Effect of Demonetization on Healthcare

Demonetization is a master stroke by PM Modi. It has done to Healthcare what all Transformation consultants put together couldn't achieve in 75 years.

These are few of my observations. Maybe isolated incidents and may not represent a wider trend; But this is what I saw...'pratyaksh athwa pramanit'.

1. Cash payments in Hospitals have gone Digital! Patients come and say 'cash nahin hai saab ji'. Hence acting as a filter between need and want. Will pay Digitally for only what is required and not what can be postponed. What was under the table has come overboard. Only 5% of the GDP is spent on health and 80% of this is in the form of out of pocket expenditure. Almost all of this out of pocket was cash; out of which I think 70% will get converted to Digital that will show in the books and attract relevant tax. Over 80% bed utilization is usually considered profitable. However I have seen bed utilization falling by 30% in the demonetization period. I think this could be a short term shock effect, hope not a long term trend!
2. The biggest impact is on Doctors in private practice for primary and secondary Healthcare. They can no longer hide some of the cash payments. Their cut practice will stop or be washed overboard. Labs, Pharmacy, Specialists, Hospitals have stopped paying cash [cuts] back to the practitioner. 'aap ko pata hai, cash to ab hai hi nahin Doc saab'. As per some estimates cut practice forms 80% of their income but hidden from income tax. About 60% of total health expenditure in India was paid by the common man from his own pocket. Almost all of this out of pocket was cash, out of which I think 70% will get converted to Digital that will show in the books and attract relevant tax. 
3. Sales of OPD prescriptions and OTC has become Digital! Pharmacies were already geared for Digital payments but now the % of Cash payments has gone down to minimal. This is a good thing because now the traceability of the sale has gone up. Each transaction has a unique number and can be traced by batch number. Out of all health expenditure, 72% in rural and 68% in urban areas is for buying medicines for non-hospitalised treatment. Almost all of this was cash, out of which I think 70% will get converted to Digital that will show in the books and attract relevant tax. 
4. IPD Medicines are fully Digital now. Whatever came through the HIS was Digital anyways. Now the medicines being bought directly by the patient are also Digital. Soon Pharma companies will have access to reliable Digital data for forecasting, which was a struggle thus far. Organised retail Pharmacy stores can handsomely monetize this Digital data.
5. Hospital consumables and materials are about 30% of the operations cost; where the procurement has gone Digital! Where is the cash to pay for all the material supplies? Hence forced to do direct funds transfer to the bank.
6. Medical consumables and material supplies to primary care and secondary care sector were all cash transactions. Now becoming cashless online payment. Small material suppliers risk getting wiped out as their business margin [< 8%] is lesser than the total tax liability!
7. Although P&C/Gen Insurance saw heavy FDI inflow after the amended law last year; but same didn't happen to Health Insurance thus far. This is because the Actuaries can't calculate the risk when the Indian Healthcare relies on hidden cash transactions and under the table deals. It's happening now because of demonetization. Insurance feels more comfortable dealing with claims that have a Digital footprint. i.e. Insurance is more comfortable reimbursing a Digital expense because it reduces the chances of fraud and abuse. From a Actuarial perspective the risk comes down. Full traceability. Hence I saw a large Healthcare group offering OPD Insurance cover. Now that is a commendable change! Thus far private Health Insurance coverage is between 3-5% and total Health Insurance coverage is between 14-18% of India's population; this is expected to grow exponentially because insurance becomes attractive in a clean business environment.
8. MNC Medical device OEM want to sell directly in India now. Not through dealers because the payments have become Digital and 100% FDI is allowed and overboard. As per FICCI the Medical Devices and Equipment industry, valued at US$ 2.5 billion contributes only 6% of India’s US$ 40 billion healthcare sector. It was growing at a annual rate of 15%. The need for Digital records, Digital payments and with IoT coming in, I expect it to grow @ over 20% annually.
9. Labs were already Digital ahead of other Healthcare stakeholders. Now thinking of leapfrogging to SMAC, IoT, Automation and AI in a big way. LOINC standardsapproved and notified for India! International Lab chains eyeing India as a viable market.
10. Radiology business is falling. Unnecessary imaging is going down. Traceability and transparency is reducing repeat tests. Obviously Patient benefit and Insurance wins.
11. Drug counterfeit market that was expected to be 50% of the market in India has been hit badly as it was all cash market. Pretty much struggling to survive. Obviously plugging such a leak is a huge benefit for all. Recognised Pharma companies should be celebrating. The total yearly drug spend of US$ 36.7 billion currently should see a huge jump this year as the market spend shifts from counterfeit to genuine drugs. It will be interesting to watch if this shift will benefit generic or patented drugs!
12. All the ad-hoc or lower level staff were daily wagers and are on daily or weekly cash payments. No one really knew if these daily wagers were real or existed only on paper. Salary payments under 30K per month did not attract TDS and hence were mostly used as a buffer or to siphon the black money. Now the ordinance of all Salary to be paid Digital brings all this out in the open! Going forward 'Ram lal 1, Ram lal 2, Babu Ram x, Babu Ram y' will no longer exist.
13. National Health Protection Scheme - Health Insurance cover of up to INR 1 Lakh per family for the poor and BPL has been hanging fire for a year now; But PM Modi announcing INR 6K direct benefit transfer [DBT] for every pregnant woman in the country is the last straw on the corrupt public healthcare systems back. The Govt will need to establish unique Digital Identifiers and registries for Services, Patient, Provider and Facility; hence EHR v2 and MDDS Standards notified. Where the DBT will be done by Jandhan, AADHAAR and mBanking [JAM]. This is start of the Public Health Transformation!
14. Real estate use for Healthcare is suddenly in demand! The dealers and builders are calling me and offering spaces at 75% discounted rentals, the same were unwilling to talk because they could get higher prices elsewhere. Now I tell them I dont have the cash to rent/buy.
15. Didn't you wonder - !! - when the balance sheets of large hospital/healthcare chains were showing losses year-on-year? Obviously this was a siphon going on. Demonetization wiped out the [black?] cash stores of HNI and traditional Indian business houses. Hence Demonetization has given a major blow to the investment confidence in green field and brown field hospitals and other capital intensive Healthcare businesses. Soon these siphon businesses will start getting sold out or wiped out of the game. Hence democratisation of funds creates a level playing field for new age digital healthcare business to compete with the old boys club. Let's bet on the winning horse now!
16. 80% of healthcare infrastructure is in public sector whereas 80% of healthcare spend is in the private sector. Majority of the spend in private sector was in cash. These cash based revenue sources for private Hospitals have taken a big hit. Value of volumes from Govt Insurance programs like CGHS, ECHS etc. have gone up. With demonetization and Digital payments the corruption is expected to come down significantly. Hence the public sector hospital functioning is expected to improve and give private sector hospitals a run for their money. Nalayak beta bhi ab layak ho gaya ;-)
17. India sovereign is now ready to become probably one of the largest Reinsurers in the world. Banking system is flush with unprecedented funds. Insurance companies will be fools to not notice! Health Insurance is no exception. Hence sets the stage for rolling out one of the world's largest Universal Health Coverage [UHC]. The number of Indians falling below the poverty line [BPL] every year due to health spending is anything between 2 to 7% of the nation’s population, and this total is on the rise. Hopefully UHC will stem this.

India's demographics playing in favor of shift to Digital payments. About 70% of India now is below the age of 40. Over 900 Million mobile phones in India. Over 60% are smart phones. AADHAAR has crossed over 1 Billion mark; its coverage is now at 93 percent among adults, 67 in children in the 5-18 age group and 20 percent of those aged zero to 5. Massive spread of Jan Dhan accounts, RuPay Cards in rural India, BHIM payment platform, Tax incentives for Digital payments, India's own GPS [NAVIC] are all preparations for the Digital onslaught on traditional lala and cash ka dhanda.

This year all balance sheets will show huge jump in revenue, assets and tax! win win for all. India will be soon ready for Universal Health Coverage! All the Healthcare MNC big boys are already eyeing India as it emerges from the shadows.

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Healthcare will have to learn Cashless Business! CBDT as per Amended Sec 285BA read with Rule 114E of The IT Rules 1962: has made it mandatory to report on Cash Transactions recorded on or after 01st April, 2016.

1. Tax Assessees (covered under the Tax Audit Norms) have to mandatorily report to the Authorities " Receipt of Cash Payments exceeding Rs. 2 Lacs for sale of goods or services of any Nature".

2. The FINANCIAL INSTITUTION must report cash Deposit or Cash Withdrawal (including through bearer cheques) aggregating valued to Rs. 50 Lacs or more in one F.Y. in one or more Current Account of any person."

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Healthcare IoT - Welcome to The Future

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Listen to Dr Pankaj Gupta speaking @ IoT Grand Slam 2015:
https://www.youtube.com/watch?v=bFSm4Xhr4E0 
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The global IoT healthcare market is expected to grow from $30 billion in 2015 to $150 billion+ by 2020 and IoT-enabled connectivity within hospital labs will increase total global laboratory test throughput by more than 3 billion diagnostic tests over the next 5 years. 

The Internet of Things (IoT) is the network of physical objects or “things” embedded with electronics, software, sensors, and network connectivity, which enables these objects to collect and exchange data. This has huge applications and implications on Healthcare. Are we prepared for the next big game changer? 

Every aspect of healthcare has devices from direct care to supporting care and rehab to community care. With the advent of smart mobile phone that space started getting connected and shrinking into the smart phone. Now the smart phones are eating away into the medical devices space. The networks are getting smarter such that the line between IT infrastructure, Networking and Applications is blurring as we move to the cloud. The Digital Hospital has all of these. Whereas Disease management takes this beyond the enterprise into the homes and lives of the person. Insurance and Pharma are analysing the lifestyle data which is not necessarily disease data. Our lives are rapidly getting digitized! 

On the flip side: Imagine what happens if someone changes the calibration of Lab analyser, Radiology modality, Cath Lab, Dialysis devices, ICU or bedside monitors. Or switches off a pacemaker. Or changes the rate of infusion or gas in the OR. All of this and more can be potentially done remotely in an IoT connected world. Scared already? Welcome to the future.

Look for the latest IoT Slam event @ https://iotslam.com/

Top Health IT Trends to Expect in 2016

Technology has transformed healthcare around the world at a faster rate in the last few years than at any other time in history. There are many exciting innovations poised to help improve patient outcomes and the landscape of healthcare as a whole over the next few years. For 2016, we can expect to see the following IT driven changes in India:

Expanding Telemedicine Services

The telemedicine market in India is expected to reach a valuation of about $18.7 million by 2017, according to Deloitte. Since telemedicine makes it possible to provide needed medical services from a distance, this may be particularly helpful for individuals in rural communities that do not have access to the larger hospitals and centralized facilities. Medical professionals can provide advice to patients and can even consult with patients about specific issues using video chat options.

Greater Integration of SMAC

SMAC, standing for Social, Mobile, Analytics, and Cloud technologies have transformed every business in India and around the world and healthcare is no exception. As medical facilities get on board with using social options, patients will be able to interact with their doctors and obtain information about their health and well being in new and convenient ways. Analytics in healthcare will allow information to be analyzed and cross referenced, assisting with research and outcome improvement.

Mobile integration puts health information at the patient’s fingertips in a way that was not possible in the past. This may help improve outcomes and communications between medical providers and patients in countless ways as the shift to mobile is embraced. The movement from client server to cloud is shifting the industry IT vendor landscape, with many smaller and newer vendors beginning to replace large vendors that have traditionally assisted with IT needs.

Increased Use of Medical Wearable Devices

The use of health and fitness wearables has increased substantially over the past few years and is expected to continue to increase at an ever-faster rate until about 2020. Start-up companies are experimenting with creating wearables featuring health IT features. We may see prototypes emerge this year that allow patients to instantly send remote information about biometric data that is obtained using sensors in various medical wearables. This could allow physicians to spot medical issues much faster.

Improved Mobile Access to Health Insurance

Private health insurance covers about three percent of India’s population. The government health plan covers about eight to nine percent of India’s population, while the rest is paid out of pocket. In 2015 the Parliament passed the Insurance Bill where the FDI in Insurance was raised to 49 percent and health insurance has been declared as a separate business. Also 100 percent FDI was allowed in medical devices. These two policy changes will bring a boom to the mHealth and health insurance market in 2016-2017.We predict Insurance support for mHealth solutions including outpatient visits and chronic disease management or non-communicable diseases [NCD] as it is called in India.

Many companies now also allow individuals to apply for health insurance using mobile apps. In 2016, we can expect to see even greater competition in the industry with more mobile access and improvements in automating the claims process.

More Complete Patient Histories with EHRs

EHR and MDDS for health domain standards were notified in September 2013 and approved in December 2013, respectively. As medical facilities adjust to using systems to keep electronic records, we can expect to see more complete patient histories begin to affect outcomes and standards of care. This is especially true across borders, as many developed nations are now employing the same standards for coding and keeping EHRs. We may see 2016 bring forth improved software that simplifies electronic record keeping, transitions of care, coding, and billing.

Widespread Adoption of Surgical Robots

India has been behind the ball in adopting surgical robots for some time now, but we may see many more robots flood the hospitals this year. Intuitive Surgical, the creator of the U.S. based da Vinci surgical systems, considers India an important market. The Vattikuti Foundation plans to increase the number of surgeons trained to perform robotic surgeries from about 147 currently to 300 by 2020.

IoT Revolutionizing Patient Care

The Internet of Things is an extremely beneficial addition to the medical industry. We expect IoT platforms to emerge that will enable integration of all healthcare applications, devices, and things. Health monitoring devices can track vital patient information such as blood pressure, heart rate, and blood sugar levels every single day and communicate this information to medical professionals. Pacemakers and other medical devices can also be connected so that information is transmitted daily and not just during doctor visits. Medical professionals can directly communicate when information is worrisome and can save time from running unnecessary tests when health signs are good.

CRM Improving Patient Relations

Customer relationship management has always been important, but is now easier than ever because of SMAC technologies and EHRs. Doctors can communicate more freely with patients and can track all interactions for future review. These options will help make doctor/patient relations more personalized. A personalized approach will improve patient satisfaction and may also help to improve outcomes.

New Healthcare Aggregators: SMAC and IoT

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See Dr Pankaj Gupta @ Healthscape IDE 2017 Panel Discussion Video 2: https://youtu.be/7RgY-5lp1qQ. Why are hospitals not moving to cloud computing?

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The old paradigm of business as a linear value chain is now facing extinction. Businesses are now ecologies and not merely producers and sellers ! That requires a change in thinking. Customer Relationship Management (CRM) needs to be a mission at every step of the process. This is hard to overemphasize! The internet is clearly the medium that allows such integration across time and space. It is time to take a more accepting look at Cloud and Social Media technologies. This offers the only universal layer of engagement across stakeholders. The investment in IT hardware as we knew it in the past has been greatly optimized by mobile. It has brought a tactile feel to life and work for all of us. Mobile mirrors the nature of Healthcare in terms of immediacy and continuity so well. Healthcare needs to embrace it wholeheartedly. Healthcare can only profit from it.

There is a huge Vacuum in Indian Healthcare-IT space. Large Healthcare-IT vendors have exited the market. Either they lost interest and exited or got bought out e.g. TrakHealth, iSoft. Also many traditional HIS/EHR are losing market share as the market is moving from client-server to cloud and from Capex to Opex models e.g. Wipro HIS, TCS Med Mantra, HealthFore. Many of these players like Wipro, TCS, CSC are suffering in their primary market [USA] due to shifts in US Govt policy and Automation and hence lack the Executive confidence to invest in product upgrades for the Indian market. On the other hand many incumbent players are not able to shift out to cloud because of their long term negotiated contracts in client-server model e.g Napier, Akhil, Srishti. New cloud based players like Dwise, UBQ, SRIT, ICT, Attune are small in size and yet to reach size and scale. Whereas Practo is trying to solve a problem that doesn't exist! Someone was stupid to assume that Appointments and Scheduling will sell whereas we Doctors want to see long waiting line of patients outside our clinics. Also the patients like to see waiting queues - in Doc sahib ki chalti hai.

Effect of Demonetization -- many hospitals are going to be sold off to PE that can invest in FDI e.g. Fortis is on the chopping block. The new management is going to hit on the bottom-line, optimize processes, re-skill staff and invest in growing the topline. All this is obviously a compelling case for Digital! So the time is now when full conversion of Client-Server Enterprise class to Digital [SMAC, IoT, CRM, AI] will happen. Now Healthcare CIOs have a choice to make - keep eyes closed and risk losing their jobs or tighten the belt and ride the Digital wave. Welcome to the Future!

The Government push towards MDDS/EHR Standards is not helping the old horses. PM Modi has put the focus of his Digital India on Healthcare, Education and Jobs [see http://economictimes.indiatimes.com/topic/Digital-India]. Whereas Healthcare is a State Subject and District Health Officers are wondering how do we benefit from Digital! Hard for many to imagine SMAC is a unifying force across enterprises and IoT breaks the silos. PM Modi's Digital India can be quite a game changer!

The era of hierarchical command and control is over. Now is the time for horizontal networking across Communities of Practice [CoP]. Whatever gets the maximum likes becomes the In Thing. Whatever is the In Thing gets used the maximum. Students are learning more from the online networking than from the formal classroom and professors. Research will reach the point of use as soon as it gets published. Primary care Providers in semi-urban and rural areas will have access to latest therapeutic recommendations. The old Adage that 'Knowledge is the only form of power that is not expendable but grows when shared' has become true.

The movie Avatar has beautifully depicted the concept of Small data ^ = Big Data where small knowledge base of each living being [App] is contributing towards the collective consciousness [Big Data] of Eywa. Now the question is will the future of SMAC/IoT be driven by technology or biotechnology?

Anyways for now - The time has come when you don't need big monolithic HIS software to run hospitals. Now you can do everything with small mobile based Apps for every function. Though I am already seeing many of these Apps in the market but what is lacking is a unified platform on which the Apps should be built such that the data can be seamlessly collated. Also it gives the provider the flexibility to select from a bouquet of Apps.

IoT integration platforms are emerging that will integrate at the App level, Data level and Semantic level. Anyone in the ecosystem can slice, dice, run reports on the collated data.

Successful Cloud models have dug the grave for the Enterprise Hardware. Capex has got converted to Opex. Now you can pay for the software on the cloud like you pay your monthly electricity bill.

SMAC coupled with IoT has a potential to bring the Aggregator Business model to Healthcare. Soon the unorganised and fragmented primary care, secondary care and supporting care market will begin to get Aggregated. I see these Aggregators becoming larger than established capital intensive Enterprise market similar to what happened in the Automobile market. It will be in the interest of Insurance, Pharma and Govt to go all out and support this emerging SMAC/IoT driven Healthcare Market Aggregation.

What happened in the FinTech space will now happen to HealthTech too. Just as the FinTech became a game changer to the Financial sector, a Digital Healthcare Ecosystem is taking shape. So many times bosses mocked new technology and got it wrong! Healthcare Businesses that are still in a denial mode will have huge re-skill challenges and risk shut shop.

References:

Why Healthcare must Re-imagine itself - and how

https://www.linkedin.com/pulse/why-healthcare-must-re-imagine-itself-how-arun-kumbhat

Why All Indian Hospitals IT is in Bad Shape

http://healthcareitstrategy.blogspot.in/2014/04/why-all-indian-hospitals-it-is-in-bad.html

Global HIS/EMR vendor nightmare outside US

http://healthcareitstrategy.blogspot.in/2012/08/global-hisemr-vendor-nightmare-outside.html

Thick client vs Thin client

http://healthcareitstrategy.blogspot.in/2008/08/thick-client-vs-thin-client.html

There is no Market for EMR in India

http://healthcareitstrategy.blogspot.in/2012/10/there-is-no-market-for-emr-in-india.html

Size of Healthcare-IT Market in India

http://healthcareitstrategy.blogspot.in/2012/06/size-of-healthcare-it-market-in-india.html