Jun, 2012     

Healthcare Delivery in India – RedSeer Perspective


This document is an article which covers insights on healthcare delivery in India covering the market size, factors affecting the industry and emerging models of private players.

Indian healthcare delivery industry is ~USD 47 billion growing with a CAGR of 12.8%

health care

Growth in lifestyle diseases and increased access to healthcare will drive the hospital market in India

Key Drivers Description
Increased Governmentexpenditure on healthcare Maria AndersGovernment outlay on healthcare has increased from 4% in to 6.5% in Eleventh Five year plan.
Growth in health insurance penetration Health insurance market is growing by 26% annually, which is providing a boost to healthcare
Increase in lifestyle diseases Roland MendelLifestyle diseases market is expected to grow with 22% CAGR in the next 5 years due to increasingly sedentary nature of jobs.
Increased access to healthcare services Hub-and-spoke delivery models will increase access to secondary care in tier-3 cities and large towns

Demand- supply imbalance is leading to increased participation of private players in healthcare delivery

Key factors affecting hospitals market
TRANSITIONING MACROECONOMICFACTORS

  • Changing lifestyle
  • Expanding Middle class
  • Growth in health insurance
  • Increasing awarenes

DEMAND-SUPPLY IMBALANCE

  • Insufficient healthcare workforce
  • Inadequate healthcare infrastructure

PARTICIPATION OF PRIVATE PLAYERS

  • Lack of infrastructure in existing Government hospitals
  • Low Government spend on healthcare

Emerging healthcare delivery models for private players

40% of surgeries can be done in day-care surgery hospitals

Day-care Surgery
Key drivers:

  • % of overall surgeries in volume: 40%
  • Set-up Cost: 20-30% of full-fledged 100-bed hospital
  • Other factors: Customer convenience and scalability of operations

Market size

  • Market size (2010): USD 330 mn
  • Market size Growth: 20%
  • Key specialties: Orthopedics, Gynecology, General surgery

Case Study: Nova's Day Care Centres

  • Established in May 2009, Nova Specialty surgery has been a pioneer in the field of day care surgeries
  • Nova is funded by the GTI Group, a New York based private investment company, and New Enterprise Associates, a leading global venture capital firm
  • Nova currently has 10 centres across 6 tier-1 cities
  • Nova plans to open 25 centres by end of 2012

Many public-private partnership models have emerged in the past few years

Public-Private Partnerships

Fully Public Government role Private role
Management Contract Owns the infrastructure Manages and operates facility for a defined period
Leasing Owns the infrastructure Leases the infrastructure under buy-back agreement
Joint Venture Roland MendelInfuses capital or provides financial concession Manages and operates as well as infuses capital
Build- Operate- Transfer Raises the capital and retains ownership Builds and operates the facility for a fixed period
Concessions Stipulates regulations and monitors the performance Takes over the ownership of existing public facility

New chains are coming up in single specialty hospitals

Single Specialty Delivery Models

Discussion

  • Currently, specialty centers are operating in mature markets and there is a huge opportunity to offer such services in tier-II and tier-III cities.
  • Advantages of Single Specialty Hospitals:
    – Cost efficiency due to higher volumes
    – Provide higher quality care due to greater specialization
    – Economies of scale and scope
    – Ease of operation
    – Increase consumer satisfaction