The healthcare industry is expected to touch USD 260 billion by 2020. It is an emerging market, which has traits of both developing and developed countries and can be harnessed to create pool of opportunities. By 2022, it is expected to touch USD 372 billion and medical devices and equipment to cross USD 11 billion in the same year.
Rising income, more incidence of lifestyle diseases, and increasing access to insurance and government-subsidized schemes are all contributing to create a strong demand.
Global players and PE firms are showing interest to invest in India as we have seen in recent transactions. Mergers and acquisitions are significant now in Indian healthcare scenario, which was not heard of a decade ago.
There is a wide gamut of opportunities in Indian healthcare today, starting from Infrastructure where we require 3 million beds by 2025, additional 1.54 million doctors, and 2.4 million nurses. Medical technology is another area, which is growing fast owing to increase in geriatric population. Mostly the equipment is imported now and India can actually use the advantage of local talent pool to work out innovations in product technology and service delivery. Combination of global technology with Indian skills and expertise can help in bringing down the cost and strengthen path for affordable healthcare. Biotech is another fast-growing segment and offers diverse opportunities for foreign firms. The Indian biotech industry has an approximately 2 percent share of the global biotech industry. The industry comprises about 800 companies and is expected to grow from the current USD 5–7 billion to USD 100 billion by 2025. India has emerged as a leading destination for clinical trials and contract research owing to the growth in the bio-services sector.
In a cost-conscious market like India, private healthcare players are working round the clock on making the supply chains efficient for increasing economies of scale to optimize cost. Growing demand, policy support, and rising FDI are driving growth in the healthcare sector currently.
The Government of India is planning to increase public health spending to 2.5 percent of the country’s GDP by 2025.
The opportunities to shape this future have never been more promising. But it will take active participation, collaboration, and investment by all healthcare stakeholders to turn opportunities into realities.
On budgetary allocation in healthcare
Union Budget 2020 has given healthcare sector a big impetus toward growth. The Center’s plans to expand the government’s flagship health insurance scheme PMJAY, along with an allocation of Rs 69,000 crore for the healthcare sector in the 2020-21 Union Budget are big announcements.
Empanelment of hospitals for the scheme has been a challenge. About 16,000 hospitals are currently empaneled, of which around 50 percent are private sector hospitals. Besides allocating Rs t6400 crore for the flagship scheme, the FM also said that the AB-PMJAY scheme would get expanded by setting up more hospitals in the Tier-II and Tier-III cities under the public-private-partnership (PPP) route. This will go onto give a boost to those who are planning to invest in Tier II and Tier-III cities.
The government’s plan to initiate a program to set up 150,000 health and wellness centers (HWCs) by 2022 is also a clear signal that the government wants healthcare to reach a wide strata, making it more accessible and closer to doorstepThe FM’s announcement that the generic medicine retail outlets like Jan Aushadhi stores would also be expanded to every district also goes on to prove the point of making medicines more affordable. What is interesting to note is that apart from medicines, these stores would now also stock more surgicals. The Jan Aushadhi stores now are housing 154 surgicals, which will now be expanded to cover 300 surgicals. This would be a positive for both SME pharma manufacturing units as well as small domestic medical devices makers who supply to the scheme. This will bring down out of pocket (OOP) expenses on healthcare of a large section of our population. Presently, almost 78 percent of the population spends OOP on healthcare.
To address the issue of shortage of doctors in the country, every district hospital will be allowed to be attached to one medical college under the PPP scheme. This will address viability gap funding. This will encourage more private players to enter the medical education sector. Also, large private hospitals will be allowed to start DNB and Fellowship PG programs, by easing the existing entry norms. This will increase the pool of specialists and super specialist doctors. Also, budget has allocated Rs 3000 crore for special bridge courses in skill development for training paramedics, technicians and nurses which too are in short supply in our country. This will add on to more employment generation and close the demand-supply gap.
The budget has given due importance to new investments in and the decision to set up new Investment clearance cell is a step in that direction.
The launch of National Infrastructure pipeline under which healthcare is allocated Rs 103 lakh crore, will boost growth of all sub-sectors of healthcare like new hospitals, pharmaceutical units, medical devices manufacturing units, consumables manufacturing units etc.
The investment of Rs 6000 crore for the BharatNet Program will enhance digital connectivity to one hundred thousand gram panchayats through optical fibre. This will impact investments in equipment for tele-medicine and also expand healthcare services through the hub and spoke model of healthcare to far off areas.
Healthcare start ups especially those in AI, bio-informatics, genetics, will be greatly benefitted as the turn over limit has been increased to Rs 100 crore and exemption in tax has been extended up to 10 years now. Similarly, healthcare start ups will also be benefitted as ESOPS tax has been deferred to 5 years.
On monitoring the quality of private healthcare
Big private healthcare players are all accredited with national and international organizations as they focus on governance with patient-centricity in mind. Also, these organizations cater to a large chunk of foreign nationals under medical tourism, so quality of healthcare delivery is strongly woven into their cultures. NABH, JCI, Green OT, Kayakalp private healthcare organizations are well familiar with these accreditations. The challenge is to drive this across all categories of hospitals, nursing homes, and diagnostic centers so that compliance to the quality guidelines are adhered to. Thrust at this stage should be more on bringing these institutions under the accreditation umbrella, and good outco me shall follow.
On PPP in making healthcare a success
Announcements regarding viability-fund-gap support for hospitals in Tier-II and Tier-III cities to meet the requirement for Ayushman Bharat and PPP-model hospitals in 112 aspirational districts will benefit the healthcare sector. The financial viability of such hospitals will be sustained through PPP models. This will cover a wider population of the tier II and tier III cities and rural population for the benefits of treatments under this scheme.
Viability-gap funding to set up hospitals and medical colleges in the most undeserved districts will certainly address the issue of shortage of beds, and enhance accessibility under the PMJAY. PPP will help in building up optimal capacity while ensuring cost effectiveness of care delivery in rural areas.
NITI Aayog has actually infused fresh lease of life into PPP by focusing on district hospitals. If this is taken up seriously, then this can cause quantum improvement in healthcare infrastructure transcending the borders of Tier-I cities.
In today’s times, healthcare organizations are focused on strict financial operations, efficient operational performances, outcome-based care delivery, and out-of-the-box solutions. Developing PPP and investing in preventive and wellness healthcare would pave the path toward sustainable healthcare.