As COVID-19 recedes, it is time to re-evaluate the healthcare system

India is going through a massive healthcare transformation, with the COVID-19 crisis proving to be the catalyst. The outbreak exposed the inherent shortcomings of the system, and brought healthcare to the center stage. Healthcare became the most exciting sector for investment and innovation, after fintech. The entire Asian region became the fastest-growing region for healthcare innovation. Whereas the number of unicorns, created in fintech in Asia, reached 136 in the last year, healthcare unicorns hit a healthy 91, with over 1900 deals being recorded.

Whilst the Indian government was responsible for driving majority of the COVID-19 interventions, with the ₹64400 crore PM Ayushman Bharat Health Infrastructure Mission a testimonial to that, there was an emergence of innovative models for collaborations between the government and private players and participation of healthcare start-ups for accelerated transformation. FICCI, in a recently released report, has shortlisted six thematic areas that require immediate deliberation and action to fast track the transformation triggered by the pandemic. These are financing for Healthy India, strengthening of the health system, robust public health crisis management, future healthcare force, improving private sector participation, and embedding digital health to bridge the systemic gaps.

There are lessons for those in the driving seat too. The pandemic ignited innovation, is forcing new ways of working and faster, and more frequent cross-functional decision making. Leaders became more intentional about where to apply standard procedures and where to shake things up with new ways of working. To stay on top coming out of the crisis and maintain speed, they are trying to embed the best of their new, agile ways of working into the organization. They have identified additional strategic opportunities for agile ways of working, including new instruments and new diagnostic tests for other infectious diseases. What leadership teams do in the coming months could change the trajectory of their businesses.

Shifting gears, the healthcare sector – pharmaceuticals, hospitals, and diagnostics – is likely to show signs of normalization with non-COVID-19 revenues growing in the July-August-September quarter of 2021-22. As the financial results come in, it is expected that hospitals are likely to report strong revenues as non-Covid occupancy ramps up. Reduction in COVID-19 cases would likely have changed the product mix more toward elective surgeries, which, in turn, would improve realizations. Occupancies are expected to have remained around 67-68 percent driven by normalization of non-COVID-19 occupancies. Vaccination revenues are expected to have declined. On a sequential basis, hospital revenues are expected to have fallen in the 2QFY2022, as the first quarter coincided with a massive second wave ravaging the country. The diagnostics sector is expected to see a slowdown with a substantial decline in COVID-19 testing demand and lower RT-PCR pricing. This is despite growth in non-COVID business and travel-related RT-PCR tests. However, YoY growth remains strong given a weak base.

The cautious have their fingers crossed, as the fear of third wave looms large with the approaching festive season!