The New Normal - Business in 2020 & Beyond
Mr. Haldar is very positive about the industry outlook and are redefining themselves with digital transformation.
Q.1. What has been the impact of COVID on Healthcare Industry?
The global pandemic of Covid- 19 has surely reoriented the society and economy as a whole, and no industry, including diagnostics has been spared. The lockdown starting last week of March saw OPDs shutting down with no elective surgeries taking place, and the whole logistics network across the country coming to a standstill. Organised pathology chain runs on the concept of hub and spoke. Here getting samples from the far corners of the country to the processing centres, running quality tests on them under expert medical supervision, and to make sure final reports reach the patients and their doctors efficiently define the successful journey. The very fundamentals of that got changed with the pandemic and lockdown. Thus, the business was deeply impacted in the initial period. With the various stages of unlock, markets opening up slowly, and the general public learning to live with necessary precautions, visiting doctors when required, the diagnostics industry has been recovering at a fast clip. However, it’s still too early to say when normalcy and pre-covid days will be back. On the other hand, for Covid testing all reputed private labs in the country joined hands with government authorities, and stood strong and tall in helping the country’s mission of critical task of expansion of testing. Apart from the key task of furthering the industry’s prerogative of helping patients in this critical juncture with quality tests, the accredited and reputed labs have also ensured that they squeeze out efficiency from the system by tighter control. Thus, Covid tests helped them cover their fixed costs, and proved beneficial at an overall level.
Q.2. How has the industry conducted business during this pandemic?
With this unprecedented crisis, our nation's healthcare system found itself navigating in an uncharted territory, in a fierce battle with a pathogen that we've never encountered before, and with no known cure or vaccine. We started the journey by learning on the fly every day. The challenges to start with were enormous when a handful of our labs started RT PCR tests. The kits were in short supply, there were not enough PPE in the market, the rates were exorbitant, and largest of all, it was difficult to get healthcare workers to get to their place of work. As these tests need to happen in a controlled environment inside a lab with necessary bio safety measures, expert supervision and temperature control, it was necessary for us to keep our people safe first. We took a variety of safety measures, not only limited to extensive training but enhanced sanitation protocol, rotation of staff, ensuring the healthcare workers are not inconvenienced by giving them temporary stay and transportation when required. Healthcare insurance cover for all frontline workers got enhanced by the reputed lab chains to ensure that in the unforeseen circumstance of anyone contracting the virus, they and their family do not get inconvenienced.
The labs made sure that patient and staff safety are not compromised, some created a separate entrance for Covid-19 patient’s where necessary, completely detached from the rest of the lab. Logistics, admin & support staff sorted things out every day due to the lockdown so that our functioning is smooth, customer care worked overtime taking thousands of calls, and our doctors and technicians worked dedicatedly inside the lab ensuring required turnaround time and accurate Covid-19 reports. Trained phlebotomists had to collect samples, while observing all biosafety precautions and using personal protective equipment. Many of us undertook training and also re-training of our staff to ensure all safety precautions are undertaken. These relate to use of protective gear, its disposal, sample collection while ensuring test accuracy and maintaining the safety of patients and employees. Basic hand hygiene & social distancing norms were strictly enforced. A lot of precautions were taken, but, our doctors, phlebotomists and other support staff who were exposed every day to the threat of infection still did fall victim to the virus. We undertook frequent check-ups for our staff, and in any such unfortunate case, they were advised quarantine or hospitalisation as per doctor’s recommendation immediately.
Q.3. Is the industry embracing new technologies to tide over this situation?
Diagnostics chains were always dependent on technology, and the current situation has enhanced both adoption of newer technology and higher reliance on technology for customer interfaces. Tele and app bookings are increasing at a significant rate, and we have been able to enhance our capacity and capability in this domain. End to end digital interfacing for home collection of samples has been perfected by companies like Thyrocare. All labs and centres remain connected in real time so sample traceability and reporting speed become enhanced. There’s also work on AI happening in other niche areas of pathology.
Q.4. Has the consumer behaviour changed and will it be permanent.
The recent pandemic has opened up awareness around the need and criticality of quality diagnosis in the overall healthcare journey of consumers. Diagnostic tests influence close to 70% of all healthcare decisions and yet, they constitute a meagre 5% of the total health system costs in India. This long ignored industry segment is now coming out of the shadows and is becoming more and more prominent amongst the overall healthcare industry. The recent pandemic has opened up awareness of tests using RT-PCR technology and molecular testing and also expanded the availability and capacity across the country. Once the intense fear psychosis gets over and we slowly return towards normalcy, I believe there will be a definitive shift towards immunity building and preventive testing for the general public. At an overall level, health awareness and consciousness amongst customers is on the rise, and large private chain labs are also improving market accessibility, making sure the highest level of tests are available in all markets through their hub & spoke model. If more people can be brought under the health insurance scheme through policy interventions and government support which includes OPD & diagnostics tests as well, that will further fuel this consumer adoption.
Q.5. Is the consumer spending getting back on track?
I wouldn’t say so. We still haven’t seen the peak yet of the infection curve, and everyone is wary and cautious about, what next. Discretionary spending in such situations will always be curtailed, and consumers would but naturally like to save for the rainy day. Many companies, especially in retail, and white goods are expecting the festive season which is just around the corner and this will lift the feeling of gloom & doom, thus consumers opening up their purse strings more. Closer to our segment, I think allocation of spending to healthcare will be on the rise as a percentage of overall household expenditure basket.
Q.6. What do you see as a permanent change in the industry?
A major part of the diagnostic industry remains unorganised and disaggregated today. This pandemic situation we are living through, has forced all to realise the true merit of efficiencies of scale, & ROI in investment behind technology and automation. Also, there has been a fresh realisation at the consumer level on the need to invest behind health and healthy living, and having better immunity. I believe that this will have a far reaching impact on the way this industry gets structured in future, and we may see some of the revenue streams and business segments coming up. I predict the following 4 overarching trends :
Higher pace of consolidation in the lab industry and movement from unorganized to organised post the epidemic ebbing
Higher consumer preference for preventive tests
Greater reliance on web, app and bot based technology, most consumer interfaces will be digitised
Greater prevalence in molecular and genetic testing at an affordable rate
In short, the diagnostics industry is all set to embrace new areas of business segments within its core vertical opening up wider revenue paths for its growth.
“The views expressed by the interviewee are their own and may not necessarily represent views of employers and partners associated with the interviewee”.
Ekaga's Point of View
India is a land full of opportunities for players in the healthcare industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities. The Indian medical service consumers have also become more conscious towards their healthcare upkeep. With the increase in the competition, businesses are looking to explore for the latest dynamics and trends which will have a positive impact on their business. The hospital industry in India, accounting for 80% of the total healthcare market, is witnessing a huge investor demand from both global as well as domestic investors.
The hospital industry is expected to reach $132 bn by 2023 from $ 61.8 bn in 2017, growing at a CAGR of 16-17%. The diagnostics industry in India is currently valued at $4 bn. The share of the organized sector is almost 25% in this segment (15% in labs and 10% in radiology).
Government initiatives like the National Health Portal, online registration system, e-Hospital etc, are expected to increase preference and adoption of e-Healthcare models among masses. Along with these, emergence of tele- medicine, and government initiatives like e-health linked with tax benefits and incentives also act as a driving force. GOI is also planning to increase public health spending to 2.5 percent of the country's GDP by 2025.
The industry is adopting and embracing the innovative technology solutions, and many leading healthcare companies are redefining themselves with digital transformation following a customer- centric approach. High demand for Digital pathology and adoption of new-age solutions such as AI, enterprise imaging and precision medicine is all set to revolutionise the healthcare sector in India which will create vast opportunities for investment in healthcare infrastructure in both urban and rural india.