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Ayushman Bharat Yojana and its impact on medical devices industry

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With Ayushman Bharat Pradhan Mantri Jan Arogya Yojana completing two years of its implementation on September 23, Satyendra Johari, founder and chairman, Johari Digital Healthcare explains how the direct procurement of critical medical equipment and devices via the Government e-Marketplace (GEM) for hospitals, in a bid to reduce the cost of healthcare service, has created a new segment of growth for the medical device industry

India’s healthcare sector, one of the fastest-growing sectors in the past few years, the high growth rate is due to the availability of modern healthcare services, health awareness, and lastly policies introduced by the government. Till some years back it was all about private healthcare in India, but with private participation in public schemes, and the government increasing its spending in healthcare, the public healthcare segment is gaining prominence. With regulatory governance and coming together of all stakeholders, the Indian healthcare sector has the potential to become a $275 billion industry.

There were numerous policies to support public healthcare in India, but the implementation of Ayushman Bharat Pradhan Mantri Jan Arogya Yojana was seen as a significant and progressive scheme for the Indian healthcare sector. The scheme aims to enrol nearly 40 per cent of India’s population for a free insurance cover of up to Rs 5 lakh including pre-existing illness and nearly 1,400 procedures. As of recent data, over 12 crore e-health cards are issued to poor people. AB-PMJAY is a very ambitious plan of the government of India as it aims to cover over 50 crore people in the country, which is equal to the population of more than 20 European countries put together.

Medical devices and AB-PMJAY

One segment which has benefitted and also contributed to the success of the scheme in a big way is the medical device segment. The government under AB-PMJAY has started directly procuring critical medical equipment and devices via Government e-Marketplace (GEM) for hospitals in a bid to reduce the cost of healthcare service. This move has created a new segment of growth for the medical device industry, remember the scheme aims to eventually cover nearly 50 crore people in India.

As the government procurement takes place at a negotiated price, it will foster price competitiveness in the Indian medical device sector. Quality medical equipment is a must for higher grade medical care, upgraded equipment and state of the art technology can help save lives. Not only medical devices but the scheme has also helped with improved quality of service as empanelled hospitals have to go through an accreditation process.

The government is aiming at institutionalising this process to make it a swift exercise. Working on a fraud and abuse prevention system is ongoing to avoid any misuse of resources envisaged for the scheme. Till now nearly 70,000 hospitals are empanelled under AB-PMJAY, and the government has started rating the hospitals on the basis of advanced service and super-specialised care they offer.

The government plans to establish 1,50,000 health and wellness centres under the scheme across the country, which also includes diagnostic services that will provide a further boost to demand for medical equipment. The government is also working on a plan to partner with diagnostic players to expand services under the scheme. A robust diagnostic ecosystem can help prevention and early detection of life-threatening diseases.

ABPMJAY has changed the landscape of the healthcare sector

Earlier, the poor and the marginalised were deprived of quality healthcare, either due to non-availability in the rural areas or due to non-affordability in urban areas, but after the implementation, a person can go to any public or empanelled private hospitals across the country and get free treatment.

Healthcare in India still has a long way to go to catch up with other advanced nations, the current per capita spend on medical devices in India is at $3 vs $13 in China and $340 in the US. High government spending on healthcare services and infra will help the sector grow at a faster pace and improve the quality of service in the country. The Fifteenth Finance Commission has asked the government to consider spending 2.5 per cent of GDP on health in the light of the pandemic. In the long term, AB-PMJAY will help the government with a unique opportunity to bring reforms to healthcare, a sector that has historically been very difficult to change due to the mindset of people. The scheme has the potential to make healthcare an important pillar in the growth of the economy and improving the quality of life.

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