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Business News/ Opinion / Columns/  Facilitating a clean bill of health

Facilitating a clean bill of health

Beyond having a clear vision, priorities and road map, we need to address three key enablers—talent, technology and funding—in an integrated manner

Currently, imports comprise 70% of India’s medical devices market, driven by manufacturing costs that are around 30-50% higher than China’s. Photo: AFPPremium
Currently, imports comprise 70% of India’s medical devices market, driven by manufacturing costs that are around 30-50% higher than China’s. Photo: AFP

With the Union budget due in a few days, we hope the government will showcase a plan for transforming and improving the health of its citizens. Redefining India’s healthcare system is essential. Beyond having a clear vision, priorities and road map, we need to address three key enablers—talent, technology and funding—in an integrated manner.


India needs to resolve both quantity and quality issues related to talent. It produces an insufficient number of medical graduates to meet demand and currently faces a shortage of around 2 million doctors and 4 million nurses. To make matters worse, the existing talent is highly skewed towards a few states and urban areas. However, with rapid growth expected over the coming decade, estimates show healthcare services will require an additional 15 million workers by 2025. It is, therefore, imperative that the government, together with other stakeholders, focus its strategy on the following:

Increase supply of professionals: Prioritizing areas with critical shortages of healthcare professionals and public health workers is essential. For example, with high maternal mortality, India is critically short on obstetricians and gynaecologists—0.02 per 1,000 people compared to 0.13 in the US. A simple first step for the government is to identify areas with similar shortages.

However, governmental efforts alone are not enough; private investment and innovative public-private partnerships (PPPs) are required to increase the talent supply. These have already seen success, but the government needs to further ease regulations around private investment in healthcare education and overcome the trust deficit between the public and private sectors.

Reduce existing demand on doctors and allow them to expand reach: Many doctors in India are underused and overextended. Focusing on primary care and moving away from hospital-centred care can decrease hospitalization rates, lowering demand for doctors. In addition, encouraging use of telemedicine and remote monitoring tools can widen doctors’ reach and increase productivity.

Improve quality of healthcare personnel: Here, the government needs to ensure uniform governance standards in teaching, training and licensing of professionals. Mandating accreditation of teaching institutes needs to be high on the government’s list of healthcare priorities to improve quality.


India’s unique needs should determine priorities for healthcare technologies. These include:

l Low-cost products and services

l Digital health for the masses

l Healthcare information technology

l India-focused R&D

Pilots of prioritized technologies need to be carried out in select critical areas before a full-scale rollout. These include mother and child health, non-communicable diseases and communicable diseases.

Although the government has a key role to play in the judicious adoption of new technology, the private sector too shares the responsibility.

The government needs to create a supportive ecosystem for medical device innovation. Addressing challenges such as high import duties on raw materials, complex tax restrictions on setting up manufacturing centres and a limited talent pool with medical device expertise will help promote domestic manufacturing.

Currently, imports comprise 70% of India’s medical devices market, driven by manufacturing costs that are around 30-50% higher than China’s.

The government also needs to invest in and encourage the establishment of a reliable healthcare IT backbone, while ensuring interoperability between internal and external electronic medical record systems and other IT systems. This critical step will not only lead to better clinical care, but also provide a focus to key quality indicators.

The private sector, on its part, should look to ensure successful implementation of the government’s plan of improved and equitable access to healthcare.

Its areas of focus could include investing in R&D for prioritized technologies (such as telemedicine); concentrating on regional initiatives using mobile and Internet strategies (doctors on call and remote patient monitoring); and promoting wearable and mobile technologies to help educate and engage consumers on healthy living and prevention. It should also look to collaborate with the government in building IT-enabled electronic health record systems and patient databases.


Healthcare has historically been a low priority for central and state governments, with a negligible focus on infrastructure development. Of the $23 billion spent on public health in 2012, capital expenditure comprised less than 10%. Given the state of healthcare in India, the following funding priorities emerge:

l Infrastructure build-out

l Greater insurance coverage

l Public health services

l Ensuring individual accountability

India has a narrow window of opportunity and must act quickly. We can aspire to achieve a massive shift towards better healthcare within a decade. Our aspiration should be for a healthy India, where citizens are aware and engaged and have equitable access to affordable health with a focus on prevention, early diagnosis and an assured minimum quality of care, offered by a vibrant and sustainable ecosystem of public and private players. It is estimated that realizing these healthcare aspirations by 2025 will require a cumulative $3 trillion in spending, including about $600 billion in capex. Given the huge challenge, the government has a key role to play in enabling greater funding from all sources, including:

Public spending: Assign higher priority to healthcare in budgetary allocations and explore new avenues for fundraising, such as health levies and sin taxes—for example, taxes on tobacco— to fund healthcare initiatives. In addition, establish an independent and empowered body to better coordinate healthcare spending for interstate and inter-ministerial implementation.

Private spending: Enable greater private investment by extending tax benefits on capex for hospitals, facilitating bank loans beyond seven years and reducing import duties on raw materials for medical devices, as well as ensuring transparent pricing formulas and clinical trial approvals.

Private insurance: Provide incentives for payers by facilitating financing options—for example, provide clarity on FDI and on tax exemptions as well as permit debt financing. In addition, offer incentives for insurance adoption by increasing tax exemptions on premiums.

Individual contribution: Increase individual accountability for healthcare through co-payments and dedicated deductions. Co-payments can lead to a 16-20% reduction in prescriptions in many health systems, as already seen in Spain, Canada and Taiwan.

One hopes the budget will pave the way for such steps if India is to move towards a desperately needed cleaner bill of health.

Karan Singh is a partner with Bain and Co. and leads the firm’s Asia-Pacific healthcare practice from New Delhi.

Parijat Ghosh, based in Mumbai, is also a partner and leads Bain’s India healthcare practice.

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Updated: 28 Feb 2015, 11:25 AM IST
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