Hospitals 2020: a paradigm shift in the modus operandi


The proliferation of internet and data analytics is changing the dynamics of patient-hospital interaction. People are now playing a commanding role in deciding the service type and delivery. As a result, hospitals need to be more patient-centric and service oriented.

Hospitals have traditionally focused on providing critical patient care, while maintaining cost margins and dividends. Today, amid rising cost and capital, management is grappling with how to integrate modern technology to ensure sustainability, while continuing to generate revenue.

People nowadays are more conscious about the need to maintain healthier life style and focus on preventive, promotive health care. They are more concerned about access to good care, efficiency, affordability and sensitivity brought about by media on health-related issues.

Doctors and staff have to take care of cost, comfort and efficiency issues in quality of service while ensuring patient safety. These factors in turn, have strong implications on hospitals’ business models, their governance and management mechanisms, and innovations. Medical advancements and innovations in technology have been disrupting the business models of the health care industry very often. Hospitals must therefore constantly adapt to the latest innovative information technologies, and clinical and surgical techniques.

Patients no longer need to reside in the proximity of advanced medical facilities or even travel across cities and countries for accessing services. Tele-medicine, tele-radiology facilities for data and image transfer offers consultation through video chatting. Integration with mobile applications makes it easy for the patients to stay connected with their general physicians/ specialists on a real-time basis, seeking appointments and maintaining treatment records. This significantly reduces time spent at the hospitals and lower patient cost. Non-invasive surgeries, robotics, cloud computing and data analytics has improved outcomes, reduced complications and improved quality of life by offering cutting-edge technology to personalize effective quality patient care.

Therefore, the hospital managers of present day are to manage an array of challenges to attain cost efficiencies amid stringent regulatory norms, payor pressure, integrate the latest technology in the primary service delivery process, as well as in its ancillary/support processes (finance, staffing, IT, catering, cleaning, etc.). Opening up to the market and its participants, including competitors, gives hospitals an edge to access resources innovatively.

Consequently, there is an overwhelming increase in consolidation, partnerships and outsourcing in the hospital industry. This trend is expected to continue. A number of large hospitals are merging with other hospitals or health care centres to arrest their declining revenues. It is commonly perceived that having a greater number of hospitals in the vicinity is beneficial; however, fewer hospitals can actually run more effectively and have better outcomes. This is because they are able to enjoy economies of scale, which results in increased production or provision of better quality services at lower costs by centralizing resources. M&A activities increase the size or volume of hospitals, which eliminates duplication and wastage. This helps better utilization of hospital beds, improves cost efficiencies, broadens capital base and improve access to funds.

To leverage these collaborations and partnerships, hospitals must identify core business processes within their respective value chains to increase focus on. They must then innovate and intensify R&D in those processes to optimize existing cost structures, build comparative edge, and appoint alternative resources. Hospitals are increasingly on the lookout for partners, service providers across industries, for providing ancillary and support services in a cost effective and efficient way. Services such as catering, technology based facility management; housekeeping, security and laundry are outsourced for greater efficiency and increased profitability.

The prognosis

Going forward, focused professionalised (strong governance and management structure) personalized patient care (primary service delivery) with enhanced collaboration will create a highly efficient and cost-optimizing value chain in hospital service delivery. External factors such as competition, regulations and patient preferences, as well as internal factors including innovation, cost margins, stakeholder dividends and access to capital, would result in consolidation across all hospital verticals. The outlook of our “Hospitals 2020”, thus, seems healthy and sustainable.

Click here to know more on Hospital 2020 from our previous edition of Performance Journal 6.3

Guru Malladi, EY India —  Advisory Partner and Leader – Government & Not for Profit sector has contributed to this article.

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