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Public vs Private healthcare in India
08 January 2020
Accessibility and affordability of good healthcare have been a challenge for India for as long as we can remember. The public healthcare system has been in a state of disarray on account of decades of apathy, low and mismanaged budgetary allocation, inadequate and outdated infrastructure, lack of concrete vision and enforcement from the government’s end.
As per reports, an estimated 27% of India’s 1.3 billion people face the risk of death in the event of a medical emergency on account of poor healthcare infrastructure. The figures further reveal that India has just a single doctor for every 10,189 patients and 2,046 patients are vying for a single hospital bed. (1)
Government healthcare spending
As recently as in the previous budget, the interim allocation to healthcare was a measly 2.2% in contrast to the 10.6% allocated to defence. Among the BRIC and other growing economies, India has the lowest spend on healthcare per capita. (3)
Allocation to healthcare need not be redirected from other expense heads, but it is high time India gave healthcare spend the much-needed priority as what other sectors enjoy. The effective spend on public sector healthcare is below 1.5% of the GDP as compared to the 18% US spends. (3)
The preference for private healthcare services
The quality of medical aid and excellence of service are the primary differentiators that have driven a competitive advantage private healthcare institutions are thriving on. When spending out of pocket, 70% of Indians would choose private healthcare services over a public institution.
Despite private healthcare being four times more expensive, 72% of rural residents and 79% of urban residents would not trust a public healthcare facility. (2) The growth of private sectors establishments fuels the contemporary belief that infrastructure of a hospital can impact clinical outcomes, and the difference is stark!
However, for financially marginalised and rural communities, there may be no other option. Public healthcare institutions receive funding from the government, making it mandatory for them to cater to all segments of the population. However, the services have been found to be extremely deficient. Only a minuscule 2% of Indian doctors service the needs of the massive rural population that further increases the dependency on private healthcare institutions.
In an irony of sorts, India offers a pool of well-trained medical professionals in the private segment along with globally competitive pricing, making it one of the most sought-after destinations for medical tourism. Growing at a CAGR of 22%-25%, the industry is expected to touch US$ 9 billion in 2020. (5).
In the last decade, vast improvement in healthcare technology, especially in areas like telemedicine and medical tourism, has enabled the private healthcare system to flourish manifold. The private healthcare industry is estimated to touch Rs. 8.6 trillion (US$ 133.44 billion) by 2022. (5)
The shift of the private establishment from welfare motive to business motive is no secret either. The cost of medical inflation in India was 7.14% as of 2018-19, almost double of the retail inflation levels of 3.4%. What this indicates, is that for the average Indian, getting medical treatment without adequate health insurance is no less than breaking the bank and compromising on the financial future.
Winds of change
Implementation of the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (PMJAY) may reform the public healthcare system. The government is looking to increase spends on healthcare at 2.5% of the GDP, which will reduce out-of-pocket expenditure on healthcare. Additionally, an estimated 1.5 lakh health and wellness centres may be set up under PMJAY.
The government also needs to bring in greater transparency and compliance to boost the quality of healthcare. An accreditation process needs to be implemented to ratify services across all public and private nursing homes/hospitals.
There is a need for accessible healthcare in rural areas that is qualitatively at par with urban services.., the vast majority of Indians who have little to no insurance need to look at investing in a comprehensive health insurance plan so that they are not left wanting in times of need.