According to the India brand equity foundation’s health sector report 2016, the Indian diagnostic market is expected to grow at a CAGR of 20% to $32 billion in 2022 from $5 billion in 2012. The diagnostic sector, including radiology and pathology, is estimated to register a cumulative growth of fifteen per cent p.a. Currently, the diagnostics market is about five per cent of the entire healthcare industry. It is assumed to be at Rs. 18,502 crore, according to a recent PricewaterhouseCoopers study.
The saturation in economic and infrastructural growth in metropolitan cities has led to new avenues. To fill the gigantic gap between the availability of pathological laboratories and their demand, more and more diagnostic service providers are exploring tier II and tier III cities due to their conducive business environment and a promising potential for growth. Medical practitioners can be a part of such growth and finance their investment with a loan for doctors.
Reasons for growing demand
Pathology services account for about 70% of the total diagnostic market. With stiffening competition, the service providers are expanding to the tier II and tier III cities due to the following reasons:
- Insufficient availability of diagnostic services
- A tremendous rise in population
- Upsurge in the cases of chronic diseases
- Rise in workflow pressure at existing diagnostic centres
- Increased healthcare spending and rise in preventive health check-ups
- Increased awareness of diseases and their management
- Demand for accurate and timely medical care
- Increased infectious and lifestyle-related diseases
- Market penetration of healthcare insurance
Scope for growth
Today, the majority of diagnostic centres belong to the unorganized sector. Due to the lack of solid regulation and absence of entry barriers, local diagnostic businesses thrive, especially in smaller cities and towns. In such a scenario, the organized players have a greater scope for penetrating the market and have a stronghold on tier II and III cities. Given this, the government is taking a step forward by encouraging the small and lesser-known diagnostic centres to have tie-ups or franchisees with well-known and proven service providers for better quality output.
Additional Read: Setting up a pathology lab: A checklist for doctors
For example, the top most chain of diagnostic laboratories in the country, SRL diagnostics, recently merged with Fortis Healthcare to extend its services in various parts. This has helped the business generate huge revenues in new cities and helped them service the inpatients of Fortis Healthcare, thus generating additional revenue. Additionally, the growth of SRL diagnostics was further augmented by the introduction of their new software application, MySRL, which made online booking and payment for diagnostic tests possible.
Another example is the public-private partnership (PPP) of Dr Lal PathLabs with the Government of India in the state of Tripura. This first-of-its-kind venture in India is a remarkable step towards creating a public-private partnership in the healthcare sector. Its revenue, which was at around Rs. 650 crore in 2016 is estimated to grow to Rs. 12,000 crore by 2019-20.
The rise in chronic and lifestyle-related diseases, such as diabetes, cholesterol, cardiovascular diseases, etc., is not confined to metropolitan cities alone. It is one of the significant factors in keeping up the sales in tier II and tier III cities as it contributes to about 30-35% of the total revenue. Such disorders need to be managed by regular tests. They do not require a prescription each time the patient wants to undergo a test, thereby reducing doctor visits and increasing the frequency of lab visits. To cater to this segment, investments are now being made in the infrastructure of smaller cities and towns, offering better and customer-friendly services like home-sample collection and online reports.
Future outlook
The greatest challenge of pathology services is perhaps not the increase in demand. It is the adoption of a business-focused approach along with ensuring quality patient treatments within the operating budget. Streamlining the workflow with standard operating procedures, information-driven business with informatics that provides visibility, growth, control, and accountability will help to survive the ever-growing demand of the population and meet the needs of the modern pathology environment.
One common requirement between all these elements is that of finances. Bajaj Finserv understands that the financing needs of medical professionals are different; hence our business loans for doctors are a tailor-made offering for medical practitioners to set up a firm in these untapped regions and expand their scale of operations. It comes in two formats- regular term loans and Flexi loans.
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