India has seen great changes to its healthcare infrastructure since Independence. Initially almost entirely dependent on the public health system, the Indian healthcare industry has transformed to over 80% private hospital beds in the past 70 years. From the establishment of multi-speciality hospitals in tertiary and quaternary care to niche single speciality players like Ophthalmology and Dialysis chains and in the past 7 years a home health explosion – the healthcare service offerings have been growing leaps and bounds. However, there are still some critical gaps in the industry and Transition or Long Term Care is one such area where we are yet to see a sophisticated solution reach nationwide presence, awareness and impact.
What is Transition Care?
Transition Care is that segment of healthcare that caters for patients that require long term care post – surgery or hospitalisation and where the care burden or profile is not conducive to home health. A natural extension of Transition Care services is Long Term Care, whether acute or sub-acute, and Elderly care – all the way from Assisted Living to Palliative Care.
As a healthcare services delivery model, Transition Care is fundamentally differentiated from other players as it requires a multi-disciplinary collaboration to deliver highly personalised services. Traditional hospitals do not engage in Transition Care as the business model contradicts their own with the latter demanding higher average length of stay (“ALOS”) and lower average daily revenues (“ARPOB”). In the United States, this industry has been established over two decades and branched out to develop its own niche verticals within and several players with multi-billion dollar revenues, private and listed, exist in this space.
Why Transition Care?
Statistically it has been shown that patients who do not receive transition care support post hospitalisation and go straight home are 30% more like to be readmitted to hospital for the same reason, 40% more likely to suffer long term disability and 30% higher fatalities are recorded. In addition, there is a strong case for cost efficiency made possible by Transition Care. In India, the average private hospital bed can cost upwards of Rs 15,000 per day (room rent plus clinical charges) and an ICU bed ranges from Rs 30,000 to Rs 50,000. Conversely Transition Care beds cost between Rs 5000 - Rs 7,000 for standard packages and Rs 12,000 for ICU level long term care. This is an immediate 50% saving for the consumer which is a compelling argument in itself but made more robust when you note that by moving such patients to Transition Care facilities in a timely manner, the tertiary care beds are made free for the more critical and relevant patients.
What is the Potential Size of the Transition and Long Term Care Industry?
There are several ways in which one can estimate the Transition / Long Term Care Industry in India. One method would be to compare the industry size to the more developed one in the United States, where there is a 1:1 ratio between tertiary and transition care beds. Medicare is the greatest spender at about $80 billion annually, which is an estimated 60% of the total spend in this space. One could argue that this method would not account for the lack of awareness currently in the Indian market of these services and that the market is smaller but there can be no doubt that it is a large opportunity.
The main factors that affect the size of the Transition Care industry are the numbers of patients that require hospital admission i.e. severe conditions / accidents or vulnerable patients e.g. the elderly that would take much longer to recover fully to a new normal. In India, the numbers across all such parameters are significant.
Current estimates indicate that approximately 250 million patients are admitted to hospitals as inpatients each year in India. 10% of these undergo surgery which are obviously the more serious cases and about 40% of these are treated in the top 10 cities. Simple extrapolation and at conservative adoption rates of 1 – 2% adoption of transition care services, we can easily arrive at a Rs 10,000 crore market size in just the top 10 metropolitan cities of India. Prudently, the industry should grow at a minimum CAGR of 16 – 18%, matching the general healthcare industry growth rates, whereas actually given the nascent stage of this industry, one would reasonably estimate a much faster growth rate.
What is the Competitive Landscape for Transition Care in India?
There are very few players in the Transition Care industry in India with a few standalone facilities, a couple of hospitals that have minor departments in this space, and numerous mom-and-pop physio clinics and nursing homes scattered around the country. Indeed, unlike traditional healthcare players that have been adversely affected due to COVID, transition care facilities have a large role to play to combat the impact of a pandemic. By moving elderly or vulnerable patients with existing co-morbid conditions out of tertiary care setups faster, hospitals can free up critical beds and also ensure that these patients are not exposed to infections. The Transition Care market, therefore, is ripe for penetration and the potential for value creation is undeniable.