A recently published report projects India's population will touch 1.5 billion by 2025 - an increase of almost 400 million in the next 20 years or less. Optimists may choose to disregard such a stark projection and it could well be off by 10 or more years.
What cannot be ignored is that all current demographic trends portend continued bad news for India on the population front.
On another note, recent news reports suggest a steep impending rise in the cost of medical insurance premiums on account of the continuing adverse payout ratios. Some reports suggest that the payouts could be as much as Rs 120 for every Rs 100 collected by way of premiums on account of various factors including collusion between the insured and the healthcare services providers.
While one cannot fault the insurance companies for taking measures to correct this ludicrous situation, the impact on Indian society cannot be much worse. With over 70 per cent of the estimated Rs 150,000 crore (Rs 1,500 billion) annual spending on healthcare being met by Indian citizens out of their own pocket (in many cases leading to a vicious cycle of indebtedness and economic deprivation), and with the private health insurance penetration rate less than 1 per cent of the total number of households in India, any increase in health insurance premiums will stifle the growth of private medical insurance - with disastrous consequences.
While our current political leadership continues to get bogged down with non-issues (or less critical issues), India continues to grow alarmingly in population terms and with that the gravity of the challenge the rising population poses escalates each moment as another child is born and as each one of us ages further.
It would be important to understand and appreciate the implications of some hard numbers. With per capita expenditure on healthcare in India already as low as some sub-Saharan republics, even this abysmally low level of healthcare availability is characterised by universally poor accessibility, generally low quality, and uncertain price.
Not unlike the state of the retail sector in India, the healthcare sector is largely "unorganised" with over 80 per cent of delivery through individual, private providers. With an estimated 175 plus million people over 60 years of age by 2025, India will have the second-largest number of silver-haired people in the world (only surpassed by China).
Lifestyle diseases such as cardiac attacks, diabetes, and cancer are feared to show high double-digit growth rates over the next decade. Against a world average of about four beds per 1,000 people, India languishes at about 1.5, i.e. just about 1.6 million hospital beds. Even increasing this to 2.5 beds per million by 2025 will imply an addition of about 2.15 million beds at a minimum cost of Rs 550,000 crore (about $125 billion), at a modest Rs 25 lakh per bed (most of the deluxe hospitals coming up in India "boast" of a cost of more than Rs 50 lakh per bed).
With just about 600,000 doctors and about 1.6 million nurses, India will need another 1.5 million doctors and another 3 million nurses even if we are to come near the halfway mark of the world norms.
Against this backdrop, while the efforts of the current "organised" players such as Apollo, Fortis, Max, and Wockhardt, among others, are laudable, the reality is that the combined impact of all such initiatives currently under way will be negligible against the gargantuan needs.
Not unlike retail, the healthcare sector needs entrepreneurial activity of the scale of a Reliance Retail or an Aditya Birla Retail, wherein thousands of crores are to be invested in a relatively short period of time to challenge and change the existing paradigms and, if successful, lead to the creation of a very positive catalytic, multiplier effect on investments in the entire healthcare services delivery ecosystem.
Till that happens, what can be done? To start with, the government must urgently clean up the cobwebs of misdirected ideology relating to the insurance (especially health) sector and must open it up immediately with whatever policy and fiscal support needed.
The origin of ownership, Indian or foreign, should not be of prime concern. What is more critical is to create a thriving, competitive insurance market wherein the overall expansion of the base of the insured population can keep the insurance premiums low.
Concurrently, the healthcare insurance providers should think of putting an absolute cap on each specific area of service provided by the provider (e.g. imaging, cost of room, and consumables) rather than an overall cap on total payout as a percentage of the total sum assured.
This will force the "organised" healthcare service providers to come up with business and operating models where they have an incentive to keep costs low if they are to take any business from insured patients.
The state governments must make land and financing options available to attract the hitherto unprecedented quantum of investment in healthcare delivery capacities with fiscal and infrastructural incentives for setting up such facilities in non-metro/non-capital cities and even semi-urban or rural areas.
And finally, big private business should give investing in the healthcare sector a very serious consideration. Notwithstanding the less than impressive financial performance of some of the current organised healthcare delivery providers, I continue to believe that with the right "business" model, investment in this sector can be financially and socially as rewarding as in any other sector.