`Hospitals cannot be treated like any other service sector’

Soumya Viswanathan - Mumbai

Even as the age-old debate on whether a medico would make a better hospital administrator or a non-medico continues, industry observers now feel that only professional management is the key to a hospital’s success. While ‘professionals’ included MBAs in the past, this definition has become narrow to include only master of hospital administration graduates.

Administrators insist that dynamics of hospital management are not the same as hotel management or any other service sector and add that this is one of the reasons that hospital projects fail.

Says Dr R V Karanjekar, medical director, Fortis Hospital, “Tamilnad Hospital and Mayo Hospital, Vadodara are two big examples of failed hospitals due to lack of professional management.” Both the hospitals were run by businessmen and are now closed. “Without good senior hospital administrators, the hospital will be doomed. If lucky, tertiary care hospital will be reduced to a secondary level,” he adds.

But unlike earlier times, it is not only the doctors who have got down to doing business in healthcare. Anybody interested in doing business is looking at healthcare. The problem here is that doctors do not understand business and businessmen do not understand healthcare. Says Anupam Verma, director, administration, Hinduja Hospital, “Any businessman building a hospital must hire professionals who have adequate knowledge and experience in the hospital industry. Doctors on the other hand think they understand projects, civil engineering and costing. It is sad how much money is sunk and public money lost.”

While private sector players are ushering in world class quality in clinical care and infrastructure, they are also under constant scrutiny of the industry. Most administrators feel that the more recent enrants in healthcare like Max and Asian Heart Institute have neglected the need to employ personnel with hospital management background. When Max started its primary care centres, most of its people were from the hotel industry. Rachna Kamre, HR, Max admits that Max employed people from the service industry but, “The need of business at that point called for building service excellence into the business which is why we had people from service industry. It was not a mistake.” She however adds that hospital management graduates are necessary to provide medical as well as business management and that Max is recruiting people with such background.

Asian Heart Institute is being run by four doctors. Tara Mahapatro, director, Asian Heart Institute, who is from an engineering background says, “I am not convinced that hospital administrators can do a better job. Where “clinical care” is involved we have doctors to help us take decisions. And as far as the other issues in customer care are involved, they are more or less in sync with other industries.”

Fortis is another hospital which has earned rave reviews for its quality of care and yet raised doubts on its viability. Says a Mumbai-based chief executive, “Fortis is a 100 bed hospital built at 122 cr which means you spend more than a crore per bed.” Harpal Singh, chairman, Fortis clarifies that even though it has opened as a 100 bed hospital, it would expand eventually to 300 beds. Speaking of need for professionals, he says, “The industry will see more and more people from hospital management background but I do not think people from other industries will not be able to do it.”

Dr Sujit Chatterjee, CEO of the upcoming Hiranandani Hospital in Mumbai says, “There are some gold standards set for setting up tertiary care hospitals but if these are not met, fate is predictable. Some of the rules of thumb are that the total project cost be less than Rs 70 lakh for a 100 bed hospital, more surgical cases and more medical specialities.”

And with around 40-60 per cent of project cost going into infrastructure, experts stress that corporate hospitals should steer clear of glass, ceramic, marbles and tiles. Dr Karanjekar admits that corporates spend a lot on plush exteriors and interiors leaving little for equipment which is more important. Fortis’s spend exceeded its budget in the first phase of its Mohali hospital but are economising for their second hospital with experience. Lack of expertise in hospital management is the reason that private sector investors invest imprudently on frills and fancies that are generally attached to other service industries say experts.

Says Dr Karanjekar, “Most of the new hospitals neglect the medical side investment and go for fancy looking buildings, attractive floorings and decorative furniture. This tendency is primarily seen in non-medical entrepreneurs who treat hospitals as hotels. They forget that hospital is an entity which should create a kind of faith through good doctors, quality treatment, cleanliness, neatness and not the extravagant expenditure on unnecessary decorative things. Indian population despises such extravagant show of money and perceives such hospitals as very costly hospitals leading to less occupancy, less utilization and financial problems.”

On the investments that need to be made in medical equipment and IT, experts say that going hi-tech right at the start up stage proves to be an impediment to success. “Max invested in high tech facilities without having hospital back up. Only when their hospitals are ready, can their labs function optimally because 70 per cent work is from in patients and only 30 per cent is from out patients,” says an industry expert.

Says Verma, “Hospitals do not become hi-tech by delivering gizmos. If the technology does not deliver value, it obviously adds to the cost and is like garbage in and garbage out. Take PACS for instance. An x-ray film can easily be delivered to the doctor because the labour charges are less in India. Even if PACS is installed, it should be done only by established hospitals.”

Taking cue from other service sectors, corporates also are investing hugely on “customer support,” “help desk,” etc. Says Dr Ashok Bhatkhande, director operations and business development, Bhatia Hospital, “It needs to be understood that patient care is the core service and therefore nature of management is different. Quality care is misunderstood for larger rooms, physical aspects courtesy, help desk.”