In India, there are various hurdles to address the healthcare issues in a comprehensive way. Though, these do not seem to be insurmountable, the country needs a clear time-bound grand strategy to squarely address this vexing concern, which also has its consequent socioeconomic fallout.
If we look at the history of development of the industrialized countries of the world, we shall easily be able to fathom that all of them not only had heavily invested, but even now are investing to improve the socioeconomic framework of the country where education and health are the center pieces. Continuous reform measures in these two key areas are proven key drivers of economic growth of any nation.
Just as focus on education is of utmost importance to realize the economic potential of any country, so is the healthcare. It will be extremely challenging for India to realize its dream of becoming one of the economic superpowers of the world, without a sharp strategic focus and significant resource allocation in these two areas.
The World Health Statistics:
As reported by the ‘World Health Statistics 2011′, India spends around 4.2 percent of its Gross Domestic Product (GDP) on health, which is quite in line with other BRIC countries like, China and Russia.This has been possible mainly due to increasing participation of the private players in the healthcare sector and not so much by the government. The following table on ‘Health Expenditure’ will highlight this point:
|Exp. on Health (% of GDP)||
|Govt. Exp. on Health(% of Total Exp. on Health)||
|Pvt. Exp. on Health (% of Total Exp. on Health)||
|Govt. Exp. on Health (% of Total Govt. Exp.)||
|Social Security Exp. on Health (% of General Govt. Exp. on Health)||
Key healthcare goals:
As articulated in a recent paper titled ‘Meeting the Challenges of Healthcare Needs in India: Paths to Innovation’, the key healthcare goals of any country have been described as follows:
- Improved quality of care and population health as measured by life expectancy and other measures of wellness
- Cost containment and pooled risk-sharing by the population to allow financial access to care as well as avoid catastrophic ruin
- Provide access to care in an equitable manner for all citizens
Specifically to India one of the key challenges to healthcare is ‘Universal Access’ to care and health equity. However, in terms of pure concept the country has a universal healthcare system, where theoretically any citizen is entitled to avail the public health facilities irrespective of socioeconomic status. Unfortunately, the reality is far out of the line.
Health is a ‘State subject’:
In Indian system, health is primarily a state subject and the Central Government deals with:
- Health related policies
- Health related regulations
- Initiatives related to identified disease prevention and control
Whereas, each state needs to take care of:
- Healthcare administration
- Healthcare delivery
- Healthcare financing
- Training of personnel related to healthcare
Primary Health Centers (PHCs) of India located in the cities, districts or rural villages are expected to provide medical treatment free of cost to the local citizens. The focus areas of these PHCs, as articulated by the government, are the treatment of common illnesses, immunization, malnutrition, pregnancy and child birth. For secondary or tertiary care, patients are referred to the state or district level hospitals.
The public healthcare delivery system is grossly inadequate and does not function, by and large, with an optimal degree of efficiency, though some of the government hospitals like, All India Institute of Medical Science (AIIMS) are among the best hospitals in India.
Most essential drugs, if available, are dispensed free of cost from the public hospitals/clinics. Outpatient treatment facilities available in the government hospitals are either free or available at a nominal cost. In AIIMS an outpatient card is available at a nominal onetime fee and thereafter outpatient medical advice is free to the patient.
However, the cost of inpatient treatment in the public hospitals though significantly less than the private hospitals, depends on the economic condition of the patient and the type of facilities that the individual will require. The patients who are from Below Poverty Line (BPL) families are usually not required to pay the cost of treatment. Such costs are subsidized or borne by the government.
Private sector is expensive:
That said, in India health facilities in the public sector being inadequate, generally under-staffed and under-financed, a large section of population still does not have access to affordable modern healthcare. As a result, more often than not, common patients are compelled to go to expensive private healthcare providers. Majority of the population of India cannot afford such high cost private healthcare, though comes with a much better quality.
Thus, as things stand today the public sector actually provides just about 20% of actual care services. The balance is catered by the private sector.
A great potential:
A 2012 report on ‘Indian Healthcare Industry’ indicates that in 2010 the size of the industry was around US$ 50 billion and is expected to register a turnover of US$ 140 billion in 2017 with a CAGR of 15 percent. This growth momentum, despite all these, positions India as one of the most lucrative markets within the developing countries of the world. On a global perspective as well, healthcare industry is one of the fastest growing segments clocking a turnover of US$ 5.5 trillion in 2010.
The main drivers of growth for the Indian healthcare industry are considered as follows:
- Second highest growing economy in the world
- Changing demographic profile
- Increasing disposable income
- Higher incidence of Non-infectious Chronic Diseases (NCD)
- New investment avenues
- A large talent pool
- Cost-effective human resource
Besides above, other growth drivers are as follows:
- Increased penetration of pharmaceuticals in the rural markets
- Increased export potential for low cost and high quality generic pharmaceuticals, as a large number of patents are going to expire in the next 5 years
- Emergence of various health cities and also single specialty clinics offering quality healthcare
- Health insurance portability is expected to increase the penetration of insurance, improve quality of service and raise competition among insurers to retain customers
- Telemedicine: E-healthcare in rural areas is gaining popularity with the involvement of both
public and private players like, ISRO, Mazumdar Shaw Cancer Center and Narayana Hrudayalaya. Some telecom companies like, Nokia and BlackBerry are also contemplating to extend the use of mobile phones for remote disease monitoring as well as diagnostic and treatment support. Introduction of 3G and in the near future 4G telecom services will
further enhance opportunities of e-healthcare through mobile phones, expanding the field of healthcare.
Within the healthcare industry, the most promising sectors are:
- Hospitals and Nursing Homes
- Medical equipment
- Pathological labs and other diagnostic service providers
According to the Investment Commission of India, the healthcare sector of the country has registered a robust CAGR of over 12 percent during the last four years and the trend is expected to be ascending further.
Quite in tandem, other important areas of the healthcare sector, besides pharmaceuticals, have also recorded impressive performance as follows:
|Clinical Lab Diagnostics||30|
|Other Services (includes Training & Education; Aesthetics & Weight loss; Retail Pharmacy, etc.)||40|
On its part, the Indian government is also in the process of giving a thrust to the healthcare sector as a whole by:
- Increasing public expenditure on healthcare from 1 percent to 2.5 percent of GDP in the 12th Five Year Plan Period
- Encouraging public-private partnerships (PPP) in hospital infrastructure and R&D
- Encouraging medical tourism
- Attracting Indian and foreign players to invest in Tier-II and Tier-III cities with huge untapped market potential. For example:
- Expansion of major healthcare players in tier-II and tier-III cities of India like, Apollo, Narayana Hrudayalaya, Max Hospitals, Aravind Eye Hospitals and Fortis
- BCG Group will reportedly open shortly a multidisciplinary health mall that would provide a one-stop solution for all healthcare needs starting from doctors, hospitals, ayurvedic centers, pharmacies including insurance referral units at Palarivattom in Kochi, Kerala.
BCG’s long-term plan, as reported in the media, is to set up a health village spanning across an area of a 750,000 sq. ft. with an estimated cost of US$ 88.91 million. Along the same line, to set up more facilities for diagnostic services in India, GE Healthcare reportedly has planned to invest US$ 50 million for this purpose
- Introduction of the ‘National Commission for Human Resources for Health Bill 2011( NCHRH Bill 2011)’, which will bring all independent bodies like the Medical Council of India (MCI), the Dental Council of India (DCI), the Pharmacy Council of India (PCI) and the Nursing Council of India (NCI) under a centralized authority for a more cohesive action.
According to the Department of Industrial Policy & Promotion (DIPP), the healthcare sector is undergoing significant transformation and attracting investments not only from within the country but also from overseas.
The Cumulative FDI inflow in the healthcare sector from April 2000 to October 2012, as per DIPP publications, is as follows:
|Sector||FDI inflow (US$ million)|
|Hospital and diagnostic centers||1482.86|
|Medical and surgical appliances||571.91|
|Drugs and pharmaceuticals||9775.03|
(Source: Fact Sheet on FDI – April 2000 to October 2012, DIPP)
The trend of new job creation in the healthcare sector of India is also quite encouraging, as supported by the following facts:
The Healthcare sector in India recorded a maximum post-recession recruitment to a total employee base of 36, 21,177 with a new job creation of 2, 73, 571, according to ‘Ma Foi Employment Trends Survey 2012’.
- Despite slowdown in other industries, in the healthcare sector the new job creation continues at a faster pace.
- With many new hospital beds added and increasing access to primary, secondary and tertiary / specialty healthcare, among others, the ascending trend in job creation is expected to continue in the healthcare sectors of India in the years ahead.
A Strategy Prescribed:
Though the report of the High Level Expert Group (HLEG) on the ‘Universal Health Coverage (UHC)’ is already in place, without going into the implementability issues of the report in this article, I would like to propose a ten pronged approach towards a new healthcare reform process to achieve the national healthcare objectives:
1. The government should focus on its role as provider of preventive and primary healthcare to all, through public hospitals, dispensaries and PHCs, including free distribution of essential medicines.
2. In tandem, the government should play the role of enabler to create Public-Private partnership (PPP) projects for secondary and tertiary healthcare services at the state and district levels with appropriate fiscal and other incentives.
3. PPP also may be extended to create a robust health insurance infrastructure urgently.
4. The insurance companies will be empowered to negotiate with concerned doctors, hospitals and other organizations, all fees payable by the patients to doctors, hospitals, for diagnostic services etc., including cost of medicines for both inpatients and outpatients treatment, with the sole objective to ensure access to affordable high quality healthcare to all.
5. Create an independent regulatory body for healthcare services to regulate and monitor the operations of both public and private healthcare providers/institutions, including the health insurance sector.
6. Levy a ‘healthcare cess’ to all, for effective implementation of this new healthcare reform process.
7. Effectively manage the corpus thus generated to achieve the healthcare objectives of the nation through the Healthcare Services Regulatory Authority (HSRA).
8. Make HSRS accountable for ensuring access to affordable high quality healthcare to the entire population of the country together with a grievance redressal mechanism.
9. Make HSRS accountable, its operation transparent to the civil society through HSRS website and cost-neutral to the government, through innovative pricing model based on economic status of an individual.
10. Allow independent private healthcare providers to make reasonable profit out of the investments made by them
All the ten steps prescribed as above, will help ensure a holistic approach to healthcare needs of India and reduce prevailing socioeconomic inequalities within the healthcare delivery systems of the country.
Rapidly growing urban centric five-star private healthcare initiatives are welcome but these are now just catering to the privileged few, perpetuating the pressing healthcare issues unanswered.
Only a well-orchestrated, comprehensive, time-bound and holistic approach is capable of addressing the humongous healthcare needs of India and at the same time providing much required growth momentum to the Indian healthcare industry, positioning India as one of the most lucrative healthcare hubs within the emerging economies of the world.
By: Tapan J Ray
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