Classification of Hospitals

There are different types of hospitals and each type has its own characteristics, strengths and limitations. Due to variation in types it is importance to classify a hospital to understand its type. (Click here to read definition and roles of hospitals)

Hospitals can be classified on following basis

·         Size

·         Level of care

·         Clinical specialities

·         Ownership

·         System of medicine

·         Length of stay

       

We will understand each of this type with its features

1.1.  Size – 

      Size of a hospital is usually measured by the number of in-patient beds it offers. An in-patient bed is a bed in which a patient can be admitted for overnight. On the basis of size, a hospital can be classified as, small hospital, mid-sized hospital or a large hospital

1.1.1.      Small hospital – The hospital with approximately 30 or less beds are generally considered as small hospital. A small hospital, typically has limited resources and do not offer high end-care. Majority of the hospitals in India are small hospitals, especially in sub-urban and rural areas. Since small hospitals cost less to establish and run, most doctors prefer to open a small hospital either individually or in partnership. Usually patients will find it convenient to approach a small hospital as they are more likely to be nearby, take less time for offering services, are less costly and are easy to navigate by. However, there can be capacity issue in several small hospitals in handling large number of patients or handling complex cases due to its limited resources. It is a common practice in small hospitals to outsource various services such as laboratory, radiology and pharmacy. Emergency care, intensive care and surgical care facilities are usually at a very basic level in small hospitals.

 

Some specific specialities that often do not require hospitalization also gets categorized as small hospitals, although they may have adequate resources to cater to all kinds of health issue within that speciality. For example, eye hospitals generally have fewer beds, but can be very well geared to provide all kinds of treatment required for eye related issue. Hence, while categorizing hospital on the basis of size, one must also look its speciality to understand the features of the hospital.

 

1.1.2.      Mid-sized hospitals – Mid-sized hospitals, typically having 30 to 100 beds are also very popular in India. They have more resources and are better geared to provide complex services; however, they are less comprehensive compared to large hospitals. They generally offer reasonable level of emergency and intensive care and will have most of the clinical support services such as diagnostics as in-house services. Non-clinical services such as food services, laundry, housekeeping etc. are usually outsourced in a mid-sized hospital

 

1.1.3.      Large hospitals – Hospitals with more than 100 beds are considered as large hospitals. Very often these hospitals offer multiple speciality and super speciality services. Large hospitals have ample resources to handle large number of patients and complex health issues. They will typically have full-fledged ICU, operation theatre complex, emergency care units and all other clinical support units such as laboratory and radiology. Depending upon speciality, large hospitals can have additional units such as radiation therapy or burns care units. High end and complex cases are usually treated best at a large hospital.

 

Large hospitals are very costly to establish and operate and hence are few in the country. They are typically located in cities and can be less accessible to people from far off places.

 

In addition, some hospitals can be very large (1000+ beds). They are generally most comprehensive and will house the most sophisticated equipment for offering medical care. Operationally, the complexity of managing a hospital increases with increase in its size

 

1.2.  Level of care – 

    Another basis of classifying hospitals is the level of care, which are basically three; Primary care, secondary care and tertiary care

1.2.1.      Primary care – The hospitals that provide basic medical care such as out-patient consultation, vaccination, medicines for simple ailment or seasonal infections, normal deliveries etc. are called primary care hospitals. In government system, primary health centre (PHC) are the hospitals that provides primary care. Primary care hospitals are simple organizations with limited resources. However, primary care hospitals serve an important purpose of handling a large number of patients with simple medical issues and avoiding them to crowd at hospitals offering higher level of care. Primary care can be considered as the level of care that can be offered by a doctor with basic MBBS qualification

 

1.2.2.      Secondary care – These are hospitals that offer medical care which is one level higher than primary care. Such hospitals will offer treatments such as general surgery, non-complex speciality surgeries, basic intensive care, clinical procedures, caesarean delivery etc. In government system, Community Health Centres (CHC) and Divisional & District hospitals are considered as secondary care level hospital. Secondary care hospitals are better resourced than primary hospitals and can handle reasonable number of emergency cases

Most of the small and mid-sized private hospitals described in earlier section generally offer secondary care. Secondary care level can be considered as a level of care that can be offered by a specialist, such as MS or MD or equivalent qualifications.

 

1.2.3.      Tertiary care – These are hospitals will most advanced level of care. Generally they offer super-speciality care which is required in the field of Cardiac, Neuro, Nephro, Cancer etc. Tertiary care hospitals will have most advanced equipment and doctors with highest level of qualification and expertise. The operation theatres and ICU of such hospitals will typically be state-of-the art. In government system, the medical college hospitals are tertiary care level. Tertiary care level can be considered as medical care that can be offered by doctors who are super-specialist, qualified as DM or M.Ch. or have gained sufficient experience to be called as super-specialist

 

1.3.  Clinical specialities – 

    Hospitals can also be classified on the basis of clinical speciality they offer. For example, hospitals offering cardiac care are classified as Cardiac hospital, hospital providing cancer care are classified as Onco hospital. A hospital can offer one or more speciality, in which case, they are categorized as single-speciality or multi-speciality hospital. A multi-speciality hospital is operationally more complex compared to single-speciality hospital. Also, depending upon the speciality that a hospital offer, the type of resources and its organization is determined. For example, a cardiac hospital will need Cath-lab and a cardiac ICU, while an Onco hospital will require Radiation therapy unit

 

1.4.  Ownership – 

    On the basis of ownership, a hospital can be classified as follows

                 ·         Public Hospital (Hospitals owned by government)

o   Central Government Hospital – Hospital managed by central government such as AIIMS, PGIs etc.

o   State Government Hospital – Those managed by state government, such as district hospitals

o   Municipal Hospital – Those managed by district administration

o   PSU hospital – Those managed by specific PSU like railway, Coal India Ltd etc.

·         Private Hospitals (Hospitals owned by private individual/organization)

o   For profit private hospitals (Hospitals that have the business purpose)

§  Individual/Partnership (Hospitals that are owned by individuals or in partnership)

§  Corporate hospitals (Hospitals owned by a private company)

o   Not-for-profit hospitals (Hospitals owned by NGO/charitable organization, that do not have a business purpose linked to it)

 

The features and characteristics that a hospital exhibit can vary significantly on the basis of ownership. For example, government hospitals, will typically provide free or heavily subsidized treatment to all, but generally the service quality of government hospital is considered to be poor. Within government, central government hospitals are usually large and provide high-end tertiary care. State government hospitals, may make policies for prioritizing treatment to patients from their state. Similarly, PSU hospital may give special facility/benefit to the employee of that PSU.

In private hospital category, whether the hospital is for-profit or not-for-profit can make significant difference. It is typically seen that for-profit hospitals are more focused on providing good customer services. These hospitals also generally offer services that are business friendly. Not-for-profit hospitals generally offer services as per the need of the society. Their customer service generally lies in between that of a government hospital and of a private hospital.

 

1.5.   System of Medicine – 

    In modern world allopathy as a system of medicine is pre-dominantly used, however, in India Ayurveda, Homeopathy and Unani are also recognized system of medicine and preferred by many people. Thus, hospitals do provide these systems of medicine also. Depending upon their dominant system of medicine, a hospital can be classified as Homeopathy hospital, Ayurveda hospital or Unani hospital. While such hospitals are few in numbers, there is an increasing interest of people in availing treatment of these system of medicine

 

1.6.   Length of stay – 

    On the basis of length of stay generally required for a patient in a hospital, the hospitals can be classified as long-stay hospitals and short-stay hospitals.

 

1.6.1.      Short-stay hospitals – Patients in short-stay hospitals are required to be admitted for a relatively shorter duration such as 1,2 days to up to 20 days. Most hospitals that we observe in our vicinity are short-stay hospitals

 

1.7.   Long-stay hospitals – These hospitals offer care that generally require its patients to stay for a long-term, such as months or years in the hospital. Typically such hospitals will be metal hospital, rehabilitation centres, geriatric care centres, palliative care units etc. Due to long—term residential requirements, these hospitals are built in a manner that gives it a feel of a home like environment rather than a hospital

 

2.     OTHER TERMINOLOGIES ASSOCIATED WITH HEALTHCARE ORGANIZATIONS

While the word hospital is generally used to describe a healthcare delivery organization, there are few more terminology used. They differ in their nature and role they play in healthcare organization and may not necessary be a hospital, as per the definition. Some of these terms are given below

 

2.1.   Nursing Homes: A very common term used in place of a hospital is nursing home. While in current practice, there may not be much difference between a hospital and a nursing home, conceptually they differ. Nursing home as a concept was developed to accommodate patients with primary purpose of providing them a nursing care. Nursing homes typically are not expected to employ doctors, but just nursing staff who help patients in going through the treatment advised by a doctor. For example, nursing home is geared to administer medicine, do wound care, collect sample for testing etc. In earlier times, people use to admit in nursing home so that they can take help for administering the treatment prescribed by the doctor

 

2.2.   Polyclinic – A polyclinic is a building or complex where multiple clinics of different specialities exist together. A polyclinic generally does not provide in-patient care   or any surgical procedure. The clinics only provide consultation while for treatment patient has to get admitted in a hospital or in a nursing home. In polyclinic different doctors, belonging to different specialities, can run their clinics together. Advantage of polyclinic is that for a patient various specialist are available under one roof and in case of cross reference, it can be done efficiently.

 

2.3.   Ambulatory care – The term ambulatory care is used specifically in western countries. It is basically and organization that offer OPD and emergency care only and do not provide in-patient care.

 

2.4.   Palliative care centres/Hospice centres – These are centres that provide care to those patients whose diseases are incurable or terminal in nature. In palliative care centres, the aim is to provide symptomatic relief from patients (such as relief from pain and swelling), while helping the patient to carry out his/her daily routine.

Introduction and role of hospital

Hospital is an integral and core part of a healthcare delivery mechanism. It is an institution which provides healthcare services to patients through specially trained people (like doctors and nurses) who use medical science and sophisticated equipment and instrument. In addition to providing care, hospitals are also involved in training of medical professionals, medical research, prevention of diseases, promotion of health and rehabilitation.

 

Pricing of Hospital Services

A Hospital offers a large number of clinical services and some non-clinical services as well. Patients availing these services can be Out-Patient, Emergency Patient or In-Patient. In-patient can further be of categorized as per their choice of accommodation, such as deluxe, semi-deluxe or general ward patient. Justified charging of services and facilities availed by different categories of patients can be confusing at times, as it requires a clear understanding of what services or components to be charged and how to differ the charges for different category of patient. In this post, a simplified explanation of how to price hospital services to charge it to patient, is presented. This will also help hospitals in developing a comprehensive document on hospital’s tariff and relevant policies for billing. In addition, you may also like to check this post on 'How much does it cost to run a hospital?'

For pricing various services of a hospital, services can be grouped under following head.

1. OPD services
2. Emergency services
3. IPD services
4. ICU services
5. Surgical services
6. Medical/Surgical Procedures
7. Diagnostic services
8. Use of Medical Equipment
9. Materials and Consumables
10. Packaged services
11. Other services and facilities

A brief description of each of these services group along-with how are they charged is described below.      

Should private hospitals empanel for Ayushman Bharat – PMJAY?

The massive scale of Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana has caught the attention of every private hospital in India. Covering almost 500 million people to the extent of Rs. 5 lacs per family, is too big a pool for any hospital to miss. Yet, there are apprehensions, as there has been bitter experience by private hospitals in various public health financing scheme. RSBY, the predecessor scheme, for example, is mired with numerous cases where hospitals have not reveived their payments for many months or even years. Hence, while many hospitals have empanelled themselves with the scheme, many more are taking a cautious approach of wait and watch.

Based on the scheme design and the experience, here are the answers to some of the questions that bothers any private hospital evaluating whether or not to participate in this scheme.

    1. Are the rates at which hospital services are paid, adequate?

NABH accreditation statistics

NABH accreditation system was established in year 2006 and since then it is accrediting healthcare organizations. Here are some statistics on accreditation of hospitals in India as of June, 2019.

1. Total accredited hospitals         –     563
2. Total pre-accreditation entry level hospitals  – 718
3. Total accredited small healthcare organizations (SHCO)  – 220
4. Total pre-accreditation entry level SHCO   –  1497

Performance measures for Hospital business

 

Hospitals are cost intensive business, both in capital as well as operational expenditure. The article ‘How much does it cost to run a hospital?’ gives a detailed understanding of different cost heads with their proportion. In addition, rising competition and increasing regulations are just making the hospital business even more difficult. For a hospital business manager, it is crucial to closely monitor the business performance of the hospital. Following are the list and description of some key measures that gives a good understanding of hospital’s business performance.

BED OCCUPANCY RATE (BOR)  

This is by far the most commonly quoted measure to describe how well a hospital is doing. BOR gives a gross idea about how well the hospital’s bed capacity is being utilized. BOR is the percentage of available beds that is occupied by admitted patients at a given point of time. BOR can also be calculated for a period (like for a month), in which case, it is average BOR for that period

Making of a loyal customer

By - Nupur Kajarekar, Student of PGDM-Healthcare Management at Goa Institute of Management

Nowadays customers make healthcare decisions based on Easy access, Quality of service offered and Cost effectiveness, as there is a wide range of options and choices available to the customers in the healthcare industry. Thus, health care providers have to provide their services with high standard of care in order to retain their customers in this growing and competitive industry which was once ignored with the notion that patients do not have choices to make when it comes to hospitalization and treatment. With growing demand and fast change in technology, even the expectations of customers have gone up wherein they demand services like online booking of appointments, self-access to medical details, health education and tips, reminders for follow-ups etc. whereas some customers still rely upon the prevalent assisted service. So here the role of health care providers is to balance between the needs and demands of customers so as to keep their growing expectations fulfilled.

How to create a winning hospital marketing strategy?

By - Bipin Srivastava, Student of PGDM-Healthcare Management at Goa Institute of Management

With the ever-increasing corporatization of healthcare services, it has now become imperative on the part of hospitals to strategically market themselves, in order to survive the competition and emerge profitable. True, hospitals cannot and should not market themselves as any other business would do, but that most certainly does not mean that hospitals should not market themselves at all. Indeed, in this day and age, no hospital can afford not to advertise its services, unless of course, it is a government hospital. 

Here, I list down several ways that could be used to market your hospital. 

How India performed in healthcare compared to other similar nations?

Since beginning of this century a large number of policy changes and initiative has been taken in healthcare sector of India. This had led to certain changes in healthcare infrastructure and population health status of the country. During the same time most other nations of the world has also done significant work in the field of healthcare. So how did India perform in healthcare in comparison to other countries that are economically similar to India? Based on the data from World Bank’s, world development indicators and WHO’s, Global health observatory data repository, I did a study to make this comparison, which was published in a healthcare research journal. The findings from this study are interesting and worth sharing with healthcare professionals.

For the sake of brevity, I have skipped the detailed design and methodology of the study (those interested can contact me for full paper). In brief however, the comparison was done between performance of India and overall performance of ‘Lower Middle Income Economies (LMIC)’ (as India falls in this category). Along-side a comparison with neighbouring countries (Pakistan, Sri-Lanka, Bhutan and Bangladesh) was also done. The parameters compared were healthcare infrastructure and health status of the population and within each parameter a group of indicators were chosen. The timeframe used for comparison was from year 2000 to 2015. The findings and learnings from the study are as follows.

How much does it cost to run a hospital?

Hospitals are places that operates 24 x 7 x 365. Crowded OPDs, long waiting time, queued up counters etc. are things that are considered a normal routine of any typical hospital. Many may wonder that the promoters of hospitals must be making big bucks out of this never slowing down business. While it’s true that hospitals generate big revenues from patients’ bills, they also spend a handsome amount on its operational expenses. The cost of running a hospital can be really high and fluctuating and can sometime result in financial losses instead of any gain. The cost at which hospitals operate leaves very thin margin and it is absolutely important that the business managers keep an eye on the expenses, or else the margin may vanish. Below, after going through the expense data of few large hospitals, I have listed down what are the important cost components and how much do they affect the overall expenses in a hospital.

(Read - Performance measures for hospital business)

GENERIC VS. BRANDED MEDICINE – WHAT IS THIS MESS?

Yesterday, I got a long WhatsApp message in which, our Prime Minister’s push for a law to make prescribing generic medcine mandatory for doctors, was heavily criticized. The message appears to be circulated by a group of doctors that alleges government’s move as irrational, biased and politically motivated. Many such messages and posts are in circulation, since the time PM spoke about prescribing generic in Surat. Few of my doctor friends whom I spoke to on this matter, appeared to be highly agitated on this matter. Time of India conducted a study where they found 73% doctors opposed to push for generic drugs. But on the other hand, government seems to be firm on pushing this agenda ahead. There has been a letter issued from MCI to doctors asking them to prescribe medicine with generic names, as far as possible. The letter was amended later as Indian Medical Association (IMA) got into semantics and issued a clarification that ‘as far as possible’ does not mean compulsory and doctors are free to prescribe what they want. Even on amended letter there is subjective interpretations being made by IMA and bodies in healthcare profession.

CASE STUDY - The Operational riddle of a health insurance company

(This case study can be used for quantitative reasoning ability for healthcare managers. It is based on price decision of a health insurance product.)

Background situation

‘Health4all’ a health insurance company, discovered a town in sub-urban area with a population of 1 lac people. They found that no health insurance company has so far tapped this area and a significant number of people are desirous of buying a health insurance product. Buoyed by the business opportunity, the CEO asked the operations head to start working on selling your insurance plan here, with a clear stated objective of maximizing profit.

As an operations head you made all arrangement to launch your flagship health insurance policy in the town, which gives the customer a cover of 1 lac rupees for a premium of Rs. 1000/-. Customer have to undergo a health check-up (paid by the company) to determine any pre-existing diseases. Company doesn’t pay for the treatment of pre-existing diseases found in health check-up.

Knowing why patients choose a hospital is essential for hospital business

Pick up a patient feedback form of any hospital and you would almost invariably find a question towards the end that reads ‘Would you recommend this hospital to your friend/relatives?’. Most hospital take pleasure if high percentage of patient respond to this question by saying ‘yes’. But do hospitals know, if the patients actually do what they write? The question can be expanded as, do hospitals actually know why patients selected their hospital for treatment? Below, I have discussed, how knowing this could be central to the success of your hospital business. (You may also like to read a related post on 'Risks in hospital business' and Performance measures for hospital business). 

Classifying patients for business monitoring

Business managers in hospital generally classify their patient’s footfall into walk-in-patients and referral patients, for monitoring their business performance and developing further plan for marketing. Whether walk-in or referral, there are few reasons which plays a dominant role in patient’s decision to select a hospital.  While patient coming due to any reason doesn’t matter as far as hospital’s sales figure is concerned, it may be of a concern for a sustainability and long-term business. For a hospital business manager with long term focus, understanding these reasons is crucial to appropriately position and promote their hospitals.

Risks in hospital business

Healthcare is considered be a recession free industry and hospitals are thought of as stable business organization. Hospital management studies generally teaches students on how to manage operations effectively with large and increasing volume of patient coming to hospital. However not getting sufficient patient is an equally likely possibility and continuing with this situation for even few months may adversely affect the sustainability of hospital.

Beside many other risk factors, there are 3 factors which are very relevant to hospital business and must be taken into consideration by managers.

Excessive reliance on star doctors – 

Many hospitals in India depends on one or few of their star doctors to generate 70%-90% of their revenue. When these star doctors leave, most of their patient just stops coming to the hospital and go wherever the doctor goes. This impacts the top-line severely and hospitals must be cognizant of this risk. While hospitals may take good care of their star doctors, there is always a risk of losing them for one or other reason. It is better to reduce the risk if there is one. Promoting other non-star doctors, increasing loyalty of patients to hospital’s brand and building a good referral chain may be some of the ways to counter this risk.

Avoiding poor online rating of your hospital

Word of mouth (WoM) publicity has always been amongst the most dominant factor that affect brand image and business of a hospital. With online medium becoming highly popular, the WoM now spreads rapidly and to a much wider audience. Hospitals, today must take their customers’ online reviews very seriously, if they have to successfully compete in business. Like most other business, in healthcare also patients’ decision to select a hospital are heavily influenced by the hospital’s online rating and reviews. Researches have also found that negative reviews have a higher effect on customer’s decision compared to positive reviews. Hence, it is of utmost important to prevent getting negative reviews of your hospital on internet for everyone to see.

What leads customers to give poor online rating of hospital:

While there could be several things that can upset a hospital’s customer, there are few which goes beyond their tolerance level and can become a reason for them to rate the hospital poorly. I evaluated about 700 negative online reviews of 28 different hospitals to identify those reasons. Based on my research I am stating the top 5 reasons for poor online rating and what should be done to prevent them.