Hazard Identification & Risk analysis concerning to Medical Equipment in Hospital

The following are few examples of adverse events I have encountered in Hospitals due to faulty medical equipment.
“The patient gets burn injury due to malfunctioning of patient plate in electrosurgical unit in operating room.”
“The medication error to patient due to non-calibrated syringe pumps in ICU”.
I am sure you too might have faced similar issues at your hospital.
The goal of this blog is to facilitate hospital team especially medical administration, Biomedical engineer (also referred as clinical engineers), clinicians, nursing & paramedical team on safe usage of medical equipment.
The ever evolving role of technology in healthcare services now allows Hospital to diagnose faster, with greater accuracy than ever before and increasingly in a manner which is least invasive. It allows Hospital to treat better and helps patients recover faster. In most of clinical areas in hospital of high risk like Operating room, Intensive care area, the processes involve usage of medical equipment. But the faulty medical equipment or use of equipment in a manner other than the equipment intended to use may lead to serious disability or death of patient. The Indian National Accreditation Board for Hospitals and Healthcare providers (NABH) accreditation standard ROM 6a mandates top management of Hospital should ensure proactive risk management across the organization .As per Joint Commission International ( JCI) standard FMS 2 & NABH accreditation standard FMS 1a, the hazard identification and risk analysis (HIRA) exercise is to be conducted by hospital and should take all the necessary steps to eliminate or reduced such hazards and associated risks. It is mandatory to monitor adverse events, near misses, and sentinel events in hospital as per both NABH & JCI accreditation standard.
The failure mode and effect analysis (FMEA) is one of the tools that can be used for performing HIRA on processes involving medical equipment. The FMEA like any other process improvement methodology is a team activity wherein relevant members from different department will be involved. The goals of FMEA are as follows:
• To identify the failure modes in the process involving medical equipment
• Establish the risks and the consequences of these failure modes
• Identify and implement mitigation strategies for the effects
• Assess the success of the mitigation strategies
• Implement modifications to hospital procedures as appropriate
The roadmap for implementation of FMEA is as follows:
• Select a process or sub process involving medical equipment
• List the potential failure modes i.e. how it may fail.
• List the potential effects of the failure.
• Estimate the Severity number (S) i.e. a numerical measure as given in table 1 of how serious is the effect of the failure to the patient.
• List potential causes or mechanism of failure.
• Estimate the occurrences number (O) i.e. a numerical measure as given in table 1.It is a measure of probability that a particular failure mode will actually happen.
• Estimate the detection number ( D ) i.e. a numerical measure as given in table 1 .It is measure of probability that particular failure mode would be detected by process members.
• Compute the risk priority number ( RPN = S X O X D)
• Determining Corrective and Preventive Actions i.e. mitigation strategies for the effects including list of individual responsible for completing the action.
• Prioritizing Actions Based on the RPN.
• Recomputed RPN after corrective actions to hospital procedures as appropriate are computed.
The following FMEA case study was done on to eliminate the possible failure modes in the use of defibrillator in multispecialty Hospital in North India. Defibrillators apply an electric shock to establish a more normal cardiac rhythm in patients who are experiencing ventricular fibrillation or another shock able rhythm.The defibrillator is lifesaving equipment used in emergency situations and any failure /wrong use while applying electric shock can lead to first or second degree burns or death of the patient .
HIRA_v1
The process of using defibrillator using external paddle whenever code blue in Hospital initiated is shown below. The failure mode for each sub process is tabulated along with effect of each failure, its severity. Occurrence & detectability. The possible cause of failure & mitigating strategies is also filled. The rating for S, O & D are fixed based on detailed brainstorming session between nursing team, Clinicians, Head of Emergency Department & Clinical Engineering (also referred as Biomedical Engineering). The risk priority number for each failure is calculated to understand which sub process needs to be focused on priority.
As we can notice the following sub process needs improvements based on calculated RPN.
• Switching on defibrillator
• Positioning of paddles on patient chest & deliver shock
• Application of conductive gel on paddle
The team assigned responsibility to relevant member to work on mitigating strategy. The team decided to review the sub process again after three months based corrective action taken & revisit RPN.

HIRA2

There is plenty of scope for hospital to do HIRA studies on medical equipment like Ventilators, diathermy unit, syringe pump. I would encourage all my e-friends who are working on safety issues in hospital to take such activity in their hospitals. In case anyone is performing HIRA study using other tools instead of FEMA, kindly shares your methodology.

Hospital Outsourcing-broad criteria for decision making

A hospital administrator always faces questions on services outsourcing in a hospital. It is difficult to take the decision as there is no common rule or criteria to identify what to outsource and what not. Currently most common prevailing practices are followed and these are driven by financial concerns. Other important factors come into picture once the service gets outsourced. At that time, it has its own challenges to revisit the decision. for eg. for a hospital decides to outsource pharmacy services on the basis of desired outcome of keeping no stock hence no capex & manpower.  But as a super-speciality hospital it’s running a medical oncology department where most chemotherapy drugs are required. In such case it’s important to maintain a control on stock, look at financial viability for hospital as well as patient and overall patient satisfaction. this can be better achieved if pharmacy is in-house.

There can be multiple criteria to consider while identifying such areas for outsourcing. There is nothing better then mother nature to provide the approach. Let’s consider a very simple colony of honey-bees. Honey bees have well defined system based upon the task to accomplish that ensures survival of the colony i.e. purpose. Members work in groups to fulfil needs of the colony. If we consider Queen as focused and result oriented leader then other members i.e. worker bees and drones are the groups to whom specialized work gets allocated by the leader in a very systemic way. Thousands of Worker Bees assume responsibility for feeding; cleaning, nursing, defending & Drones assume responsibility of mating with queen for colony growth. The distribution of tasks is on the basis of its characteristics. These characterises can be decoded and can be consider as criteria for outsourcing decision making.

Hospital Outsourcing concept

Goal- It’s very important to identify the Goals of the hospital which gives the clarity about the short & long term achievements.  Eg. For the hospital low cost treatment as one of the goal, leaders should isolate all the areas that lead to reduction in the cost thus impacts on the service delivery pricing. These areas can be non-clinical services, consumables or pharmaceutical products. If hospital has a goal to provide high end diagnostic service then all the areas like MRI, CT, and medical equipment procurement should be considered.

Critical Services– it’s important to identify criticality of the area considered for outsourcing. These critical services may be super-speciality associated services as defined by a hospital. Ideally such services are the differentiating factor for a hospital & should be in-house. For a level 1 trauma centre, ambulance service is critical and should be in hospital control. The delivery of such services will directly impact the patient care and satisfaction.

Value of services– in case of bees, drone is important for specific time period but doesn’t add value to other tasks done by worker bees. In a healthcare organization, support services like housekeeping or parking are important services but not a major value addition services to hospital mission. Some services are for specific time periods but are important and can impact operations any time. Equipment maintenance is one such example. Hospital has to keep a team in house or can outsource the maintenance. Up-keeping is the important activity and assurance to minimize sudden downtime.

Future plans– Drone bees are only useful as future assurance.  In the same way Organizations should identify the future plans. It’s important to understand whether they wanted to focus only on the hospital(s) core services or wanted to develop some services as separate business units. To develop separate business units organization should develop the expertise and develop them with in-house. These areas can be clinical areas like dialysis or imaging service and non-clinical as F&B department, Patient Care Services.

Operational Risk– bee colony is limiting their risk of ‘not having their offspring’ by sheltering a group of drones. Operational risk including cost, process, quality impact is the important component to consider while outsourcing. It’s better to have options to fall upon. Eg. IT infrastructure maintenance can be handled by an in-house team but because of the nature of issues and dependency, it’s a good idea to keep a highly skilled team as backup and outsource few selective activities like IT hardware maintenance.

Setup Complexity– in a colony of bees setting up the honeycomb, prepare food, taking care etc. tasks are taken care by the worker bees this is same as complexity linked with initial setup.  In hospital it’s important to identify these complexities like initial cost, operational challenges in setting up the services etc. for example it’s very important to check the setup cost for rehabilitation dept. with operational challenges as its different from focus areas (Ortho or Neuro) for a specialized hospital. It will require larger space with different set of equipment. But on other hand by combining rehabilitative services with the specialities can provide end to end care for the patients.

Skill Set– required skill set and its availability is also a major criterion to be considered while outsourcing. In a super speciality hospital setting up Dental department requires different kind of doctors and skill sets. Hospital branding & campaigning required exclusive skill set which belong to different sector.

Resources– in bees’ colony, the activities require high resource but having low or medium value proposition are taken care by the worker bees. In a same way in hospitals activities require Hugh manpower or consumables but the value addition to our goal is not much but supportive, it can be considered for outsourcing.  e.g. Housekeeping services, security services etc.

Hospital Outsourcing matrix

Quality, Cost & service efficiency are the part of the desirable outcomes and common in above said points but not the only criteria for decision making. These points should be covered while negotiations & preparing SLAs.

Disclaimer: The views expressed in this post are purely the thought of the author and are not meant to be derogatory to any institution or organisation. The author is open to further discussions. Thank you for your patience and tolerance.

Analysis of Nature of Complaints In Medical Equipment

Dr.Rawat ,Medical superintendent of multispecialty Hospital had tough time with financial head Mr.Swamy for seeking approval of spare part for Gastroscopy as total maintenance budget had exceeded the yearly projected budget. We face this kind of situation in most of the hospital.

One of the important cost head in hospital annual budget is on repair & maintenance. The challenge as medical administrator faces is lack of control on medical equipment maintenance cost .Even though the annual Operational budget is given to management, most of the time it is based on gut feeling of Biomedical engineering manager (also referred as clinical engineering manager) .There are forecasting techniques in statistics to address this issue but no attempt is been done to analyze the nature of complaints & there correlation with spare & accessory replacement.

Downtime is the period of time during which equipment is not in a condition to perform intended function.
The maintenance cost index is the ratio of total maintenance cost and equipment capital cost. The maintenance cost is the summation of cost incurred on equipment spares, repair and annual maintenance cost.

The Hospital Biomedical Manager should always ensure to have lower downtime for all medical equipment without increase of maintenance cost index. The historical data on medical equipment provides lot of insight to hospital team to address the issue on maintenance cost.

The following case study conducted in one of the leading tertiary care hospital in western part of India.The data analysis is carried out to know percentage of complaints related to each block of medical equipment as explained below.

The typical medical equipment consists of following blocks:

Slide1

Stimulus: In many measurements, the response to some form of external stimulus is required. The stimulus may be visual (e.g. a flashlight), auditory (e.g. a tone) or direct electrical stimulation.

The Transducer: The transducer is a device capable of converting one form of energy to another. In medical equipment the transducer may measure temperature, pressure, flow, or any other variable that can be found in the body, but its output is always an electrical signal.

Signal-conditioning: The part of the instrumentation system that amplifies, modifies, or in any other way changes the electrical output of the transducer is called signal-conditioning equipment.

Display: The display equipment may include monitor or chart recorder to view the desired signal.

Recording, Data processing, and Transmission: This is used to record the measured information (e.g. Floppy disk, magnetic disk) for possible use later or to transmit it from one location to another in hospital.

Control devices: This usually consists of feedback loop in which the output from the signal condition or display equipment is used to control the operation of the system in some way.

The data on spare part replaced in non-operational equipment is collected for one year from equipment maintenance tracker software from multispecilality Hospital. The data analysis is carried out to know percentage of complaints related to each block of medical equipment. Based on the analysis, maintenance strategy was prepared by team of Biomedical Engineers & presented to hospital management.

The following are the important conclusions drawn from the above case study.
(1) The equipment failure due to electronic part is double than due to mechanical parts failure. In some of the area wherein equipment were nonfunctional had issues related to stable power & temperature. The matter was addressed with engineering team.
(2) The mechanical parts failure (like compressor unit in ventilator, gear assembly in film processor, motor unit in saw) can be reduced by identifying major mechanical parts for each medical equipment & prepare check list of same. In some equipment the preventive maintenance schedule was skipped. The Biomedical manager was asked to closely monitor PM schedule vs executed.
(3) In electronic parts of medical equipment, the transducers are highly susceptible for failure due to the fact that they do come in contact with patient and are handled by nursing staff & technician. Making nursing staff & technician understand the Do’s & Don’ts of equipment & routine calibration of transducers can reduce these failures. The continual training program should be prepared, coordinated & implemented by Biomedical Engineers.

Slide2

(4) The electronic failures in other section can be reduced by regular routine preventive maintenance servicing of equipment as per standard checklist given in the service manual of medical equipment. The few examples of failure of electronic parts are failure of preamplifier section in ECG machine, motherboard in syringe pump, pressure transducer in patient monitor, hardiest of computer section of MRI etc.

(5) The Biomedical manager & medical administrator got clear views on which all area’s the biomedical engineering team can focus like user training ,adhering to preventive maintenance schedule, ensuring proper environment for equipment to function etc. The operational budget was done considering these factors into account.

It is suggested to perform similar analysis in your hospital to understand which all issue related to medical equipment to be addressed so that maintenance cost can be monitored and controled & maintenance budget can be properly forecasted.

Defining your KPI’s – What is your Hospital Measuring ?

KPIs what are you measuring

Ill start with a  Cliche  – “What is not measured is not done”, but  i truly believe  in the power of measurement  and that’s why measuring all that you have envisioned for your hospital becomes critical.  But then how good are our hospitals at measuring?

Before we can really answer that question we need to identify what it is exactly that we our measuring.  I have come across a few discussions which were based entirely around what hospitals should measure and honestly every individual seems to have his / her own response.  Yes there are some basic KPIs such  as  ALOS , Occupancy, Revenue etc that keep cropping up from time to time however  I haven’t really come across a  really well defined KPI directory that you can choose from .  And sadly enough some  rare  managers and administrators that I have come across  are not  even aware of  the  entire  implication that a  particular KPI has  on the  functioning  of the  hospital.

My attempt here is not to define a directory for you but rather to set a direction to our way of thinking about KPIs

So what do hospitals measure?

Our entire KPI classification is based around

 Clinical Quality  – e.g. Medication errors, outcomes, mortality, hospital acquired infection , repeated surgeries, readmissions etc

Operational Quality – e.g. waiting times,  Going  above  estimates, Consultation quality, Discharge times, Admission times etc

Operational efficiency – e.g. ALOS, Volume growth, Cost per bed, Material cost  %, utilization rates, Your basic time motion studies regarding process efficiency etc

Financial health – eg. EBITA, Debtors outstanding, Case mix, Revenue source mix, Cash to debtor’s ratio, Cash flow etc.

This is definitely not all inclusive in terms of KPIs or categories but basically top of the head stuff. I have  also seen people merge Operational quality and efficiency but id rather keep them separated.

Wow that’s quite a lot of things to measure  if you think about it and  we haven’t even quite scratched the surface yet.  How will I keep an eye on the ball when I’m being bombarded with balls? The answer my friend is simple identify what’s important for you

So what is important for you? Prioritise

The KPI dashboard that you are most concerned about is directly related to the level / nature of involvement that you have with the organization.

If you are a C level executive your KPI dashboard might be entirely different from let’s say someone related solely to Operations which might be different from the individual heading Quality. When i say different it doesn’t mean there is no overlap there will be overlaps but functionalities are different.

So a CEO would have some of these things on his / her  mind  –  EBITA , Material Expenditure, Volumes for critical procedures , Case Mix , ALOS, Debtors , Utilization etc.

And then this further would percolate down to departmental levels.  Eg OPD would have different Performance indicators such as waiting times, doctor punctuality, material consumption, Staff attendance, Overtimes, Complains, average consultation times, volumes,  etc .Marketing would have measures  like – call volunmes, sector wise revenue, cost per  customer  acquisition ,  doctor wise  performance, activity vs conversion etc

I would say define your parameters well at the departmental levels to drive true quality and efficiency.

Ideally a C level manager should look at about 30 – 50 selected indicators on a daily basis and then selectively look at indicators from departmental levels which show huge discrepancy from the expected values or unusual results. Focus can also be shifted while working on specific projects. Please note it’s difficult to keep an eye  on 170 parameters so prioritise and reorganize your dashboard  on regular intervals

At the departmental level each department should be encouraged to develop their own KPI bout 20 – 30 against which they measure themselves. Please remember while defining your KPI it’s important to understand why you are measuring it and whether you need to include it, be specific and be selective.  Also VOC (voice of customer) must  be imbibed into your Dashboard structure. Lastly  identify the correct method to measure the KPI you are defining a lot of times time is wasted on goose  chases with either  the  wrong  data or  erroneous  data  collection.

Implementation 

This is the tough part here is where you record, review and correct and this is not only for a particular phenomenon that you  are  measuring  but also your dashboard structure add omit and refine the  dashboard as  you go along. But before  that  i can not stress on the  importance of getting the  message across to your entire hospital team. The  grass root level must understand the  importance of  an entry they make or the data they capture to ensure the quality of data and the  success of the system.

What would be the benefit?

The answer is simple consistent quality service provided with efficiency and accuracy.

HIS / BI Tools

I am certain there are quite a few HIS systems as well as Business Intelligence tools which integrate with your HIS systems to raise alarm and to bring things to your notice. However treat them as tools but don’t be over dependent on them. Because solutions which come in a tin are not necessarily the solutions we need.

Authors note:

My overall experience with KPI mapping in hospitals in India is that we are inept at measurement.  Most hospitals basically follow a basic set of indicators that are commonly predefined and taught in Hospital Management courses, however creative development of newer indicators seems rare.  A problem that is causing this is that management professionals are not necessarily keen at sharing their knowledge,  and the knowledge share which happens is mostly of data which is already out there in the  public domain.  Also as an industry there is a lot to learn from the Manufacturing sector and we must keep our minds open to newer possibilities through cross industrial / sector learning. In the end Collective Cognition is the need of the hour.

Disclaimer: The views expressed in this  post are my own and  are  not meant to be derogatory  to any institution or organisation. These are just my thoughts and  these are open for further  discussion and  development. Please do comment and  share and  let’s get some universal cognition into this. Thank you for your patience and  tolerance.

Value Based Healthcare Delivery

I recently came across this talk by Michael Porter about healthcare that he had delivered at Harvard  Business  School though the  talk was  generally about the healthcare system in the US  however  i felt that  it was quite  relevant  to healthcare  systems in general across the globe.

One  of the  most  important things that he talked about was  Value Creation and  improving the  Value delivery system. But then the question which arises is what is the  true value.  How do we  define Value becomes  critical , is it just patient outcomes , is it cost of delivery , could it be a  generalised figure and  he defines  it quite comprehensively  he says that it the patient health outcomes achieved  relative to the money spent to achieve those outcomes.  Which becomes a  simplified outcomes as numerator and cost as denominator.

This is  quite  a shift  in our existing way of  measuring success  which are either  based around profit maximisation, or Volume  delivered, or  access to healthcare in general. Quality as  it stands currently is  based entirely around the  process definition and  improvement. Be it any guideline we  follow NABH or JCI its  mostly process based. Process improvement  is very important  however outcomes  are  even more important.  And  are we really measuring the  clinical outcomes. If the  system is to improve  then the competition has to move from being profit or  process based to becoming outcome based and then to value creation and thats the  only way we can get a  handle on the spiralling costs of healthcare delivery.

So how do we really shift the  focus to value.

Lets Look at Outcomes outcomes need to defined per  patient and  his / her medical condition. We need to look at survival,  functional status, independence, residual defect / illness. Yes it is an intensive  exercise  but the  results would truly be  enlightening and  a true move towards the  goal  of quality. Define the  Outcome parameters for any surgery / medical treatment that is meted out including survival rates, extension of survival period, dependence of medication etc etc.

Secondly identify your costs. For some strange reason healthcare seems to shy away from a  practice which is so commonly followed in the manufacturing  sector and this is ABC (Activity based Costing ) .For Healthcare i would suggest a  time related Activity based  costing. Whats even more  specific is that it will  be a  patient based time related activity based costing.  We tend to see ourselves as distinct departments and subunits and we tend to do our costings similarly too(that  is if we do our costings). However a  true costing exercise must capture the entire cost related to the  patients  journey through  care  pathways. And through this way we should be able to define  the true value of a  patient outcome. The focus needs to be on the  Outcome , and  existing technology in terms of HIS  systems must integrate these costing parameters  but  the  end result could truly be transformational .

I personally look  forward to a  day where  we will focus on the right performance indicators though that  is a  different post in itself. But  i think this could very well be a move  in the right direction be it for a private hospital, a charitable trust or a  public trust.  Efficiency , effectiveness  both would be  effectively measured and  documented and  true value would lead to better profits / access/ volumes so this is a  win win no matter  which way you take  it.

Here is the  Video if you are  interested , apologies for the poor sound quality.

Disclaimer: The views expressed in this  post are my own and  are  not meant to be derogatory  to any institution or organisation. These are just my thoughts and  these are open for further  discussion and  development. Please do comment and  share and  let’s get some universal cognition into this. Thank you for your patience and  tolerance.

Going Cellular on healthcare – an exploration

According to mobile analytics firm Flurry India’s connected device installed (smart phones and tablets for the uninitiated) base grew by a whooping 160% from April 2012 to April 2013. According to the latest report of IAMAI and IMRB, till Oct. 2012there  are a total of  76 million mobile internet users  ie accessing internet from their  mobile devices  in India and this doesnt include  dongles and data cards.  This number is expected to reach 130.6 million by march 2014 and 164.8 million by march 2015.

Now those  are  crazy  stats but the  question here  is  are  you on the  smart phone  yet. Applicability for   smart devices in hospitals is just  at its infancy but the  possibillities are just enormous.

A Hospital Based  App  –  this is for marketers as well as for  operational convenience. Though i have thought of other  applicability ill leave that for another post.

Developing one  basic downloadable hospital application with various utility parameters set into it. So lets get my thoughts straight here these  are just some random ideas that  i have  worked  upon or come across which work or should work you can always add  more in the  comment section.

a) Pill Reminders  – once a  prescriptions been filled  out and dispatched from the pharmacy this application can be downloaded and it will remind you when you need to take your  medicines  could be used for both in and  outpatient. I think this application is already being used  by Wallgreen  (part of the wall mart enterprise)

b) Health check reminders once you have booked  a  health checkup this does a basic count down to the  health check reminding you from three days  prior to the HC . and  one day before it sends you details as to what is expected from you . Also allows  you to give an online feedback

c) Virtual consultant  feed your query get an answer and  tie in for fixing up an appointment

d) Appointment  scheduler no calls required like an online consultation allows you to choose a speciality a consultant and an available time slot maybe about a  month in advance again a  reminder system can be put in for when your consultation is due

e) Diet check – basic calorie / special need diets  includes interesting recipes as well as  a basic calorie calculator such apps already exist on  the  ios and  android markets and can be integrated they are  for free  usually.

f) im not to sure if this can be done but basically an emergency helpline number that  the  app can directly feed into your mobile and  which will be  accessible at the  touch one button

g) Promotions any new  promotion pass it on  to your existing customer , though this is a  bit of an issue but can be

h) Disease research  – if you need to know anything about a  particular disease  get the data here

i) Patient connect  – connecting with patients suffering from similar disorders successfully treated by the  hospital with contacts if required like mobile testimonials and brand ambassadors. also mention best times to contact.

Thats  just the  tip of the iceberg i am certain as we go ahead we can find more utility.

Whats important for a particular app to be successful is that its  patient centric and understands  what purpose in patient care or patient  information provision it serves.  The  App has to be utility focussed and  not just there because  everyone is moving onto the  mobile platform or because  you want  to push messages to your community  from your hospital. If thats the  approach you have  then even if people do  download your app  they will get  rid of it faster than you can say flu. So remember friends utility is king and thats the only way you can create a  successful app.

Disclaimer: The views expressed in this  post are my own and  are  not meant to be derogatory  to any institution or organisation. These are just my thoughts and  these are open for further  discussion and  development. Please do comment and  share and  let’s get some universal cognition into this. Thank you for your patience and  tolerance.

Analysing the common Primary Healthcare Model

Have  you ever wondered why there  is such little  investment in primary healthcare setups by established  healthcare  players. Though there have  been models like the  Apollo Clinics, or the  Manipal Cure and care. But why the  limited expansion and why only such few players.

A population of over 1.2  billion surely deserves a  better  primary healthcare setup and  honestly though individual private clinics are sprouting up  day in and day out why is it then that corporate healthcare chains are finding it so difficult in  establishing their presence .

The very evident answer to that probably would be the  bottom line the  EBITDA margins.Let us  consider what  exactly are the  revenue streams in  a Primary healthcare setup and what are the approximate gross margins associated with them.

OPD consultation – The  base of the stream  is the  Opd consultation and other than a basic one time registration charge the Consultation fee can be split with the consultant  according to various models. Though from my limited  knowledge the most common model is the  70 – 30 split, though in other cases a base rental model can also be selected specially if the  clinic  is located  in a  prime location. But consider this, this is a prime revenue  stream , the stakes can’t be changed much unless we are looking at growing consultants. The reason for this is our direct competition with hospitals, tertiary care providers , and established consultants if they do choose to visit a  primary care setup would ideally do it atleast on similar terms as with most established  corporate  hospitals. And there are a few hospitals out there who are  not looking at gaining anything from the  opd consultation component. It’s a  tough market ,  thus unless  we devise a  new model maybe even profit  sharing model could be considered, which promises larger returns once the  clinic is established  its difficult to see how this particular component can change, honestly for me  the  profit sharing model would eliminate two major problems of  community clinics ,  the  consultant  attrition and the Cash flow drying up . Another  way around it could be to review the  entire  community clinic model in terms of clinical manpower selection (growing  consultants) and have a  strategy in place there  to increase share in revenue , but of course this would come with longer break-even times, and maybe higher  marketing expenditures.

The LAB  –  i think this probably is the  king maker in the  community healthcare centre. To make the clinic setup profitable in-house investigation facilities are important.  And probably the critical factor here is reaching a  certain critical mass to make on site  batches optimal.  The  Health checkup vertical  as well as the opd will feed this. In addition it’s also important to establish the centre as a  really good competitive  path lab, and  competition just increases manifold from there. Another  problem here  is  insecurity if you are  looking  at establishing you lab as a  critical revenue earner there  will always be the  insecurity with GPs about patient poaching and this needs to be dealt  with effectively.  The  gross margins here are  around the  60 to 80% mark i think  from what  i have heard. But  then it all depends  on volumes.  I think an important  strategic decision here is  how we enter the market. We ideally  should look at reaching a  critical  number  of  clinics in a  geography / city so that a  central lab can be established and we can get some economies of scale.

The Pharmacy  – this is another very important  factor for the  primary healthcare  setup , the  in-house pharmacy the margin  here would be around the  25-32% gross. When compared to hospitals and surgical consumables  this is less. Again the  strategy ideally would be to establish the brand independent of the  clinic, as a  stand alone pharmacy. Again the  model would gain from a  centralized purchase department, to gain from economies of scale. However external factors such  as the DPCO if they are to be implemented stringently would affect our margins further  here, both in terms of negotiation abilities as well as  margins .

The referral revenue – This is specially applicable to primary setups linked  with corporate hospitals where a  certain revenue inflow  occurs from patient  referral and conversion

It makes  me wonder why other  corporate giants don’t entre this arena. It seems to be profitable, and  im certain the capital expenditure associated is comparatively negligible. I mean it’s just the  Land / property cost associated and most diagnostic machineries now are  available on the consumables model thus decreasing the  basic cap ex required.  The associated operation expenditure  is similar to hospital opds in   terms  of proportioning costs on scales. But then consider this most marketing departments  from corporate hospitals are ready to support primary care setups, for star referral doctors.  They are  willing to provide  free consultations in lieu for conversions, then must primary care setups for hospitals be considered as separate cost units. Could they be an extension of marketing activities  outreach community setups . Just a  thought need to look at  the financials of this.

Another  solution to the  primary care setup would be the  PPP model and I think this has been discussed before. However  most  corporates would be a  little  apprehensive about the pricing with PPP models and the  SE stratum they would be targeting might differ. Though the  volumes would definitely increase and the associated costs will decrease as associated  land / rent costs will be removed. But then again wont the mid ranged primary care setup models like the  Aushadhi  / med plus mode in AP gain from such an association.

Well lets see what the future holds  for us here, but primary care definitely needs some good effective players the gap between demand and supply is enormous and  not just that  ,  I personally feel that honest ,  transparent primary care  setups  could gain loads from a highly knowledgeable  and aware  middle class population who  would love to be associated with quality primary care brand , where  there  is continuity of care and honest  and transparent referral pathways  for when  secondary and tertiary care is required.

Disclaimer:

The views expressed in this  post are my own and  are  not meant to be derogatory  to any institution or organisation. These are just my thoughts and  these are open for further  discussion and  development. Please do comment and  share and  lets get some universal cognition into this. Thank you for your patience and  tolerance.