The Healthcare system of India is a mess. Results of the National Sample Survey 60th round bring out the picture in black and white. On the one hand, morbidity, which measures what proportion of the population reports and ailment, is going up, on the other hand, treatment is increasingly shifting from government sources to private sources, particularly in urban areas, and the associated costs are going up.
Unlike other countries, India cannot afford to make health insurance mandatory, as there is a severe cramp on infrastructure, with only about 0.7m beds available with the healthcare industry, according to estimates. The health of a nation is best indicated by the health of its people.
On this count, India is certainly on the sick-bed. Key indicators like infant and child mortality, maternal morbidity and malnourishment paint a dismal picture. For those focused on the economy, workdays lost due to sickness have a huge economic impact.
At the level of family, the anguish of ill health-whether personal or those near and dear- is known to each of us. A beginning has already been made in tapping the huge market for providing health services to people from other countries. A combination of professional expertise, world-class facilities, and low cost seems to be driving this phenomenon. This is further accelerated by the increasing costs for medical care in the west and longer waiting times for surgeries in their hospitals.
Organized HEALTHCARE:
Getting healthcare organized is not something that can be ignored or tackled merely by raising budgetary outlays. Major institutional reform is called for, involving the expansion of public health engineering and public health facilities, expansion of medical insurance and institution of intelligent regulation of healthcare. Corporate hospitals are forging tie-ups with big overseas insurance firms to boost health tourism, even as the government has started the process of accrediting healthcare facilities.
The government and the industry have begun working on two key requirements to facilitate the growth-hospital accreditation and standardization of rates. The Quality Council of India is now in the process of giving accreditation based on the parameters evolved by the healthcare industry. To address fears of arbitrary billing, the Confederation of Indian Industries has chalked out a price banding mechanism that will ensure that a certain treatment cannot be charged beyond a ceiling.
The concept is expected to impress insurance firms looking at tapping the health tourism market in India. Given the size of the global market for such medical operations, this sector can rival India’s success in IT. Creating conducive conditions to promote it is essential.
An SEZ for medical care facilities would certainly be a worthwhile proposition; liberated from bureaucratic rules, with easy import of key equipment, high-quality support infrastructure, and appropriate fiscal incentives, could be a major economic powerhouse, even as it employs a huge number.
MEDICAL DEVICE INDUSTRY:
The medical devices industry is set to come under the regulatory purviews of the health ministry, which now controls 10 notified devices of critical nature. The ministry has not notified detailed guidelines on the licensing procedure for these devices.
While importing and local manufacturing would require a license from the Drug Controller General of India, State governments; licenses are needed to sell the products. Better discipline in this segment, growing at close to 5% a year, is essential for the growth of health tourism and also to attract multinationals looking to enter into the health segment.
The government’s move is to regulate the manufacture, sale, and imports of all devices starting from disposable surgical materials to high tech imaging gadgets. The health ministry is planning to have a separate wing to license medical devices. Under the proposed National Drug Authority devices such as catheters and stents represent nearly two-fifth of the entire range of diagnostic devices and are most critical as per international classification. This ad hoc arrangement will be replaced with a full-fledged regulatory regime for diagnostic devices.
HEALTHCARE STATISTICS:
The ministry of health and family welfare has a worse record in respect of healthcare. It has not been able to use Rs. 851 crore of its budget in 2005-06. The year before, the unspent sum was Rs. 1159 crore. This includes heads like National Population Policy and reproductive and child health projects. It is not the case that the Government is not able to meet healthcare targets for want of funds but the departments have surrendered huge money since they could not draw up timely plans to spend them.
The other facts regarding healthcare in India are as follow:
Out of the total Indian population, less than 2% have health cover of any amount.
Cheap premiums are bound to rise given the cost of medical inflation, which is estimated at around 15% every year.
Roughly 6% of all policyholders make claims every year, making it extremely difficult for insurance companies to continue at the prevailing low rates.
The claim premium ratio in some companies is 110%, whereas it goes up to almost 127% in another.
Only about 0.7m beds were available with the healthcare industry.
Current premium charges are roughly around 1% of the Sum assured. The cost of medical insurance in western countries is much much higher.
It is statistically advantageous to get insured, even though the insurance company is bleeding.
Insurance companies are demanding tax relaxations in health insurance plans, giving a re-look at the fringe benefits tax levied on the superannuation funds.
There is a storm among pharmaceutical companies. A confluence of events-complex diseases, expensive clinical trials, increased scrutiny from regulators and demanding stakeholders-means that research and development costs are doubling while the molecular output is stagnant.
A new stream of health education by setting up a Public Health Foundation to train a cadre of health managers with expertise in the management of diseases, in addition to other disciplines.
Still, there is a need for health professionals with the expertise and managerial skills to design and deliver health programs at the national level and down to the village level.
It is estimated that New Delhi itself has an Rs. 60 crore health tourism market now, while the entire country has the potential to have a $ two billion market by the close of the decade.
PROPORTION OF HOSPITALISED TREATMENT:
The incidents sourced from government hospitals of a proportion of hospitalized treatment has declined, from 60% in 1986-87 to 43% in 1995-96 and 39% in 2004-05 in urban areas. The corresponding figures or rural areas are 60%, 44%, and 42%.
This applies across the board, cutting across hierarchies of both caste and income. Such increasing reliance on private healthcare needn’t be such an unmitigated disaster, if one, private healthcare were organized in a fashion that is non-exploitative in terms of both cost and efficacy and two, the government were to pick up the tab for the poor even in private hospitals.
We need to quickly gear up our facilities, not just the medical component, but also the support infrastructure, including a great deal of record-keeping, data access and transfer between the patient’s regular health provider and the Indian facility. More and better-equipped hospitals have come up, more doctors are attracted to return to India from abroad, and the size of the new facilities ensured additional facilities for Indians. Moreover, the need to compete and provide world-class care leads to a raising of standards.
SPREAD OF HEALTH INSURANCE:
The spread of health insurance would do a lot to make healthcare more accountable after all, insurance companies have a stake in avoiding wastage and getting value for money. Quite happily, a lot of experimentation is currently on in different parts of the country in low-cost private healthcare.
These involve hospitals themselves providing insurance, public-private partnership, and charity. While international medical tourism has huge potential, another possibility in this area is even more exciting, and of greater relevance for India.
Advances in IT are now making telemedicine increasingly feasible medically, and viable financially. Health insurance products are emerging as major components in the portfolio of insurance companies. In many developing countries health insurance is in nascent stages.
As these countries enter the phase of liberalization and structural adjustment, health insurance would have a critical role to play in supplementing public health expenditure and enabling benefits of health care technology to reach a wider mass of the public.
The field is rapidly evolving with new products and systems of financing health care. Insurance companies are currently facing the classic chicken and egg syndrome, and more so when it comes to health insurance or mediclaim.
High claims to premium ratio, as seen with the major PSU insurance providers, make spending on advertising an unaffordable luxury. However, since insurance has always been a product that has to be sold in India, and not bought, high spending on advertising and such like is needed to increase revenues.
INSURERS JOINING HANDS WITH HOSPITALS:
Recently a PSU General Insurer United India has structured a new policy, Uni Heart Care, under which it would tie-up with hospitals for providing risk cover to patients who undergo cardiac surgery. In case of death, while undergoing surgery, the patient’s relatives or dependents would have the hospital expenses reimbursed. The amount would be equal to the hospital expenses, which mostly depends on the cost of the surgery. The payment would be routed through the hospital concerned.
Another unique feature of the scheme is that the patient or his relatives do not have to shell out any money to get the cover. The hospitals concerned would pay the premium amount. United India is in talks with a slew of hospitals specializing in Cardiac care for offering the novel insurance cover.
The premium on the policy would depend on the track record of the hospitals and the number of patients undergoing surgery. If the failure rate in a hospital is very high, the premium would also go up accordingly.
INSURANCE TIE-UPS WITH HOSPITALS:
The Ranbaxy promoted Fortis Healthcare Ltd. has recently tied up with a host of insurance firms like US-based Cigna, HTH Worldwide, and Aetna, UK’s Bupa and Belgium’s Vanbreda to provide health insurance cover to the patients visiting the hospital chain.
The group is now in talks with many other firms like British insurer AXA PPP Healthcare. The tie-ups also cover the hospital’s recent acquisition Escorts Heart Institute and Research Centre. Many other hospitals are in the process of striking similar agreements.
This is the first step towards recognizing India to extend insurance cover to the patients in their home countries who want to visit India for treatment. Fortis agreement would initially cover only foreign students, ex-pats, and tourists who require treatment while they are in India. Till now, they had to fly to Singapore to get the insurance benefit.
Health issues need to be conceptualized in a framework that understands these relationships and diseases can be treated through a mixture of social and clinical management. The technological and business opportunities are waiting to be grasped. The government needs to create the right enabling conditions, and the industry needs to rise to the challenge.
This is one area where need meets potential profit, and doing well can be combined with doing good. An understandable concern is whether scarce resources and hospital beds would be diverted to foreign patients instead of needy Indians. This would be so if one were to assume fixed and inflexible resources; however, as we have already seen, such demand, stimulates the supply system.
A system devised for poor Indian villagers can be equally useful for prosperous, urban westerners, with a few bells and whistles added. This will not only mean a huge market, but the stringent needs of a demanding foreign market will ensure high levels of quality and reliability.
A big market can mean economies of scale and result in lower costs for local use. As in the case of global medical tourism, catering to the world market can mean lower costs and better health-care for Indians.
By Jagendra Kumar, Jaipur, Published in The Insurance Times, June 2006
