Friday 31 August 2012

Quality Accreditation - The sustainable competitive advantage

Below is a whitepaper I had submitted for publication during a conference on Quality accreditation held in Pune.
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We live in exciting times in India. As an emerging market, India is at the centre of attraction of the world and everyone is talking about India as the land of opportunity. Indian Healthcare industry is one of the sectors of the economy which is leading this exuberance. All major consulting companies, be it KPMG or PwC, estimate double-digit growth figures for the healthcare industry for the next decade. An IBEF (India Brand Equity Foundation) report of November 2011 estimates healthcare industry size at US $280 Billion1, bolstered by rising income levels, expanding middle class, an increasing appetite for premium services and conducive policy environment.

In all this hoopla, it is easy for anyone to miss the reality. The fact is that most investment in healthcare in India is by private sources and a lot of money in flowing into building new hospitals and adding more beds, given the low bed availability in our nation. According to World Health Statistics, India has 0.9 beds per 1000 population, way below the global average of 2.92. But most of this infrastructure is getting built in the metros and tier-I cities of the country leading to over-penetration in many areas. Most of this infrastructure is being built at a high capex. The mushrooming of hospitals in urban centres has led to an increasing competition among the various players. So on one hand, hospitals are grappling with higher costs, on the other hand they also need to fight tooth and nail with their peers to achieve moderate bed occupancy.

Indian healthcare also suffers from systemic flaws which haven’t been fixed due to misplaced priorities by both government and healthcare businesses. Even when the size of the industry has become US $50 Billion3, standardization of quality of care still remains a dream in our country. The pricing patterns even for common surgeries vary extremely in the country. Not many patients would agree that they could understand the processes or policies followed in the hospitals from which they received care. Most hospitals do not provide clarity on the services rendered by them and one can easily find examples of misrepresentation of services by hospitals in most of the Indian cities. Indian doctors have also been blamed for following unethical practices like prescribing over-medication and unnecessary diagnostic tests to pocket commissions from pharma companies and diagnostic centres respectively.

Visiting a hospital in India is a pain of its own kind. One can easily observe poor inter-departmental coordination and may even face eccentric rules and policies in a hospital. Most hospitals, for the sake of saving money, compromise on patient safety. While in the West, people are obsessed about preventing Healthcare-associated Infections (HAI) and there are elaborate studies on the risks to patients because of them, Indian hospitals are still sleeping over the issue. The biggest risk to patients arises from the inexperienced doctors and untrained medical professionals providing their services in our hospitals. Industry’s standard excuse has been the high rate of attrition and the huge demand pressures leading to compromises on quality of medical professionals. One can go on and on in identifying the problems that the industry faces. Finally, it is the trust of the patients that takes the beating because of these problems.

However, there has been a paradigm shift in how patients today consume healthcare services. In the internet age, patients are using social media to voice their opinions about the quality of care they receive at the hospitals. The present day patients question the treatment options offered to them by their doctors and many of them switch doctors easily if they are not satisfied. Gone are the days when patients trusted their doctors and hospitals with their eyes closed. The modern day patients demand healthcare providers to demonstrate quality in their services and deliver clinical excellence which is measurable and comparable.
Till a decade back, hospital accreditation was unheard of. National Accreditation Board for Hospitals and Healthcare Providers (NABH) was established in 2006 to bridge this huge gap between what the patients demanded and what the healthcare providers were offering. NABH standards for hospitals (1st edition) began with 504 objective elements spread over 10 chapters and 100 standards and in its latest revision (3rd edition) the NABH standards for hospitals have grown to 102 standards with 636 objective elements. Accreditation requires a healthcare provider to demonstrate its compliance to standards and after a stringent assessment process they are given the accredited status. This assumes significance in the light of the fact that till date only 138 hospitals4 in India have been able to achieve accreditation from NABH. According to one estimate, India has about 40,000 hospitals of small, medium and large scale5. Therefore, as per this estimate, not even 1 percent of hospitals in India have NABH accreditation.

In this scenario, accreditation presents a unique opportunity to healthcare providers. Quality accreditation can provide a sustainable competitive advantage to healthcare businesses if they build their strategy around creating NABH standards compliant infrastructure, policies and processes. A closer look at NABH standards indicate that the standards promote adherence to global best practices of healthcare delivery and there are detailed guidelines on measuring performance of hospitals on pre-defined quality indicators. Through a systematic approach, any healthcare business can achieve compliance to these standards. But it is easier said than done. Accreditation requires an organizational culture change which needs to be sustained for a longer period of time. A culture developed on the bedrock of quality care and patient safety will provide utmost quality assurance to patients and the community at large. Recent trends also indicate that patients have become more aware about accreditation and they are basing their choice of hospital on whether the hospital has any kind of accreditation or not.

Given the fact that only quality-focused hospitals will be able to achieve accreditation, it would ensure that those hospitals will always remain on top of the preference list of the patients. While the competing unaccredited hospitals may boast of great infrastructure, good doctors and affordable pricing, patients will not risk their lives with such institutions when an accredited facility is available in their city. It is a commonly known fact that in the matters of health, patients do not take their decisions based on the price of the treatment. Rather, they base their decisions on the treatment style of the doctor and assurance of better clinical outcomes. An accredited hospital would definitely enjoy an edge over its unaccredited peers. Since achieving accreditation is not an easy thing and an applicant may take couple of years to pass the NABH audit, this would ensure that an accredited facility stands out from the crowd.

In conclusion, it can be seen that there is a paradigm shift in healthcare industry in India. Accreditation bodies like NABH will play a vital role in ensuring delivery of quality care through the hospitals which are accredited by them. While there is an intense competition among hospitals, ones which have received accreditation will be able to provide greater assurance to patients about the quality of their care delivery system, something which their unaccredited peers cannot provide. Healthcare businesses need to have a strategy on leveraging accreditation to convey their superior care system to the patients. Since not even 1% of hospitals in India have received accreditation, this situation presents an opportunity for healthcare businesses to establish sustainable leadership position in their target markets by aligning their organizational culture and infrastructure to comply with quality accreditation standards.

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Sources:

1. Healthcare Report by IBEF, November 2011, URL: http://www.ibef.org/download/Healthcare50112.pdf, last accessed on August 8, 2012
2. The Times on India Online Article titled “India doesn't have even 1 hospital bed per 1,000 persons”, October 2011, URL: http://articles.timesofindia.indiatimes.com/2011-10-10/india/30262811_1_beds-tertiary-care-aiims, last accessed on August 8, 2012
3. The Economic Times Online Article titled “Indian Healthcare to double size to $100 bn by 2015”, January 2011, URL: http://articles.economictimes.indiatimes.com/2011-01-28/news/28428766_1_healthcare-sector-private-equity-indian-healthcare, last accessed on August 11, 2012
4. NABH, URL: www.nabh.co/main/hospitals/accredited.asp, last accessed on August 15, 2012
5. Views on Healthcare Quality Blog titled “eNABHle: Achieving NABH accreditation”, May 2012, URL:  http://ikureknowledge.blogspot.com/2012/05/enabhle-acheiving-nabh-accreditation.html, last accessed on August 15, 2012

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