In a nation like India, where there is no formal social security system in place, notwithstanding the high tax rates, healthcare and health insurance become that much more crucial.
One of the fastest growing and most potent sectors in India is the healthcare sector. India has become a hot medical destination for patients in the Middle East, Africa and even the West.
Word is fast-spreading that Indian hospitals can provide world-class care at competitive rates. India today has big names in healthcare like the All India Institute of Medical Sciences (AIIMS), Apollo Hospitals and Shankara Netralaya.
A vibrant and dynamic healthcare sector is imperative for the new human resource intensive world. Quality healthcare is vital for the growth of any nation. The key objectives of an effective healthcare system would be to enhance average life expectancy and to improve quality of life and productivity.
The sector today has a radical outlook with major emphasis on high skill sets that can leverage technology and medical science, and needs to cater to a critical and inevitable customer need at an affordable cost. It works on the principle of network economics touching innumerable lives.
Recent developments
India is very well placed to tap the growing potential of the healthcare sector. It has the relevant skill-sets with adequate human resources to become the preferred healthcare player in emerging countries across the globe.
Increasing urbanization, superior demographics, better health consciousness and higher life expectancy has enhanced the demand for quality healthcare.
Although the Indian government-run public sector has taken lot of initiatives in regards to the development of healthcare facilities, it is unable to do much now, which has brought the private sector into the picture.
This in turn, has brought in more capital, better technology etc. The recent Union Budgets too have been favorable to the healthcare sector. There has been reduction of customs tariffs on life saving medical equipment, reduction of excise on certain critical drugs and abolition of duty on drugs and materials imported for clinical trials.
Permissible depreciation rates for medical equipment under the Income Tax Law have been increased to enhance cash flows of the corporate hospitals in the private sector.
Lower interest on lending for private sector hospitals exceeding 100 beds will improve access to low cost funding for hospitals.
But the biggest leap has been the community-based universal health insurance scheme for the poor whereby a cover of Rs 30,000 is available for as low as Rs 2 per day with the Government contributing Rs 100 per annum for families below the poverty line.
Competition has proven to be the biggest blessing in the sector. Notwithstanding the healthy competition, several big corporate houses have ventured into the sector. The availability of various equipments has proven to be life saving many times. The formation of many big hospitals is the hint of the boost in this sector.
The entry of big pharmaceutical companies into this segment is a clear sign of corporate focus on this sector. Earlier many diseases did not have any cure for them but today such diseases have no longer remained a big threat to mankind. The implementation of newer and better technology in hospitals has helped save many lives.
What is driving the sector?
The increase in expenditure by government towards enhancement of medical facilities is a big plus, as is the involvement of large corporate houses. The reduction in customs and excise duties on various items is proving to be of great help to the sector resulting in the formation of the healthy competition.
Constant research and development have led to the discovery of new and better life saving drugs while the development of infrastructure and various incentives provided by the government is proving to be a great booster.
The government has also come up with various insurance schemes, which could help the sector and this is aided by the formation of various institutes, which have given the country the best of the doctors.
Where are the roadblocks?
One of the biggest roadblocks is the fact that the cost of many of the required equipments in this segment is too high. Resultantly, small healthcare centers cannot afford them and lag behind.
Similarly, many people are unable to enjoy the benefits of the new and advanced technology as the cost of treatment by these advanced equipments is very high which is often not affordable.
Finally, there are many dealers in the market who dupe people by selling them outdated medicines. However, the government is using legislation to place serious curbs on this malpractice.
Notwithstanding proliferation in the urban areas, the lack of good healthcare facilities in the backward rural areas is a cause of concern. It is undisputable that the total available healthcare centers are lesser in number than required. Finally, though there has been a reduction in duties, there have also been certain changes in the excise norms, which affect pharma companies.
The road ahead
Healthcare is a fast-growing sector which is developing at a very fast pace. People are becoming health conscious and are demanding better quality healthcare measures. Many hospitals have been formed for the purpose of providing quality healthcare to the people. Huge investments are being made in R&D which has led to development of new and better life saving drugs and equipments.
The government has reduced certain duties, which has brought down the cost of various drugs and equipments. There has been a constant focus by the government on the development of the healthcare sector.
Even various pharmaceutical companies have contributed to develop and provide better quality drugs. Various steps are being taken to develop the healthcare sector.
The future of this sector looks bright and promising. Both, the government and private sector enterprises are joining hands to boost the Indian healthcare sector. Overall, the prospects appear very bright and reflect the old adage 'health is wealth'.
Ashok Kumar heads Lotus Knowlwealth in Mumbai.