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Healthcare management: A road map
A N Madhavann

Physicians should take the resource management to their “heart” and often see the involvement from the point of the management of the hospitals rather than their own personal management

The sudden boom in the healthcare industry and the FIIs considering this as a sunrise industry in India and world over is ample testimony to the fact that next to IT (software), healthcare industry is the second largest growing sector. Infact, there was a report in Economic Times a week back indicating that the dotcom companies’ period is not as progressive as that of healthcare sector for the next five years.

Management of healthcare could, interalia, include the following business models (all of them assumed to be fee based):

a. Strategic Business Units (SBU),

b. Franchise Models wherein Master Franchising System is also included

c. Medical Portals thro’ internet medium including MedVarsities

d. Conventional hospitals, nursing homes, diagnostic centers

e. Nature cure facilities and anthrosophy constructions

f. Medical Marts, Care Centers and Pharmacies with Consult Chambers

g. Hubs with information booths networked to the hospitals across

h. Primary Health Centers with networking

i. Secondary and tertiary care hospitals — both public and private sectors

The concept of subsidy, funding and free treatments are quite common languages used in this sector but the real reach is the patient (in all forms and virtues). The care to the patient in all respects is really the need of the hour and in this, the public health centers have failed. The advent of privatization in the last three decades has resulted in the tremendous growth of confidence in the general public — both inland and overseas — to adjudge India to be the medical capital for the southern part of the hemisphere. Some of the Middle East population believes Madras to be the medical capital of India. These were possible because of the remarkable contribution of the healthcare leader viz., Apollo Hospitals and the vision of the chairman of the group.

There are certain distinct methodologies applicable to the healthcare corporates, which earlier had some compulsory ’free treatment’ mechanisms. The present, due to the increased purchasing power of the average middle class Indian, contributes to the sizeable development and growth towards this industry even without insisting of these mechanisms. The hectic lifestyle also contributed to the uplifting of the sophisticated technology in bringing the same in alignment with the speedy life methods existing and likely to accelerate further.

As per the recent statistics, an average middle class Indian (in the age group of 36 to 52 years) consumes tablets and pharma products valuing almost Rs 1200/- per month. If we take 42 per cent of the present population that falls under this category and assuming only fifty per cent of this mass consumes medicines, the cost is as high as Rs 300,000 crore per annum. The present market needs to be revamped to cater to this demand and this is only one segment of healthcare. The treatment issues are separate.

The specialists’ role in this sector is more important than in any other field; the supervision and management is another art and skill, which very few personalities possess. Ultimately the mantra ’patient care’ is more important than any of the other issues in this field. Propagating ’wellness than illness’ slogan is due to the advent of such sophistications emerging primarily due to hectic life style and habits. This can be achieved very effectively only by those corporate groups who possess the tenacity, sincerity, knowledge, man management skills, depth of understanding the business, technical expertise and above all handling professionals connected with the industry in tune with the developments across the globe.

The measurement of hospital performance in Australia was done through a questionnaire to the CEOs on the three following areas:

a. how the hospitals responded to output based reimbursement schemes

b. what are these effects in hospitals’ performance

c. what are the implications for designers of management control systems

Out of the 132 questionnaires distributed almost 80 per cent of the hospitals responded and these analysis were done only when the bed strength per hospital was more than 200. It was felt that the size of the hospital through bed strength does influence the ability to health management implementation and also certain managerial practices of interest. The dominant approach to the study was the effect of environment on organisational behavior which actually bases itself on the adaptation perspective of organizational and management behavior towards health management.

Earlier theories of health management include three processes viz., institutional, managerial and finally technical technological. The institutional level includes the relationship between the organization and its external environment and hospital management would probably include lobbying with the government also. Managerial level responses include strategies which focus on ensuring the resources being used optimally, diligently and purposefully ensuring suitable accountability. Thirdly, the technical & technological level includes, interalia, the man management and machine management techniques which are designed to directly influence the behavior of the service providers so to say.

Healthcare Management now pervades to the further concept of output based funding requirements too. The internal governance structures in hospitals are changing internationally. Earlier the centralized structuring was followed but now responsibility is delegated on functional basis. The type of structuring would match the requirements and the traditional funding methods too are now assigned to engineer the accountability which all along had been fixed with the top management and not with the operational people.

Management theory now predicts that the type of structure that would enable a hospital is to effect output based funding arrangements. In a manufacturing set up, the structure is often referred to as a product line but in hospitals the same could be those individuals who are involved in treating the patients, their immediate management and those with the delegated authorities. Crisis happens only when the authority and responsibility is mismatched i.e., that those who have responsibility don’t possess management authority or recognition.

Three factors as below contribute to the better performance of hospitals:

a. Strategies that are being implemented which aligns physicians and hospital with incentives

b. Extent to which budgeting systems are assigned to financial responsibilities for outputs being implemented

c. Extent to which the management attempts to develop an organizational culture which encourages physicians to take up resource management for positive results to the hospitals

Physicians should take the resource management to their “heart” and often see the involvement from the point of the management of the hospitals rather than their own personal management. There are management control literatures, which actually focus towards the organizational growth and most effective healthcare providers but the same needs to be linked thro’ physicians for the common governance structure.

In conclusion of this article, the I would say that healthcare management is not establishing hospitals and handing over the resources to the physicians attached to the hospitals, but handling both the internal and external customers as ultimately they are the king and also the revenue givers. Ofcourse hospitals are integrated organizations and face challenges which are distinctly different. Overcoming this difficulty and solving the control problems are some of the many challenges, which await the management and their networks.

(The author is GM-finance, Apollo Hospitals, Chennai and can be contacted at memaa@vsnl.com)

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