04-09-2012, 05:08 PM
HEALTHCARE IN INDIA: AN IT PERSPECTIVE
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Healthcare is one of the most essential services in any society. Yet it is the most neglected
one across the developing world. A recent report in the newspapers indicates India’s
public expenditure on healthcare is a measly 1% of its GDP, making it one of the
lowest ranked countries in the list. Even as this document limits the discussion to the
still-evolving Indian healthcare industry, the issues raised here are no less relevant to
other developing nations.
Any debate on the state of healthcare as an industry in India will most likely lead to
its comparison to the healthcare infrastructure of the developed nations. While it is a
foregone conclusion that a socialistic system like the National Health Service (NHS)
that is prevalent in the UK and Canada, will never succeed in India. Much of India’s
healthcare actually resembles the US healthcare system in its formative stages. Of
course the obvious conclusion of such a comparison is how much India lags behind
the US.
It took most of the later half of 20th century for Healthcare to evolve and mature in
the developed world. While the US went from the “pay-for-your-services” or the
“Indemnity” model through the “defined benefits concept” of the Managed Care
era, and then to the now somewhat popular “defined contribution” models of
Consumer Directed Health Plans, the Indian healthcare industry has stopped
evolving beyond the “Indemnity” model.
Indian healthcare industry: Current Market and Potential
A quick look at some facts and figures:
> Size of Indian healthcare industry is estimated at Rs 1000 billion. Of this,
pharmaceuticals account for Rs 200 billion (CII-McKinsey study)
> On an average, Indian families spend Rs. 600 per month on healthcare which is
11% of the household income (WHO Report)
> India's health expenditure is 5.2% of its GDP, whereas most established market
economies spend 7-10 per cent of GDP on health. US on the other hand spends
over 14 per cent.
> Ratio of public to private health expenditure in India is 13% and 87% respectively.
Health insurance is extremely marginal as indicated by "Out of Pocket"
expenditure percentage of 84.6% - this means that the financial structure of the
industry is still in the primitive stages. (WHO report)
Problems plaguing the Indian healthcare industry
Now given all these, why is it that India lags behind the developed nations in this
industry? Why is it that Indians do not have access to high-quality, cost-effective
healthcare on-demand? Is it poverty? Is it education or political empowerment or is
it simply wrong policies?
The mutual reinforcement of poverty and ill-health is something we all understand.
There is growing evidence of how asymmetrically resources, efforts and outcomes
are distributed between the well-to-do and the poor, both in the urban and rural
scenario. Benefit incidence studies consistently show that people living in poverty
receive less than a proportional share of public funding for health, relative to the
populace above the poverty line.
At MindTree we believe that all the above factors lead to the continuation of this
crippling problem. But the problem is not unsolvable. The solution exists if we look
at how developed nations have handled this. Remember that they had the same
issues that India is facing now, maybe 3 or 4 decades ago. It is just that they were
enterprising and solved the problem, and India needs to start doing the same.