Healthy Trends

Focus / Nov 1 2012

The healthcare sector in India is attracting lots of medical tourist from other countries owing to lower cost and advanced treatment facilities. The industry promises immense potential and is likely to show buoyancy in growth not only because of the overseas medical tourist but also due to huge potential which is waiting to be unlocked from the increase in the purchasing power of the Indian middle class. The factors such as higher income levels, increase in life expectancy, growth in life-style diseases and increased awareness about the need for health insurance are driving demand for healthcare products and services along with more and more people opting for insurance products to safeguard against future illnesses. According to World Health Statistics 2011 published by World Health Organization (WHO), the total expenditure on health as a percentage of Gross Domestic Product (GDP) in 2008, for India is 4.2% as compared to expenditure on health in respect of some select developing countries, e.g. China 4.3%, Bangladesh 3.3%, Indonesia 2.3%, Malaysia 4.3%, Pakistan 2.6% , Sri Lanka 4.1% and Thailand 4.1%.

SECTORAL CHALLENGES

Building capacity is one of the most daunting task on hand for the Indian Healthcare sector to sustain the status of the most favoured destination for medical tourism. Trained manpower is available but the healthcare services with world class facilities needs to be build on a gigantic scale if the beneﬁts of medical tourism is to be reaped. The private sector commands a larger role in this sector. The upgradation of the existing facilities meeting international standards can do the trick of removing the supply constraint to match with the growing demand. While expressing views on capacity building, at the “Health & Hospital Conclave 2012”, organized by Confederation of Indian Industry (CII) at the University Exhibition Hall, Ahmedabad, all the experts have opined that for capacity building in line with the demand, requirement of investment is also high.

Shortage of trained medical personnel can be a major constraint for providing universal healthcare. The capacity augmentation of Medical colleges, nursing institutions, and training schools for paramedical professions should be taken up on highest priority. The availability of trained personnel in future would also be a decisive factor for the sectoral growth in India. It is estimated that India will need nearly four times as many healthcare personnel by 2022 nearly 10 million new trainees. As per the information available in the Annual Report of the Medical Council of India (MCI) for the year 2010-11, the total number of registered medical practitioners in the country is 8,40,130 as on
31.03.2011 with one doctor for every 2,000 persons. About 25–30% doctor’s posts are vacant in rural India, but the ﬁgure is likely to reach 50% by 2020.

KEY ADVANTAGES

The healthcare sector holds tremendous potential and advantages compared to it’s counterparts in Western countries. The cost of surgery and other world class healthcare facilities are just 1/10th of the cost incurred in countries like UK and USA. The waiting period is nil. As per CII website, the Medical tourism market in India is likely to attract more than 1 lakh foreign patients every year and is worth over $310 million. The market is estimated to touch $2 billion mark in 2012. The other areas of interest from growth perspective are the increase in outsourcing of the Diagnostic and the Pathological services and Clinical trials due to low cost prevailing in India. The pool of trained medical personnel is vast. As per Government Statistics, under the NRHM, during 2005-12, over 1.57 lakh personnel have been added to the health system. This is apart from personnel added by the private sector. While addressing the CII conclave, Dr. Rajiv Modi, Vice Chairman, CII Gujarat State Council and Managing Director, Cadila Pharmaceuticals Ltd, said, “Healthcare sector in India is poised to acquire the status similar to country’s pharmaceutical industry, which meets 20% of the world’s total demand for medicine. The size of market for hospital services in India is expected to reach US $ 18 billion by 2020 and medical tourism will play an important role in growth of the sector in days to come.”

PRIVATE SECTOR PARTICIPATION

The role of private sector in the growth of the healthcare sector is vital and crucial as it has the wherewithal to come up with large investment required for setting up world class facilities as well for buying latest hospital and healthcare equipment. Most of the healthcare units in India are owned by SME’s. The consolidation of these units into formidable alliances is the need of the hour. The collaboration among smaller players can result into deriving beneﬁts out of pooling of investment, trained manpower and other resources. This can go a long way in establishing brands which can attract foreign medical tourist and cater to the growing needs of the growing number of urbanites in India. At the CII Conclave, Dr, Vikram Shah, CII Event Chairman & CMD, Shallby Hospitals, Ahmedabad, has said, “Public sector hospitals in India lack advanced infrastructure and facilities, while the hospitals run by the charitable trust are not able to cope up with the cost when it comes to use of latest equipments and infrastructure. In such a scenario, there is an enormous growth potential for private sector hospitals provided they run their business very efﬁciently. These hospitals should have core focus on energy efﬁciency and reduce their energy consumption cost from 5% of the business to 2.5%.” He also strongly pitched for granting industry status to healthcare sector instead of considering the hospitals just as commercial establishment.

RURAL / URBAN DIVIDE

The Government spending on healthcare services in India does not meet the demand side. Due to ever growing population growth, the public healthcare system is proving to be inadequate, the allocation of funds for upgrading or setting up hospitals is miniscule compared to the demand scenario. Most of the healthcare services are now in the domain of the private sector. But here the problem is the cost being charged by the private players. The affordability factor is critical to the growth of this industry in India. The rural / urban divide in terms of availability of healthcare services is widening with every day. The Government run public sector hospitals are not able to match the deployment of latest tech for treating the citizens and are often found to be having insufﬁcient resources vis-a-vis the requirement.

While participating in the panel discussion on “Future of Healthcare Delivery Practitioner’s Perspective”, held as a part of the CII conclave, leading doctors opined that with the largest population of the sick people and 20% them not having money for medical treatment, providing medical treatment to the weaker sections of the society is one of the biggest challenges faced by India.

GOVERNMENT INITIATIVES

The 9th meeting of the Mission Steering Group of National Rural Health Mission (NRHM) was held recently in New Delhi under the chairmanship of Ghulam Nabi Azad, Union Minister of Health & Family Welfare. The Minister has emphasized the importance of social determinants of health. He has promised that programmes concerning nutrition, drinking water and sanitation are major factors impacting health, will receive signiﬁcant increase in funds in the 12th Plan. The proposal for an Urban Health initiative with a focus on primary health care for the urban poor has been cleared by the Expenditure Finance Committee (EFC) and it will soon be placed before the Cabinet for consideration. This approval would meet a long overdue need to address the health care needs of urban poor.

Aiming to provide affordable healthcare, the Government of India proposes to start an initiative for free supply of Essential Medicines in Public Health Facilities in the country by reducing out of pocket expenses of medicines. This initiative will promote rational use of medicines and reduce the consumption of inessential, unscientiﬁc and hazardous medicines.

To provide a ﬁllip to the growth of the healthcare industry, 100 per cent FDI is permitted for health and medical services under the automatic route.

FUTURE OUTLOOK

According to Fitch ratings, the Indian healthcare sector is expected to reach US$ 100 billion by 2015 from the current US$ 65 billion, growing at around 20 per cent a year. The pace of growth would be slow in 2012. Pointing to the emerging geographical trends, the rating agency opines that increase in competition and real estate prices in bigger cities will drive healthcare players to set up facilities in Tier II and Tier III cities, where lack of healthcare services, cheaper real estate and lesser competition will be the main growth drivers. The hub and spoke model and private public partnerships will guide the investments in smaller towns. The investment opportunities will be in terms of increasing bed capacity, ancillary industries like medical technologies and diagnostics in Tier II and Tier III cities, while speciality services like cardiology, neurology, joint replacements etc. are likely to attract most of the investments in bigger cities.

The Government of India looks at scaling up expenditure of health from the current level of 1.4% to 2.5% of GDP by
2017 i.e by the end of 12th Plan and 3% by 2022 i.e by the end of 13th Plan. According to a report by PriceWaterhouseCoopers, an estimated 189 million people in the country will be more than 60 years of age by 2025, needing higher healthcare spends.

According to a RNCOS report, titled “Booming Medical Tourism in India” India’s share in the global medical tourism industry will reach around 3 per cent by the end of 2013. As per this report, the medical tourism is expected to generate revenue around US$ 3 billion by 2013, growing at a CAGR of around 26 per cent during 2011–2013. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the forecast period to reach 1.3 million by 2013.

Tender Opportunities

PWD, Govt of Maharashtra
Plans to construct 20 bedded hospital on existing eye hospital at civil hospital at Parbhani in Maharashtra.
Contact: Executive Engineer, Parbhani, Maharashtra. T: 02452-22708

NTPC Ltd
Plans for renovation of BTPS hospital at NTPC Badarpur in Delhi.
Contact: DGM (C7M), Badarpur Thermal Power station, Badarpur, New Delhi-110044. T: 011-2694916

Andhra Pradesh Health And Medical Housing And Infrastructure Development Corporation
Plans strengthening of FR Unit at district hospital, Tenali in Guntur district. Contact: Executive Engineer, Guntur, A.P. T: 0863-2220834

PWD, Govt of Haryana
Plans to construct veterinary hospital cum breeding centre at village Behbalpur, Distt. Fatehabad in Haryana. Contact: Exec Eng, Nirman Sdn, Sec-
33/A, Chandigarh, T: 0172-2618100

PWD, Govt of Madhya Pradesh Plans to construct ayurvedic hospital at Khamkheda in Madhya Pradesh.
Contact: Executive Engineer, Vidisha, Madhya Pradesh, T: 07592-232805

PWD, Govt of Kerala,
Plans to construct KR Narayanan memorial hospital at Uzhavoor in Trivandrum, Kerala.
Contact: Superintending Engineer, Kerala 33. T: 0471-2322946

PWD, Govt of Delhi
Plans to construct 500 bedded new ward block at GTB Hospital, Shahdara, New Delhi.
Contact: Superintending Engineer, Kerala 33. T: 0471-2322946

PWD, Govt of Haryana
Plans to construct proposed building of ayush wing in existing civil hospital at Yamunanagar.
Contact: Executive Engineer, Yamuna
Nagar, Haryana. T: 0172-2568063.