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Healthcare Tourism in India C M Y K 3 Healthcare Tourism In India 3.1 HEALTHCARE SCENARIO IN INDIA 3.1.1 Overview India’s health system can be categorized into three distinct phases31: a) In the initial phase of 1947-1983, health policy was assumed to be based on two broad principles: (i) that none should be denied healthcare for want of ability to pay, and (ii) that it was the responsibility of the state to provide healthcare to the people. This phase saw moderate achievements. b) In the second phase of 1983-2000, a National Health Policy was announced for the first time in 1983, which articulated the need to encourage private initiative in healthcare service delivery and encouraged the private sector to invest in healthcare infrastructure through subsidies. The policy also enhanced the access to publicly funded primary healthcare, facilitating expansion of health facilities in rural areas through National Health Programmes (NHPs). c) The third phase, post-2000, is witnessing a further shift and broadening of focus; the current phase addresses key issues such as public-private partnership, liberalization of insurance sector, and the government as a financier. 31 Report of the National Commission on Macroeconomics and Health, Ministry of Health and Family Welfare, Government of India, August 2005 77 C M Y K C M Y K Healthcare Tourism: Opportunities for India The National Health Policy, 200232 outlines improvement in the health status of the population as one of the major thrust areas in social development programme. It focuses on the need for enhanced funding and an organizational restructuring of the national public health initiatives in order to facilitate more equitable access to the health facilities. The National Common Minimum Programme identifies health as an important thrust area. The Government is in the process of raising the public spending on health with focus on primary healthcare. As a result of various initiatives, India has registered significant progress in improving life expectancy at birth, reducing mortality due to Malaria, as well as reducing infant and maternal mortality over the last few decades. The rural primary public health infrastructure has increased and now India has around 145,000 Sub-health Centres, over 23,000 Primary Health Centres and around 4000 Community Health Centres, catering to a population of 5,000, 30,000 and 1,00,000 respectively33. However, only about 20% of healthcare services are being provided by public sector, with the remaining being provided by the private sector. It is also estimated that about 10% of population is covered by any form of health insurance. Private healthcare is expected to continue as the largest component (Rs. 156,000 crores) of healthcare spending in 2012, and could reach Rs. 195,000 crores with broader coverage of health insurance34. According to a study by KSA Technopak, private sector plays a major role in servicing the Indian healthcare market; more than 90% of it is being served by the urorganised sector. However, transition is expected to happen in the healthcare industry, with more and more corporate players are entering the business in an organized way. It is also estimated that increase in income levels, 32 Ministry of Health and Family Welfare, Government of India; http:// mohfw.nic.in/np2002.htm 33 Annual Report 2006-07, Ministry of Health and Family Welfare, Government of India 34 Healthcare in India: The Road Ahead, CII-Mc Kinsey & Co.; October 2002. 78 C M Y K C M Y K Healthcare Tourism In India increase in share of population with lifestyle diseases, increasing penetration of insurance market, especially the health insurance segment are important reasons for more number of organized players entering in the market. Exhibit –14 depicts increasing share of private sector in India’s healthcare market over the years. Tables 6 and 7 illustrates the healthcare profile of India, and the density of health workers in India, respectively. Exhibit 14: Increasing Share of Private Sector in India’s Healthcare Market Source: Ten Industry Trends: 2007, Healthcare Outlook, KSA Technopak, Volume – 1, February 2007. 3.1.1.1 Healthcare Education and Research The Government has set up regulatory bodies with the objectives of monitoring the standard of medical education, and promoting training and research activities in the country. The overall objective is to sustain the production of medical and para-medical human resources to meet the requirement of healthcare delivery system in India. Regulation of medical education and profession in India is given in Exhibit - 15. 79 C M Y K C M Y K Healthcare Tourism: Opportunities for India Table 6: Healthcare Profile of India Sl. No Description Data 1 Total Expenditure on Health as % of GDP (2003) 4.8% 2 Government Expenditure on Health as % of Total Expenditure on Health (2003) 24.8% 3 Private Expenditure on Health as % of Total Expenditure on Health (2003) 75.2% 4 Government Expenditure on Health as % of Total Expenditure (2003) 3.9% 5 External Resources for Health as % of Total Expenditure on Health (2003) 1.6% 6 Social Security Expenditure on Health as % of General Government Expenditure on Health (2003) 4.2% 7 Out of Pocket Expenditure as % of Private Expenditure on Health (2003) 97.0% 8 Private Prepaid Plans as % of Private Expenditure on Health (2003) 0.9% 9 Per capita Total Expenditure on Health at Average Exchange Rates (US $) – 2003 27.0 10 Per capita Government Expenditure on Health on Average Exchange Rates (US $) - 2003 7.0 Source: Working Together for Health, World Health Report, 2006; World Health Organisation, 2006. Table 7: Density of Health Workers in India Categories Year Number Density per 1000 Physicians 2005 645285 0.60 Nurses 2004 865135 0.80 Midwives 2004 506924 0.47 Dentists 2004 61424 0.06 Pharmacists 2003 592577 0.56 Public and Environmental 1991 325263 0.38 Health Workers Community Health Workers 2004 50393 0.05 Lab Technicians 1991 15886 0.02 Other Health Workers 2005 818301 0.76 Source: Working Together for Health, World Health Report, 2006; World Health Organisation, 2006. 80 C M Y K C M Y K Healthcare Tourism In India Further, Indian Council of Medical Research (ICMR) has been set up as an apex body for planning, organization, implementation and coordination of medical research in the country. In addition, there are plethora of institutions for education and research in the healthcare sector. Exhibit 15: Framework for Medical Education / Regulation in India 3.1.2 Role of Private Sector in Healthcare India is encouraging investment in healthcare sector; over the years, the private sector in India has gained a significant presence in all the sub-segments of medical education and training, medical technology and diagnostics, pharmaceutical manufacture and sale, hospital construction and ancillary services, as also the provisioning of medical care. Over 75% of the human resources and advanced medical technology, 68% of an estimated 15,097 hospitals and 37% of 623,819 total beds in the country are in the private sector35. The composition of private sector in India is diverse with large number of sole practitioners or small nursing homes having bed capacities of less than 20. There are also several corporate entities, including pharmaceutical firms, and non-resident Indians (NRIs), 35 Report of the National Commission on Macroeconomics and Health, Ministry of Health and Family Welfare, Government of India, August 2005 81 C M Y K C M Y K Healthcare Tourism: Opportunities for India who have invested in the Indian healthcare sector and are providing world-class care at a fraction of the cost compared to many developed countries. In addition, there are also traditional healthcare providers, such as Ayurveda and Yoga, who have set up facilities. It is reported that there are 1369 hospitals with a bed capacity of over 53000 in India catering to the needs of traditional Indian healthcare; about 726,000 registered practitioners are working under the traditional healthcare system36. Indian hotels are also entering the wellness services market offering Spas and Ayurvedic massages, tying up with professional organizations in a range of wellness fields. 3.1.3 Health Insurance According to Insurance Regulatory and Development Authority (IRDA), health Insurance is one of the fastest growing portfolios of general insurance business37. In order to give a special focus to this area, the IRDA is in the process of setting up a separate Health Insurance department. IRDA is also planning to bring out separate regulations/guidelines for health insurance. Penetration of health insurance in India is low; health insurance is estimated at around 10% of total population. However, majority of the health insured in India are covered under social health insurance or community-based health insurance, and the penetration of commercial insurance may be around 1% only. The reasons for low penetration of commercial health insurance is due to low level of innovation in health insurance products, exclusions and administrative procedures governing the policies, and chances of co-variate risks, such as epidemics, which keeps the premiums high. Following the enactment of IRDA Act, 1999, Third Party Administrators (TPAs) are facilitating the healthcare insurance penetration. The prime role of TPAs is to provide the back office 36 Department of AYUSH, Ministry of Health and Family Welfare, Government of India; http://indianmedicine.nic.in/summary-of-infrastructure.asp 37 Annual Report 2005-06, Insurance Regulatory Development Authority, December 2006. 82 C M Y K C M Y K Healthcare Tourism In India administrative set-up to insurance companies – such as issue of identity cards, processing of claims and settlement of bills. Performance of TPAs in terms of claims settled in India is given in Table – 8. However, TPAs have also helped in facilitating a large number of policy holders in getting cashless medical treatment in hospitals.
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