Economics & Dynamics of Aarogya Bharat

With India aspiring to become a 5 trillion USD economy by 2025 and a high middle-income nation by 2030 at an economic target of USD 10 Trillion, the goal of Universal Health Coverage will be a critical yardstick for this achievement.

By 2030, we hope to make distress-free healthcare a reality along with a functional and comprehensive wellness system for all. To achieve this universal goal, both the government as well as the private sector stakeholders need to formulate financing models that are not only innovative but can also assist in increasing the overall investment scale of the sector.

A 5 trillion economy by 2024-25 would unleash a fresh momentum to the healthcare sector as well. According to NATHEALTH-Aarogya Bharat Report, total spending on healthcare is anticipated to reach about 6% of GDP by 2025, with out-of-pocket spending at less than 30%. Private insurance is expected to grow at a compound annual rate of nearly 25% to cover the top 25% (by income) of the population. Public insurance would provide essential care to 60% of the population. Capex spending is likely to grow from less than 10% of overall spending to 15%, as per the Report. Expanding infrastructure would lead to 1.8 million additional functional beds, improving the density of beds from 0.9 per thousand to 2.0 per thousand in 2025.

On the other hand, we have several challenges. India is facing rising dual disease burden and Non-Communicable Diseases (NCDs) are a major concern. The Aarogya Bharat Report estimates that NCDs will cost India $ 6 trillion by 2030. Hence, population-level NCD screening efforts are required among high-risk groups, followed by the enrolment of diagnosed populations in holistic care plans, including education and counselling on healthy living.

It is a well-established fact that a robust healthcare system drives GDP growth with adequate investments, higher productivity, and creates a conducive environment for more jobs. Such an environment also attracts foreign exchange earnings and provides opportunities for innovation and entrepreneurship. It is also true that the healthcare sector faces challenges of establishing hospitals at high costs with real estate prices surging. Further, there are also associated issues such as the relatively high cost (capital and operational) of providing healthcare services including medical technology upgradations, which results in stretched payback periods, thus limiting the investment appetite of players in the healthcare value chain.

India is a high-cost economy in terms of prices of land, cost of credit and other infrastructure facilities. To address these challenges, the healthcare industry, since the past several years, has been seeking ‘Priority Status’ to get access to timely credit. However, this year Budget could not fulfil a long pending demand of the sector. NATHEALTH, apart from seeking priority status, had recommended to the government that funding by creating a specific fund for healthcare infrastructure and innovation would facilitate access to capital for the sector. These funds would encourage entrepreneurship and newer business models to improve access, availability, and quality, especially in Tier 2, Tier 3, Tier 4 cities and rural areas.

Pradhan Mantri Jan AarogyaYojna (PMJAY) under Ayushman Bharat (AB) Mission has recently created a healthcare ecosystem where the primary healthcare system works in a manner that they identify cases which need to be referred to secondary or tertiary care and then treatment is provided free of cost to the beneficiaries under the scheme. With these medical reimbursement provisions, the providers would be able to accommodate many more patients who need medical facilities for serious and critical diseases. It is also very promising to note that both the private and public sector has shown interest in supporting the government.

The government in its Union Budget 2019-20 has allocated Rs 62, 659 crores, 15% higher funds for various health schemes and programmes. The increase in funds would facilitate efficient implementation of several health schemes, which would have faced problems otherwise. For example, Ayushman Bharat gets Rs 6,400 crore that is Rs 4,000 crore higher than the previous allocation. This reflects the fact that tertiary care programmes have been at the centre stage of policymaking.

Healthy India is a prerequisite for a wealthy India by 2030. Universal health insurance would be a critical component in achieving the goal of a healthy India. Today, insurance coverage is very low that leads to very high out-of-pocket spending for healthcare services. For effective management of the population’s health universal health insurance would act as a powerful catalyst. One major reason why health insurance has still not been able to penetrate India at a wider scale is that it is optional. The weaker section has been covered through PMJAY and the government has taken significant efforts for its implementation however, by making the coverage mandatory for all citizens, better results could be achieved.

Going forward, we recommend a few scaling innovative modes which should be introduced for funding Indian healthcare. These include Fund of funds such as Pension funds, Investment route through PPP, long – term debt. Yet another option is funding through business trust entity like Real Estate Investment Trusts along with bilateral investment treaties.

In nutshell, with an enabling ecosystem, Indian Healthcare is all set to make a Healthy with distress-free and comprehensive wellness system for all as envisaged in ‘Vision 2030.’ International experience shows that the most efficient public healthcare systems use private capital and expertise to induce efficiency and innovation. Public-Private Partnership would drive the next phase of growth in terms of private investment in the delivery system, medical education, R&D, Innovations, and domestic manufacturing.

Dr. Sudarshan Ballal

Guest Author The author is Chairman - Manipal Hospitals and President of Nathealth.