DHARAMSHILA NARAYANA), Bhavdeep Singh(Former CEO, FORTIS), Sanjay Bhutani(Country Manager, BAUSCH & LOMB), Shashi Baliyan(MD, CLEARMEDI HEALTHCARE), Kapil Ahuja(CFO, SENTISS PHARMA), Devashish Ohri(VP-AMEA, AVANTOR), Sameer Wagle(MD, ASIAN HEALTHCARE FUND), Mihir Vora(Founder and CEO, MAGNUS MEDI), Dr. Manjinder Sandhu(MD, ARTEMIS HOSPITALS), Deepak Bahri(Chairman & MD, SENTISS PHARMA),Rony Banerjee(Country Head, BIO RAD), Abhik Moitra(President & co-founder, HBG MEDICAL ASSISTANCE), Sunil Thakur(MD, QUADRA CAPITAL), Ajay Bagga(Director-Finance, ZIMMER BIOMET), Navjeewan Khosla(MD, FOSUN INTERNATIONAL), Neeraj Katare(CEO, DR. STORE HEALTHCARE), Dinesh Chandra Arora(CFO, CLOVE DENTAL), Vivek Tiwari(Founder and CEO, MEDIKA BAZAR), Rajiv Kapahi(Director, BOSTON SCIENTIFIC), Sanjeet Singh(EVP, MEDIKA BAZAR), Dr. Vidur Mahajan(Associate Director, MAHAJAN IMAGING), Sanjay Banerjee(Partner, AMROP India), Dr. Kapil Mohan(General Manager, AAKASH HEALTHCARE), Dipali Tak(Head, AVANTOR), Neeraj Gupta(CEO, GENES2ME & IMPERIAL LIFE), Malyawant Passi(Group CFO, JAYPEE HEALTHCARE), Vipul Mittal(CEO., HITECH GRAIN PROCESSING). The session was moderated by Dr. Rana Mehta(Executive Partner & Leader, PWC) and chaired by Mr. Pavan Choudary (MD Vygon, India, Author & Coach).
Navneet Bali explained that hospitals work on cross subsidization. One form of cross subsidization involves taking money from cash patients and subsidizing panel patients such as from CGHS, ESI, ECHS. This way hospitals maintain an EBITA of 12 to 18 % depending on cost efficiencies. The other way they cross subsidize is by taking higher margins in drugs, implants, stents, clinical diagnostics and remunerating doctors and meeting overheads through the excess. This cross subsidizing will now reduce because margins are reducing and panel patients are increasing.
Neeraj Katare said in tier 2 and 3 cities, for the 30-100 bedded hospitals, run mostly by doctor entrepreneurs, Ayushman Bharat has brought in increased footfall and revenue.
Shashi Baliyan, the oncology provider said that his sector is benefiting from Ayushman Bharat. Patients are increasing and so is revenue. He cited the example of a small town Nandan where the radiation patients have increased from 30 to 80. However, he was concerned that the government is blaming the providers for increase in radiation cases.
According to Sunil Thakur the hospitals that did not suffer from price control were the ones already on low margins. However, he as well as Rajiv Kapahi pointed out that prices regulated today are not good enough even for tier 2 hospitals.
Both Shashi Baliyan and Neeraj Katare said that presently hospitals are receiving Ayushman Bharat money on time, but when the bills start increasing, they wonder, will the money still come on time or will it go the CGHS way where huge payments stay pending from the government side.
Further, Neeraj Katare added, Ayushman Bharat price capping will not work unless government provides a national GST like transaction or payment grid for suppliers and providers. Otherwise suppliers will continue to add the delayed payment component to their cost and mark up their price taking into consideration the expected delay in payments from government to providers and onward to suppliers.
Navjeevan Khosla said that the concern with schemes like CGHS, ESI, ECHS and now Ayushman Bharat is that there is a huge build up of receivables, stress on working capital and resource getting wasted in following up on payments and managing the receivables from government. This discourages foreign investment. The capex in hospitals in India is anyways very high and after investing huge money foreign investors don’t want to run behind government agencies to get their money back in morally ambiguous ways.
Bhavdeep Singh said that good news is new cash is coming in through investors but most of it is ROI driven. Pavan Choudary further explained that new money is coming in because old money wants to exit. Existing providers wish to exit the market because they were used to 25-30% EBITA which is no longer possible under government induced price control.
Sunil Thakur was concerned that the clinical path in India is so distorted that even a cough and cold patient lands up in a multi-speciality hospital. He suggested that access accelerators like telemedicine get more backing from investors, so that primary care gets more focus and the load on tertiary hospitals comes down.
Suppliers and Partners
Rony Banerjee shared that 5 years back A1C, a diagnostic test to check diabetes , cost Rs. 120-130, and the same test has come down to Rs. 60. This makes its manufacturing in India unviable and for investors, who wish to enter manufacturing, as well as buyers, China becomes a more attractive terrain.
Dr Rana Mehta was perturbed that post price control several Medical technology companies are relocating to Singapore with only distribution centres in India.
There was also concern that the ham handed way in which authority is being misused in the garb of big vision, needs to be urgently addressed. If it goes unchecked many companies will shut down.
Dr Harsh Mahajan was worried that competition commission has started asking diagnostic centres for equipment purchase prices and cost being charged to patient for the tests. It is also asking companies equipment selling price so that they can cross verify as well as work backwards to find out what should be the cost to patient.
All this is leading to negativity towards the healthcare industry. In fact, on one of TV shows discussing an old 2016 hospital case, the TV presenter had the audacity to say that he will put people behind bars for fleecing the patients.
Dr Manjinder Sandhu questioned that when, for poorer population under CGHS, price capping on stents was already there since Dec 2013, then why was it introduced again. He was also concerned that because of price capping, many better quality stents are no longer available, even for patients who can afford them. Many such patients have started travelling out of India to countries like Dubai, Singapore, Bumrungrad for angiography or angioplasty, a trend which had reversed 10 years back. Diwakar Rana and Dr. Rana Mehta further commented that with price capping, the quality of procedure and after care is going down and may lead to long term social ramifications.
On another note, Mihir Vora said that patients – domestic as well as international, need transparency in cost. In today’s connected world, patients are already looking at reviews from various portals. It would be even better if providers come forward and be transparent in sharing their real time costs. This way they would not lose out on business because some malafide source is bad mouthing them.
Historically, Vivek Tiwari shared, Universal Health Coverage(UHC) has failed in those countries where private health care was the dominant player. He implored that for UHC to succeed in India public participation has to increase. It cannot solely survive on government funds.
The way forward
Providers need to bring in transparency in sharing their real time costs. There is also an urgent need to bring in efficiency and ROI, especially in large tier 1 hospitals. One possible way could be by looking at each and every component of the value chain to see where they could save cost. For instance, to achieve quality, PAT and cost benefit, supply chain disrupters could be utilized such as Medika Bazaar supplying consumables directly to tier 1, 2, 3 city hospitals and Shubhram managing non-clinical component of hospitals such as housekeeping etc.
Healthcare industry’s big data needs to be efficiently mined. There is a need for a common platform to share and use this data.
Chairman Pavan Choudary closed the discussion by saying that in trying to sanitize the healthcare sector the government should not inadvertently sterilize it. The intention of the government to overcome inertia in healthcare reforms is unmistakable and praise worthy, however the remedies deployed need re-evaluation.
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