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Role of ICT based Emerging Business Models in Rural Healthcare Market Development in India

Anshul PachouriSenior ResearcherInstitute for Competitiveness, IndiaE-Mail: anshul.pachouri@competitiveness.in

sRural India: A Snapshot

Definition of Rural India

The most standard and widely accepted definition is given by Census of India in 2001 which define an area as rural area if it fulfills the following conditions;

(1)Population density of less than 400 sq km (2) Atleast 75% of the male population engaged in agriculture(3) No presence of Municipal Corporation or Board.

Quick Facts

Rural India – 70 % of the total Indian population

Total Rural Population :- 833 Million Individuals

Contribution to the National Savings – 33 %

Contribution to Total Consumption – 57%

Contribution to Total GDP – 45%

(Source: IBEF, NCAER and Census of India)• The monthly household per capita consumer expenditure (MPCE) in rural areas has increased by more than thrice from 1993-2010.

• Rural areas are going high on spending.

• But in the actual terms, they are spending half in comparison to their urban counterparts.

Source: Data Extracted from Key Indicators of Household Consumer Expenditure in India 2009-10, Ministry of Statistics, Government of India

Rural India: Bottom of Pyramid

World Resource Institute Definition

There are 4 billion people who forms the bottom of the economic pyramid with incomes less than 3000 international 2002 $ as per 2002 local purchasing power parity.

Socio-Economic Pyramid

According to late C.K Prahalad (2002), Bottom of pyramid forms the group of the people who earns less than 2 dollars at US purchasing power parity which is also shown in figure of global socio-economic pyramid below.

• Rural BoP market is defined by the households which are earning less than 3453 INR (US $ 75) monthly which lies in the bottom four expenditure quintile. (Definition adapted from IFMR)

• It covers 114 households and 76% of the total rural population.

Source: Data Extracted from Key Indicators of Household Consumer Expenditure in India 2009-10, Ministry of Statistics, Government of India

Rural Healthcare : Opportunities

• India BoP healthcare market is estimated to be 26.5 billion 2005 International dollars at purchasing power parity dollars. In 2008

• The average rural population meant to be served by each health sub-center and primary health center is more than 6000 and 36000 respectively.

• It is estimated that nearly 1.75 millions of beds will be required to achieve the status of 2 beds per 1000 people, 700,000 doctors to reach one doctor per 1000 population by 2025. (PWC)

•The total capital investment to reach the above targets is estimated to be US $ 80 billion approx.

• 8% of the total expenditure of rural people on health.

Rural Healthcare: Challenges

Rural People Challenges Organizational Challenges

Emerging Business Models

Telemedicine and BPO Model:

A new model which is emerging today is delivering healthcare with the help of information technology tools.

Companies have discovered a notion to provide doctor’s advice on phone by using latest tele and video conferencing technologies.

Healthcare Information Management Systems:

This model also uses the ICT technologies to guide its users about various good health practices.

It teaches its subscribers about the different steps they should take which depend on the type of disease or health problem they encounter.

Changing Times in Rural Healthcare

With the advent of time, there has been significant change in the business models practiced in rural healthcare and each type of healthcare is served by a particular type of business – model and format.

Traditional brick and mortar model can’t serve the healthcare needs of rural people.

There is a need of sustainable and scalable business models which can cater to this potential customer base.

Case 1.1: Apollo Tele-Medicine

Apollo Telemedicine is largest and oldest telemedicine network in India founded by Apollo Hospitals in 1999.

Apollo Hospitals has two concurrent businesses in rural healthcare and telemedicine, one is under the banner of Apollo Telemedicine Network Foundation and other is Apollo Reach Hospitals.

The company was started way back in 1983 by visionary doctor Dr. Prathap Reddy when private healthcare was not so popular in India.

Challenges

•Changing the mindset of the people towards telemedicine. •Winning the trust of the patients of rural areas. •Standardize the protocol of interaction between doctors and tele-medicine center.

Healthcare Delivery Model

The patients were advised from doctors from the distance varying from 200 to 2800 Kms.

The technology had enabled the telemedicine centers to scan and mail the X-Ray’s and other medical

The details of the patients were transferred to be multi-specialty hospital by using desktop software.Apollo Telemedicine Networking Foundation

First project of Telemedicine was implemented in the village of Aragonda in state of Andhra Pradesh by building 50 beds hospital connected to Apollo multi-specialty hospital of Chennai.

Video conferencing tools supplied by the Indian Space Research Organization (ISRO) were used to make tele-medicine possible to reach the villages of India.

One tele-consultation with the super specialized doctor is done at price of US $ 11.2-16.7 and 50 US $ if overseas consultation is being done.

Case 1.1: Apollo Telemedicine

ISRO State Governments Medical Equipment Suppliers

Offering Primary and Secondary Healthcare services Tele-Medicine

Affordable & Quality health-care services in Tier-2 cities and rural areas

Managing customer data online

Poor Patients (Subsidized) Rich Patients

Doctors

Para-Medical staff

Diagnostic Setup Medicines

Fees for specialist tele consultation Fees for Primary and Secondary Healthcare Services Medicines

Infrastructure (Hospital, Equipment, Staff) Resources (Doctors, Paramedical staff) Training, ICT Setup, Software

Video-conferencing through tele-medicine centers

Case 1.1: Apollo Tele-Medicine

Results

Today, ATNF has more than 150 tertiary hospitals which are connected to 35 specialty hospitals across the globe.

Today, Apollo had done 69000 tele-consultations done by more than 100 tele-consultation centers setup across the globe.

The Aragonda hospital has done more than 2000 consultations had been provided in the last 10 years from direct video interaction with specialist doctors.

Case 1.2: Apollo Reach Hospitals

Apollo Reach Hospitals

In 2008, Apollo started its initiative Apollo reach hospitals to deliver low cost quality healthcare in Tier-2 cities, sub-urban and rural areas.

Apollo reach hospitals also extend the telemedicine network of the group which helped the people of the villages to get the best advice at their reach.

Challenges

The Apollo reach hospitals faced the critical challenge of availability of the doctors as people don’t want to work in smaller cities.

Innovation in Business Model

The Apollo reach hospitals targets both rich and poor patients in equable manner.

The revenue comes from the high income people and affordable healthcare was provided to the low income people on the other side.

The health insurance covers RSBY hospital expenses up to Rs. 30,000 ($667) for a family of five people.

The transportation costs were also covered up to a maximum of Rs. 1000 ($23) including Rs. 100 ($2.23) per visit to the hospital or doctor.

Apollo had also signed a loan of 50 million dollars from International Finance Corporation to open up more reach hospitals and telemedicine center in 2010.

Case 1.1: Apollo Tele-Medicine

ISRO

State Governments

Medical EquipmentsSuppliers

Diagnostic Tests

Tele-Medicine Consultation

Primary and Secondary Healthcare

Affordable & Quality health-care services in Tier-2 cities and rural areas

Primary & Secondary Healthcare

Insurance Offer (RSBY)

Poor Patients (Subsidized) Rich Patients

Doctors

Para-Medical staff

Diagnostic Setup

Face2Face Consultation Video-Conferencing

Infrastructure (Hospital Setup, Equipment etc)Resources (Doctors, Paramedical staff)Training, ICT Setup, Software

Primary and Secondary Healthcare Money from InsuranceMedicinesTele-medicine

Case 1.2: Apollo Reach

Results

The inclusive business model of Apollo Hospitals had helped to reach sustainable revenues ranging from Rs 6000 ($132) to Rs. 7000 ($154) per bed.

It is estimated that more than 1, 00,000 patients who earn less than 2$ per day had been served from Apollo reach hospitals.

The group aims to open 15 more hospitals and serve more than 400,000 patients by 2015. The group also aims at opening 1000 telemedicine centers by the end of 2012.

Case 2: E-Health point Services

Healthcare Delivery Model

Tele-medicine consultation was done by HIS urban health center where doctors give their advice and diagnose by video-conferencing tools.

Doctors were recruitment from local areas so that there are no linguistic disadvantages and they are especially trained to for providing tele-consultations.

EPH also has the facility of performing near 70 tests and equipped with devices like digital stethoscope, blood pressure monitoring machine and ECG.

The average cost of each medical test was just $1.

E-Health Point services is owned by HealthPoint Services India (HIS) started its operations in 2009 in partnership in Ashoka Foundation and Naandi Foundation in the state of Punjab.

Three projects were started simultaneously at different places by providing the services of tele-medicine, diagnostic services, pharmacy and clean drinking water supply to around 10000 people.

In 2011, E-Health Points (EPHs) are operational with more than 80 EPH centers spreading over seven districts of Punjab.

Innovation in Business Model

The services were offered with a nominal fees of less than 1$ mostly to make it affordable for rural households.

The subscription was given at a very nominal fees of 1.5$ per month and gives 20 liters of clean drinking water daily which has helped in decreasing the water-borne diseases in rural areas. The medicines were given to patients by licensed pharmacy available at EPH and are sold at a discount of up to 50% on the listed prices and directly procured from channel partners of the companies to get the cost advantage.

Case 2: E-Health point Services

Ashoka Foundation Naandi Foundation Government of Punjab

Pharmacy

Tele-Medicine Consultation Providing Clean Water

Affordable & Quality health-care services in rural areas

Primary Healthcare Clean Water

Poor Patients Rich Patients

Doctors Video-conferencingSetup Center Staff

Video-ConferencingEPH Centers

Infrastructure (Tele-medicine center, Equipment etc) Resources (Doctors, Staff) Training, ICT Setup, Software

Tele-medicine Fees, Medicine revenues and Clean water subscription

Case 2: E-Health point Services

Results

EHP has done about 29000 tele consultations, 15000 diagnoses and 35000 prescriptions have been given since its inception to September, 2011. T

he impact and wider reach of EHP at bottom of the pyramid can be understood by the way that it has around 3,50,000 daily users of clean water in rural areas.

Case 3: Piramal E-Swasthya

Piramal E-Swasthya was started in 2008 as a social healthcare initiative of well established pharmaceutical company Piramal Healthcare in collaboration with Dean Nitin Nohria of Harvard Business School.

Innovation in the Business Model

E-Swasthya doesn’t charge any consultation fee from the patients, they just charge the expense of the medicines.

The medicines were made available to the health workers for selling to the patients to generate instant revenues.

The marketing was done in a very effective manner to engage the rural people and BoP households through regular messages, drug remainders and publication of articles on telemedicine.

Challenges

The patients are not ready to buy all medicines as prescribed or just don’t complete the full course of medicine.

Recruit the motivated health workers which can take the model to the next level.

To address this challenge, E-Swasthya has launched pilot project with Government of Rajasthan to recruit ASHA (Female Government Health workers).

Healthcare Delivery Model

Case 3: Piramal E-Swasthya

Government of Rajasthan

Tata Consultancy Services

Vision Spring

Aquatabs

Pharmacy

Tele-Medicine

Selling Water purification tablets and reading glasses

Affordable & Quality health-care services in rural areas

Primary Healthcare Health worker

Poor Patients

Rich Patients

Video-Conferencing

Health worker

Medicine revenues Infrastructure (Call center) Resources (Doctors, Call center Staff, Health worker) Training, ICT Setup, Clinical Support System

Doctors Health workers Call center Clinical Support Systems

Case 3: Piramal E-Swasthya

Results

E-Swasthya has treated 40,000 patients through several pilot projects which were deployed .

E-Swasthya gets on an average 1.2 patients per health worker per day in 50 operational villages.

To cover all the costs including the operational, technological and personnel and make the model financial sustainable in the long run, it is required to achieve 1.7 patients per health worker per day on an average for 1000 villages. The figure is quite achievable as already many villages have witnessed more than 3 patients per health worker per day.

Conclusion

Tele-medicine has emerged as a sustainable business which can cater the healthcare needs of the rural people and bottom of pyramid.

Tele-medicine is extremely helpful in primary and secondary healthcare, however more advancements are required to replicate the model for tertiary healthcare in rural areas.

The use of information & communication has removed the distribution and geographical challenges in delivering the primary and secondary healthcare in rural areas.

ICT has significantly reduced both the infrastructure and operating cost for delivering the quality healthcare services to rural areas.

Tele-medicine has been used as market development tool by the companies to create a new market for getting an expert doctor advice without meeting him in personal.

The emerging business models looks very promising but it’s very early to comment on their long term scalability and sustainability. The next 2-3 years will actually show clearer picture of the future of tele-medicine in India.

The treatment of the poor segment at cheap and affordable price is a huge social capital created by these business models.

By giving treatment to the poor segment and people in rural areas, these business models are contributing in the inclusive growth of India full filling the dream of “healthcare to all”.

Recommendations

Government hospitals should be converted into public private partnership models to make them more profitable and effective in delivering the healthcare.

Companies need to make tele-medicine as their core activity rather than a side activity. They need to offer full basket of healthcare services in order to make their business models more sustainable and scalable. There is also a need of more advanced healthcare information management system like Nokia health tools. Healthcare information systems can play a crucial role in preventive healthcare and creating the awareness about healthcare with the increasing penetration of mobile phones in rural India. The government need to give adequate subsidies and tax benefits to the companies operating in rural healthcare to make their business models more scalable which can enhance the reach of tele medicine to different parts of the country.

It is very important that bigger companies should enter the market the tele-medicine and rural healthcare industry to develop the market and make it more scalable and sustainable.