Source: economictimes.indiatimes.com

CHENNAI/BANGALORE: Indian hospitals are upping the ante on outsourcing. Instead of making heavy capital investments on expensive diagnostic equipment, costing Rs 1.5 to Rs 5 crore for MRI & CT scans, hospitals are opting for newer pay-per-use and outsourced models.

And, government hospitals are more actively latching on to this trend, that promises lower ownership cost and technology redundancy risk. The outsourcing model in the domestic medical equipment market, estimated at $2.25 billion, is nascent but picking up, says Jayant Singh, industry analyst (healthcare practice), Frost & Sullivan.

It is working well with governments, notably in Gujarat, West Bengal and Rajasthan. Companies like GE are working with the Gujarat government and Hindustan Latex has a pact with CGHS, he adds.

This trend is likely to continue in the government sector, according to Siemens Medical Solutions executive vice-president D Ragavan. In the case of private sector, the risk-return formula will drive this model, and more so, when they expand into tier II and tier III towns, he adds.

Basically, there are three players in this outsourcing game: The customer (hospitals), service provider and the medical equipment companies. In some cases, equipment companies themselves act as service providers.

High-end imaging and pathology equipment account for lion’s share of the market followed by cardiology, orthopaedics and laboratory equipment. Since the equipment cost is high, companies are constantly looking for low-cost models.

“Medical equipment cost has been skyrocketing in the last five years. To capitalise on their intellectual property rights, equipment suppliers try to recover their cost in the initial years of the equipment lifecycle,” notes Federation of Hospital Administrators of India veep UK Ananthapadmanabhan, who is also president of Kovai Medical Centre.

The outsourcing, in fact, goes beyond physical equipment to cover technicians as well. Given the huge skillset shortage, technicians are being outsourced in mega establishments like M S Ramaiah of Bangalore.

Other models such as equipment contract with five-year consumable supply leading to its eventual possession by the hospital and outsourcing of specialist functions like radiology and pathology labs is catching up too.

Apollo Hospitals Group veep (materials) Narotham Reddy says, it has several reagent rental contracts for over 10 years now. “Such contracts account for 5% of the total investments on equipment. Asset possession usually happens at the end of three years, he says. Typically, Apollo spends Rs 100 crore annually on new technologies and sources equipment from Philips, Siemens and GE.

Citing a typical revenue-share model, Chennai’s Deepam Hospital chairman Dr A Pandian says, cathlab, MRI and CT scans are “fast moving” category of equipment with much greater revenue realisation. For example, a vendor invests Rs 3 crore on an MRI machine in a hospital that carries out at least five MRIs a day.

With a monthly revenue of Rs 4.5 lakh, the sharing arrangement typically is 75:25 between the supplier and the hospital. Equipment suppliers typically target hospitals that enjoy robust patient footfalls but lack financial muscle to buy hi-end equipment and quickly scale up.

Source: www.itp.net

Dubai Department of Health and Medical Services (DOHMS) has signed one of the largest outsourcing deals by a government body in the UAE with a AED20 million ($5.4 million) contract with Intertec Systems to manage its IT operations.

“DOHMS wanted major improvements in internal customer service, and it has a huge network of around 4,000 users, which it needs to support the network across the whole emirate of Dubai in 26 locations. For this it needed a big team, and a full technical helpdesk,” said Naresh Kothari, MD of Intertec.

Instead of expanding its own IT department, DOHMS opted for the managed service approach, and signed the three-year contract with Intertec in March.

“We’ve been doing a lot of business with Intertec for the past few years, and have had good experiences with its expertise and support. Whatever we have requested, they have committed to it - even down to taking on expatriate staff from DOHMS on the same salary and benefits they were on here. This is why we can agree with Intertec - it is more flexible than others,” said Ali Mohd Ibrahim Al Ali, deputy director for IT at DOHMS.

Under the terms of the contract Intertec will take on 40 staff, and will also manage DOHMS’ Emirati IT staff, although they will remain employed by the government department, according to Al Ali.

“Our key requirements included improvements in the service, improvements in flexibility, long-term cost reduction - we will benefit from this contract, as we are expanding more and more, but we won’t have to keep on recruiting more and more IT staff,” he added.