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Path lab centres in tier II & III: A growing market for doctors to leverage

  • Highlights

  • The Indian diagnostic market is expected to grow to USD32 billion in 2022

  • Rise in the number of chronic and lifestyle diseases in tier II & III cities

  • Huge scope for penetration of diagnostic services in these cities

According to the India Brand Equity Foundation’s health sector report 2016, 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 total healthcare industry and is assumed to be at Rs.18,502 crore, according to a recent PricewaterhouseCoopers study.
The saturation in economic and infrastructural growth in the metropolitan cities has led to the search for new avenues. To fill the gigantic gap between the availability of pathological laboratories and its 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 to 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:
1. Insufficient availability of diagnostic services
2. Tremendous rise in population
3. Upsurge in the cases of chronic diseases
4. Rise in workflow pressure at existing diagnostic centres

5. Increased healthcare spending and rise in preventive health check-ups
6. Increased awareness of diseases and their management
7. Demand for accurate and timely medical care
8. Increased infectious and lifestyle-related diseases
9. Market penetration of healthcare insurance

Scope for Growth:

Today, majority of diagnostic centres belong to the unorganised sector. Local diagnostic businesses thrive due to the lack of strong regulation and absence of entry barriers, 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. In view of 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, the SRL diagnostics, recently merged with Fortis Healthcare to extend its services in various parts of the country. This has not only helped the business generate huge revenues in unexplored cities but has also 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 the 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 forward towards creating 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 the number of chronic and lifestyle-related diseases, such as diabetes, cholesterol, cardiovascular diseases, etc. is not confined to metropolitan cities alone. It is one of the major 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 and do not require 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 infrastructure of smaller cities and towns, offering better and customer-friendly services like home-sample collection and online reports.

Checklist to start a pathology lab | Bajaj Finserv

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 provide visibility, growth, control, and accountability will help to survive the ever- growing demand of population and meet the needs of modern pathology environment.

One common requirement between all these elements is that of finances. Bajaj Finserv understands that financing needs of medical professionals are different, hence our Business Loans for Doctors are a tailor-made offering for medical practitioners to setup 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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