“New surgery technique gives man a new life”- This was a recent headline in a prominent daily. This ill man from a country that lacked the required medical facilities had almost given up on life when he heard about a private hospital in India that could help him out. Today, such cases are not rare. I also frequently read about westerners visiting India for cost-effective treatment. I think India is well on its way to become a medical travel hub with ASSOCHAM pegging the medical tourism sector to be worth Rs 10,800 crore as early as next year1. According to healthcare company executives who participated in the recent FTOB survey conducted by Wipro, medical value travel or medical tourism will be one of the key business drivers that shape the Indian healthcare industry in the next five years.
Greater consolidation among private hospitals is another important driver according to the report. Market competition being what it is I am not surprised. I think enhancement of scale and geographical presence is imperative for the survival of private hospitals. Organic growth takes simply too long, making mergers and takeovers a better solution. Already, M&A in healthcare figures frequently in news stories and I think these activities will only intensify in the next few years. I’m noticing another development which the survey respondents also see as a defining trend: Many healthcare companies are in the process of shifting focus to tier two and three cities and smaller towns. With the metros and large cities almost saturated with medical facilities, I think it is but natural that healthcare companies look to penetrate newer markets. I think this trend will contribute to the much-needed expansion of healthcare reach.
In the future, I also see the already-high healthcare costs becoming even more prohibitive if healthcare companies do not take concrete action. In the past, companies have expressed their helplessness, the excuse being that price reduction would dent their margins. I see that changing now with healthcare companies realizing that cost control is the way to go for lowering healthcare service prices without sacrificing profitability. A few companies have found a way out by adopting a low-cost delivery model in the form of day care surgical centers. Respondents of the FTOB survey think that increased IT penetration will enable healthcare companies to cut costs, and see increased technology adoption as a definite trend. I fully agree with them. There is a lot of technology innovation happening in the healthcare services space that will surely help to create newer and better efficiencies.
What are the other drivers that will shape the healthcare industry in the years to come? Please share your comments in the section below.