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Indian Healthcare: Opportunity and Solutions. 07 May 2011. Overview of the presentation. The Indian healthcare -- landscape and change drivers Key imperatives and potential solutions. Indian Healthcare – Landscape and change drivers. 1. 4. 12.0. 1. 2. Doctors per '000. 2.6.

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overview of the presentation
Overview of the presentation
  • The Indian healthcare -- landscape and change drivers
  • Key imperatives and potential solutions
snapshot of indian healthcare industry

1

4

12.0

1

2

Doctors per '000

2.6

Nurses per '000

1

0

8

5.0

6

4.1

9.4

1.2

4

1.9

2.5

2.4

1.3

0.6

0.7

2

3.8

1.4

2.8

1.8

1

1.3

0

World avg

USA

Brazil

China

Malaysia

India

Snapshot of Indian healthcare industry

Beds per 1000 population in India

Industry composition

64%

>200 beds

% beds

36%

1%

5%

100-200 beds

10%

30-100 beds

PHCs

% of institutions

<30 beds

Govt. hospitals & CHCs

Source: Data on Mortality & Burden of Disease, WHO, 2002

Doctor and nurse density

Value: USD Bn

116

96

48

2010

2015

Source: Global atlas of the health workforce [online database]. World Health Organization, 2008. Period of data is 2000-2006.

Source: EY Analysis

slide5
Indian healthcare in its current state is plagued by problems with the key roadblock being the lack of propensity to pay for healthcare

Prevalence

Provider

Propensity

  • Highly inadequate infrastructure - Bed density is less than 1/3rd of the world average & less than ½ that of China
  • Inequitable distribution of infrastructure - 6 states with 37% of the Indian population have hospital beds per ‘000 less than 2/3rd of national average
  • Only 35% of the population has access to modern medicine
  • 17% of world’s population has 20% of world’s disease burden
  • Disease burden per 100,000 is 85% more than that of China and 38% more than that of Brazil
  • Disease burden for communicable diseases 3 times that of Brazil & 5 times of China
  • Pre-dominantly acute (~50%), disease burden with a rapidly growing prevalence of chronic diseases
  • Low expenditure on health
  • Per capita spend on healthcare ($116) is ½ of China and 1/7 of Brazil
  • 64% of health expenditure is out-of-pocket – 4 times the world average
  • Insurance covers only 12% population
  • In addition, monthly per capita expenditure of the Indian population is low making affordability an issue – 12% ailments remain untreated

>$43

10.6%

$20 to 43

31.6%

% urban popn.

MPCE for urban

$7 to 20

55.7%

2.0%

< $7

Source: EY-FICCI “Fostering Quality Healthcare for All” 2008

to summarize current characteristics of healthcare in india
To summarize, current characteristics of healthcare in India
  • Largely a “Sick-care”industry
  • Characterized by high disease burden
  • Serviced by an inadequate and highly fragmented provider infrastructure
  • Catering to a population that has to spend from out of its pocket for most of its healthcare needs
however the industry is at throes of a transformation driven by three key trends
However, the industry is at throes of a transformation driven by three key trends

1

Growing middle class & higher spend of middle class on healthcare

Healthcare spend – Share of wallet

Low

Medium

High

Income Level

Income in Rs.’000

Share of wallet

2

Changing mindset from ‘sick care’ to ‘healthcare’

>1000

  • Testaments to this changing mindset are –
  • The increasing penetration of private insurance – CAGR of more than 30%
  • Increase in ‘share of wallet’ for healthcare by 30% in the coming 5 years

200 to 1000

Middle class

50 mn

600 mn

< 200

Healthcare share of wallet

2025

3

2005

Emergence of healthcare as a political agenda

Source: MGI & EY

Government outlay for healthcare to increase from 1% to 3% of GDP

BPL population meant to be a significant beneficiary thus driving ‘healthcare inclusiveness’

National immunization programs to expand

unleashed demand will require an overhauling rather than incremental changes in healthcare
Unleashed demand will require an overhauling rather than incremental changes in healthcare

India would need to add 1.75 Million hospital beds, 0.7 Million doctors and 1.6 Million nurses by the year 2025

No. of doctors (Million)

No. of beds (Million)

No. of nurses (Million)

2.3 x

2.2 x

2.9 x

(Assuming current doctor to nurse ratio)

Creation of the required infrastructure would require an investment of ~ USD 90bn over next 15 years

Source: EY FICCI Healthcare report

key imperatives
Key imperatives

1

Reduce demand on curative care – primarily secondary and tertiary care

2

Focus on building capacity and capability

3

Undertake initiatives to enhance access – geographical and financial

potential solutions the market shapers and the game changers
Potential solutions – the “market shapers” and the “game changers”

Game Changers

Market Shapers

  • Emphasis on preventive care and wellness
  • Strengthening of primary care
  • Facilitative changes in norms regulating medical education and practice in India to generate additional resources from existing infrastructure
  • Focus on tier-II cities for expansion
  • Move to day care surgeries
  • Focus on healthcare inclusiveness driven through health insurance
  • Creation of healthcare infrastructure through “Public Private Partnerships”
  • Leveraging IT to enhance access to care
  • Training and empowering healthcare workers to reduce dependence on MBBS doctors and specialist
market shaper i ii strengthening of primary care system promote health
Market shaper – I, IIStrengthening of primary care system, promote health
  • Strengthening of rural healthcare infrastructure by government
    • Launch of NRHM in 2005 with focus on:
      • Creating community health workers (ASHA program): ~ 700,000 enrolled till date
      • Primary care infrastructure upgradation/ creation
      • Decentralization of healthcare requirement planning
  • Initiatives to create awareness, early detection and treatment of non-communicable diseases, e.g. diabetes, dialysis, cancers, strokes, cardiovascular diseases
  • Emphasis on promoting health
    • Focus on health determinants: Access to safe drinking water, sanitation including waste disposal systems, controlling environmental pollution, minimal level of nutrition safety, and education
    • Need for a coordinated approach for securing of these basis entitlements – “Right to Health” by Assam government
market shaper iii facilitative changes in norms regulating medical education and practice in india
Market shaper - III Facilitative changes in norms regulating medical education and practice in India
  • Facilitative changes in norms regulating medical education and practice in India, e.g.

Allowing capacity addition to existing facilities

    • Ceiling for MBBS admissions has been raised from 150 to 250 depending on bed strength, bed to student ratio changes
    • Teacher-Student ratio has been relaxed from 1 : 1 to 1: 2 in medical colleges

Facilitate creation of new infrastructure

    • Relaxation of land requirement norms (from 25 acres to 20 acres, special concession for NE states and some UT, major cities 10 acres)
    • Rationalization of infrastructure requirements setting up new medical colleges
    • Relaxation of bed strength and patient occupancy norms
    • Companies registered in India permitted to set up medical colleges
market shaper iv is access or affordability the key to tap these tier 2 rural markets

Metro

Class I/IA

Class II-IV

Rural

Market shaper - IVIs access or affordability the key to tap these (Tier 2 & rural) markets?

Current market split

(pharma)

No. of towns/villages

Population (mn)

Households with high-medium purchasing power

35

108 (11%)

27%

Tier 1

39

359

88 (9%)

34%

Tier 2

3792

89 (9%)

11

20%

Rural

593,807

743 (72%)

56

19%

Metro: >1 mn population, Class I towns: 0.1-1 mn, Class II-IV: 5000 – 0.1 mn, Rural: less than 5000 ; Tier 1 markets: Metros and Class I towns, Tier 2 markets: Class II-VI towns and Rural areas *High – medium purchasing power – Annual income is Rs. 1 lakh and above

Source: NCAER, MGI, EY analysis

Source: NCAER, MGI, EY analysis

Is access or affordability the key to tap these (Tier 2 & rural) markets?

market shaper v move towards day care surgeries
Market shaper - VMove towards day care surgeries
  • Concept:
  • Number of day care surgeries: US -- 75% of total surgeries, India ~ 40% which can go up to 60% given the current infrastructure
  • Advantages:
  • Reduced cost to the patient (can save up to 30% to 40% of typical surgery amount)
  • Lesser period of stay for the patient and use of high end technology for faster recovery
  • Lower capex requirement, quicker breakevens, Frees up precious hospital infrastructure (beds)
  • Can help enhance access
game changer i health insurance schemes
Game changer - IHealth Insurance Schemes
  • Government sponsored schemes for economically weaker sections of society
    • RSBY – 2.98 crore households covered
    • Weavers scheme – 18 lacs weaver families
    • Aarogyasri scheme (AP) – 2.03 cr BPL families
    • Other states: 13 other states have initiated various models of health insurance schemes in 2008-09 and 2009-10
  • Private insurance – growing at a CAGR of 30%
  • CGHS and ESIS schemes

These schemes will make healthcare financially accessible to a large section of population which earlier could not afford it

50% of Indian population can be covered by health insurance in 2015 if formal sector and BPL is given mandatory coverage

game changer ii creation of healthcare infrastructure through public private partnerships
Game changer - IICreation of healthcare infrastructure through “Public Private Partnerships”
  • High potential to accelerate access since it can
    • Overcome Government’s budgetary constraints
    • Promote entrepreneurial action by private players and accelerate facility creation
    • Provide quality care at concessional rates to financially disadvantaged and at competitive market prices to others
  • Key success factors:
    • Agenda defined by the first “P” – i.e. “Public”
    • Strong philosophy of partnership - equity, trust and autonomy
    • Risk sharing framework designed with both public and private players assuming risks that are best suited to them
    • Normal rate of return on equity with upsides for efficiency for private players
    • National framework and standard templates for concessionaire agreements
a model for ppp in provider care
A model for PPP in provider care

State

Reimburses private provider based on agreed upon tariffs

Ensures governance and quality of care

x%

Insurance premium

Land

Insurance company

%

Monitoring

Agency

Indicates share of funding between Centre and State

Financial monitoring

Viability gap1 funding in form of an annuity for setting up facilities in select non Tier 1 areas

y%

Quality monitoring

Centre

Healthcare

provider

Funds operating and capital expenditure

100%

Cess/ Surcharge/ Health tax

Provides treatment

BPL Population

APL Population

Stakeholders involved

Out of pocket premium – 0%

Out of pocket premium

PUBLIC

SECTOR

PRIVATE

SECTOR

CONSUMER

Electronic health cards distributed by government

game changer iii using technology to improve access to healthcare
Game changer - IIIUsing technology to improve access to healthcare
  • Encompasses data-gathering for public health research programs
    • Tracking of disease outbreaks, epidemics and pandemics
    • Development of health policy
    • Design of healthcare interventions

Public health research

  • Efficiency improvement

Information and self help

Primary care/ remote consults

  • Using ICT

Includes services and applications that support the diagnosis of medical conditions, and the provision of treatment by frontline local medical staff (remotely or at site)

Applications promoting wellness, and incentivizing or encouraging individuals to improve their own health

Management of long term conditions

Emergency care

Enhancement of emergency care, in hospitals and elsewhere, through the deployment of mobile technologies

game changer iii some business models enabling remote professional
Game changer - IIISome business models -- Enabling remote professional

Pool of medical experts at central location

Skilled health workers equipped with advanced Smartphone

Experts can cover more ground – no need to travel

Skilled health workers can deal with more problems in consultation with experts

Doctor provides health record platform fro free, but charges for the consultation

Developer is paid for app and platform

End user pays per transaction

End user

Panel Doctor

App Developer

Mobile network operator receives fee for video call

Payment company

Mobile operator

Receives transaction fee

game changer iv skill upgradation more active role of non doctor health workers
Game changer - IVSkill upgradation, more active role of non-doctor health workers

Overcome Inequitable Distribution

  • Need to make our health delivery less doctor dependent and more nurse enabled
    • Nurse to doctors ratio: India (2.5: 1), UK (5:1), US (3:1)
  • Three years rural medical practitioners/ assistant courses (e.g. Assam and Chhattisgarh)
  • Inclusion of AYUSH doctors in healthcare delivery specially in underserved areas with necessary skill upgradation

Source: WHO World Health Survey 2003, Morbidity, Healthcare and Condition of the aged NSSO 60th Round, “Financing and Delivery of Health Care Services in India”, Background papers of the National Commission on Macroeconomics and Health”, 2005