Dr Nitiraj Gandhi
Senior Manager,
Ernst and Young LLP.

Healthcare market in India

Healthcare in India is very different from the global market when compared with developed nations. While in countries like the US and the UK, there is a public healthcare system, the Indian healthcare system can be described as mixed. While the government provides healthcare at primary, secondary, and tertiary levels, there is a burgeoning number of private hospitals with better medical facilities. Unfortunately, most are too expensive for the average citizen. Healthcare is taken far more seriously in the US, as we have already seen.

In India, the total expenditure on healthcare as percentage of GDP is just 4 percent, while in the US it is 17 percent. Almost 65 percent of Indians pay out of pocket for medical expenditures. This typically strengthens the financial mechanism of the insurance sector. In the US, the out-of-pocket expenditure is much lower at 10–12 percent.

On budgetary allocation in healthcare

The budgetary allocation for the Department of Health and Family Welfare has been increased by 15 percent to Rs 62,659 crore (BE 2019-20) from the revised estimate for 2018-19. Unlike last time, allocation for the National Rural Health Mission (NRHM) has been increased this year to Rs 27,039 crore. The 7.1-percent increment may not be enough to better rural healthcare in terms of infrastructure.

Sixty percent of primary health centers (PHCs) in India have only one doctor while about five percent have none, and, only 20 percent of existing PHCs fulfill Indian Public Health Standards norms, according to the Survey tabled on July 4. There is an acute shortage of human resources. Allocation for the National Urban Health Mission has gone up to Rs 950 crore from Rs 875 crore in the previous year. The fact that tertiary care programs have been at the center stage of policymaking was also reflected in this year’s budget. The allocation to these programs saw an increase of 60 percent from the previous year’s revised estimates.

On vision for health and family welfare

The vision for health and family welfare has to be the successful implementation of schemes like Ayushman Bharat. Conceptually, it is a bold step to ensure universal healthcare coverage. Some of the challenges for successful implementation, however, are as follows:

Pricing. The pricing of PMJAY is lower than the public sector insurers and even the CGHS. While private hospitals are supposed to deliver tertiary care, such pricing makes it impossible for them to cover their costs. A consultative approach, where the rates are developed in collaboration with private players with robust costing studies carried out in variety of hospitals, would be welcome.

True care instead of sick care. Schemes like PMJAY, which aim to cover a population in excess of 500 million, will be unviable if the focus is only on acute conditions and treatment. A strong emphasis has to be laid on primary care, early identification of illnesses and managing NCDs (non-communicable diseases). Over 61 percent of total deaths in India are attributed to lifestyle or non-communicable diseases (NCDs). Another important factor is that the same NCDs whose onset in US is at 55 years occur in India at 45 years, which is 10 years in advance in a life span.

A robust primary care system along with health and wellness programs is required to address these needs. While PMJAY talks about the same, the funds allocated are not sufficient.

Today, there are over 20 international healthcare brands in India with several corporate hospitals. However, a large section of the private healthcare delivery segment is scattered and quality of medical care continues to remain a matter of concern.

On monitoring the quality of private healthcare

The private healthcare segment is the largest utilized in India with almost two-thirds of patients being treated in these hospitals/nursing homes. The segment is scattered and quality is a concern. Primarily, the concerns arise from healthcare delivered in small nursing homes, which are largely driven by doctors who could be graduates in allopathy or alternative medicine. Patients go to these nursing homes due to familiarity with the doctors and because they get treated at a very low cost. Maintaining quality at that cost is a big challenge. When we look at the 20 major corporate hospitals/chains, the cost of care is high in the Indian context. However, this cost of care is less than 20 percent of the cost of care in the US. Most of these hospitals have accreditations from bodies like NABH, NABL, and JCI, which means they have complied with and need to adhere to a certain standard of care, which includes: credentialing and privileging of doctors, adherence to internal quality parameters, adherence to the licenses required for running a hospital on an ongoing basis, and so on. They are also required to invest in sophisticated medical equipment as the doctors who practice in these hospitals are trained in reputed institutions abroad/India and need to be given the necessary tools for them to apply the techniques learnt during their training and also to feel assured of the outcomes. While surgical advancements have made it possible to treat complex conditions, a large amount of this success is owed to the advancement in technology, which allows surgeons to be more precise during the treatment, e.g., a urologist will prefer to use laser for surgeries like removal of prostate because it is more precise, patients have fewer complications, and there is minimal blood loss. Patient safety and quality come at a cost and we need to accept that rather than blaming hospitals for being expensive.

On importance of public-private partnerships in healthcare

Public-private partnerships (PPPs) are very important in a country like India. Today, we are experiencing a slowdown in private investment in new hospitals. The ROCE in hospitals has traditionally been <9 percent. Due to regulations, like price capping of consumables, the margins have shrunk further. In addition, due to schemes like PMJAY, investment in hospitals is not regarded as a wise decision. Instead, if PMJAY were to fuel PPPs, where the government would invest along with private players to create more hospitals and medical colleges, we would have a great opportunity to increase the number of doctors and skilled nurses to fill the demand-supply gap. This will also boost employment because one hospital bed created, typically requires five to six people employed in different capacities to run the hospital.

On the areas where government should invest

There are three major areas in healthcare where the government should invest to ensure access to affordable and quality healthcare for everyone:

Capacity building. The number of doctors, nurses, paramedics need to be increased. It is projected that by 2030, India will need 2 million additional doctors and 6 million additional nurses. The government needs to invest in creating this workforce.

Infrastructure. Most PHCs (80 percent) do not meet IPHS norms. Primary care infrastructure needs huge revamp to address the healthcare needs. Especially in rural areas, where there is a lack of access to trained professionals and hospitals, PHCs are the lifeline of healthcare. Therefore, they cannot be neglected. The government should also invest in building medical colleges in Tier-II cities to encourage doctors and nurses to get trained and serve the population there. This trained manpower, if available in Tier-II cities, will lead to private investment in hospitals, because the administrators will not need to worry about manpower issues, which they currently grapple with in these cities.

IT. India’s internet base today has crossed 500 million, majorly driven by rural India. The number of users in rural India is projected to reach 290 million by the end of 2019. Indian government has come out with two major vision documents – the National Health Stack and the National Digital Health Blueprint. The framework in these two documents must be adopted to encourage health awareness and using start-ups, which are developing apps for healthcare; smartphones should be used to implement health and wellness programs. In addition, the user should be encouraged to take charge of his personal health data using these phones. Blockchain technology should be used to ensure that privacy is protected, while through AI and ML the following are achieved:

  • Reporting and analysis of anonymized public health data
  • Prediction of disease patterns
  • Detection of frauds

On policy interventions required

The states need to ensure that the schemes that are at state level are aligned to some central government schemes. An example of the non-alignment would be the West Bengal Clinical Establishment Act where the definitions, nomenclature, and prices of procedures are not aligned with PMJAY.

States also need to address the issues of portability of insurance schemes and tag the beneficiaries at a national level so that if they emigrate to another state, they can be identified. This way, they can be removed from the register of their previous place of inhabitation and added to the register of the current state in which they live. Migrant population would greatly benefit from such processes, if these can be done seamlessly.

The states also need to contribute in improving the national-level schemes by refining the policies and provisions. Each state is unique and has a certain kind of disease burden. The states must ensure that the national scheme incorporates the necessary amendments/provisions, which can address the local needs.

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