Healthcare has been a major development goal. And if resource constraints have not always allowed the government to give the sector its due financial support, the involvement of the private sector has seen the sector grow at a brisk speed in recent years.
Healthcare has become one of India’s highest growing sectors – both in terms of revenue and employment. Healthcare comprises of hospitals, medical services, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment.
The increasing involvement of the private sector in the healthcare domain has significantly reduced the pressure on the government’s health infrastructure and the private sector has become a major component in the country’s healthcare delivery system. The government or the public healthcare system comprises limited secondary and tertiary care institutions in cities and focuses on providing basic healthcare amenities in the form of primary healthcare centres in rural areas. The private sector provides the majority of secondary, tertiary and quaternary care institutions with a major concentration in urban areas.
While the private sector dominates healthcare delivery across the country, a majority of the population living below the poverty line continue to rely on the under-financed and short-staffed public sector facilities for their healthcare needs. Moreover, the majority of the healthcare professionals concentrate around urban areas where the consumers have higher paying capacity, leaving rural areas underserved.
The responsibilities of the government, however, do not end at providing healthcare amenities alone. It has larger responsibility in running institutions to train medical professionals of various categories. In fact, India’s competitive advantage lies in its large pool of well-trained medical professionals.
This, on the one hand, has given India’s healthcare sector a huge cost advantage and on the other, the scope to grow at a high speed. Deloitte Touche Tohmatsu India, a UK-incorportaed multinational professional services firm, has predicted that with increased digital adoption, the Indian healthcare market, which is growing at an annual compound rate of more than 20% will touch a huge $ 280 billion-mark by 2020.
According to Delloitte, the revenue of India’s corporate healthcare sector is estimated to grow at 15% in 2017-18. Interestingly, medical tourism has become one of the fastest growing components of the healthcare sector in India; growing at an estimated 22-25% annually. Medical tourism is expected to double its size from about $ 3 billion as on April 2017 to $ 6 billion by 2017. Arrivals of medical tourists increased more than 50% last year from about 1.3 lakh in 2015 to two lakh in 2016.
The change in government’s FDI policy has helped the sector to attract foreign capital. Now 100% FDI is allowed under the automatic route of Greenfield projects and for Brownfield project investments, up to 100% is permitted under the government route. Demand growth, cost advantage, and policy support have been instrumental in attracting FDI. As a result, FDI inflows to hospitals and diagnostic centres increased 134% in just two years from Rs 2,367 crore in 2014 to Rs 5,543 crore in 2016.The aggregate FDI inflows to hospitals and diagnostic centres amounted to a huge Rs 2,40,370 crore during January 2000 to December 2016.
There is a significant scope for enhancing healthcare services considering that healthcare spending as a percentage of India’s private final consumption expenditure is increasing. Rural India, which accounts for over 70% of the population, is set to emerge as a potential demand source. The government has been talking of increasing the share of health in GDP for years; government’s own documents like the draft National Health Policy 2015 as also the 12th Five Year Plan clearly spoke of increasing health’s share to 2.5%.
And if achieving a target of 2.5% of GDP, set by the government, seems difficult, the government has been raising allocation on health in successive budgets. The allocation on healthcare has increased by nearly 23% in 2017-18 Budget over the revised estimates of 2016-17 Budget. The allocation was nearly 28% higher when compared with the budgetary allocation of 2016-17. A 23% increase in budgetary allocation is a welcome move, but it is still far short of the country’s requirements. But if the allocation falls short of India’s need, what is significant is that the finance minister has given some remarkable directions to the country’s healthcare policy in his 2017-18 Budget. He has promised to eliminate communicable diseases such as Kala-azar, Filariasis, Leprosy, and Measles. He has also given definite timelines to do the same. He has also promised to eliminate Tuberculosis by 2025.
Finance Minister Arun Jaitley’s Budget has also focused on the shortage of specialist medical practitioners, especially in the rural areas. He has envisaged an ambitious programme to increase the number of postgraduate seats by 5,000 every year.
The specialisation through the Diplomate of National Board route has been made easier by roping in district hospitals and large private hospitals to conduct three-year specialty courses. The plan to set up two more medical institutions similar to All India Institute of Medical Sciences in Gujarat and Jharkhand is also a significant move to broaden the country’s health infrastructure.
The decision to convert lakhs of sub-centres into health and wellness centres is expected to increase the scope and relevance in the era of epidemiologic transition when non-communicable diseases are becoming more common, even in the vast rural hinterland of the country.
For senior citizens, Aadhaar-based Smart Cards containing their health details will be introduced. A beginning will be made through a pilot in 15 districts during 2017-18. This has the potential to be the starting block in building a comprehensive health information system for the country.
But if Jaitley has given a new direction to health sector in his Budget by promising to eliminate a number of communicable diseases, he has remained silent on many other pressing issues. India has one of the highest household out-of-pocket health expenditures in the world, apart from one of the most inequitable health allocations. The Universal Health Coverage (UHC) was promoted by the erstwhile Planning Commission as the panacea for all these issues. The ambitious UHC programme envisaged universally accessible and equitable healthcare solutions to the total population of our country, even though critics were skeptical about its practicability.
Even as the health budget has announced increased provisions for government programmes for women and children, it is time to re-examine the increased prioritisation of care for pregnant women. For over a decade now, institutional deliveries and immunisation have been incentivised. Perhaps it is time to taper off this programme that pays women across India to deliver at hospitals, some of which may not necessarily be up to required healthcare standards.
But if the government is unable to provide enough healthcare facilities to its people, the people themselves are
compelled to spend on medical treatments from their own pockets. This is amply evident in the mushrooming of
private hospitals and nursing homes across the country.
With ever increasing cost of healthcare, the expenditure on healthcare has become an important item in households’ consumption expenditure. The aggregate private final expenditure on healthcare at 2011-12 constant prices increased nearly 42% in three years between 2011-12 and 2014-15. The share of healthcare in total final consumption expenditure went up by about 0.7 percentage points during this period from 3.7% in 2011-12 to 4.4%