00:00:05
This research is actually a book that we
00:00:08
just published uh this year through
00:00:09
Cambridge University press it's a guide
00:00:12
to the entire Health Care system of
00:00:14
India uh designed for the people who
00:00:17
provide Health Care the designed for the
00:00:19
people who make products that they sell
00:00:21
to the health care providers in India
00:00:23
designed for the people who want to
00:00:24
basically do business with any of the
00:00:26
stakeholders in India's healthcare
00:00:28
industry books organized around three
00:00:30
topics the what we call the three PS of
00:00:33
healthcare the providers of Health Care
00:00:36
the payers for healthare and the
00:00:38
producers of health care products and
00:00:40
we've you know we Loosely tie all that
00:00:43
together as the healthc care value chain
00:00:45
of India payers producers and providers
00:00:47
let me drill down a little bit on the
00:00:49
3ps so with regard to the providers
00:00:52
there is a small but growing Private
00:00:54
Hospital syst set of Hospital Systems in
00:00:57
India mimicking like what we have here
00:01:00
in the United States the vast majority
00:01:02
of their Hospital industry however are
00:01:03
public government-owned
00:01:05
hospitals uh in terms of the medical
00:01:08
profession there's a group of allopathic
00:01:10
trained Physicians like what you find
00:01:12
here in the United States and other
00:01:13
Western countries but supplementing that
00:01:16
as a group of traditional medicine
00:01:18
practitioners and totally untrained
00:01:20
practitioners which people even over
00:01:22
there call Quacks uh then you have an
00:01:24
insurance industry a private insurance
00:01:27
industry which is just getting off the
00:01:28
ground but then you have some local and
00:01:30
community health insurance schemes to
00:01:32
try to supplement that and then for the
00:01:35
manufacturing you know India's become
00:01:36
famous for its generic pharmaceutical
00:01:38
manufacturers it's trying to get a
00:01:40
biotechnology industry off the ground a
00:01:42
medical device industry off the ground
00:01:44
and so the book goes through all these
00:01:46
things that are developing largely
00:01:48
centered on the private sector in
00:01:53
India well you know India and the US
00:01:56
have a number of parallels which are
00:01:58
actually quite interesting and that make
00:02:00
it makes it easier easier for people to
00:02:03
understand India's healthcare industry
00:02:05
if they understand a system like their
00:02:07
own such as ours so for example they
00:02:10
have very similar structures for the
00:02:12
financing and delivery of healthc care
00:02:14
that we do they also have the same
00:02:16
issues and concerns that we do so I can
00:02:18
elaborate a little bit on this so in
00:02:20
terms of financing their financing of
00:02:22
healthcare is fragmented across several
00:02:25
different stakeholders you have the a
00:02:26
week central government lots of States
00:02:29
who do a lot of provision of Healthcare
00:02:30
in fact it's their constitutional
00:02:32
responsibility to provide and finance
00:02:34
healthc care you have individuals and
00:02:36
now you have a growing number of private
00:02:38
sector firms providing health coverage
00:02:40
for their employees so Health Care
00:02:42
financing is fragmented across all of
00:02:44
those just like in the United States at
00:02:47
the same time you have both a public and
00:02:49
a private sector of Health Care
00:02:51
Providers it used to be primarily a
00:02:53
government public sector but now we have
00:02:55
the rise of Private Hospital chains and
00:02:58
you have this enormous number of private
00:03:00
physicians and that's really what the
00:03:02
public prefers is the private sector of
00:03:05
providers over the public sector of
00:03:06
providers very similar here to the
00:03:08
United States so in terms of financing
00:03:11
and the provision of healthc care you
00:03:12
have these two systems that are
00:03:15
increasingly private sector very
00:03:18
fragmented in terms of financing but
00:03:20
also very fragmented in terms of the
00:03:22
structure of the Delivery Systems so you
00:03:24
have lots of small hospitals lots of
00:03:26
small doctors and small clinics
00:03:28
scattered over an enormous geographic
00:03:31
area with very little consolidation or
00:03:34
concentration of activity so there's
00:03:36
lots of room to grow and consolidate
00:03:37
these industries so that's on the
00:03:39
structure and the financing side then
00:03:42
India has the same set of concerns that
00:03:44
we have when it comes to healthcare we
00:03:46
call it here the Iron Triangle of
00:03:48
healthc care the three the three angles
00:03:51
of that iron Triangle are cost quality
00:03:53
and access India is concerned about all
00:03:56
three at the same time they see a rising
00:03:58
cost to healthcare as Healthcare moves
00:04:00
from the public to the private sector
00:04:02
and more technology begins to filter in
00:04:04
and as you have more of a private sector
00:04:07
providing Healthcare uh you also have
00:04:10
access problems because there's a low
00:04:11
level of insurance coverage in that
00:04:13
country and people have to pay an
00:04:15
enormous amount of the health care bill
00:04:17
out of pocket and then quality is the
00:04:19
you know the frontier for India because
00:04:21
there's basically no regulation of
00:04:23
India's Health Care
00:04:28
System you know one of the things that
00:04:30
really surprised us was the composition
00:04:32
of the medical profession in India it's
00:04:34
fascinating there about
00:04:36
700,000 what we call allopathic
00:04:38
physicians in India people with normal
00:04:40
medical school training that we're
00:04:42
accustomed to and a lot of those
00:04:44
Physicians who are allopathic trained
00:04:46
and then trained at some point in the US
00:04:48
or the UK but complimenting those
00:04:51
700,000 allopathic Physicians are
00:04:54
700,000
00:04:55
traditional practitioners of medicine
00:04:58
and in India that's called IOU
00:05:00
which is a acronym for ayuvedic unani
00:05:03
Sida and homeopathic and there's 700,000
00:05:06
of those practitioners as well they each
00:05:09
have their own sets of medical colleges
00:05:12
and training institutions and uh they're
00:05:14
called registered medical practitioners
00:05:17
and then on top of all that you have
00:05:19
anywhere from 1 million to 2 million
00:05:21
totally untrained unsupervised
00:05:23
practitioners largely found out found
00:05:26
out in the rural areas which people
00:05:28
normally refer to as quacks but they're
00:05:31
basically the the primary care delivery
00:05:34
system for India which is still roughly
00:05:37
a you know a rural Society so that was
00:05:39
one major uh set of findings that it
00:05:41
surprised us the other set of findings
00:05:43
that surprised us had to do with India's
00:05:45
hospitals particularly in the private
00:05:47
sector turns out that a lot of their
00:05:49
private hospitals are mimicking the same
00:05:51
strategies that us hospitals and
00:05:53
Hospital Systems have been following for
00:05:56
the last 15 to 20 years and three of
00:05:58
those Trends are horal Al integration
00:06:00
forming you know Hospital chains
00:06:03
vertical integration employing doctors
00:06:05
like we're doing here in the United
00:06:07
States and the third is what we call
00:06:08
diversification where they're getting
00:06:10
into quazi and unrelated businesses to
00:06:13
try to grow their footprint and and
00:06:15
they're doing that not not just in India
00:06:17
but across southeast Asia so they're
00:06:20
doing all three things at the same time
00:06:22
and that's very similar to what we see
00:06:23
here in the United
00:06:28
States well I think one of the more
00:06:30
practical things has to do with the
00:06:32
medical tourism business there's been an
00:06:35
awful lot of speculation over the last
00:06:37
10 years that as India develops its
00:06:40
Private Hospital systems that those
00:06:43
systems will increasingly attract Us and
00:06:46
other Western patients to fly over to
00:06:49
India to these private hospitals for
00:06:51
elective surgeries uh and perhaps also
00:06:54
combine that with vacations and so there
00:06:56
are these huge expectations that the
00:06:59
private hospitals over in India will
00:07:01
flourish with this influx of Western and
00:07:04
US patients uh which will not only boost
00:07:08
their revenues but also boost the India
00:07:11
tourism business and perhaps take away
00:07:13
business from the medical providers here
00:07:15
in the United States so that's been on
00:07:18
on the uh the discussion table for about
00:07:20
10 years what we found out is that those
00:07:23
expectations are way overblown and that
00:07:25
the medical tourism business going from
00:07:27
the West to the east is is really a lot
00:07:30
of hype uh what we found instead is that
00:07:33
the there are several barriers to us
00:07:36
patients going over to get treatment
00:07:39
from India providers not least of which
00:07:43
is the the fact that most health
00:07:44
insurance schemes here in the US don't
00:07:47
cover medical tourism travel over to
00:07:49
India the Medicare system which pays for
00:07:52
you know 45 to 50% of all healthare not
00:07:55
about 40% of All healthc Care
00:07:57
expenditures here in the United States
00:07:58
will never cut
00:08:00
treatment over in India uh it the
00:08:03
American medical profession has you know
00:08:06
loot has only uh embraced medical
00:08:08
tourism in a lukewarm way and basically
00:08:11
Advocates against it saying you know
00:08:13
they no malpractice or liability
00:08:15
safeguards for you if you go over there
00:08:17
labor unions aren't crazy about their um
00:08:21
their members going over to India
00:08:23
employers aren't crazy about trying to
00:08:25
coerce or strongly encourage their
00:08:28
employees to go over there so there are
00:08:29
a whole number of things impeding that
00:08:32
flow of traffic I think what we're going
00:08:33
to see instead is what we call domestic
00:08:36
medical tourism where patients in one
00:08:38
part of the us will go to another part
00:08:40
of the us for Health Care rather than go
00:08:42
to India and just the most recent
00:08:45
illustration of that are the
00:08:46
Partnerships that the Cleveland Clinic
00:08:48
has has formed with various big box
00:08:51
retailers for cardiac surgery so those
00:08:54
big big box retailer employees when they
00:08:56
need heart surgery or H heart bypasses
00:08:59
they're not going to fly over to India
00:09:00
they're going to fly to
00:09:05
Cleveland well there a number of
00:09:07
strategic opportunities for Western
00:09:09
firms over in India one of the more
00:09:12
interesting things we found is that uh
00:09:14
in contrast to the west and other uh and
00:09:17
other countries in Europe um the bulk of
00:09:22
spending in in on Healthcare in India is
00:09:24
on retail Pharmaceuticals it's not on
00:09:27
hospitals and doctors so maybe 50% 60%
00:09:30
of all Health Care spending over there
00:09:32
is on retail drugs and when you go over
00:09:35
to India you find that there's very
00:09:37
little in the way of an organized retail
00:09:39
pharmacy sector so maybe 10% of the
00:09:42
pharmacies over there are in Chains of
00:09:44
any organized fashion that means 90% are
00:09:47
n are basically mom and pop operations
00:09:51
and so there's an opportunity to develop
00:09:53
you know more advanced Retail Pharmacy
00:09:57
operations over there and a number of
00:09:59
Wharton students who are Indian after
00:10:01
they get their mbas they go back to
00:10:03
India to set up these Retail Pharmacy
00:10:05
chains City by City because they
00:10:07
recognize there's such an opportunity
00:10:10
the other thing they have to think about
00:10:12
however is even though retail drugs over
00:10:15
in India constitute let's say 50% of all
00:10:17
Health Care spending that's in the
00:10:19
aggregate but at an individual level per
00:10:22
person uh the amount spent on drugs is
00:10:26
pretty small India still has 3004 400
00:10:29
people 400 million people who are really
00:10:32
poor making maybe1 to2 dollar a day so
00:10:34
they don't have a whole lot to spend on
00:10:36
Pharmaceuticals so if we want to go over
00:10:38
there and set up Retail Pharmacy
00:10:40
operations you have to keep in mind that
00:10:42
the average consumer over there isn't
00:10:44
spending much money but there's a lot of
00:10:47
collective Monies to be gained in terms
00:10:49
of market share by developing these
00:10:55
operations well you know it's
00:10:57
interesting uh ever since I taught the
00:10:59
global modular course on India's Health
00:11:02
Care system I developed a second Global
00:11:05
modular course on China's healthc care
00:11:07
system and so the last two years I've
00:11:09
gone over to the guanga School of
00:11:11
Management at peeking University to
00:11:14
basically teach another 4-day course but
00:11:16
this time on China's Health Care system
00:11:18
and its Health Care reforms and the
00:11:20
number of similarities between India and
00:11:22
China are remarkable uh but first both
00:11:25
are very large countries geographically
00:11:28
huge populations over a billion
00:11:30
population in each country they're very
00:11:32
spread out you have lots of markets you
00:11:34
have to serve the the infrastructure for
00:11:37
getting to all these markets as uh
00:11:39
challenging to say the least and then
00:11:42
you have uh basically very small private
00:11:46
sectors in healthc care uh you have uh
00:11:49
much much of healthc care is organized
00:11:51
in in India at the state level in China
00:11:54
at the Province level and so you have
00:11:55
these layers of government that you have
00:11:57
to deal with and and then you have very
00:12:00
small portions of the provider industry
00:12:04
are are Western trained and they have
00:12:07
very similar Medical School structures
00:12:09
and one one thing that's really
00:12:11
remarkable when you go into these two
00:12:12
countries is the fact that the vast
00:12:14
majority of Physicians have maybe maybe
00:12:17
three to five years of training After
00:12:19
High School and so they're going to have
00:12:20
issues with quality of Health Care
00:12:23
access to health care and China right
00:12:25
now is engaged in rolling out health
00:12:28
insurance to almost the entire
00:12:30
population and what China is going to
00:12:32
experience is the rising cost of Health
00:12:34
Care paid for by the government through
00:12:36
the expansion of this health insurance
00:12:37
scheme and so they're going to be
00:12:39
worried about the same iron Triangle
00:12:41
issue that India is worried about and
00:12:43
that we've been struggling with here in
00:12:45
the US for the last 20 or 30
00:12:51
years well actually what's really
00:12:53
interesting is what's happening to some
00:12:55
of the hos Private Hospital Systems over
00:12:57
in India uh when I was over there last
00:13:00
in the fall of 2012 I gave my India
00:13:03
School of Business students a final exam
00:13:05
where they had to read the annual report
00:13:07
for Fortis Healthcare which is the
00:13:09
second largest for Private Hospital
00:13:11
chain over there and if you read through
00:13:13
forse's annual report for 2011 2012 they
00:13:16
talk about how they're into the
00:13:18
integration of healthcare which is a
00:13:20
very Western idea and so foris head was
00:13:24
building out its horizontal Hospital
00:13:26
chain it was getting into the physician
00:13:28
employment and attracting star physician
00:13:30
business and building up the value chain
00:13:32
of healthc care you know the people who
00:13:34
will refer to the foris hospitals
00:13:37
diagnostic clinics things like that and
00:13:39
then they were also diversifying both
00:13:40
geographically across southeast Asia as
00:13:43
well as into different product markets
00:13:45
in healthcare for example uh acquiring
00:13:48
dental clinics in other countries so I
00:13:51
asked my students at the ISB and their
00:13:53
final exam to critique those strategies
00:13:55
because those are those are the same
00:13:57
strategies that us hospitals have been
00:13:59
following for the last 15 to 20 years
00:14:01
with mixed if any success and so really
00:14:04
I was asking them to figure out are you
00:14:06
going to have the same outcomes as we
00:14:07
are having or you going to have
00:14:09
different outcomes well what's happened
00:14:11
in the last two years since I was there
00:14:13
and this is what's been in the news is
00:14:15
that Fortis Health Care has been D
00:14:17
diversifying and de-integration
00:14:19
basically realizing that all those
00:14:22
businesses and geographies they were
00:14:23
occupying weren't helping them they went
00:14:25
into massive debt to acquire these
00:14:27
things and now they're getting back to
00:14:29
focusing on their core Hospital Market
00:14:31
in their core Geographic Market of India
00:14:34
and so that's an illustration of you
00:14:36
know hospitals in India mimicking what
00:14:39
hospitals here in the United States have
00:14:41
done coming up with the same results and
00:14:43
then having basically to go back to the
00:14:45
roots and that's one of the things we we
00:14:48
discovered when we developed this
00:14:49
chapter on India's Hospital
00:14:55
Systems I can think of at least two one
00:14:57
we've already mentioned that's Global
00:14:59
tourism Global medical tourism there's
00:15:02
more hype there than reality and what
00:15:05
what even makes us more interesting is
00:15:06
that people thought that as India
00:15:10
entrepreneurs build Health cities in
00:15:12
Bangalore and other and other you know
00:15:15
major metropolitan areas in India that
00:15:17
more and more Western patients would go
00:15:19
over there to get health care through
00:15:21
these Health cities that hasn't happen
00:15:23
what's H what's even more interesting is
00:15:25
that one of the entrepreneurs who
00:15:27
developed the first Health City in India
00:15:29
which is Dr deie Shetty who is Mother
00:15:32
Teresa's cardiac surgeon very well known
00:15:35
written up in you know Harvard Business
00:15:37
School case studies what he's done is
00:15:39
instead of trying to attract us patients
00:15:42
over there he's now building a health
00:15:44
City in the Cayman Islands and so you
00:15:46
will no longer have to fly over to India
00:15:48
for health care with Dr Debbie shett and
00:15:50
his health C you can just go down to the
00:15:52
Cayman Islands and have it done there so
00:15:54
that was one of the uh things that we
00:15:56
thought uh some of the the uh
00:15:59
hype that needed to be dispelled I think
00:16:01
the other thing has to do with whether
00:16:03
or not those Health cities can be
00:16:05
replicated by other players around the
00:16:08
world and particularly here in the US
00:16:09
because deie shed's model has gotten a
00:16:12
lot of attention here what we found
00:16:14
though in doing the research is that
00:16:15
there are a number of you know
00:16:18
advantages that Dr Shetty had in
00:16:20
developing his health cities back in
00:16:23
India which other people won't enjoy so
00:16:25
for example a lot of the financing came
00:16:28
within his his family from his
00:16:29
father-in-law a lot of the land for the
00:16:32
health systems was donated or at low
00:16:34
cost from the government and those are
00:16:37
those are advantages that allow you to
00:16:39
run a lowcost operation and deliver care
00:16:42
you know and subsidize it for the poor
00:16:44
and the non-paying patients in India but
00:16:47
other Hospital Systems who don't have
00:16:48
those advantages won't have that low
00:16:50
cost structure and won't be able to
00:16:52
duplicate what deie shett has
00:16:57
done I say there are a lot of books on
00:17:01
India's Health Care system and I do not
00:17:05
pretend to be the expert on everything
00:17:07
going on in Health Care system in India
00:17:09
particularly with regard to rural Health
00:17:11
Care delivery traditional medicine and
00:17:14
things like that what we have done
00:17:16
though is described the totality of
00:17:18
India's Health Care System the payers
00:17:20
the providers The Producers what we call
00:17:22
the value chain of healthcare and and
00:17:25
put that all together systemically with
00:17:27
the research evidence that exists I
00:17:30
think the other thing that sets our book
00:17:31
apart is just how thick it is because
00:17:33
it's 600 pages long and it's easily
00:17:35
triple the size of any other
00:17:40
book well I'm doing it right now uh
00:17:43
based on the global modular course that
00:17:45
I taught in Beijing I'm now writing a
00:17:48
companion volume on China's Health Care
00:17:50
system in reform pretty much based on
00:17:52
the course that I taught over there
00:17:54
using the input of the guest speakers
00:17:57
who came to that course and my teach ing
00:17:59
assistants who helped me who are Chinese
00:18:01
who are in my MBA program to help put
00:18:03
that book together and I'm being given
00:18:05
the opportunity to go over to the uh
00:18:07
Wharton global forum in Beijing next
00:18:09
month uh I think it's on June 13th to
00:18:12
present some of the results from
00:18:17
[Music]
00:18:27
that
