Is Home Healthcare Market Ready to Take off in India?

Context

As the country remained locked down during the Apr-Jun period in 2020, millions of chronic patients were deprived of appropriate medical help. Home service providers stepped in to fill a critical gap and home visits by doctors, blood tests at home for diseases such as diabetes, thyroid rose sharply.

Moreover, the demand for home health got a boost as quite a few hospitals were declared C-19 facilities and Govt. advised children, elderly, pregnant women not to visit medical facilities for normal checkups or consultations.

What is Home Healthcare?

Home healthcare is cost-effective medical assistance at home offered by caregivers at the time of illness or injury. It primarily comprises three segments.

a) Home health services- at-home nursing, medical consults

b) Home health devices- health screening, monitoring, and self-diagnostic devices such as pulse oximeters

· The importance of Diagnostics market is gauged from the fact that while it operates at 4–5% of total healthcare expenditure, it influences 95% of the remaining costs.

c) Home health solutions- Telemedicine and telehealth

· Telemedicine is expected to reach $5.5B by 2025 growing at a CAGR of 31%. Further, as per a recent study, 15–20% of the healthcare ecosystem could shift to virtual care which will include remote monitoring, home health, triaging, consults, etc.

Global Market Size

The global home healthcare market is estimated to be ~$312B in 2020 and will grow at a 9% CAGR to reach $370B by 2022

While home healthcare comprises ~8.3% of total health spending in developed countries such as the US, in India it constitutes a mere 3.6% depicting massive headroom for growth

India Market Size

The Indian home healthcare market was valued at $5.2B in 2019 and is expected to grow at a CAGR of 19% to reach $11–13B by 2025

The organized home health segment will likely reach $300M spend by FY25 growing at 40%+ CAGR

Overall Health Tech has seen increased investor interest in India since 2016 while 2020 saw a drop to $500M but could rebound quickly in 2021

2020YTD till Jun

As millennials born in the technological era age and retire with higher disposable income, the segment will be willing to pay the ‘convenience premium’ offered by home healthcare.

Growth Drivers (Read across the italics!)

India will age sooner than you thought…: India’s elderly population (people aged 60 and above) will grow at a faster rate than general population growth. It is set to move from 8% (~100M) of the total population in 2015 to 19% (325M) by 2050. India has time only till 2035 to capture the demographic dividend advantage and will age rapidly thereafter

With the disease burden shifting to chronic diseases…: Due to sedentary lifestyle, diet changes, rising obesity levels, higher stress, and rise in nuclear families. Lifestyle diseases will account for a whopping 74% of total deaths by 2030

while the health infra remains massively burdened beyond India1: The vast gap in India’s health system is surprisingly stark. India has 0.8 physicians per 1,000, 2.1 nurses per 1,000 and 0.9 beds per 1,000. This is worse than Sub-Saharan levels.

At 1.6% of GDP for FY21, public spend on healthcare in India is abysmally low with countries such as Bhutan, Ethiopia spending more on health

Hospitals are severely overburdened especially in critical and personalized care. India has a doctor-patient ratio of 1:1,445 which is among the lowest in the world. Moreover, the quality of institutional care (PHC’s, Govt. hospitals) remains questionable beyond Tier 1 cities, and families are demanding quality care for loved ones.

Home healthcare will solve both problems. It will decongest hospitals to focus on critical care needs while setting up a continuum for pre-and post-recovery at home. Doctors are also warming up and becoming receptive to home healthcare.

Govt. recognizes this and has recently launched favorable regulations….: The two most notable initiatives launched recently are the National Digital Health Mission and Ayushman Bharat. Both attack the two-pronged problem of approach (lack of structured data to undertake long-term initiatives) and affordability (ability to pay for chronic care treatment)

NDHM can significantly improve the efficiency, effectiveness, and transparency of overall health service delivery. Each patient will be given a Health ID where they can securely store and access their medical records (prescriptions, diagnostic reports, and discharge summaries), and share them with health care providers to ensure appropriate treatment and follow-up. They will also have access to more accurate information on health facilities and service providers and the option to access health services remotely through teleconsultation and e-pharmacy.

Swasth initially designed as a telemedicine app for C-19 is being built as a comprehensive home care solution that offers a spectrum of services across the patient journey.

Over the medium to long term, it wants to evolve into a National Health Stack (to be designed along the lines of India Stack)

Execution will be the key!

And insurers have stepped up to support the segment: Only 37% of India’s population was covered under any health insurance in 2018. However, Insurers are now covering patients for healthcare at home. ICICI Lombard launched a home-care service in collaboration with Portea and Healthcare at Home. IRDAI is likely to extend such cover on an industry-wide basis

Timing- Why now, what has caused the change

Pandemic induced disruption…: Rising urbanization, increased spending on healthcare, rising disposable income has been driving the demand for home healthcare for the last few years. The pandemic accelerated home healthcare adoption as most patients who needed regular access to clinics and hospitals switched to it

Has helped realize home health to be viable and cost-effective….: Almost 80% of the care that is currently given in hospitals can be delivered in-home settings through the proper use of technology

A report also states that home healthcare can replace up to 65% of unnecessary hospital visits, cost up to 40% less as compared to hospitals, and reduce hospital’s operational costs by 20%. An ICU patient at a hospital pays Rs. 35–50K per day while a similar set up at home ranges from Rs. 7.5–10K per day.

Recuperation time at home is also 15% lower as compared to a hospital set up. This is driven by the psychological comfort of being in a known and comfortable environment which speeds up the recovery process

And people’s experience with home health will likely stick….: Patients suffering from lifestyle diseases such as hypertension, diabetes, etc. which required frequent doctor visits and checkups have shifted to home diagnostic devices such as blood pressure monitor, glucometers, etc. According to a FICCI survey, 54% of people prefer lab tests, medicine delivery, and nursing care at home

In a market where assisted living/ community assisted models is missing: While developed countries have established care pathways through old-age homes or assisted living, the concept is largely nascent in India due to its socially unacceptable nature which also provides a strong fillip to home health facilities

Overall, the convenience in terms of reduced wait time and hassles, access to quality doctors, smooth data upload and integration means that the behavioral changes provide strong tailwinds to the segment

Innovations- Interesting startups and business models

This is probably the most exciting time for startups building in the home health/ digital healthcare space

Telemedicine which was in the doldrums for long due to unclear regulation, lack of adoption from doctors and patients has seen massive growth in the lockdown.

Home diagnostic for routine tests, e-prescription, online medicine delivery is all seeing high adoption curve. Innovation has also been driven by regular health monitoring, health report-based predictions, lifestyle-based recommendations by startups.

Home healthcare is also picking up for chronic diseases that require ongoing care (neuro, stroke, paralysis, ortho, cardiac, diabetes, infertility, etc.) as well as for specific segments (senior citizens, special needs children, patients recovering from surgery).

Even complex hospital-based procedures such as dialysis, chemotherapy, and post-cancer supportive care are being done at home. The ability to promote home healthcare as a clinically safer choice for post-surgical recovery and inpatient services (ICU, dialysis, chemotherapy) that require greater clinical supervision is a growth opportunity for startups

Another interesting trend is that hospitals such as Max (Max@Home) and Apollo (Apollo Homecare) have entered the homecare space. Some have also established JV’s such as the Burman family (promoters of Dabur) with UK-based Healthcare at Home and India Home Healthcare with US-based Bayada Home Healthcare

Notable players in home healthcare include Portea, Care24, and Medwell Ventures

Almost all of them have witnessed massive demand spikes in 2020. Portea witnessed a 60% jump in demand during the 70-day lockdown while at Medwell Ventures, post lockdown demand is up by 40% as states opted for home quarantine

Overall, the organized providers are expected to serve 4–5 lac patients by FY25 up from 1 lac patients in 2020

Other interesting startups include Dozee which is into remote health monitoring and saw a 5x jump in sales of its remote health tracking device in 2020 and Healthians which offers full body checkup, health test, blood test with free sample collection, and doctor consultation

Lastly, the opportunity in home health is attracting players in related segments. Startups such as 1mg, Practo who were setting up integrated digital healthcare platforms have accelerated their efforts. Efforts are on to bundle diagnostics, monitoring devices, home consultation, medical supplies, telemedicine, and mobility devices

1mg has created a ‘Smart Hospital’ concept which allows hospitals to create a lifecycle-based relationship once the patient checks out. The Integrated Healthcare plan is subscription-based and covers pharmacy, diagnostics, and consultations

Portea has also focused on building an ecosystem approach through acquisitions. This includes Medybiz Pharma (specialty pharma distributor), PSTakeCare (information platform), PorteaActiv (fitness and wellness) in recent years

In the long run, moat could be created through network effects which bring in strong organic referrals from both patients and caregivers to reduce acquisition costs. Cross-sell and upsell to other family members and becoming an endpoint to serve the needs of a particular patient to improve LTV could help. Differentiation can also be created by training caregivers to specialize in managing various chronic diseases. Nurses and caregivers could be segmented by specialty

Challenges- Barriers to scale, what will it take to win in the market

Home health is a win-win combination for various stakeholders. For patients, it offers convenience with lower prices, for hospitals it frees up beds faster allowing them to focus on patients with more acute needs, for doctors it gives them comfort that continuous monitoring of patient health condition will support faster recovery and lastly for insurers the cost is reduced as the patient is discharged earlier with a lower incidence of readmission to hospitals.

However, lack of trust in accuracy and quality coupled with the reluctance of people to address health issues at home have been the biggest challenges. Low margins, operational issues such as high attrition of caregivers, lower tenure, unutilized capacity also hinder home healthcare.

Unlike models like Uber which are able to improve utilization capacity of the asset, in home care set up finding a new customer each time a job ends is not easy for the caregiver which can make her/ his earning capacity unstable with fluctuating utilization

Apart from the right hiring, startups need to ensure that they deploy the right staff to the right patient at the right time. Depending on the disease type, the service and task must be identified and linked to the skills of the staff.

In house training verticals (as built by Care24, Portea) can ensure better quality, higher stickiness, and lower churn among staff. A more cost-effective approach could be tie-up with quality healthcare providers such as Virohan which helps reduce manpower costs of search, training, and retention.

Players who want to succeed will require laser-sharp execution as it is a people-intensive and operationally challenging business to scale. As margins are lower, scale is crucial to ensure viable operations. Overall cracking unit-level economics and becoming EBITDA profitable at a city level is crucial before replicating the playbook in other cities for startups in home health.

Startups might need to tap markets outside India (such as MENA, Europe, Japan, etc.) where the demand (aged population proportion), service durations, and propensity to spend (hence margins) could be higher

Existing players have largely relied on referrals from hospitals to drive business. However, with hospitals also entering the space, startups might need to diversify customer acquisition and use digital marketing, community awareness programs which can drive up marketing costs.

Home health could also remain restricted to Tier1 cities. Tier 2,3 cities and rural areas with a massive shortage of trained health professionals and poor health infrastructure could remain devoid of its benefits

The risk of consumers paying higher than the market price for tests or being asked to go for additional tests that are unnecessary at home as depicted from this example also looms high. There is a thin line between profiting and profiteering and it switches very quickly in healthcare

Proper customer awareness driven through efforts from Govt. and the healthcare ecosystem is crucial to minimize this

The Govt. needs to proactively set standards and create policies to regularize the home healthcare industry. Better clarity will drive more entrepreneurs and more investors to fund these models. Accreditation and regulating the supply of quality medical professionals is also crucial.

Issues on addressing patient data privacy and prescription substitution will also need to be addressed by the Govt.

Conclusion- Road Ahead

Home healthcare has largely been an unorganized fragmented market with slow growth for long. In the next few years, it provides a huge headroom for growth driven by massive behavioral shifts and strong consumer adoption.

A few years from now, patients might get complex tests and diagnostics done at home and wonder why they used to step out for these services earlier

Integrated health and wellness platforms will rise and fundamentally reshape the way individuals diagnose, consult, treat, and prevent diseases.

Image credits: Kalaari Report, Redseer, India HomeHealthcare, Ken

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of any institute or organization he is associated with.

Venture Capital, Blogger, Travel Enthusiast, Ex- Goldman Sachs