Saturday, October 12, 2013

Healthcare industry – what went wrong and what can be done

I begin this blog with the invocation of Lord Dhanvantari, an avatar of Vishnu, a medical practitioner and the surgeon of gods.

The Indian healthcare industry comprises of hospitals, medical infrastructure, medical devices, clinical trials, outsourcing, telemedicine, health insurance and medical equipment. Potential Healthcare is the world's largest industry with total revenues of approx US$ 2.8 Trillion. In India as well, Healthcare has emerged as one of the largest service sectors with estimated revenue of around US$ 30 billion constituting 5% of GDP and offering employment to about 4 million people. Sample this -
·         We have the largest number of medical colleges in the world.
·         We produce among largest numbers of doctors in the developing world. Indian doctors work in many other countries and are considered among the best in the world.
·         We get ‘Medical tourists’ from many developed countries reflecting the high standard of medical skill and expertise here. They seek care in its state-of-the-art, high-tech hospitals which compare with the best in the world.
·         We are the fourth largest producer of drugs by volume in the world and are among the largest exporter of drugs in the world. Indian Pharma companies are feared across the world for their cost efficient production methods and competitiveness.

Since we Indians have a genetic makeup making us vulnerable to heart and sugar ailments, our visits to the doctors is virtually guaranteed. Let us look at what ails the Indian Healthcare industry -  

Avoidable deaths
We don’t value the human life in this country. A mere look at the simple ailments that cause many deaths in the country – 40,300 Indians died of malaria last year, about the same no of typhoid, 50 lakh kids die every year during childbirth (called the Infant Mortality Rate which is 42 per 1,000 births for us) and we lost about 56,000 mothers during childbirth last year - the highest women mortality rate during childbirth in the world. Very little effort can make a big difference to save so many lives, but then, who cares?

Accident victims
18 deaths occur every hour in our country as accident victim don’t get timely medical aid (the first hour is the most crucial). Do the maths – how many lives are lost each year? Let me tell you, these numbers are again are the highest in the world. But we don’t care. If we did, the courts would not need to continuously remind hospitals to admit accident victims so that their lives can be saved. Still the hospitals will not do what is instinctively the right thing to do – what’s the point if the patient is unable to pay the bills?

Too much greed
A doctor’s job is good for society.  But that was 50 years ago. Now it is a cash cow which needs to be milked as much as possible. Why not? The medical fee is so high and the cut offs so impossible that only the brightest make it to medical school. There is then the fierce competition to make money for the hospitals that you are associated with to justify the set up costs and profits. Don’t worry about your bill – just swipe your credit card or better still – there is a medical insurance to fall back on. Also the Gold Loan branch is just around the corner – in case you need to raise some quick money by mortgaging your ornaments.

Private sector – the wrong way
The motto of the private sector is to maximise profits. If hospitals are run by the private sector, don’t blame them for not thinking twice before engaging in questionable behaviour to maximise profits.
Consider this - most of the medical resources lie with the private sector - 80% of all doctors, 26% of nurses, 49% of beds and 78% of ambulatory services and 60% of in-patient care. It is naive not to exploit the dominant position. I wonder why almost all the deliveries of my friends were caesareans – maybe a couple of days more spent in the hospital is good for the hospital profits. Why would anyone complain about that, after all there is a bundle of joy to show for the “expense”. Freely recommend angioplasty and other complex procedures – who minds spending a couple of lakhs on a surgery when it might extend your life. There is a BIG case for the hospitals to be run purely on a “non profit” basis. Why should our celebrities (Mangeshkar) and business houses (Ambanis, Hindujas) run hospitals to make money? Don’t they have enough already?

Customer Centricity
I am sure that a majority of the readers will not be “happy” with their interactions with the medical practitioners. Are we all “customers” of the services offered by them? Yes. Do we feel like “customers” when we visit them? Certainly NO. I am yet to see a doctor who is on time, a 2-3 hour delay is considered normal. And I have never heard them apologise if the patient is kept waiting for hours after the scheduled appointment time, we are supposed to understand that there are emergencies and many lives of us ordinary citizens that these angels are supposed to be saving. When loved ones are admitted for procedures in hospitals, the relatives are made to sign a declaration absolving the doctors of many things. Is this not one sided? I hope the courts in the country take note – we have no choice but to sign the totally one sided declaration. This is not the way a customer – service provider relationship is supposed to operate.

Human Touch
How do you handle patients? They are suffering and need a delicate touch – not the push and the cold shoulder. Arrange for the money and only then the critical operation will be performed. Make arrangements for the blood. Sign these forms which absolve us from punishment in case the patient dies due to our mistake. The canteen is only for the patients – relatives are free to go out and eat. The waiting benches are uncomfortable? Why are you thinking of comfort when your loved one is in danger?

Five star treatment
The hospitals are now 5 star hotels and the per night room rates also match. If it was not for the sanitized smell and the presence of white coats around, you would not be able to make out the difference. The charges on the items of the bill vary depending on what sort of “room” you are admitted in. But then, not everyone can afford 5 star. What happens to the not so lucky in the society? Who decided who can pay how much for a treatment. Foreigners are welcome to be treated in our country – Indians – well what is your net worth?

Compulsory medical insurance
Each visit to the doctor is getting costlier. Each admission to the hospital can easily set you back by a couple of lacs. Everyone of us should have medical insurance – but that is not the solution. There are no free lunches in life – the insurance company will compensate you but unless the industry corrects its way, the premiums that we pay will keep going higher every year and will become unsustainable at some point of time – at the current rate – very soon is my guess.

Pharma value chain –
Companies make medicines. They have a sales force that can be seen sitting outside the doctors cabins, eager to meet them. Their job is to “influence” the doctors to prescribe their medicines over others. On offer are prizes, white goods, cars and foreign holidays. Let’s look at the entire value chain – the drug producing company makes 20%, the wholesaler 10% and the pharmacy 20 – 60% Pharmacy retailing, people in the jewellery business and agricultural middlemen are the most consistent profitable (legitimate) businesses in this country. Is the cost of this intermediation good for the society? NO

Drug prescription and pricing
We buy the medicines that the doctors prescribe. What are medicines? They are chemicals agents that are mixed together and some of them are now generic household names like Paracetamol. Generally in the markets there are more than 20 brands available for the same chemical agent. So a diabetic patient should only be recommended a chemical agent that he can buy from a pharmacist or given a choice of 5 brands to choose from instead of buying the expensive brands that are prescribed so that fat commissions can be paid to the doctors and pharmacists. The high drug costs lead to very high out-of-pocket (OOP) expenditure for the general public. It is estimated that 78% of all spends on healthcare are paid by the people and 72% of this is on drugs alone. Estimates suggest that 39 million people are forced into poverty because of medical expenditure. 

Imagined ailments, expensive prescription
The industry keeps researching new (questionable) ailments to cure and the doctors are more than happy to prescribe them. Anxiety, hypertension, sleep disorders, vitamin D deficiency, bipolar disorder and schizophrenia, ADHD, osteoporosis – latest being sweating while sleeping, the industry is in a mad rush to create new ailments and expensive drugs around the same. The new fad is combination drugs – one may not work so try a combination – dosen’t matter what effects they have on the human body. Why don’t we still have a cancer cure? (refer to my earlier blog- 10 questions that need answers). 

Is medicine science
In science you can control the output based on inputs. In medicine you can’t. Doctors say it is difficult to estimate the end result as the human body is complex and different people react differently to treatments. Most of the decisions on the line of treatment that the doctors take are based on “experience”. In earlier times surgeries were performed s a last resort on patients that had no hope of survival. Thanks to anaesthesia now surgeries are recommended performed as a routine for ailments that did not exist some years ago.  I would encourage readers to pick up Antifragile by Taleb and read the chapter on Medicine – it is an eye opener.

Government intervention –
The government spending on healthcare is grossly inadequate. We spend about 1% of the nation’s GDP on healthcare – lower than even some of our neighboring countries. Healthcare was never a top priority after independence which has led to social sectors like health and education (my next blog) being neglected. In fact, it wasn’t until 1982 that the National Health Policy was endorsed by our lawmakers. Medical education is also neglected, there are no great Indian medical institution brands like the IITs or the IIMs.
I am a strong supporter of “government should not be in business”  However there is a good reason why the private sector should never be allowed to run law and order, utilities (water supply, electricity, transport) and defence as the profit motive mentioned above will lead to the exploitation of the monopoly that these services create.
Healthcare is facing the same problems today. The private sector should run hospitals but the government should be in the dominant position and the private sector should operate on the fringes (say 80:20). The private sector should compete with the government sector in providing healthcare services – today the private sector competes with each other and this way the costs will only keep on rising. Only a significant government intervention will make a difference. I know that the majority will (rightly) feel that the government cannot run any enterprise effectively – let alone something as critical as hospitals. The other solution is a cap on the returns that the private sector can make from these businesses, let us say 20%. I don’t know which is a better solution, but one thing is for sure, things cannot be allowed to run in this way.

Need for a change and choice –
We should have a transparent choice between doctors and hospitals.
We should have a choice of brands for purchasing the medicines that the doctors prescribe.
There should be accountability in the medical profession
We should be treated as customers deserve to be treated.
Medical insurance should cover all costs – including visits to the doctor
There should be a regulator/watchdog for the industry
Government should be the leading service provider for the industry.

Disclaimer– I hate taking any medicine and going to the doctors/hospitals (like most of us) so some of this may be biased, but a lot of it is (unfortunately) true.

I also end this blog with the invocation of Lord Dhanvantari, an avatar of Vishnu, a medical practitioner and the surgeon of gods. I also hope the practitioners stops chasing only the “Dhan” in Dhanvantari. I wish all readers a Happy Dussera and pray that the industry return to the right path that they should follow.

Next week I will take the readers on a journey to take a look at the Indian Education Industry.

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