Healthcare-IT Business Strategy

Tuesday, January 3, 2017

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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Thursday, December 8, 2016

MAXimising Benefits



Max Healthcare IT Transformation Cover Story in Ehealth Magazine Eletsonline. Perot systems corporation Total ITO. Largest VistA EHR implementation outside the Veterans Health Administration (VHA) - U.S. Department of Veterans Affairs and outside the USA. The institutional memory of the grand success was lost in the merger of Perotsystems with Dell Services further merged with NTT Data. Though the success achieved in Max is unprecedented and still largely unmatched. Lot of firsts here. First Indian Hospital chain to go on a private cloud. All Hospitals working from the same HIS/EHR/LIS with common IDs for Patients, Doctors, Facilities. Records having Diagnosis, Procedure, Lab Standard Code Sets.


The IT outsourcing deal puts Max Healthcare on the roadmap for becoming the best IT-enabled hospital chain in the country The Indian healthcare system has recently realised the potential of information and communication technologies in completely transforming care delivery at hospitals. The industry witnessed its first complete IT infrastructure technology outsourcing deal in September 2009, when Max Healthcare and Dell Services (formerly Perot Systems) partnered for developing IT operations at all Max Hospitals. The cost of the deal, Rs 90 crore (excluding infrastructure cost), is an indicator of the increased priority that is now being given by Indian hospitals to IT, which is an extremely positive sign. As per the agreement, the deal will last for ten years, out of which one year has already passed, and a lot of positive transformation has already been noticed. The unique partnership is not only expected to provide a lot of value to Max Healthcare in terms of enhancing the quality of services and reducing treatment costs, but it will also be a great learning experience for Dell, which marked its entry into the Indian healthcare market with this deal.Status update Post its inception in September 2009, the ITO deal will last for 10 years and which, according to Dell, will comprise of three major phases – transition, improving productivity and optimisation.

As one year has passed, the transition phase is almost over. During this phase Dell installed the entire IT infrastructure for Max, by migrating the already existing IT infrastructure to a modern infrastructure. The entire data centre of Max, which was housed in their Okhla office, was migrated to the Dell facility in Noida. To reduce hassles, the shifting work was done during off hours on weekends, so that the work at the hospitals does not get affected. The entire process lasted for a couple of months and currently all Max Hospitals are running from the data centre housed in the Dell facility in Noida. The servers and network devices have been installed with monitoring devices that generate alerts in case a problem arises. There is also a situation management process in place to ensure that even the problems of highest criticality get resolved within a definite period of time.

Original publication for Reference: http://ehealth.eletsonline.com/2010/10/11436/

Summary of outcomes beyond the published article: Max Healthcare was the largest ever full ITO and Clinical Transformation Account of Perotsystems International. $20M deal across multiple years. Total Business Transformation done including technology, process, people and business. This includes Enterprise Architecture, Operations and Projects:

Phase I: Infrastructure Upgrade completed
  1. Centralized Service Desk for L1 support and triage to L2 and L3 teams
  2. Converted the P2P network to a MPLS private cloud
  3. HIS and all other software applications of 7 Max hospitals are now running from the Dell data centre
  4. HIS re-engineered and stabilized to take the load of new environment
  5. Physical, Network and Data level security established
  6. Operations management as per SLAs
  7. Governance process for decision making
  8. Integration with Medical Devices - ICU, ECG, EEG, LIMS, Lab Analysers, CT, MRI, Modalities, RIS, PACS, Surgery, Scopes etc.
  9. Bar Code, Medication Administration and Nursing Devices
  10. Computer on Wheels, Mobile CPOE Orders Devices
  11. Retail Pharmacy, CRM, Physician Mobile, Remote Monitoring Devices
Phase II:
  1. Customization of Opensource VistA Electronic Health Record System. Max Healthcare is the largest VistA implementation outside the VA and anywhere outside the USA.
  2. Implementation of CPOE, CDSS, BCMA, ePrescription
  3. Developed standard master data e.g. Service master, Lab master, Drug master, etc.
  4. Order sets, Notes Templates
  5. HL7 based Enterprise Application Integration using Mirth.
  6. Clinical transformation as per ADOPTS methodology

Business Benefits realized by Max Healthcare:
  1. Private Cloud IT Infrastructure: plug-n-play environment for new facilities
  2. Business downtime due to infrastructure and HIS outages is history
  3. Process Re-Engineering -- 1000 beds in 7 Hospitals; expanded to 1500 beds in 11 Hospitals.
  4. Standardized operations without disruptions reduced the waste and improved the topline.
  5. Near paper-less, > 95% Adoption in Clinical.
  6. Achieved full NABH and HIMSS Stage 6 accreditations later.
  7. Hospital was able to attract FDI investments.
The institutional memory of the grand success was lost in the merger of Perotsystems with Dell Services further merged with NTT Data. Though the success achieved in Max is unprecedented and still largely unmatched.

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Tuesday, May 24, 2016

CAUSE Methodology for Healthcare Organization Change Management

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See Dr Pankaj Gupta @ Healthscape IDE 2017 Panel Discussion Video1: Clinician Adoption challenges are the biggest hurdles to hospitals adopting technology. What are these Adoption challenges? Dr Gupta trying to defend that Change Management is important but in-vain :-) !
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For Boot-Strapping Healthcare Organisation Change Management, I follow my proprietary CAUSE Methodology for managing change in people, process and technology. This has emerged out of our collective experience of managing change in healthcare organisations. 

Consciousness of need to change: The people must be informed by the Head of the organization again and again until they are very clear in their mind about why the change in needed. There is no over communication for this. Treat the organization like an anxious child about to undergo a surgery and will need a lot of reassurance.

Aspiration to support change: The organization must Aspire to support the changes. Since the organization is going through a transition this is an opportunity for the organization to redefine itself across the organization. The Aspiration must come from within not without.

Understanding how to change: Once the organisation is conscious of the need to change and they aspire for the change from within then they are ready to be trained. Before this stage any trainings will be futile. Now train the team on new processes and technology extensively, again and again till it becomes second nature to them. Keep Checking for gaps in knowledge between expected and achieved.

Strength to over come hurdles and implement change: It is important to realize that processes will break and problems will happen when such a major implementation is done. Trick is to recognize the problem areas before it is too late to avoid big failures. Top management should be ready to cope up with the hurdle and internal resistance and not buckle down under pressure.

Ecosystem to support, sustain and adopt change: Lot of support is required in terms of hand holding and training till the change gets adopted by the users and is irreversibly embedded into the ecosystem. Unless you support the change till it becomes an ecosystem the change will not last. It will swing back to zero as an elastic and throw the organization into chaos.

Most of the large transformation projects fail because the contract did not make time and budget for the Change Management and the organisation did not recognise Change Management as a specialised expertise.

My experience spans Organization change management, Business transformation, Clinical transformation, Knowledge management, Transition management, eHealth Consulting, mHealth Consulting, Chronic Disease Management, Solution design, Implementations. Due to my background and experience I am interested in Healthcare Operations, Pharma, R&D Labs, Medical Devices, IoT, SMAC, next generation technology platforms for Digital Hospitals.

CAUSE Methodology is an outcome of having done organization change management over and over again. I have applied this framework to many healthcare organisations in terms of IT, Process, Quality and Management changes.

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