On The Consultancy Trail

The burgeoning Rs-800-crore-strong hospital consultancy sector is making its presence felt from Dharamsala to Delhi, penetrating even Raigarh to Rai Bareilley. Rita Dutta checks out this latest phenomenon in healthcare industry.

In 1998, while working together on a hospital project at Surat, cardio-thoracic surgeon Dr Ramakant Panda offered Dr Vivek Desai, MD of HOSMAC to plan and design Asian Heart Hospital. Dr Desai, who had till then not executed any such mega project, was both shocked and surprised. “I could not believe that Dr Panda was seeking my help for such a prolific project,” recollects Dr Desai. After seven years and 120 projects, the Rs 2-crore-firm HOSMAC is considered one of the leading hospital consultancy firms in India.

For a sector which made a very sluggish start, the success story are many, all of which echo a similar exponential growth. So much so that when recently a group floated tender to build a hospital in Delhi, more than 20 groups applied for it. To think of it, even four years back, consultancy firms had to peddle their services to hospitals.

Five years back, there were not more than five firms. Today, the sector teems with more than 20 established firms and there are more than 50 individual consultants who work both full-time and part-time. The consultancy market has also opened up three years back. And today, analysts clock this sector at Rs 800 crore, set to have an annual growth rate of 15-20 per cent.

"Only Delhi has made it compulsory to award hospital projects to companies which are either into hospital planning & designing or if they architects, they have to have an hospital consultant associated with them" - Col Dr K B Sood Managing Director, NOUS, New Delhi

The firms are happy with the greenbucks they are raking in. For instance, New Delhi-based NOUS Hospital Consultancy (p) Ltd has contracts worth INR 9 crore as their fees for next five years for seven major projects. Says Col Dr K B Sood, Managing Director, NOUS, “This is two per cent of the total costs of new building constructions for the projects which is at Rs 450 crore. It will take almost Rs 450 crore worth of equipment also. So the market is huge.”

"Hospital consultancy requires specialisation in each of the minimum 28 areas of hospital parameters and functioning, which only consultancy firms can do" - Dr Chandra Prakash Kamle, Dr Kamle’s Prescription, Boston, US

The firms are mostly concentrated in the metropolis- mainly in Delhi, Mumbai and southern part of the country. Dr Chandra Prakash Kamle, Dr Kamle’s Prescription, Boston, US, explains the trend, “Presently, small towns do not offer adequate business to these firms. Small towns at the most have glorified nursing homes and mostly doctor-promoter with his knowledge and experience of seeing some of the hospitals in metropolis and abroad borrow the crude concept of hospital planning.” Yet, firms located at Jaipur or Mumbai are eyeing for projects beyond their geographical boundaries.

What Led To The Surge?

Pegged at 23 billion USD, the Indian healthcare industry is growing at an annual rate of 13 per cent, with private spending on healthcare amounting to 60 per cent. With corporatisation of healthcare, entry of health insurance, competition, there is a greater emphasis on quality of care and accreditation—all leveraging the growth of hospital consultancy firms. Perhaps, the biggest factor fuelling the growth is the realisation by stakeholders that special skill-set is required for orchestrating a hospital project from ideation to implementation.

One Stop Shop

These firms have their fingers in every pie—from designing new hospitals, restructuring to expansion of existing hospitals, computerisation and system management of hospitals, equipment planning, manpower planning and training, medical informatics and telemedicine, managing operations. The practice of involving doctors and hospital administrators for the above functions is becoming anachronistic.

While large and established firms provide a one-stop solution, new and emerging ones prefer to work on a few specialised areas. For instance, Jaipur-based Ace Vision Health P Ltd focuses on clinic/medical audits and clinical risk management. Says Sheenu Jhawar, Director, Ace Vision Health Consultants P Ltd, “When I started in November, 2004, the need was very clear. The expertise was not hitherto available by other functioning consultancies, and the northern part did not have any such consulting firms.” Small firms also help hospitals in training, marketing and management strategies. According to Vivek Shukla, Managing Director of Vivek Shukla and Associates, Dharamasala, “Training people in soft skills and managing their finances constitute an important part of our services. Some hospital are willing to spend lakhs on buying equipment, but are hesitant to spend on marketing their products. Hence we try to address such flawed business strategies.”

"The driving principle and ethos for each firm is different. We did not want to swim in ocean of comfort. For us, it is taking medical service to remotest corners of society" - Col A K Singh, MD, Medicontrivers, Mumbai

Some even work with a missionary zeal. Medicontrivers, for instance, has chosen to concentrate on semi-urban areas like Belgaum (KLES Hospital), Calicut (Malabar Institute of Medical Sciences) and Patna (Dr Ruban Diagnostics and Dr Ruban Memorial Hospital) as there is a woeful lack of medical facilities in these areas. Apart from rendering consultancy services, it funds its own projects. After transforming a sick nursing home into a clinic, Medicontrivers helped conduct the first kidney transplant in Bihar in June, 2005 and also got the first digital X-Ray to the city. According to Col Dr A K Singh, MD, Medicontrivers, “The driving principle and ethos for each firm is different. We did not want to swim in ocean of comfort. For us, it is taking medical service to remotest corners of society, where big firms dread to enter.” It strives to make advanced treatment affordable to the common man. “We have priced our bypass surgery package at KLES only at Rs 85,000 so that more people can afford it,” says Dr Singh. His dream project is to build a 500-bed multi-specialty hospital in Patna boasting advanced technology.

The preference scale of most firms are tilted towards planning and designing new hospitals than any other service and why not. With around an unofficial estimate of 300 new hospitals within next two to three years, the choice is obvious. It is said that around 50-70 per cent of project cost is spent only on constructing the building.

Even academic institutes like IIHMR-Jaipur are trying their hand at hospital consultancy through its consultancy division Total Health Solutions (THS). Says Santosh Kumar, Lecturer, THS, “Though THS was formally instituted in the year July 2004, IIHMR is rendering services in hospital management consultancy for both private and public sector since its inceptions 20 years back.”

Should large firms do multi-tasking or confine themselves to a few areas? Rendering services in multiple areas will provide perfect co-ordination and will meet the uniformity of standards and specifications. “Specialists from various functional areas of hospitals alone will form a true hospital consultancy firm. A lone crusader can only be a generalist and a far cry from a hospital consultant,” reasons Dr Kamle.

Why Hire Consultancy Firms?

Recently, Jaslok Hospital had taken the help of consultancy firm Concept to train its people in soft skills. In the words of Gurushant Phatate, GM, HRD, Jaslok Hospital, “It is always good to take external help to train your staff as it most unbiased.” From hospitals in Rai Bareilley to Amritsar, from a meagre 20 bed to princely 500-bed hospitals, it has become a common practice for hospitals to knock the doors of consultancy firms. What is the need for such firms? Why cannot hospital administrators execute the same job? Hospital administrators are generalists, say experts. “Hospital consultancy requires specialisation in each of the minimum 28 areas of hospital parameters and functioning, which only consultancy firms can do,” explains Dr Kamle.

Complies Dr K C Ojha, Managing Director, Hospic, “Setting-up a new hospital and running the existing hospital professionally both are very complex. Hospital is capital-intensive, labour-intensive, high technology-intensive and skill- intensive industry.” Add to this, the complexity of engineering requirement of a hospital, including, AC, electricals and plumbing service, areas which doctors have very little technical know-how.

Then, there is the economics of market. Says Dr S K Biswas, VP, Duncan Group, Kolkata, “The healthcare market is no longer monopolyst or oligopolyst. It is attaining a perfect market competition stage, where the same kind of service is rendered by many players. In such a scenario, one has to get the best skill set.”

A healthcare organisation goes through three stages: exponential, cost control and improve quality and stay-afloat stage. Hospitals in the second stage have to rely on specialist’s help to survive in the business. “The firms help the hospital attain its goal and achieve break even within the given time,” says Dr Biswas, also a consultant to Klassi Apartments, Kolkata, which specialises in hospital construction and design consultancy. Delays, cost over-run or even abandoning the project at a later stage can be avoided, if consultancy firm is involved at the outset. Multiplicity of command, deviations of parameters and standards, non-coherence of specifications and non-accountability of the final monument can also be averted if the help of a firm is sought.

And it is not just big hospitals which seek help. “Smaller hospitals req uire more help, because they often do not have a regular administrator. However, working for these hospitals is not very cost effective for the firms. So, it is a catch 22 situation for the consultancy firms,” opines Jhawar.

Paradigm Shift

When did the tide turn? The winds of change started only in 90s, when hospital projects were planned and designed by people trained for the job. This ended a regime of unplanned and haphazard planning, which had doctors and architects brainstorming to plan and design hospitals. Explains Dr Ashish Roy, Managing Director, Professional Health Planners, New Delhi, “Hospitals built prior to 60’s have good design and planning as they were built by the Britishers, who employed architects having knowledge of hospital architecture. From 60’s to 80’s, hospitals were built by general architects, with no knowledge of hospital architecture.” The result was disastrous, with some of them building windows that could be opened, in OTs and labour rooms. Thanks to the knowledgebase of consultancy firms, such disasters are averted now. But as stated earlier, the boom in consultancy firm started only around three to four years back

At the Helm

The consultants are also from diverse background including doctors, architects, management experts, IT experts, accountants, ex-administrators of hospitals, service engineers and even MCI inspectors. Apart from a handful of full-timers, the firms often outsource specific services from outside experts on project to project basis. Who should ideally head such firms? Responses vary from doctors to people from service industry.

Business Affairs

The burgeoning of firms is an indication of the lucrative business. Most firms ask for three to eight per cent of the project cost. Some go for long-term revenue sharing or just on a time-bound performance contract determined by the scope of work. While big hospitals don’t hesistate to dole out the fees, most often the firms have to face bargaining clients from semi-urban areas.

The northern and north-eastern part of the country lies untapped for consultancy. Experts predict that the future will see Indian firms catering to more international clients, mainly from the SAARC and ASIAN region especially Maldives, Srilanka, Thailand, Indonesia, Nepal and Afghanistan.

Teething Trouble

Lack of Indian guidelines compel the firms to come up their own, which is often an amalgamation of various international guidelines like JCAHO, ISO and Six Sigma. “Though the Bureau of Indian Standards is coming out with guidelines for building a hospital of 30, 50 and 100 bed, there is none for hospitals larger than 100,” rues Dr Roy. Lack of understanding of importance of hospital consultancy firms coupled with ignorance about their existence also hamper business avenues.

According to Rakesh Solanki, Healthcare Projects and Marketing Consultancy Organisation (H-PAMCO), New Delhi, “The sector is highly unorganised and needs to launch itself professionally.” The established firms are also irked by fly-by-night operators who have “created bad odour compelling new players to establish credentials. This is because unlike any other sector, domain knowledge is always from more than one source in healthcare industry,” avers Dr Sood.

Future Trends

Experts predict that the current trend of turnkey hospital projects should continue only till next five years. “Development and implementation of HMIS, performance benchmarking and quality improvement would be the buzzworld in near future,” says S Kumar.

While the indigenous hospital consultancy sector would grow, more international firms are expected to enter the market in future. With the increasing demand of professionals qualified in hospital planning and mushrooming of institutes catering to training of hospital planning and design, general architects would be completely replaced by specialists in hospital architecture, feel experts.

To maintain quality of work, however, the industry needs a statutory body which would regulate various firms. “As architects have to be formally qualified and registered with Indian Institute of Architects, we also need professionally qualified hospital consultants and a statutory body monitoring them,” maintains Col Singh. To which Col Sood adds, "Only Govt of NCR Delhi has made it compulsory to award hospital projects to companies which are either into hospital planning and designing consultants or if they are architectural firm, they have to have a hospital consultant ssociated with them. Other states need to follow this too.”

Once the control and statutory measures are in place, the day would not be far when large entrepreneurs and industrial houses like Birlas and Tatas would approach a hospital consultancy firm directly for various hospital projects, rather than first finding a consulting doctor who chooses the firm.

rita@expresshealthcaremgmt.com