Monday, September 05, 2011

Why I am bullish on the Indian healthcare IT sector

The Indian healthcare system has become sick. The system is broken and needs to be fixed. However conventional approaches are just not going to work.

Trying to set up new medical colleges to churn out new doctors just increases the supply of doctors which only ends up in increasing the demand for more medical treatment. After all, the one thing doctors are good at doing is creating a demand for their services - they are not going to sit around twiddling their thumbs doing nothing ! More physicians just means an increased volume of "supplier-induced" medical services. There is a persistent positive correlation between the number of physicians per capita and frequency of physician visits and surgical procedures.

Here's a very old joke: What do you have if there is only one lawyer in town? Too little work. What do you have if there are two lawyers in town? Too much work. This is equally true for doctors. If there's only one doctor, he will do only the medical procedures which are absolutely necessary, and no more , because he's already very busy. The moment there's another, they'll either start referring patients to each other if they specialise in different fields; or they'll start competing and offering newer and more expensive services - many of which are not needed !

Trying to build new hospitals in order to cater to the ever increasing numbers of patients is impractical and not cost-effective. Hospitals only provide expensive tertiary care , whereas what we really need is more primary health care. However because primary health care is not seen to be fashionable or lucrative , there just aren't enough good doctors who provide this. This means that patients end up going to specialists , which sets of a vicious cycle which ends up in overdiagnosis and overtreatment.

The secret is to remember that patients are the largest untapped healthcare resource. We need to change our perspective. Today we think that the large number of patients we have is the biggest problem the Indian health care system faces , because these patients are seen to be a burden. In reality, they are part of the solution – we are the ones to need to reframe the problem and change our perspective !

The trick is to use information technology cleverly in order to empower and engage them so they can be helped to take better care of themselves

This is already happening in the USA, where e-patients are playing a leadership role in reforming and healing a sick healthcare system. It’s just a matter of time that this movement will grow in India as well.

Because we have so many skilled doctors and much IT expertise, this is actually a huge opportunity for India to leapfrog and become the medical call center of the world ! Indian companies can develop clever apps at a fraction of the cost of what US developers can – and this is a huge business opportunity.

It’s heartening to see that entrepreneurship is being actively encouraged in India – and as the Indian economy booms , the opportunities will multiply, setting up a positive virtuous cycle.

It’ still early days, but we are in the right time and at the right place ! This is why I am an angel investor in many healthcare IT companies, including Yos Technologies, Plus91 and PEAS – and I continue looking for opportunities to invest in this space !

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