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With expectations running high about the Narendra Modi government’s first full-year budget, the stage is set for the centre to signal its seriousness about transforming India’s underperforming healthcare system and committing investments for a long-term payoff for all Indians.

By ramping up investments in healthcare, the government will have the perfect opportunity to start a virtuous cycle of health. It will improve productivity, enable greater consumption and boost economic growth, as well as help the Make in India campaign become a reality. Healthcare reform can protect Indians from out-of-pocket expenditure burden, create 15 million additional health services jobs by 2025 and allow the country to emerge as a global hub for innovative, low-cost health products and services.

As we have seen, a business-as-usual approach to health won’t work and can hurt India’s future growth, development and competitiveness. According to one estimate, the burden of non-communicable diseases (NCDs) alone will cost India $6.2 trillion by 2030.

Not a picture of health

Despite successes, including the eradication of smallpox and polio and a significant reduction in HIV infections, the current healthcare system is unsustainable, with healthcare both under-served and under-consumed.

India carries a dual burden of communicable diseases (an estimated 315 million Indians suffer from tropical diseases) and an NCD epidemic (its contribution to mortality will increase from 53% in 2008 to 73% by 2030).

The World Health Organization estimates that by 2030, India will contribute to a quarter of global productivity loss from NCDs such as diabetes, cardiovascular disease and cancer. Further, the prevailing culture of treating a disease after its onset (as opposed to prevention), the high drop-off rates across the patient corridor and urbanization trends will worsen the impact.

Public health in India is also clearly inadequate. Although the Swachh Bharat Abhiyan is a much-needed initiative that will have a beneficial health impact, India cannot accept diphtheria-tetanus-pertussis (DTP3) immunization rates of 72%, infant mortality rates of 44 per 1,000 live births and 42% of children under five suffering from malnutrition. At 1.3% of gross domestic product (GDP), government spending on health is among the lowest in the world.

To add to this grim scenario, India’s healthcare infrastructure is woefully lacking—we are currently short by around 2 million doctors and 4 million nurses, and would need another 2 million new beds by 2025 just to get to reasonable benchmarks. Furthermore, about 70% of the supply of healthcare services is concentrated in urban India, which accounts for only 30% of the population. With only a quarter of Indians covered by health insurance, many are left bearing their own healthcare expenses. Studies show that about 3% of Indians fall into poverty annually due to health-related expenses.

Blueprint for a cleaner bill of health

The nascent state of healthcare in India provides it the opportunity to better define an India-centric health system that takes into account our constraints, caters to our needs and is sustainable and future-ready. We need to define a clear path that holistically addresses the issues of healthcare access, affordability and quality.

Based on its extensive Indian and global experience in healthcare, Bain and Co., along with NATHEALTH, has charted a vision for healthcare in India in its report Aarogya Bharat—India Healthcare road map for 2025. The report calls for equitable access to healthcare alongside minimum quality standards for citizens by 2025. It recommends a sustainable healthcare ecosystem based on a wellness-oriented culture, focusing on prevention, early diagnosis and intervention.

Access: India should aspire to provide universal access to essential healthcare. Every citizen should be covered for services identified to have maximum impact. This includes pregnancy-related care, child health, and certain high-impact communicable and non-communicable diseases, as well as preventive and primary care. The private sector should take the lead in urban areas, with the government focusing on a payer and regulator role. The road map for 2025 sees public insurance providing essential care to 60% of the population, while out-of-pocket spending comprises less than 30% of total healthcare costs (compared with 58% today).

Cost: A defined basket of essential services should be insulated against the risk of healthcare cost inflation, ensuring affordability. The country needs to reshape the paradigm of care, create a culture of health and wellness and reduce the burden of disease. Early disease intervention is a great way to start—it has been shown to improve outcomes by two to ten times and reduce costs by 40% to 80% in ailments such as cervical cancer, HIV, chronic kidney disease and chronic artery disease. Taking cues from models like Singapore, India needs all stakeholders to come together to drive change by encouraging healthy living practices and by shifting the payment model from a fee-for-service to a capitation model.

Quality: The government, working with all stakeholders, should define, institutionalize and assure minimum quality standards, ensuring data capture at points of care, achieving greater accreditation of facilities and moving towards protocol-based care. India needs to use technology to track clinical outcome metrics, share information and reward providers for delivering cost-effective, desired clinical outcomes.

Realizing this vision for healthcare in India will require a huge financial commitment—to the tune of $3 trillion in spending, including $600 billion in capital expenditure by 2025. Achieving real change in healthcare will entail the government creating a clear road map with incentives and accountabilities spread across providers, payers and product suppliers, allied industries like consumer goods, education and technology, and community organizations.

Come 28 February, Indians will look for indicators that the government is serious about significantly increasing spending on healthcare and focusing on public health, as well as ensuring universal access and coverage.

Karan Singh is a partner with Bain and Co. and leads the firm’s Asia-Pacific healthcare practice from New Delhi. Debasish Talukdar is a manager in Bain’s India healthcare practice and is based in New Delhi.

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