Avoiding doctor-centric Health Solutions

May 29, 2014 by · Leave a Comment
Filed under: Announcements, Events & Updates, Healthcare 

Source: The Hindu

The old adage ‘health is wealth’ was given legitimacy by no less a personage than Professor Jeffrey Sachs, who in 2000, chaired the World Health Organization’s Commission on Macroeconomics and Health (CMH). The CMH report brought forth indisputable evidence of the link between health, development and wealth, arguing that neglect of health entails real costs to the economy — in terms of household expenditures incurred on buying drugs rather than nutritious foods, investments for hospitals rather than factories that generate jobs and impair growth due to reduced productivity and so on. As these impacts are not as easily perceptible as say the closure of a factory, they are routinely forgotten in policy dialogues in India.

Immediate concerns

The Bharatiya Janata Party’s stunning victory raises two immediate concerns: one, the focus on economic growth visualised in terms of physical infrastructure to the exclusion of the social sector, namely health and education; and two, the ideology of ‘minimum government and maximum governance’, so often stated by Narendra Modi in his election speeches. Such a formulation may be appropriate for economic sectors but in the context of health, it could imply a government reneging from its duty to provide primary health care, both preventive and curative, and universal access to public goods like piped water, nutrition and sanitation.

The economic growth and development dialogue needs to centre round the human capability dialogue — that it is the educated and healthy that create wealth, not the illiterate and sick. And given that health markets are plagued by failures due to asymmetry of information, state intervention becomes imperative for ensuring access to public goods. In other words, no country can be “shining” or “incredible” with a balance sheet that shows 40 per cent of its children malnourished, 69 per cent defecating in the open and less than 30 per cent having access to piped water in rural areas, productive lives being cut short by tuberculosis and other infections, and emergence of non-communicable diseases affecting the rich and poor alike.

There is little doubt that the nation’s health is in a critical state and needs immediate attention. The compulsions of earlier coalition politics resulted in soft pedalling on substantive issues that directly impacted outcomes. As each crisis loomed, a knee-jerk policy response was provided. While the United Progressive Alliance government can legitimately take credit for having finally eliminated polio, reduced by half the incidence of HIV/AIDS and accelerated the reduction in maternal and infant mortality, it failed to take hard decisions on two vital issues: the availability and quality of human resources in health and forging intersectoral linkages with social deteriments viz water, sanitation and nutrition.

Doctor-centric approaches serve vested interests in opening more medical colleges in the absence of systems that make them accountable to the quality of the product they produce. The manner in which the private sector is given easy passage to open medical colleges is no less a scam than the 2G — the “presumptive loss” to be calculated in terms of the consequences an unsuspecting patient could face due a poorly trained doctor. In fact, the recent report of U.K. removing from its rolls a large number of Indian doctors due to inadequate training hardly behoves well for India claiming its place in competitive global health markets. Achieving aspirational goals of Universal Health Coverage and the more immediate ones of arresting disease and bringing down morbidity will be dependent on initiating reforms related to assuring the quality of our doctors, our ability to paramedicalise primary care, the effective utilisation of technology and the active engagement of the lay public in the governance of health.

The new government has the onerous responsibility of making up for lost time. It is creditable that Mr. Modi seeks inspiration for his growth model from China and Japan rather than the U.S., which is a high-cost, specialist-driven model. China and Japan did not jump into health rights or health security for all without first attacking the causal factors responsible for ill-health. China started its “healthy China” narrative by first ensuring simpler and more basic services like access to water and toilets, good nutrition, access to public health at the community level and promotive health for forming sanitary habits like drinking boiled water, bringing to mind Mr. Modi’s call for instilling the values of cleanliness and hygienic habits in his thanksgiving speech in Varanasi. The difference in outcomes between China and India (in the table) will explain the importance of the paths we have chosen.

The question boils down to choices in resource allocations. Achieving universal access to the basket of public goods listed above requires an estimated Rs.10.8 lakh crore against which the Planning Commission has barely allotted 40 per cent during the 12th Plan period. Primary health care is itself underfunded — just meeting the National Rural Health Mission standards needs 3 per cent GDP against which hardly 1 per cent is being allotted.

The new government must undertake institutional reform to assign to the different layers of governance their functional responsibilities.

Highest priority must be accorded to resource allocation for public goods and implementation must be monitored at the Prime Minister level. Attention to water and sanitation alone will bring down morbidity and mortality by half and improve public health in a manner that doctors, medicines and hospitals may not be able to do.

Issues such as pricing, patenting, international agreements, quality control and regulation of drugs must be integrated and a cohesive drug policy formulated.

Multiple schemes related to nutrition — the Public Distribution System, food law, mid-day meal and Integrated Child Development Services programmes — must be revamped and integrated. This will reduce wastage and duplication.

The relationships between public and private sector in health, between the Centre and States, between the various hierarchies of human personnel such as doctors, nurses and paramedics, and between allopathy and other systems of medicine must be reworked through a broad and consultative process, which will reduce duplication and enable more cost-effective use of resources.

Finally, central funding must be provided to States (conditional to good governance) in terms of a State policy on human resources — training, recruitment and deployment and establishment of systems that ensure the synchronisation of all inputs.

India does not need any more reports. What is needed is sheer hard work to implement recommendations already available.

Need for sound regulation to ensure provision of Quality Healthcare

May 29, 2014 by · Leave a Comment
Filed under: Events & Updates, Healthcare, Industry Update 

Source: Economic Times

Health minister Harsh Vardhan has reportedly said that the new government will give top priority to health insurance for all citizens. Universal health insurance is a flawed idea, and expensive too.

The premise that the government should pay for insurance and insurance spread will ensure healthcare is misplaced. The start of healthcare must be public health and nutrition. And the essentials are providing safe drinking water and hygienic disposal of human and animal waste. This, in turn, calls for fixing the deranged sanitation system that contaminates aquifers and spreads disease. The government’s focus should be on expanding sanitation programmes like Nirmal Gaon, involving local communities.

The lowest-cost healthcare would be the one delivered by state facilities without a profit motive. Private healthcare would entail actual cost plus a profit margin. When private healthcare is accessed via insurance, the premium would have to cover, apart from actual cost, two layers of profit: the private care providers’ and the insurers’.

Should the government bear this burden? The state should build its own care facilities. The second option is for the state to pay for managed healthcare, in which providers charge per capita to keep a group healthy, with an inbuilt incentive to keep costs down. The need is to have sound regulation to ensure provision of quality healthcare.

India needs a regulator for the health sector to bring in transparency in procedures and billing, and also promote ethical competition among hospitals. Narayana Hrudayalaya and Aravind Netralaya are sound examples of low-cost healthcare models that others should follow. The state must concentrate on own care facilities, effective regulation, expanding healthcare manpower and clean drinking water and sanitation.

Global hospital chains, buyout PE funds eye majority stake in Vasan Healthcare

Source: Economic Times


Large private equity buyout funds along with a few global hospitals and daycare chains are in separate early stage discussions to buy a majority stake in Vasan Healthcare Pvt Ltd, India’s largest network of eye care hospitals, as its three existing financial investors revive plans for an exit.

The transaction may also see Vasan’s founder promoter selling out or paring his stake significantly, leading to a potential change of management control, said multiple people with knowledge of the matter…

A Mumbai-based domestic investment bank has already been roped in to facilitate the transaction, which could see valuations cross over $1 billion on the back of a huge demand-supply gap in a country where 80% of blindness is avoidable, as per World Health Organization data. In 2012, a WHO report stated that India has an estimated 12 million blind people and additional 456 million people who require vision correction.

In the recent past, the company had explored several fund-raising options such as an IPO and as recently as late last year, Vasan’s investors were in informal discussions with a few global players such as Parkway Holdings, Southeast Asia’s largest healthcare provider, its Malaysian parent Integrated Healthcare Holdings and a South African chain for a potential transaction, though nothing came of these. Now for the first time, a formal process is expected to start within the next few weeks.

Although the exact shareholding is still not clear, once converted on a fully diluted basis, the funds could own 45-51% in the company, with GIC having a lion’s share, said sources in the know. Healthcare entrepreneur AM Arun, who launched the first Vasan eye clinic unit in Trichy in 2002 and is currently chairman and managing director, owns the rest. Karti Chidambaram, son of former finance minister P Chidambaram, used to own a 5% stake in Vasan through one of his investment entities.  According to one of the investors in the company, he has ceased to hold a stake and resigned from the board in 2013.

Vasan’s Arun, GIC’s India spokesperson and VT Bharadwaj, MD of Sequoia Capital and a board member of Vasan, did not respond to email queries from ET till the time of going to press. Calls to Arun’s mobile were also unanswered. KP Balaraj, co-founder and MD, WestBridge Advisors Pvt. Ltd, and also a board member in Vasan, declined to comment.

Profitable growth

Chennai headquartered Vasan Healthcare, with roots in the pharmacy business since 1947, currently has more than 175 speciality eye care and 30 dental centres nationwide. However, the southern states still remain the most important market. It has also expanded its geographical footprint to Dubai and claims to be the largest such eye care chain around the world.

The company has also started growing inorganically. It bought Jothi Eye Care Centre in Puducherry, North Bengal Eye Centre in Siliguri (West Bengal), Shekar Nethralaya and Vijay Nethralaya in Bangalore and Grover Eye and ENT Hospital in Chandigarh.

In FY14, the company clocked Rs 750 revenue and Rs 180 crore ebitda while in the next fiscal it is aiming a Rs 350 crore ebitda on Rs 1,000-1,100 crore top line. The company is expecting a valuation of Rs 7,000 crore or 20 times FY15 ebitda, which most consider a significant premium.

“Within the single speciality healthcare segment, high quality scaled assets tend to trade around the mid teen range on a one-year forward ebitda basis. We have yet to see sustained interest from overseas strategic players in this segment and hence the audience for such large deals will remain limited for the time being,” said Shiraz Bugwadia, MD with investment bank o3 Capital, and a pharma and healthcare specialist.

Some however are not fully convinced. “The company is the largest player in its space without a doubt. But many would question its growth or numbers. Sometimes they don’t add up,” said a Bangalore based consultant.

Clear vision

The eye-care segment has seen the emergence of not-for-profit companies such as Aravind Eye Care and Sankara Nethralaya, which provide services at very little cost or free. These two companies have gained both size and critical mass along with a clutch of private companies such as Vasan, New Delhi Centre for Sight and Eye-Q, all of which are PE backed.

PE players have especially been lapping up investment opportunities in the local specialty healthcare delivery segments such as eye, dental and women and children with several small-sized transactions.

These asset-light business models, though still at a nascent stage in their evolution, offer investors an alternative to asset-heavy hospitals that tend to guzzle cash. The ebitda margins of such specialty chains like eye care tend to be at least 5-10% higher than other single-specialty and multispecialty players, feel some analysts.

NABH sets new entry-level standards for Accreditation of Hospitals

Source: The Hindu

The National Accreditation Board for Hospitals and Healthcare Providers (NABH) has released a new batch of entry-level standards for accreditation of smaller hospitals. As the name suggests, Entry Level Standards are meant for hospitals who want to get started on the quality certification journey, but are unable to do so due to the stringent requirements of the full NABH accreditation.

“The whole idea behind introducing this new set of standards is to become more inclusive; to get a number of hospitals to join the quality journey. With the full set of NABH standards, recognised by the International Society for Quality in Healthcare [ISQua] many smaller hospitals cannot even hope to apply for,” explains K.K.Kalra, CEO, NABH. Currently, there are only 227 hospitals with NABH accreditation, and about 1200 in various stages of application.

The new standards will be a foot in the door for a number of small hospitals who find the rigor of the NABH full standards beyond their capacity. At the same time, Dr. Kalra hastens to reassure those in the field that there will be no dilution of standards whatsoever.

“There are two types of new standards: One, for hospitals with over 50 beds, and two, for small hospitals with less than 50 beds. While the full NABH has 102 Standards and 636 Objective Elements, there are about 45 Standards and 173 Objective Elements for 50-bedded hospitals and 41 Standards and 149 Objective Elements for less than 50 beds,” he adds.

It is by no means easy to get accreditation even at the entry level without adhering to a set of regulations, Dr. Kalra says, and without hard work on the part of the hospital, it will not be possible.

The NABH standards were put in place about seven years ago to provide quality assessments for hospitals in the country. The NABH accreditation has been viewed as the ideal qualifying criteria for selection or empanelment by the Ministry of Tourism, Central Government Health Services, several public and private insurance companies.

In fact, a number of insurance companies are considering making the entry level standards the bare minimum for empanelment of hospitals, Dr. Kalra added. Once the smaller hospitals get in the race, they can even work on moving to full NABH accreditation. “But this is the entry point. Small hospitals in small cities too have a right to joining the quality race. Why should they be kept out?”

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