Monday, March 8, 2010

Healthcare in India: The Road Ahead

During the past decade there has been tremendous advancement in the health care scenario in India. Mainly spurred by economic growth private health care facilities have sprouted in all urban localities. The public sector spending still remains a dismal .9 % of GDP. With insurance scheme recently on the anvil it may go up marginally by introducing 1% cess on Income Tax for health care which primarily will be used for health insurance. How far will this succeed in removing health inequality in the country will remain debatable. Because health inequality is not only governed by economic consideration but many other factors, such as low level of awareness, poor connectivity, economic and gender bias etc. 15 % of Indian population do not have access to health care due to various reasons. Rural health care facilities are almost non-existent.

As per World Bank, India has a vast network of rural health care infrastructure but acutely deficient of trained manpower, and other facilities which would make such infrastructure capable. In other words there is a wide gap in capacity & capability. India has about 137,000 Sub-centres, 23,000 Primary Health Centres (PHCs), about 3,000 Community Health Centres (CHCs), and about 12,000 secondary and tertiary hospitals. Public Sector manpower includes about 29,000 doctors, 18,000 nurse midwives, 134,000 auxiliary nurse midwifes (ANMs), and about 60,000 paramedical staff (Min of Health & Family Welfare 2000). Thus availability of doctors is just about 1 per thousand, that of nurses is still lower at 0.9 per thousand, and for midwives the figure is just 0.2 per thousand. Total beds in India are about 0.7 per thousand (a total of about 8 Lakhs beds) whereas as per the WHO standards it is supposed to be at least 5 per thousand (about 40 Lakhs beds).

So, in the future substantial addition is likely to take place in hospital beds. Assuming that hospital beds in a decade would be 4 per thousand that would amount to more than four fold increase in the bed strength in the country. Only on account of hospital beds it would amount to an investment opportunity of more than INR 24,000 Crores (assuming each bed would cost about INR 10 Lakhs which would include other technical & non-technical infrastructure and equipment; and work services) in a decade. In fact this estimate is going to go up with awareness regarding waste management having taken roots in the health care sector by about additional INR 10, 000 per bed. Apart from this if the rural health care infrastructure is to be improved it would require heavy investment to improve infrastructure in the villages, such as basic amenities and connectivity. Most importantly the public health care is on the decline. Void is being filled up in the urban areas but there is no agency to fill the gap in the rural areas. Private health care facilities are not likely to invest in villages since these are profit oriented. Insurance scheme is being thought about but whether it will help the situation is debatable. Such schemes are likely to fail since it does not take two things in account. One is that insurance by itself is not going to cure a patient. He/she will have to be brought to a tertiary care hospital which does not exist at many places near a rural area. And even if there is one, connectivity being poor time taken would be more than acceptable. Moreover ethos and practices in the India are such that one patient is usually accompanied by one or two relatives. Insurance will not cover their expenditure. Taking all these in consideration it is doubtful whether insurance will be helpful to the rural population. Thus benefit of insurance would be limited to urban population, by and large. And one should not forget that more that 70 % of population live in villages in India. Need is to improve infrastructure at the villages- improve technical capability of the PHCs, improve awareness amongst the village population, institute better hygienic practices, improve availability of potable water, improve connectivity (in time frame), and create facilities which would at least not distract medical professionals from getting posted to rural areas. No doubt, these measures would require heavy investment; but an investment which is likely to give cost-effective and durable results.

Indian economy is on the move. Spending power amongst middle class has been growing continuously. We have had 7 % growth successively for the fourth fiscal year. With economic growth there is changed aspiration and expectation. Healths being primary to healthy growth of a society, hospitals are bound to mushroom. Already we are having many chains of hospitals in the country. These are all in the private sector and in urban areas, but with passage of time such chains and state of the art hospitals are likely to come up even in the rural areas. With growth in the health sector there will be demands for manufacture & supply of equipment, construction of hospitals, training of medical staff, and continued awareness programmes all through the year.

As per the National Health Policy 2002 aggregate annual health expenditure is about INR 80, 000 Crores. R & D in health sector is just about 1150 Crores. Goals set to be achieved by year 2010 is to increase the allocation in health sector (centre) to 2 % of GDP, and to increase state sector spending from present 5.5 % to 7 %. Thus we have to look at investment opportunity to the extent of at least INR 80,000 to 100, 000 Crores every year up to year 2010. If the proportion of doctors, nurses, and paramedics is to be improved (which will have to be improved to cater for increasing hospital beds) then many more educational institutions will have to be created and run. One can very well imagine what it would mean. It will mean tremendous addition in the infrastructure which would require all sorts of consumables & durables required to establish and run a training establishment. All these will be a challenge and opportunity for Indian Companies to come forward and deliver.

For example if only the future requirement of equipment for health care waste management is taken into consideration the scenario would be some what as follows: -
• Assuming there will be a four fold increase in hospital beds
• Assuming that waste management plans are as per the rules
At the rate of about INR 10, 000 per bed estimate it would be about INR 800 to 1000 Crores as per present projections & requirements; and about INR 3200 to 4000 Crores in the next 5 years. Therefore there is no doubt that health care sector is going to have a major change and allocation of resources from the public as well as private sector is going to go up many times.

Much of medical and dental equipment are imported at present. Thus investment cannot be said to be cost-effective as much as it could be. Therefore there is an acute need for indigenization of manufacture of equipment and medicines in the country, which has tremendous scope. Of course, research & development in manufacture of equipment & also in medicines will have to go hand in hand only then one can expect a substantial change in the present scenario. Present scene of research is rather dismal in terms of allocation of financial resources, trained manpower, and unfortunately the mind set where every researcher tries to emulate the WEST. No doubt scientific advancement which has taken place in the developed countries must be taken advantage of but application must be tuned to conditions, infrastructure, and practices & beliefs as per local conditions. This is truer in areas of applied research. In certain cases research & development will have to be in areas which can be directed as per need. More research will have to be undertaken in areas, such as environmental health, system application research for hospitals and medical institutions, applied research for rural health care etc, where capacity will have to be translated to capability. Only then advancement will be beneficial to public at large without discrimination and division of resources. If India has to gain advantage (in health care sector) of present economic boom applied research will have to be dominant area of research. All these would not only be a challenge but tremendous opportunity to the business sector in the country.

Health tourism is a recent development in India. Patients from other countries are attracted due to good quality of medical care and low cost in comparison to developed countries. Long waiting period in countries like the UK is another reason. It is easily an industry of about 1000 Crores per year. As per statistics published in Asia Times Jul 19, 2003 “hospital services, health care equipment, managed care and pharmaceuticals are poised to grow by 13 percent annually for the next six years. India's health care industry could grow exponentially, as have software and pharmaceuticals over the past decade. The government believes that only 10 percent of the market potential has been tapped. With global revenues an estimated $2.8 trillion, health care is the world's largest industry”

All in all it would be apparent that health care sector has large potential for growth and offers challenges & opportunities together.

To the question should Indian industries aspire to take a lead in the health care sector the answer is an emphatic ‘YES’. It is technically, administratively as well as financially feasible and is capable.

Lalji K Verma

New Delhi November 29, 2005

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