The Hindu Business Line : Small hospitals want to be rated big

WHEN two mid-sized hospitals in Nashik were graded favourably by an external rating agency on their ability to deliver high quality care, few in the business of healthcare may have taken notice.

But analysts tracking the burgeoning healthcare sector in the country observe that it could well signal a new found aggressiveness of the small and medium-sized hospitals, challenging Goliaths in the segment like the Apollo Hospitals Group, the Wockhardts or the Escorts.

Even as the healthcare delivery industry witnesses more organised behaviour and branding in an attempt to standardise care and win over consumers, the mid-sized hospital is looking at grading of its services as a strategy to keep pace with competition, analysts told Business Line.

Only recently ICRA had assigned healthcare gradings to Rajebahadur Hospital & Research Centre Private Ltd (RHRC) in the category of multi-specialty non-teaching hospital and Rajebahadur Heart Foundation Private Ltd (RHF) in the category of single-speciality tertiary care hospital category. Earlier ICRA had certified, through its grading, the healthcare services of CMC, Vellore.

Industry watchers observe that an increasing number of small hospitals are going in for grading, as they may not be as marketing-savvy as large hospitals.

"There are several factors driving this grading. In some cases, small well- run hospitals are trying to hold their ground in the face of intense competition from big hospitals that are opening clinics virtually in your neighbourhood.

Some other hospitals are grossly dissatisfied with existing standardisation procedures that do not translate into actual benefits on the ground, in terms of improved services or profitability. And with banks and re-financing institutions keen to support hospital projects, grading becomes a requirement in the absence of other credible data," analysts observe.

RHRC, commissioned in 1992, is a 60-bed multi-speciality hospital that offers progressive patient care services through its outpatient, inpatient, emergency, labour room, operation theatre and intensive care facilities. Housed in the same building, RHF was commissioned in 1999 and is a single-speciality, tertiary cardiac care hospital. While details of the hospitals' financial performance was unavailable, the rating agency points out that it did show declining operating costs and improving profitability.

The agency's grading methodology evaluates the capability of the institution concerned to deliver quality care from the user's (patient's) perspective. It evaluates based on two significant parameters - technical and interpersonal care.

Mr Ratan Jalan, CEO, Apollo Health and Lifestyle Ltd (that runs The Apollo Clinic network in the country), points out "relying on the doctor as brand may be necessary but may not be very long term in its vision. There is a rationale behind small hospitals going in for visible indicators endorsing their credibility, as it helps instil confidence in consumers. Large hospitals may take time to warm up to grading, till such time that consumers go to hospitals depending on it's grading. But for now, they may continue to carry forward on the strength of their reputation, even as lesser known hospitals start to get market-savvy."

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