The opportunity in affordable healthcare
Doctors, technology innovators, the government, entrepreneurs and venture capital investors are teaming up to solve India’s healthcare challenges. In this feature, we take a closer look at some of the entrepreneurial opportunities in the affordable healthcare space
Earlier this month, Glocal Healthcare, a low-cost primary and secondary health services provider focused on medically underserved areas, launched a unique software product called LitmusDx. The cloud-based product is designed to help physicians diagnose and treat routine diseases and their associated symptoms. Essentially, it is a clinical decision support system that’ll help a doctor wade through the vast amount of information on symptoms, diseases, risk factors, prescriptions drugs and medical tests, and help him or her recommend the right treatment. From an affordable healthcare perspective, the software tool certainly helps improve the quality of medical care in underserved regions of the country.
LitmusDx is just one of the many examples of innovation in the affordable healthcare space. From technology and process innovation to interesting ideas to reduce cost of medical devices, the private sector, startup ecosystem, doctors and technology professionals are coming together to do their bit. At a broader level, the key challenges in offering affordable healthcare in underserved areas revolves around three aspects - accessibility, availability and affordability. And the key to solving each of these aspects lies with investors and entrepreneurs who need to come up with smart solutions in this space. The rider is that entrepreneurs and investors can do well financially by also doing good.
Lending its support to entrepreneurs in the affordable healthcare segment is the Government. For instance, under the Rashtriya Swasthya Bhima Yojana Scheme (RSBY, which literally translates to National Health Insurance Scheme), the government offers health insurance to the poor, which provides cashless hospitalisation in government as well as private hospitals. In the Union budget for 2013-2014, this scheme has been extended to rickshaw, auto-rickshaw and taxi drivers, sanitation workers, rag pickers and mine workers as well.
“Skilling should not only be restricted for professional healthcare workers and consultants, but also be extended to other people who help in situations such as pandemics, mass casualty and large scale disasters,” adds vijay simha, founder of onebreath
However, to fully realise the impact of the affordable healthcare segment on society, one needs to gain a deeper understanding of the challenges this industry faces, how the gaps can be addressed and what business models can be explored to achieve sustainable growth.
Some key challenges
Firstly, despite technological innovations spanning across administration and operations, there is an evident lack of trained healthcare workers, who know how to adopt technology, to provide the right diagnosis and right medical services to their patients. “Skilling should not only be restricted for professional healthcare workers and consultants, but also be extended to other people who help in situations such as pandemics, mass casualty and large scale disasters,” adds Vijay Simha, founder of OneBreath, a Bengaluru-based company that develops low-cost ventilators for consumption by the bottom of the pyramid (BoP) segment.
Secondly, many hospitals do not have adequate systems in place to ensure early detection of a disease. “One of the major limiting factors for such an activity to be operationalised is the inability or inadequacy of screening techniques to handle a large crowd of people. There are a number of such promising technologies in the pipeline, that address this issue,” says Simha.
Adding to this, Zeena Johar, founder and MD of SughaVazhvu Healthcare, states that patients in rural areas do not visit a doctor unless they are in a critical condition and, the lack of a structured differentiation between services offered in a primary, secondary and tertiary healthcare centre results in large crowds gathering at nearby hospitals, thus resulting in an imbalanced delivery of healthcare services to those who need it the most.
Thirdly, there is a needlessly large capital spend on medical infrastructure and processes, which adds to the overall cost of healthcare delivery. While the emerging companies operating in this space have developed several lean models to cut down capital expenditure, a particular strategy adopted by Glocal has led it to deliver healthcare at reasonably low costs while at the same time help generate additional revenues, which have been directed towards further expansion and capacity building.
As Soura Bhattacharya, chief MedTech, Glocal, points out, typically it would cost a hospital Rs. 16 crore to setup a 100 bed hospital, but, Glocal has developed a model which reduces the cost of infrastructure to just Rs. 8 lakh per bed. He believes there are three major contributing elements to it. One is the choice of location. Choosing a location where real estate costs are high means that 5 per cent to 10 per cent of the project cost goes towards the land cost itself. Also, efficient project management, in terms of architecture and infrastructure which will help management save costs. Importantly, Bhattacharya stresses the need for an in-house construction team, which will not only reduce labour costs by 10 per cent, but also help close construction projects within six months.
Fourthly, there is an inaccuracy in the epidemiological data collected, because the processes used for the collection of the data are subject to human and transcriptional errors. To overcome this challenge, the research arm of SughaVazhvu, IKP Centre for Technologies in Public Health (ICTPH), referred to global health guidelines such as the U.S. Preventive Services task force and UK’s National Institute for Health and Clinical Excellence, to identify parameters to be tracked in a human being and tests to be built based on them. It also kept track of patient records and observed any pattern of diseases. This led to the development of a PISP (population-based individual screening protocol) model, to offer low-cost medical services to villagers.
Jayant Sinha, Managing Director, Omidyar Network India, an impact investing firm that has invested in several affordable healthcare startups, sums it up well. He says, “I’d say we need to look at three aspects first. First, the lack of trained healthcare workers has to be addressed. Second, we have to ensure there are regulations in place to ensure responsible yet fast-paced growth of the industry. Third, private and public hospitals have to team up to implement the government-sanctioned schemes well. We need to focus on massive innovation; once this happens capital will flood in.”
Some early successes
In a move to address these challenges, entrepreneurs are churning out several pilot projects that vary from building low-cost ventilators to establishing cost efficient healthcare centres. Glocal, for one, has identified 17 diseases that constitute 85 per cent and 42 diseases that make up 95 per cent of the disease load in rural India and developed an effective business model addressing only these ailments. “Though the disease load is more or less similar for urban and rural areas, the latter does not have sufficient access to healthcare infrastructures. The diseases really compromise their abilities and create economic hardships. That is why we chose to focus on this segment,” says Bhattacharya.
Similarly, SughaVazhvu’s PISP (population-based individual screening protocol) model is developed in such a way that it can offer free health check-ups for villagers while costing the healthcare centre an expense of just Rs. 5. Take for instance the case of a model developed to identify the degree of cardiovascular diseases (CVD) risk a patient faces. By recording the patient’s details, such as age, gender, medical history and waist circumference, it can identify if he or she is at a high risk of having CVD. If the report indicates a high risk, then the patient is sent for further tests, which will again cost only Rs. 30 to Rs. 150. In fact, on the other hand, to address the challenge of trained healthcare workers, the organisation has tied up with the University of Pennsylvania, to offer six months of training to its mainstream medical practitioners in India for care delivery. “This ensures that standard medication and diagnosis practices are followed across all our centres,” states Johar.
Another interesting advancement that this segment has witnessed is the development of low-cost medical equipment for consumption by the BoP. One such company operating successfully is OneBreath. Owing to the growing incidence of chronic respiratory diseases in the country, the company has developed low-cost ventilators, priced at around US $ 3,000 as compared to US $ 10,000 to US $ 12,000 for other models. The company has primarily focussed on redesigning the original product to enhance its reliability while catering to the Indian needs of minimal power consumption, compressed air supply and simple functioning. “Medical equipment or devices, like drug development, face long and arduous development cycles, stiff regulatory approvals and extremely tight post market surveillance, a risk that most investors would shy away from. But we are fortunate to have a number of angels and venture capital companies who are focussed and dedicated towards supporting this industry,” says Simha.
On the drug manufacturing side, Indian pharma companies have taken advantage of the government’s compulsory licensing act to allow companies to manufacture and sell lower-cost versions of patent protected drugs. Recently, Natco Pharma acquired the license to manufacture the generic, low-cost version of Bayer’s anti-cancer drug, Nexavar.
Additionally, one cannot overlook the impact and potential role of telemedicine in the future. For instance, if somebody suffering from a medical ailment is able to get into a centre in a remote area and access a specialist, the doctor can then diagnose the ailment and share the right prescription. He can also evaluate if treatment can be provided at a primary centre in their area or whether they need to opt for specialised treatment. “What is important in telemedicine is to ensure that the specialists are available at all times to deploy their services. Another way in which telemedicine can be helpful is in providing specialised care. Having health workers and specialists operating from a centralised location can be more efficient than having them at different locations. It saves time, resources and cost,” says Omidyar’s Sinha.
“In the years to come, the healthcare space will continue to remain an investment option, as the risks associated with the addressable market are low. It is the longer waiting time before which revenue starts flowing is what entrepreneurs need to factor in,” states OneBreath’s Simha, on an ending note.
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