Technological advances are influencing our lives in unprecedented ways. Be it shopping apparel in the comfort of home or getting groceries delivered at doorsteps or finding a yoga instructor – old means of availing goods and services are evolving rapidly. A newer addition to this ‘on-demand’ and ‘at convenience’ suite of services, is healthcare coming home – popularly known as ‘In-home Healthcare Market’. In-home health is about bringing essential patient care and health services to people at the convenience of their home.
The concept, popular in the developed nations such as US and also developing countries akin to India such as China, is gaining ground and the reasons are obvious. India’s geriatric population (aged over 60+) currently at over 100+ million is expected to grow to approx. 325 million by 2050. The burden of chronic diseases is increasing rapidly amidst aging population, sedentary lifestyles, diet changes, and rising obesity levels. It is estimated that lifestyle diseases will account for a whopping 74% of total deaths by 2030 (compared with 56% in 2008) with Cardiovascular, Cancer and Diabetes accounting for a majority. With increasing urbanization and increasing women participation in workforce, people are hard pressed to give the necessary time and attention to their aging parents. Home-based healthcare is an initiative to reach to such households beyond the boundaries of traditional hospital infrastructure.
Players in the industry provide a range of services including general primary healthcare, post-hospitalisation care, chronic disease management, elderly care, and allied services at home. The global market for in-home healthcare (services, devices, products) is expected to reach USD 355 bn by 2020 growing at a CAGR of ~8% from 2014-2020E. North America is the largest market (accounting for ~40% share) while Asia Pacific is the fastest growing.
Asian home healthcare market is expected to grow at a CAGR of 9.7% from 2014 to 2020 owing to high unmet medical needs coupled with rapidly improving healthcare infrastructure in emerging markets of India and China. The Indian market is at a nascent stage but with significant potential. The Indian market is currently estimated at over USD 3 billion p.a. and growing at 20+% annually. As per industry players, the industry has huge prospects as almost 80% of the care that is currently given in the hospital can be delivered in the home setting, with the proper use of technology.
Companies in the home healthcare market are adopting innovating models to provide access, affordability and conveniece right at the patient’s doorstep. Portea Medical, the pioneer in the segment was founded by Zachary Jones and Karan Aneja in 2012 and sold to serial entrepreneur couple Meena Ganesh and K Ganesh in 2013. The company is the leader in the segment and has raised over USD 45 mn in two funding rounds led by Accel Partners.
The company operates across 24 cities in India and 4 in Malaysia with 60,000 visits a month. Approx. 60% of its customer base comprises those above 60 years of age. While it does not handle emergency care, Portea focuses on general primary healthcare, post-hospitalisation care, chronic disease management and allied services. Portea is also the frontrunner in technology adoption and uses an in-house app for centralized patient records, hand held devices for field staff and GPS tracking for monitoring of logistics.
While entrepreneurs with a penchant towards technology have been early movers in the industry, other big corporates and even hospitals have not been late in gauging the impending need as well as the potential for home-based healthcare services in India. The Burman family (promoters of Dabur India) has ventured in the segment through Health Care at Home India (HCAH), a JV with the UK-based Health Care at Home. Established in 2013, HCAH claims to carry out roughly 5,000 visits in a month, offering services in the range of Rs 500 to Rs 20,000 per day.
India Home Health Care (IHHC), a south-India based company with operations in Chennai, Bangalore, Pune, Hyderabad has partnered with BAYADA Home Health Care, USA. Other notable players include Medwell Ventures – which acquired Nightingales Home Health Services and Mumbai-based Care 24.
Even hospitals including Apollo and Max have forayed into the Indian home healthcare market. Apollo started the service with over 500 homecare professionals offering services across Hyderabad, Chennai and Delhi. It has plans to add 13 more cities over the next 15 months with a total investment of Rs 50 crore.
The players in the industry have ambitious growth plans and intend to increase their reach to cover Tier II/Tier III cities. With players taking big strides, the industry is fast catching attention of PE investors.
key PE deals in the sector:
Another allied segment which is gaining attention is online pharmacies. Despite uncertainty over the legality of the business itself, investors have invested in the segment. Majority of the money has gone to Netmeds (USD 60 mn) and 1MG (USD 20+ mn). Other players in the segment include mChemist, Pluss, BigChemist, Zigy.
The existing home players, notably Portea, are also strengthening their foothold in the segment through acquisitions and strategic investments. Below are the key M&A in the sector:
The homecare business comes as a boon for the already burdened healthcare infrastructure in India. There is significant demand-supply gap plaguing the Indian healthcare system – while India accounts for 20% of the global disease burden, it accounts for only 6% of global hospital beds and 8% share of doctors and nursing staff. Home healthcare concept complements the healthcare delivery by reducing the average length of stay, ensuring efficient utilization of existing bed capacity and reducing chances of re-admission. They can also improve the average revenue per occupied bed if they work out the synergy in the right manner with the homecare providers.
The patients and their families are also increasingly adopting healthcare services at home. It provides the comfort of home and saves the physical and psychological pressure of hospital visits and stays. Home healthcare service is also more affordable than hospital stays. With savings on real estate and infrastructure cost, the model operates at ~15-30% lower cost when compared to hospital expenses for similar treatment.
For Apollo, depending on the nature of the service, the cost could range between Rs 2,000 to Rs 3,600 for a 24-hour attendance. With life expectancy increasing significantly in India, home health care is becoming mandatory. The concept of old-age homes or assisted living is socially largely unacceptable in India and therefore there is huge demand for home-based health care facilities. It is also finding great flavor with expats who have parents at home in India and are looking for professional healthcare for them at the convenience of home.
Key Challenges and Success Factors
Being an evolving model, the industry has its own challenges to deal with. Home healthcare is a very people intensive and execution-oriented business. Some of the current challenges include employee retention, employee utilization, operational issues such as inconsistency in quality and lack of standard protocols for in-home healthcare training. Successful models would need strong management, medical oversight, and high-quality nurses supported by a quality controlled pharmacy.
The role of technology is critical as it facilitates strong execution be it scheduling of appointments and other logistics. Also companies are exploring options such as changing employee mix, building a “network panel” of doctors/nurses to cater to excess demand to reduce operating costs. The margins in the home healthcare business are lower so companies need scale for the operations to be viable.
Currently most players have collaborations with leading hospitals to generate referrals – however with hospitals also entering the business, a shift from the current business models is expected. Players are increasingly adopting marketing activities, both residential awareness programs and digital marketing to increase awareness and expand reach. Some experts believe that business models that coexist with the current health care systems and networks in India will be the key to success in this market.
The home healthcare market in India is all set to disrupt the conventional medical service space in the near future. Organized players will bring in credibility, standards and accountability, which have been lacking in this area in India. This would also encourage insurance companies to cover home healthcare giving a further boost to this sector. Home healthcare is playing a critical role in expanding the spectrum of healthcare services in India providing the much needed professional care, convenience and cost benefits to a sizeable population in India that needs and is willing to pay for these services.
Note: This article first appeared in the Asian Hospital and Healthcare Management website on June 30th, 2016.