It All Starts With a Simple Handshake

The industry case for hospitals to partner with established diagnostics labs to build an holistic, successful and sustainable healthcare services value chain

Dr. Ajay Phadke, Centre Head of SRL Dr. Avinash Phadke Path Labs

We live in an age of collaboration. It is clear that a focus on a single core competency drives more long term success for a business by enabling it to craft, perfect and sharpen its delivery over time. But today’s consumers demand a single window of service, and the ideal balance lies in bringing together multiple proficiencies under one umbrella to truly extract the power of many. The healthcare services market, slated to be well over $130 billion by 2025 in India alone and one of the largest sectors in the country in terms of revenue and employment generation, is no different, but has the industry truly embraced the power of many at its core?

The healthcare industry comprises of multiple large sub-sets including hospitals, medical devices, clinical trials, telemedicine, medical tourism, health insurance, medical equipment along with a host of niche, new age and disruptive healthcare services and technologies. But even then, health care services, comprising majorly of hospitals and diagnostics, make up a large chunk of this mammoth industry. With 70% of all clinical decisions based on pathology findings, it was no surprise that hospitals quickly diversified into providing diagnostic solutions at source. This made absolute business sense, provided a steady source of revenue, and ensured consumers were able to get the single window healthcare experience they demand.

With many hospitals taking this route, it is surprising the much of the Rs. 30,000 Crore pathology market is still dominated by single location pathology centers and a host of national private players outside of the hospital infrastructure. The answer lies in focus and core competence. Hospitals need to focus on treating, while diagnostics should be razor focused on tests and accurate data points. This is the true power of collaboration, and as business has always proven, it will drive more bottom line success for both entities in the long run.

Hospitals will find more sustained results with mitigated risks by partnering with an established diagnostic expert rather than taking the plunge themselves. There have been multiple instances of hospital diagnostic labs not being able to retain strong systems and processes, deliver accuracy and deliver erroneous data points. This can be anticipated, as testing is not their core, treatment is. A diagnostic expert with years of sharpened processes and eagle-eye precision will be better suited to play the testing role in the healthcare value chain. There have been a few instances already of hospitals seeing great success by partnering with established diagnostic players, and in this age of collaboration, this trend is bound to continue.

The Set Up

Establishing a strong diagnostic infrastructure is not an easy task. A domain expert will be better able to understand the diagnostic value chain and bring in technology, machinery, expertise and process at a level unmatched by a hospital setting up this infrastructure for the first time.

Furthermore, the initial capital expenditure for a diagnostic unit is not a cheap, and many a times, hospitals will spend more money to hire consultants to give them a turnkey solution. While this may be a short-term fix, finding trained teams to run the lab becomes the next hurdle a hospital will face. All of these challenges can be overcome by partnering with a seasoned diagnostic player.

Sharing Footfalls

Whether it’s a hospital or a diagnostic lab, the race is for footfalls. Sharing one location where two brands, having expertise in their respective competencies, can mutually benefit each other by providing stellar service and enabling footfall to each other. A known diagnostic brand within a hospital can drive an extra set of consumers the hospital may not have ever accounted for. With competition rising rapidly in the healthcare segment, this symbiotic relationship can help, not only provide an industry grade standard, but also, the bottom line of each entity.

Join Hands for Exponential Growth & Increased Diagnostic Offerings

Diagnostics can make up roughly 28-30% of a hospital’s revenue, but by partnering with an expert, known player, this contribution to revenue can go up to as high as 40-42%. This is due to the rising footfall and the ability of each of the partners to feed off each other to grow their respective business.

The diagnostic partner can also bring in expertise to provide many more complicated tests than a regular hospital center. The pathological test menu in India has grown to as large as 3,000 tests. While even an in-house lab does not guarantee all tests are available in-house, the partnership ensures the capacity to expand. Further, the diagnostic center gains an advantage of overcoming their biggest challenge: Logistics of Samples & Related Data Inaccuracy Due to Poor Logistics. The partner lab can have a single point of contact within the hospital to co-ordinate logistics and reporting. That also allows the lab partner to educate the hospital staff about the latest technology for testing which can benefit the patients.

Grow Your Hospital Business, Not a Migraine

Having an expert diagnostics partner will mean that the processes, standards of quality and the delivery of accurate results rests on the accountability of the expert, while the hospital can focus on taking accountability only for its clinical decisions and treatments. Moreover, many of these partnerships enable the diagnostic partner to make the full investment in the lab, and therefore, walk away with a higher share of the revenues. This makes perfect business sense as the hospital mitigates its risks, maximizes its revenue and optimizes its spends.

In certain cases where expenditures are not on the shoulders of only the diagnostic partner, the cost can be effectively shared between both stakeholders. Pathology labs take care of the manpower, reagents, consumables and other expenses, while hospitals can provide infrastructural requisites like space for the lab set up, electricity and water.

If We Would Have Only Listened Closer To Our Parents

Quality of life is strongly impacted by the medical support, systems and infrastructure in place. The medical industry is progressing towards the implementation of newer, advanced technology to improve the overall efficacy of the patient journey. The future of every sector depends on collaborations and partnerships, and the future of our patients depends on medical professionals coming together to provide an amalgamation of expertise.

Every industry, over the years, has adopted a collaborative approach to building their businesses, and it’s time the medical fraternity followed suit. There are some areas wherein partnerships have begun to be seen, however, the pathology space has much to offer, and is still severely under-utilized. The first partnership that is in dire need today is between doctor & diagnostics.

We have always been told to listen to our parents, as their advice is not extracted from intelligence itself, but rather from wisdom. As we grew up, our parents always told us it is better to be a king in one than to end up a jack in none! Hospitals partnering with established diagnostic brands is a true testament for them sticking to their king.  The beauty of collaboration is that while a deck of cards may only have 4 kings, the power of many lets you hold a hand of as many kings as you like.

And to think, it could all start with a simple handshake.


Around The World