Healthcare is registering an exponential growth and receiving lime light for right and for some wrong reasons. The country has to tread a long path, however, in terms of healthcare where its budget continues to be a negligible 1.3 per cent of the GDP; 70 per cent of healthcare spending in India is out-of-pocket.
Industry is majorly dominated by private segment and for the same reason government is also empanelling them through various schemes like CGHS, ECHS, ESI and a recent launch is Ayushman Bharat which was launched on September 25 by Prime Minister to provide people universal health coverage. This is a lucrative business opportunity will sure be soon coming up with regulatory norm of price ceiling. The government has also realised the importance of quality and is pushing hospitals to have NABH accreditation, but then ‘matching cost’ and ‘delivery quality’ under the regulations is a key to success.
Although there is broad policy consensus that both cost containment and quality improvement are critical, the association between costs and quality is poorly understood.
The affordability enigma
Cost of delivery
One possibility is that improvements in quality will require increases in cost (or conversely, cost reductions could reduce quality. On the other hand, improvements in quality could lower costs by reducing complications or hospital readmissions. In reality, the association between cost and quality probably falls between these two extremes, so that some types of health care costs are associated with high quality and others with poor quality. The effect depends on where the money is spent.
Of late, there appears to be an increasing focus on tackling the affordability issue by regulatory actions that control prices. However, the issue of cost restraint needs to bear in mind the following:
- In today ‘s age of innovation and advancement, there is a wide variety and quality of equipment, devices and drugs that is available globally. If India is to continue to attract the top-end products and technologies, the prices have to ensure economic sustainability for such premium products. With continuously reducing prices, there is a risk of such products and services disappearing from the Indian market.
- There is a threshold below which the quality vs cost equation can become dangerously tilted in favor of low quality, especially in the case of healthcare products and services. Hence, it is critical that the government lure a balance between these and find measures to mitigate the risk of lowering prices leading to corresponding drop in quality to sustain the margins. An increased focus on, and a well-implemented plan for quality control is critical at this juncture.
- Healthcare, in today’s age is provided in large measure by the private sector and is funded by corporate or private equity investors who will expect a fair return on investment.
Moreover, there is a need to review the notion that the healthcare players are making super-normal profits. While evaluating costs and margins, healthcare delivery needs to be assessed as a range and not broken up into various components and products. There is a need to co-opt experts, who will carry out a fair and accurate assessment of the true cost of a delivery.
This would take into account requirements of minimum quality as well as an understanding that, beyond a point, increase in volumes cannot lead to lower costs in the case of healthcare. There are constraints on capacity of both equipment as well as medical professionals.
Moreover, considering that India depends heavily on private healthcare infrastructure, any steps that make investing in it unviable will exacerbate the already existing shortage of health infrastructure.
Ability to pay
In a poor country such as India, and for a high investment sector like healthcare, it will never be possible to solve the affordability issue by simply attacking the cost side. There is a need to address the other side of the equation too, i.e. ability to pay.
Healthcare is neither a priority area nor something most Indians are willing to save for and there is a sense of entitlement to ‘free’ quality healthcare which is nothing but a pipedream for a country with the world’s second largest population but where only 3 per cent pay taxes. The government should focus on healthcare financing, particularly for the part of population that cannot afford healthcare. Launching the National Health Protection Scheme (NHPS) is a step in the right direction. However, the success of the scheme will depend on how well it is detailed out, and implemented on the ground.
In order to generate maximum value out of the massive investment by the government in this scheme, efforts should be made to encourage and incentivize wellness/preventive care and making primary care (including basic diagnostic tests and outpatient care) accessible and affordable for all. This will not only improve the overall health of the population, but also free up resources and reduce the overall cost to the exchequer.
Few areas to focus on-
a) Increase indigenisation in medical equipment, devices and medications through training biomedical engineers and harnessing innovations b) Incentives to entrepreneurs to set-up hospitals in smaller towns where real estate and project costs are lower c) Increased use of generics in pharmacy to reduce use of imported drugs d) Sensible rate arrangements between governments and private players to ensure availability of care without large capital outlays which government can ill afford e) Create affordable public health insurance for all to a reasonable level f) Uniform development of healthcare facilities all over without imbalance
Technology can play a significant role in managing population health. Big data analytics and artificial intelligence (AI) can help us in the areas of risk identification, disease prevention and early diagnosis, and the government must use these for public health purposes. Lastly, it is critical that issues of quality and sustainability be borne in mind while setting package prices under NHPS in a manner that balances quality and economic viability.
To conclude, healthcare is a very complex sector and several countries and societies are struggling to get it right.
We, in India, are fortunate to have an extremely competent pool of healthcare resources, who can boast of some of the best health outcomes. India is called the ‘pharmacy of the world’ and is fast becoming the hub for innovation and manufacturing. All we need is for the private sector and the government to work collaboratively and with trust and respect for each other. Each can support the other and work towards creating a healthcare sector that ensures quality healthcare to the poorest of the poor, as well as facilitates the availability of best-in-class products and services to those who can afford it.
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