Budget 2019 Wishlist: Here Are The Key Challenges For Healthcare Sector

Key Challenges

  • Increase in NCD burden
  • Shortage of beds, especially in rural areas
  • Low spend on healthcare — We spend only <4% of GDP on healthcare vis-a-vis world average of > 9%
  • Returns lower than cost of capital: Many health care providers on average earn return in single digits, which does not even cover their cost of capital
  • Lack of clinical manpower impedes healthcare delivery especially in tier2, 3 cities and rural areas
  • Imports of medical devices and equipment: Close to 75% of medical devices are imported leading to forex loss and lack of country specific innovations
  • Low reimbursement rates under Ayushman Bharat: Low rates making it unattractive for the private sector to participate in the programme

Budget 2019 wishlist: Here are the key challenges for healthcare sector

Budget 2019 wishlist: Here are the key challenges for healthcare sector

Industry Ask

  • To address the acute health care supply side constraints, fiscal concessions in the Budget to create an enabling environment which encourages investment and protect returns.
  • Adequate budgetary allocation to Ayushman Bharat especially the wellness pillar. Given the late detection and treat-ment of disease, this could significantly reduce the country’s health care costs
  • Improve Ayushman Bharat participation: For secondary and tertiary care, ensure attractive package rates for private sector to participate in the scheme. Additionally, ensure adequate budget for ensuring better primary care through wellness centers which can act as feeders for higher care in the private sector
  • Mandate PPP in other clinical procedures as has been done in dialysis. This will encourage private sector participation and improve outcomes.
  • Revisit incentives for the domestic manufacture of medical equipment channels such as technology upgradation fund or capital subsidies for medical equipment, tax holidays and other incentives for manufacturing medical devices in India
  • Other measures to provide incentives for salaried class such as increase health insurance deduction limit from current Rs 25,000 to Rs 50,000 under Section 80D to promote large value insurance covers
  • A dedicated fund for health care start-ups working on enhancing access and reducing costs

PwC Point of view

Budget 2019 wishlist: Here are the key challenges for healthcare sector

“Ayushman Bharat’s promise to provide financial access to over 500 million Indians increases the demand for healthcare services. Given the current supply side constraints of infrastructure and manpower, this is likely to put further stress on an already overstretched delivery system. Concessions to ensure the flow of both local and foreign capital should be put in place. Public Private Partnerships need to be further institutionalised to ensure cost effective delivery of quality care. Fresh impetus to local manufacturing of devices to reduce costs should be put in place.The tax deductible limits on health insurance should be revisited and a fund to promote startups which can enhance accessibility to care should be set up. “

Dr Rana Mehta, Partner and Leader Healthcare, PwC India

Industry Voice

Budget 2019 wishlist: Here are the key challenges for healthcare sector

“Innovation is very important for the pharmaceutical industry. The Budget must have policy measures that encourage indigenous innovation in a big way. Local industry should be incentivised to invest in research and development. Secondly, the real interest rates are high and this issue has to be looked at from a long-term perspective. While the Central bank has recently taken some steps, there is an issue with transmission. Moreover, ease of doing business has to improve. While this includes faster approvals etc, the government has to also look at how operational cost of local industry can be lowered. For example, bringing gas and electricity under the purview of GST can be considered on a priority basis and one can consider oil event-ually. This would significantly reduce operational costs and improve the export competitiveness.”

Pankaj Patel, chairman, Cadila Healthcare

Business Standard

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