Mooc presentation
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India's healthcare sector is in poor condition despite strong economic growth. Healthcare spending remains low at 4.5% of GDP, with only 0.9% from public spending. This has led to inadequate infrastructure like 0.7 hospital beds and 0.7 doctors per 1000 people. Reforms are needed like public-private partnerships, impact investments, increased public funding, and policies to reverse "brain drain" of medical professionals in order to give India's healthcare system a much-needed boost.
Mooc presentation
- 1. Giving a booster shot to India’s healthcare sector Vaibhav Khurana
- 2. A Growing Economy’s Snapshot • India’s economy has grown at an average of 7.5% over last thirteen years • Population growth rate has been reduced from around 2% during 1960’s to 1.6% currently • Recently India has emerged as the fastest growing emerging economy • With stable socio-economic indicators, India seems to be in the sweet-spot where things are seeming to be happening in its favor • Lets look at some graphs:
- 3. A Growing Economy’s Snapshot 0% 1% 1% 2% 2% 3% 1950s 2000s Population growth rate 2.0% 1.6% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 1970s 1990s Incidence of Poverty 0% 10% 20% 30% 40% 50% 60% 70% 80% 1991 2001 2011 Literacy rate Increasing literacy rate Declining poverty rate
- 4. So…What about healthcare sector? • While the economic indicators paint a flowery picture, India’s healthcare sector tells a different story • India’s healthcare spending has remained around 4.5% of GDP over past 15 years • At 4.2% of GDP in 2009, India ranked second to last among OECD and select other countries, and 171/175 among all countries • Out of the 4.2%, only about 0.9% was public sector spending • Per capita spending on healthcare in India is just around $132, adjusted for purchasing power parity • Around 70% of healthcare cost are borne by the patients out of their pocket
- 5. So…What about healthcare sector? • While OECD average is around 4.9 hospital beds per 1000 population, India offers just 0.7 hospital beds per 1000 population • In fact, even though India has maximum number of medical colleges in the world, India has just 0.7 physicians per 1000 population • Rural population accounts for almost 60% of India’s population. But this is being served by just 30% of medical professionals • Even this 30% includes a large number of unqualified practicing professionals, commonly called “quacks”
- 6. Developments in situation of healthcare sector in India • In India, healthcare is a responsibility of the State government as well as the Central or Federal government • While the central government forms policies, state governments are responsible for the delivery of healthcare services to the masses • Given the bad results of government in rolling the services, private sector soon became the major provider of healthcare services • However, the gap between provision of services to the rural population got left behind • While the government has been very successful in some healthcare programs like eradication of small pox and polio, policies on provision of basic healthcare services have had little outcomes • Given the risk of loosing out on the demographic dividend India’s public sector has awakened to the need of providing better healthcare services but there is a long way to go…
- 7. Pin-pointing major reasons for this abysmal situation: • Low allocation of public funds to healthcare sector • Zero accountability of healthcare facilities maintained by public sector employees • Higher levels of absenteeism amongst doctors and nursing staff in public sector hospitals • Non-availability of basic diagnostic machines at majority of healthcare centres
- 8. Solutions???? • Private sector healthcare providers have always been at the fore-front for past twenty years • Now they face challenge as they enter the unchartered territory of providing healthcare in rural sector where profit margins are thin – the main reason behind less number of private healthcare providers present in rural india • Government needs to channelize ways to help private sector healthcare providers by providing help on financial and regulatory matters • A lot of reforms are needed to give healthcare the much needed booster shot!
- 9. Solutions???? • Since Government has limited funds available to invest in the various sectors, private sector has to step in to solve the healthcare crisis • The following reforms provide some alternates and solutions to the manner in which this problem culd be solved • Financing for development would mean using government funds initially to give push to private sector to start the reforms!
- 11. Structural reforms • India’s public sector has historically depended on capital intensive solutions like building new hospitals, etc. which locks a lot of capital, thus leaving less for running these hospitals – the main reason for their bad performance • Structural changes are the need of the hour • Structural changes refer to finding alternative ways of increasing the reach of the masses
- 12. Structural reforms • Public Private Partnership models • Incentivizing private sector to take equity risk by giving tax benefits • Allowing more impact investment funds to open offices in India • Rolling out healthcare specific bonds to tap capital markets • Investment in newer technologies like Telemedicine and Teleradiology
- 13. PPPs – Public Private Partnership models • PPPs are opportunities waiting to be tapped by the healthcare sector in India • Various PPP models can be followed: – State government donates the land to a private sector healthcare provider to build and operate the hospital which will provide healthcare services to poor at subsidized rates – Maintenance contracts are awarded for the upkeep and running of already established healthcare centers, which include hospitals, Primary health care centers, chronic disease control centers • Though some of the facilities are being maintained under PPP model, there is a lot of scope of ramping up in both rural and urban areas • Examples of successful PPP models in healthcare sector include: – Apollo Hospitals maintain government hospital in Richur – Primary healthcare centers in Karnataka are maintained by Karuna Trusth The KEY to the success of these models is to use “PAY FOR SUCCESS” model wherein government pays private sector players performing maintenance services only on the basis of their outcomes and public good
- 14. Impact Investing in healthcare • Wikipedia defines Impact Investing as “Investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return” • Outside the Western world, India is the biggest market for Impact Investment Funds. However, around 70% of these investments go to microfinance sector and healthcare receives around 9-10% • There is clearly a big opportunity available for more impact investment funds in this sector • The only push needed is from the government to allow setting up of new impact investment funds which invest specifically in healthcare sector - this will start the much awaited domino effect • One of the examples is that of investment done by Acumen in Vaatsalya Hospitals – a chain of hospitals which operates in South India
- 15. Other structural reforms • New innovative solutions to healthcare provision like Single specialty hospitals instead of multi-specialty hospitals are still considered risky businesses because of their little ability of revenue generation • Government can invest in such new ventures – to absorb the initial riskiness and to set examples for the industry to follow • “Hub and Spoke” models connecting primary healthcare centres to main city hospitals should be promoted by the government • Some examples of these are Aravind Eye Hospitals, LVPEI hospitals, etc.
- 16. Other structural reforms • Telemedicine: Telemedicine provides yet another newer pasture for healthcare industry in India to explore. Telemedicine centers can be set up across the country which can be connected to main district hospitals. • Teleradiology: Teleradiology is the technique through which a lab technician present in far away place can perform the radiology tests on patients and send the reports to doctors sitting in other parts of the world. This way patients do not have to travel to cities to get the tests done. The Radiologist can look at the test reports and prescribe medicines. • India currently does have some innovative solutions available but implementation is the key. • Financing these being the problem, the government needs to increase its expenditure in healthcare in order to provide the private sector players the much needed impetus to invest in the newer technologies FINANCING FOR DEVELPOMENT HAS TO COME FROM THE GOVERNMENT INITIALLY
- 17. Policy Reforms • Reformulate / redraft healthcare laws to make medical professional more accountable • Devise strategies to attract trained doctors for working in rural areas - this could involve giving tax breaks to such doctors, etc. • India’s current Tax-GDP ratio is at a low of 17% compared with 25% as average for OECD nations • The incremental funds arising from higher taxes could be diverted to funding public sector healthcare expenditure • India has recently introduced “Swachh Bharat Cess” to accumulate funds for running programs across country aimed at cleaning the garbage. Similar “Healthy India Cess” could be levied to accumulate funds for healthcare sector • India needs stricter laws to control “Brain drain” in medicine students
- 18. Reversal of “brain drain” • “Brain drain” has been the biggest reason for shortage of trained physicians in India • Brain drain refers to the leaving of trained medical professionals from India to developed nations in search of better opportunities, better salaries, etc. • India offers medical education at subsidized costs. However, it does not have strict laws to prevent flow of rained doctors to the developed nations before serving for some time in India - this has resulted in acute shortage of trained medical professionals • Reverse “brain drain” has become very important. However, given the challenges in doing so, stricter laws should be made to prevent brain drain
- 19. Conclusion • India’s healthcare systems are in a bad shape and need a booster shot at the soonest possible • While India has always relied heavily on private sector to take the lead in provision of healthcare, its time to incentivize the private sector for continuing to do so • PPPs and impact investment in healthcare sector represent the tipping point which could start an avalanche of better healthcare but these represent only the tip of iceberg • From starting new healthcare ventures to innovating the older established models, healthcare can provide a lot of opportunities to those looking into the space • In order for private sector to ramp up its efforts, government has to create some ground rules around Transparency and Accountability of services provided by the private sector • Though this is just the beginning, it’s a long long way to go…
- 20. THANKYOU
- 21. • Sources of information include OECD database, India Healthcare statistics, etc. • I do not take credit of the information presented here… a lot of it has come from various sources on the internet and I am very thankful to those sources.