At a time when regulatory uncertainty and pricing pressures are plaguing the healthcare industry, managing costs with quality is at the top of the agenda for Indian healthcare providers, according to a report by Bain & Company, titled ‘Operational Excellence in Healthcare Delivery in India — A Critical Imperative During a Painful Transition’ released on Friday.
The report which seeks to understand the existing realities and perspectives of India's healthcare system, is based on the findings of Bain's research conducted among NATHEAlTH members across India. It goes on to suggest measures, which if adopted, would improve revenues and reduce costs of private healthcare providers.
Designing operations at hospitals by taking into account procurement, monitoring staffing and pricing is therefore taking centre-stage among healthcare providers to manage costs and boost profitability.
The research made it abundantly clear that regulation, intense activism, competition and public trust-or lack thereof, constantly tug at private healthcare providers in India. Eighty per cent of respondents said that regulatory uncertainty and pricing pressures were the top sustainability concerns plaguing India's healthcare providers.
Consequently, the report noted that several healthcare service providers in India are constrained in terms of their investments in required areas to manage costs. Severity of cases vary, care is not standardized, and the quality of clinical delivery is variable over time and across players.
Patient experience and service standards could suffer and deteriorate as providers struggle to manage costs under the evolving market scenario. Parijat Ghosh, Partner, Bain & Company and the lead author of the report said, “Cutting costs to improve profitability has not been easy and failure to take tough and thoughtful decisions on areas of cost cutting adversely impact patient experience.”
The report revealed that for both private healthcare providers' viability and patients' health, operational improvements are key. Providers' experience, however, indicates that few have succeeded in making such improvements.
Only about 20 per cent of the respondents have benefitted from operational improvement measures. About 65 per cent are still in the process of implementing solutions; most are attempting to optimise only procurement, processes and overhead.
Based on patient feedback, some healthcare providers in recent years have focused on quality and therefore opted for accreditations, which lead to higher-quality patient care and safety. This accreditation approach not only benefits patients but also distinguishes hospitals in a competitive environment, the report says.
Healthcare providers have reduced costs through three methods which include, front-end manpower cost optimization, material cost optimization, overhead optimization. A good cost transformation strategy focusses on the need, profile and behavioural patterns of customers.
This customer-centric approach formulates an integrated roadmap that includes change management as well as zero-based cost accounting.
Bain research indicates that behaviour change is often the biggest challenge during and after an operations transformation programme. Any management executive embarking on an operations transformation initiative in a provider setting is advised to focus on change management to realise its value. Using a data-based, objective approach identifies delivery risk areas early and measures and mitigates the risk by allowing early intervention.
Anjan Bose, Secretary General, NATHEAlTH said, “Enhancing overall operational excellence in structured ways in hospitals can provide a win-win for all: providers, patients and other healthcare stakeholders. The impact will be much more than only regulating the prices of medtech products.”