Unlocking Opportunities for Small Clinics and Hospitals in a Competitive Healthcare Landscape

19 September 2024
Chitradurga

For years, India has witnessed rapid growth in its healthcare sector. With the development of larger hospital chains and investments by global private equity firms, the top 5 hospitals in India have recorded fleet-footed year-on-year growth of 17.2%: Apollo Hospitals, Fortis Healthcare, Manipal Hospitals-also known as MHEPL-Max Healthcare, and Narayana Health.

Manipal Hospitals reported a stellar 41.3% increase in revenues, and investment activity is at an all-time high with marquee global investors like Temasek and Blackstone making big purchases.  This leads to consolidation in the industry, which is evident from the revenues thrown up by Apollo Hospitals-Rs. 19,059 crore-and Fortis Healthcare-Rs. 6,892 crore. 

Manipal Hospitals has been on an aggressive overdrive, adding Medica Superspecialty Hospital and AMRI Hospitals to its portfolio and taking its total number of beds past 10,000, surpassing Apollo Hospitals in the process. All this expansion, along with getting private equity firms like Temasek and Blackstone on board, raises the apprehension that the cost of healthcare will go up for the common man. 

The Impact of Consolidation on Small Hospitals

As the larger hospital groups become more dominating now, smaller hospitals may be pressured to keep pace with their services or technology on offer. However, it also presents an opportunity for smaller hospitals and clinics to forge their niche in providing specialized care, patient-centric services, and community healthcare at affordable costs.

Health Insurance Penetration: An enabler of vital importance

Increasing health insurance penetration in India is yet another area of growth. Large chains have the edge over others due to their large-scale tie-up with insurance providers. Small hospitals, too, can cash in on this trend by forging tie-ups with insurers and offering cashless treatment services. With the Indian middle class growing, and more of them enrolling into different insurance schemes, insured patients will prefer accredited hospitals. This implies that more and more corporate business will flow even to smaller institutions if they become part of the insurance network.

Hence, at the time of such occurrence, other initiatives such as Ayushman Bharat-where health cover is provided for low-income families-can mean small hospitals will be able to broaden their patient base to serve such people. Small hospitals and clinics focusing on affordable care may become vital providers in such government health schemes, ensuring a steady flow of patients without being drowned out by large corporate hospitals.

Innovating to Compete with Larger Hospitals

While chains like Manipal Hospitals and Apollo Hospitals are leading the way in bed capacity and infrastructure, small hospitals are making a name for themselves by targeting niche markets and concentrating on select specialties. For example, companies like Dr. Agarwal’s Eye Hospital and Lotus Eye Hospital have found successful models by merely specializing in ophthalmology-a high-demand segment with relatively low clinic capital requirements.

Smaller hospitals can also find their niches, say in ENT, orthopedics, or dermatology-to mention a few-and try to attract those patients who seek specialized care.

Moreover, small hospitals forge strong community bonds and provide great patient experiences. As healthcare becomes more and more patient-centered, personal attention and superior bedside manners may prove to be the biggest differentiator for small hospitals.

This rapid expansion of the topmost tier of the healthcare industry entails a number of challenges and opportunities for smaller clinics and hospitals. While consolidation and corporatization may be becoming characteristic among the bigger players, small and medium-sized hospitals can create a niche for themselves by capitalizing on some key trends, such as quality management, operational excellence, cost leadership, and health insurance penetration.

Conclusion: Challenges with Opportunities

But despite such rapid corporatization and consolidation of the Indian healthcare industry, many opportunities continue to exist for the growth of small hospitals and clinics. By adopting quality management, operational excellence, cost leadership, in liaison with health insurance providers, and offering certain specialized, patient-oriented services, small providers of healthcare not only can survive in a competitive market but also grow successfully. Government regulation of treatment costs could further bolster their competitive advantage in making healthcare accessible to and more affordable for the common man. With strategic focus and innovation, small hospitals can turn challenges into opportunities for sustainable growth and success in the evolving Indian healthcare landscape.

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Dr. Prahlada N.B
MBBS (JJMMC), MS (PGIMER, Chandigarh). 
MBA (BITS, Pilani), MHA, 
Executive Programme in Strategic Management (IIM, Lucknow)
Senior Management Programme in Healthcare Management (IIM, Kozhikode)
Postgraduate Certificate in Technology Leadership and Innovation (MIT, USA)
Advanced Certificate in AI for Digital Health and Imaging Program (IISc, Bengaluru). 

Senior Professor and former Head, 
Department of ENT-Head & Neck Surgery, Skull Base Surgery, Cochlear Implant Surgery. 
Basaveshwara Medical College & Hospital, Chitradurga, Karnataka, India. 

My Vision: I don’t want to be a genius.  I want to be a person with a bundle of experience. 

My Mission: Help others achieve their life’s objectives in my presence or absence!

My Values:  Creating value for others.