labels: healthcare, quality, investments
Spreading good healthnews
Shehla Raza Hasan
24 July 2003

Kolkata: India's healthcare services industry, which touched the heart of Pakistani baby Noor Fatima and gave her a new lease of life after repairing congenital damages, is poised to emerge as one of the future growth drivers of the economy.

With new terms such as health tourism, healthcare outsourcing and medical back office support being bandied about, given the right mix of government push and private sector initiative India could emerge as a cost-effective healthcare service provider in South Asia and Southeast Asia and indeed to the rest of the world.

Is healthcare going to be India's next big thing after information technology?

Some of the latest trends are quite interesting. The British government is contemplating to fly its citizens down to India for treatment to clear up long waits for treatment and surgeries in British hospitals.

Hospitals in Kolkata have long queues of patients from Bangladesh waiting for appointments with Indian medical specialists. And, now, the bus service between India and Lahore has opened up new opportunities for the people of Pakistan to avail of better quality healthcare in India.

The statistics are impressive. According to India's ministry of external affairs, the $17-billion Indian healthcare industry (which is roughly 4 per cent of the country's gross domestic product), which comprises hospital services, healthcare equipment, managed care and pharmaceuticals, is poised to grow 13 per cent annually for the next six years.

In the pink of health
With global revenues of an estimated $2.8 trillion, the healthcare industry is the world's largest industry. India could emerge as a major player owing to its high population. According to the Insurance Regulatory and Development Authority, the Indian healthcare industry has the potential to show the same exponential growth that the software and pharmaceutical industries have shown in the past decade. Only 10 per cent of the market potential has been tapped till date.

The growth of the healthcare industry is to be fuelled by the rising purchasing power of the Indian middleclass, which is willing to shell out more for quality healthcare that is today more available than, say 50 years ago, thanks to the involvement of the private sector in the healthcare industry and hospital management. With the kind of interest in availing of Indian healthcare services shown by other countries, the growth could be more than what has been calculated, feel industry watchers.

Privatisation of healthcare in India is the key to the resurgence of this sector. A Central Bureau of Health Intelligence study indicates that a majority of Indians of the middle- and high-income groups have confidence in healthcare products and services offered by private hospitals than the government-owned healthcare agencies. On an average, private healthcare service is 60 per cent more expensive than the government-owned ones.

Despite private healthcare being the more expensive alternative for resident Indians, for the British government it is cheaper to fly down English patients and fly them back to the UK after treatment in India than bearing the social costs in the home country.

Lower costs is the main issue that weighs the balance heavily in favour of India. The cost-benefit advantage is phenomenal. An open-heart surgery could cost between $34,000 and $70,000 in the UK or the US, but in India the same surgery could cost between $3000 and $10,000 in the best of hospitals. Healthcare cost differences, therefore, could be anywhere between 200 per cent and 800 per cent.

Cost effective
Good marketing efforts could divert patients from African and West Asian countries, who normally go to the US or the UK, for treatment to India. Another niche segment that could be marketed is the area, generally not insurance-covered in advanced countries, like cosmetic and plastic surgeries and other high-end lifestyle treatments.

While quality remains an issue, it is important to understand that Indian healthcare quality seems to have improved with more and more private hospitals being able to import useful and high-tech medical equipment. This has recently got a fillip with the Indian government announcing reduction in import duties of medical equipment.

In a report published by Dr Vinay Kothari, managing director, Hospihealth, hospital and healthcare planner and operation management consultants, it is mentioned that a decade ago, India was about 50 years behind the US in the medical field, but over the last 10 to 15 years this gap has bridged much faster with high-tech super speciality hospitals coming up all over the country. Most Indian private hospitals are trying to improve quality by employing quality manpower, better salary structure, training, and arranging for continuous medical education (CME).

It is, therefore, very likely that Indian healthcare would be very close to global standards in the coming years. According to the Frost & Sullivan Indian Healthcare Industry Forecast 1996-2006, the growth of the healthcare industry will ride on the overall congenial business environment of the country in terms of tax cuts, broadening tax base and reduced interest rates on borrowing. The forecast says the introduction of product patents in India is expected to boost the industry by encouraging multinationals to launch specialised life-saving drugs.

India's natural advantages of lower production costs and skilled workforce can attract multinationals to set up research and development and production centres here. The export of bulk drugs and formulations is set to increase at a compounded annual growth rate of 20 per cent and 10 per cent, respectively, between 2002 and 2006. Over-the-counter drugs are likely to be a major market driver for formulations during this period.

Healthcare in India, therefore, is one huge business opportunity for the future. To make India truly a most-preferred healthcare destination in the world, the government and the private sector should join hands to invite global healthcare brands to invest in Indian facilities. The should carry the notion of health tourism forward by making available specialised services related to lifestyle treatment and specialised services such as geriatric services, wellness programme, alternative medicine and preventive care facilities.

(© 2002 Asia Times Online Ltd. This article first appeared on Asia Times Online,, and is republished with permission.)

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