Market News


Need to Change Hospital Business Model to Overcome Challenges- Healthcare System Post Covid- 19 and Growing Healthcare Cost

The recent pandemic has turned out to be the greatest threat to business continuity and it affected all sectors of the business.  Hospitals and associated healthcare system which are in the frontline have been equally affected even though one will consider this sector benefited out of treatment opportunities.

The magnitude of the problem and lack of infrastructures especially in the underdeveloped regions have badly affected the hospitals and clinics.  Many hospitals and clinics were not prepared to meet the demand and hence preferred not to treat such patients.  While patients who fall under non-COVID types stayed away from hospital due to the fear of potential infection, in case of negligence from any part.  Meanwhile, hospitals were forced to invest a huge amount for PPE as part of providing basic protection to hospital staff.   The higher risk of infection for hospital staff added additional cost in terms of granting them compensatory leave and other benefits.  This resulted in declining revenue and increasing operating expenses of hospitals.

According to market intelligence, the cost of running a COVID hospital is very high and 50% of that is fixed costs.  The additional investments were in terms of investing in PPEswhile attending a patient, and the need to test every patient who comes to the hospital for Covid-19.  For a doctor, every patient is Covide – 19 till tested otherwise.  Hence, they need to do all precautions while consulting with such patients.  Doctors and nurses who are in the COVID sections have to be quarantined on a periodical basis. The drop in out-patient footfalls, lesser diagnostic testing /surgeries, and fall in health tourism further contributed to increasing the cost of running medical care facilities.

The worst affected regions in India are the States or Regions where there is the lower doctor to patient ratio.  At an average, India has one doctor for 1,445 persons is much less than the WHO’s prescribed norm of one doctor for 1,000 people.  However, the developed regions like Delhi, Karnataka, Kerala, Tamil Nadu, Punjab, and Goa have better norms than WHO standards.

With the pandemic, the patients who stay away from hospitals are adapting remote health check to handle their immediate small issues.   This is pushing further the concept of remote medical consulting which has been in the market for quite a long time and DART also gives industry consulting to various industries.   The adaption of online channels for multipurpose activities during the pandemic is also compelled the current generation to go for the online channel for Doctor Consultation as well as for procuring medical supplies.  Thus, the pandemic is throwing out new opportunities for the existing healthcare service providers in spite of that it has affected them badly in recent times.   Now, it is for the hospitals to move further with remote and telemedicine to reduce the fixed costs associated with running hospitals.

The early adopters would be benefited by exploring the huge untapped market of the healthcare sector.  With the help of remote consulting, the concept of doctor to patient ratio will disappear, and healthcare services will be made available to all.  Even the authorities at the Panchayat level can tie-up with hospitals to provide better medical care to patients at remote places.  The local authorities can arrange facility for home sample collection for diagnostic tests in tie-up with labs and can augment such remote telemedicine.  There are plenty of healthcare app providers in the market and this gives additional opportunities for hospitals to have to tie up with them exclusively to launch the operations without wastage time and huge investment.

There are reports that the health tech industry in India is expected to have a positive outlook in the coming years and the digital healthcare market in India market is expected to reach $6.59 billion by 2024 growing at a compounded annual growth rate of 27.41%. It will be a big loss if the existing healthcare service providers if they are not changing their business model at this juncture. According to market research, the usage of digital health records (DHRs) is at vogue and around 76% of healthcare professionals in India are already using it as part of their professional practice. DART’s market research services include data collection, cleansing, and analysis. The telemedicine market in India is expected to reach $5.4 billion by 2025 with an expected CAGR of 31%.

DART Consulting is a market research and business consulting service provider that provides business consulting through its network of Independent Consultants.  Our services include preparing business plans, market research, and provide business advisory services through our network of Independent Consultants.  More details at