Healthcare organisations in the VUCA world

Providing preventive care and promoting wellness is quickly becoming a business priority, says Colonel Hemraj Singh Parmar

VUCA world, VUCA World, VUCA environment, Term VUCA, Growing economy, Govt of India, Cost optimisation, Technological advancements, Talent management, Rapid advancements, Medical technologies, Legal challenges, Hemraj Singh Parmar, BR Life

VUCA World! Another military term stolen by the business! I was invited to an event recently the theme of which was ‘Healthcare in the VUCA World’. As a speaker, it conjured up memories of my personal engagement in the highly volatile environment of Jammu and Kashmir, in three different tenures spread over more than five years. A truly VUCA environment is fraught with unending risks, insurgency, firefights, fog of war and a chaotic environment fueled and fomented by one or more interested parties (in our case, our Western intransigent neighbour), keeping us at wits end 24x7.

Term VUCA (Volatile, Uncertain, Complex and Ambiguous) was first coined by the US Army during the 1990s at the height of the Iraq and Afghanistan turmoil. It has come to typify uncertainty surrounding a constantly changing world and the inherent risks associated with that ever evolving and dynamic change.

The shift is now on moving back patient care back to the comforts of his home, well away from the hustle and bustle of a hospital by leveraging advancements in modern technology, improving protocols and improvements in clinical skills.

Healthcare industry is changing at breakneck speed globally, more so in India. What makes Indian healthcare a VUCA environment? The answers are not so simple though.

Growing economy and investment and opportunities galore

Our Prime Minister, Narendra Modi, has recently announced that he wants to make India a $5 trillion economy over the next few years. Our healthcare spend currently stands at a dismal 4.7% of the GDP, of this only 1.15% is from the Government. In the US, this figure is close to 20%, which is likely to increase to 25% over the next few years. Size of their healthcare economy itself is close to $3 trillion, which is substantially higher than the entire economy of India, currently pegged at close to $2.8 trillion.

The launch of Ayushman Bharat is therefore a step in the right direction and will spur investments, although current rates of 1350 odd procedures fixed by the GoI are very low and counterproductive to sentiments of investments and growth.

Abysmal healthcare delivery

The onus of providing qualitative healthcare delivery lies on the government. Just have a look at the prevailing abysmal healthcare delivery statistics in India:

Private hospitals are the primary source of healthcare delivery for 70% of households in urban areas and for 63% in rural areas. The above statistics point to a sorry state of affairs in the public hospitals with no accountability. As per a study recently carried out by IIM Bangalore on behalf of the Association of Healthcare Providers of India (AHPI), a consortium of private healthcare providers, established that the average of cost of delivery for the same procedures was much higher in public sector hospitals than that in the private hospitals, but the private providers remain the favourite whipping boys and have to weather the storm of regulatory pressures, rising costs, increasing litigations, depleting margins and downward pressure on overall profitability.

Highly regulatory environment and depleting margins

The Govt of India (GoI) has recently put caps on stents, implants and many drugs. This has substantially eroded profitability of the healthcare providers. This brings us to the element of cost optimisation while enhancing revenues. Most people in the C-suite concentrate on the top-line but seldom look critically at their costs. Cost optimisation now is the new norm.

Rising costs and need to optimise them

Companies that optimise their costs stand a better chance of remaining more profitable. Doctor costs (up to 25% of the revenue), manpower costs (up to 15%), material costs (25-30%), other administrative cost (up to 15%). Healthcare is a very capital-intensive industry, add to this the cost of rents and interests on debt. This leaves very little margin for the investors on the table.

Insurance penetration in India is currently little higher than 20%, there is major proportion of our population that is still left uncovered. Therein lies the opportunity. Close to 80% of our medical devices are imported, a huge drain on our economy. We must reduce dependence on imports by encouraging indigenisation under the novel ‘Make in India’ initiative. ‘Digital India’ will further give a fillip to accessibility and affordability of our healthcare delivery. Companies that are likely to ensure backward integration (resource permitting, producing their own drugs, implants and pharma products) are more likely to be successful since costs are rising dramatically and we have never-ending regulatory pressures. We need to learn to do more with less.

Technological advancements

Technology itself is changing the landscape of healthcare industry rapidly. This includes AI, IoMT, 3D printing, blockchain, big data, wearables, telemedicine, robotics, precision medicine, EMR/HER, predictive analytics (oncology – IBM Watson), remote care and connected health, just to name a few. This calls for learning, unlearning and relearning.

Talent management, retention and upskilling

Healthcare leaders have never felt being more under pressure to optimise business and improve margins. The industry is manpower intensive and is one of the few industries that has larger proportion of women in its workforce, truly an equal opportunity employer with a country wide employee base of more than 4.7 million. There is no gainsaying the fact that healthcare industry is starved of good talent, since it was never one of the preferred options for many good candidates in the past, save in the last decade or so when the industry has really come of age in India. Attrition is particularly high among the nursing staff because of opportunities in the Middle East and Asia Pacific Region with better remuneration and working environment. Other technical and support staff is equally vulnerable to the lure of the lucre. Talent retention therefore assumes utmost importance.

With the rapid advancements in medical technologies, we need to constantly upgrade skills of doctors, nursing and other technical staff. Low skilled or repetitive jobs will soon be lost to improving technologies and automation, leading to increased redundancy and obsolescence. Some of the jobs that are already falling pray to AI and emerging technologies are in the radiology and pathology departments. This threatens to spread to other departments soon.

Many organisations have come up with innovative employee engagement initiatives and educational and skilling programmes to meet the emerging challenges and retain talent. Top leadership itself must constantly adapt and keep abreast of the emerging technologies and leverage them to improve patient safety and outcomes, asset utilisation and patient throughput, optimise costs and consequently improve profit margins. This also calls for leadership of the highest order and a workforce that is constantly adapting to the changing dynamics of the healthcare industry. We need people who are nimble in their thinking and are ready to embrace technology and acquire new skills.

Consumer/ patient activism, legal challenges and hostile media

Hospitals will continue to receive high risk patients and are willy-nilly easy targets for flak and adverse publicity. Being better educated, consumers (patients and their dependents) in India are now more aware of their rights and privileges. They reserve the right to recourse to legal action in case of untoward incidents or mortalities in high risk cases. There is no replacement to constant training of the patient facing staff. The staff has to be very transparent, objective and empathetic in communicating with the patient and his/ her dependents.

Media should be more sensitive to such incidents and not add fuel to the fire. Moreover, its scrutiny must be based on authentic information gleaned from all parties before arriving at a conclusion rather than feeding on the public frenzy and high-octane sentiments alone and resorting to a media trial. In view of the constant media glare and the rising consumer activism, it’s going to be more and more difficult for hospitals to manage adverse events in broad media glare. Staying ethical, transparent, empathetic and above aboard is the only way forward.

Value-based care

Govt of India has recently launched a very novel initiative called as Ayushman Bharat. This is a path-breaking initiative indeed and will set the stage for ‘Universal Health Coverage’ and will ultimately transition to the much acclaimed ‘Value Based Care’ as against the now defunct concept of ‘Fee for Service’.

The road ahead

The days of simply treating illness are well-nigh over. Now, the focus is on preventive medicine. Providing preventive care and promoting wellness is quickly becoming a business priority, instead of only a clinical one. All stakeholders including physicians, nurses, technicians, and other staff will need to form closer, stronger relationships with patients, not only to tailor wellness plans for each individual, but also to ensure that patients are taking the steps necessary to improve their overall well-being. More and more healthcare providers are going in for evidence-based design for their facilities to ensure comprehensive and holistic treatment of their patients, based on evidence-based medicine. We need to design dynamic and innovative business models to deliver affordable and safe healthcare delivery in line with excellent patient outcomes.

For the organisations to be successful, we need to have participative decision making, value our employees’ collective voice, keep them optimally skilled, change the mindset of status quoism, encourage innovation, constantly evolve, build in organisational resilience to face up to emerging challenges and drive growth orientation through the rank and file. 

Colonel Hemraj Singh Parmar is CEO of  BR Life.