According to a KPMG Report, diagnostics sector is projected to contribute US$ 3.5 billion by 2015 but due to the market being largely unorganised, choice for the right brand becomes a challenge for the franchisees and even for the common man. Especially in metros, each area has several local labs which demonstrate themselves to be authentic and valid.
Dr. Madhukar Gangadi, Founder and CEO, MedPlus Health Services Pvt. Ltd says: “Lack of consumer awareness about good labs and who can deliver an accurate result, puts too much power in the hands of doctors who quiet often abuse this. Kick backs and cuts are extremely common and these are what drive the prices higher for a customer. Dependence on the prescribing physician to get business makes the labs more focused on marketing to the doctor and keeping in their good books than on quality, building a consumer brand and driving the prices down through scale.”
On what steps should be taken, Dr. Gangadi comments: “An industry wide effort is required to educate consumers about the need for quality equipment and processes that can deliver accurate results. Secondly, push is required by the authorities to enforce minimum quality standards.” On the other hand, H.M Singh, COO and Dilpreet Sahi, CEO, Sera Cue Labs inform that major challenges these days for diagnostics chains are non adherence of quality standards, untrained technicians and unethical practices.
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No incentives to spread the network
Ibef.org states that the hospital and diagnostic centres attracted foreign direct investment (FDI) worth US$ 2,793.72 million between April 2000 and January 2015, according to data released by the Department of Industrial Policy and Promotion (DIPP). However, in India still lack of regulations remains a major challenge for many leading players.
Agreeing to the same, Ameera Shah, MD & CEO, Metropolis Healthcare Ltd informs: “The challenge that multi-national diagnostics chains are facing is the lack of regulation in the industry. The onus on providing a quality report lies with the diagnostic company. To be able to provide reports of highest standards, we get ourselves accredited from renowned bodies like CAP (College of American Pathologists), which is the gold standard in quality accreditations. The diagnostic industry is largely fragmented with the bulk of the players forming the organised sector. Only about 10% of the players are accredited and this leads to huge disparity in quality and accuracy of the report and costs that are related to it. Apart from quality challenges we also do not get any incentives to spread our network in the rural belt where healthcare demand is the most. It is important to reach every corner of the nation to make universal healthcare a reality.”
Quality control
Most private diagnostics and lab services have always been very expensive for a common man in India. Only the government tests offers services at nominal rates but then there is always the trust factor involved. People still prefer choosing a private lab instead of Government run. To reduce the costs and reach out to the masses, diagnostics chains in India are slowly and steadily doing their bit.
Sera Cue Labs are committed to bring quality and ethical practices to the Indian Consumers. The brand collects samples only within a radius of 50 Km where their testing lab is stationed so that they are able to offer quality, faster TAT - Turn around time and the saving on logistics etc is passed on the Indian Consumer. Dr Gangadi says: “Labs are a small part of our overall business but we see a lot of inefficiency in the current system and we will be coming out with a plan to address a lot of these that will bring value to the end customers.”
Ameera Shah says: “The challenge in India is that diagnostics is seen as an expense while in actuality, a correct report is the very first step in accurate disease management. To make preventive healthcare an agenda for the common man we have introduced the loyalty card wherein customers can avail discounts on preventive tests. This will encourage people to undergo routine tests and stay healthy rather than identify disease after it has occurred. As the pathology specialists, Metropolis has been at the forefront of taking preventive healthcare to the masses and will continue to take steps to ensure that.”
Adopting franchising for growth
Almost all major players in the diagnostics sector have sooner or later adopted the franchise way. Dr. Lal Pathlabs is franchising since 1981. They were probably the first to take up franchise model in this sector. Other brands like SRL Diagnostics started operations in 1996 but chose to franchise its model in 2003. The most beneficial feature for the brands adopting franchising was the strong local grasp and support as compared to those who chose not to franchise. Other factors that made the brands take up franchising were fast expansion, wider reach, easy reach to smaller towns too etc.
