Indian public healthcare sector is patchy, with underfunded and overcrowded hospitals and clinics, and inadequate rural coverage. Reduced funding by the Indian government has been attributed to historic failures on the part of the ministry of health and family welfare to spend its allocated budget fully. This is despite increasing demand, due, in part, to growing incidence of age- and lifestyle-related chronic diseases resulting from urbanization, sedentary lifestyles, changing diets, rising obesity levels, and widespread availability of tobacco products. India's healthcare sector witnesses close to 50 percent spend on in-patient beds for lifestyle diseases, especially in urban and semi-urban pockets. In addition, India has one of the world's highest numbers of diabetes sufferers, at more than 65 million individuals. This trend has resulted in the mushrooming of super-specialty hospitals to combat lifestyle diseases.
Spending on healthcare in India was an estimated 5 percent of gross domestic product in 2013 and is expected to remain at that level through 2016. Deloitte estimates that the total healthcare spending in local currency terms is projected to rise at an annual rate of over 12 percent, from an estimated Rs.616,320 crore in 2013 to Rs.1,252,480 crore in 2018. While this rapid growth rate will reflect high inflation, it will also be driven by increasing public and private expenditures on health.
The statistics for India's health infrastructure are below those of other large countries. The United States has one bed for every 350 patients while the ratio for Japan is 1 for 85. In contrast, India has one bed for every 1050 patients. To match bed availability to the standards of more developed nations, India needs to add 100,000 beds this decade, at an investment of Rs.320,000 crore. Also, India's expenditure on healthcare information technology is considerably low. Hospitals in India will need to increase their IT spend considerably to provide improved and patient-centric service.
The shortage of qualified medical professionals is one of the key challenges facing the Indian healthcare industry. India's ratio of 0.7 doctors and 1.5 nurses per 1000 people is dramatically lower than the WHO average of 2.5 doctors and nurses per 1000 people. Furthermore, there is an acute shortage of paramedical and administrative professionals. The situation is aggravated by the concentration of medical professionals in urban areas, which have only 30 percent of India's population. Many patients, especially those living in rural and semi-urban areas, are still receiving services from unqualified practitioners. The industry needs an additional 1.54 million doctors and 2.4 million nurses to match the global average.
India's healthcare professional and infrastructure shortage is one of the major reasons for the country's high mortality rate. Although there has been a consistent decline in the infant mortality rate (IMR) and the under-five mortality rate (U5MR), based on robust projections, at the current rate of decline, India is unlikely to meet the targets for millennium development goal (MDG)-4, which aims to reduce U5MR by two-thirds, between 1990 and 2015.
Health IT advances may help to mitigate some professional and infrastructure deficiencies. Telemedicine is a fast-emerging sector in India. The telemedicine market in India is expected to rise 20 percent annually, to USD 18.7 million by 2017. Telemedicine can bridge the rural-urban divide by extending low-cost consultation and diagnostic facilities to the remotest areas via high-speed Internet and telecommunications. In addition, India's solid mobile technology infrastructure and the launch of 4G are expected to drive mobile health (mHealth) adoption. Currently, there are over 20 mhealth initiatives for spreading awareness of family planning and other ailments - the industry is expected to reach Rs.3840 crore by 2017.
India's new government has announced a health policy to focus on reducing malnutrition, improving the use of essential medicines, expanding immunization, modernizing public hospitals, and instituting a better tobacco control program. The government wants a holistic healthcare system that is universally accessible, affordable, and dramatically reduces OOP expenditures.
The Indian government has accorded priority in its 2014-2015 budget to the healthcare sector. Key recommendations that will have a direct impact on enhancing healthcare access include a rise in foreign direct investment (FDI) limit in the medical insurance business to 49 percent; four more medical institutions of the status of All India Institute of Medical Sciences (AIIMS); 12 more medical colleges in the public sector; and broadband connections in rural areas to expand the reach of telemedicine. In addition, a Rs.10,880-crore fresh fund allocation to encourage start-ups and another scheme for establishing biotech clusters will help to develop innovative healthcare technologies. Finally, the budget provisions also aim to address the infrastructure deficit by establishing institutions like AIIMS in all states and setting up 15 model rural health research centers to bridge the rural-urban divide.
Execution of these plans remains a challenge. The vision for the plan period of 2012-2017 is to achieve acceptable standards of healthcare for the Indian populace. However, India still does not have a central regulatory authority for its healthcare sector. In 2011, a high-level expert group constituted by the Planning Commission of India suggested setting up a National Health Regulatory and Development Authority to monitor both government and private sector healthcare providers. The group has also proposed to establish a National Health and Medical Facilities Accreditation Authority (NHMFA) for defining healthcare facility standards.
Also, India's healthcare sector is capital-intensive, with long gestation and payback periods for new projects. Land and infrastructure costs account for 60-70 percent of the capital expenditure for hospitals. The industry requires capital for upgradation/maintenance/replacement of medical equipment and expansion. Availability of capital at a reasonable cost remains a hurdle.
One option being explored is funding and access through innovative public-private partnerships. While an appropriate model for partnerships at the primary, secondary, and tertiary levels is still being worked out, participation by the government and private sector will help create a blueprint for such partnerships to create an infrastructure for the future. For instance, SRL Diagnostics has partnered with Himachal Pradesh state government to set up and operate 24 labs in the large state-run hospitals in various districts, thereby bringing superior diagnostics services to the doorstep of people in remote areas.
Among other suggestions to improve care, companies could leverage information technology (IT) to create patient-centric healthcare systems that can improve response times, reduce human error, save costs, and impact the quality of life. At the same time, the government could focus on establishing more medical colleges and training institutes to provide the requisite number of doctors, dentists, nurses, and paramedics. The government also needs to invest in preventive and social medicine by promoting health education and preventive healthcare concepts.
Some Growth Drivers for FY2016
Healthcare firms to raise funds for expansion. Many Indian healthcare players are expected to launch initial public offerings (IPOs) in FY2016, including private-equity-backed diagnostic chains (such as Thyrocare, Metropolis, and Dr. Lal Pathlabs), multi-specialty hospitals (such as Max Healthcare, Manipal Hospitals, Narayana Hrudayalaya, Aster DM Healthcare, HealthCare Global and Yashoda Hospital) and single-specialty hospital chains (such as Vasan Eye Care, Dr. Agarwal's Eye Hospital, Shalby Hospitals, and Cloudnine).
Medical tourism to fuel healthcare growth. The medical tourism industry in India is expected to reach Rs.15,000 crore by 2016, with an estimated 350,000 tourists visiting the country next year. To capitalize on this opportunity, several industry partnerships are under way. For instance, UAE-based Emirates Airlines has a joint venture with Apollo Hospitals to provide reduced round-trip fares to patients from 19 countries across the Middle-East and Africa, who want to visit Apollo's flagship hospitals in Chennai, Hyderabad, New Delhi, Kolkata, Ahmedabad, and Bangalore. Hospitality players (like Hyatt, Hilton, and Crowne Plaza) are developing properties located near healthcare chains and will offer customized packages to medical tourists, along with a host of recreational activities.
Government initiatives to provide further impetus. The government has announced several measures aimed at growing the Indian healthcare industry and promoting medical tourism. These include a medical circuit that will connect hubs of Ayurveda and modern medicine. Under the National Health Assurance Mission, the government is also empaneling private hospitals to offer guaranteed health benefits to the entire population. The first phase of this project will be rolled out early in FY2016, at a total estimated cost of Rs.166,400 crore. Additional measures include efforts to attract investment and boost domestic manufacturing of healthcare products. To illustrate, the government plans to relax FDI regulations, allowing such investment in brownfield projects and existing companies, as well as greenfield and new ventures in healthcare.
Potential Growth Decelerator for FY2016
Inadequate public health spending could constrain growth. In 2014-15, India's healthcare budget was cut by Rs.6067 crore owing to fiscal strain, a nearly 20 percent decline over the previous year. Public expenditure on healthcare in 2013-14 was already low - just 1.4 percent of GDP, compared to 3 percent in China and 8.3 percent in the US. Indeed, India continues to rank among the bottom five countries globally in terms of public health spending. Even though the government is moving to correct this, increasing spending on healthcare and improving India's ranking will take time, presenting an ongoing challenge for this sector in the coming year.
Worldwide Healthcare 2016 Predictions
There has never been a more pivotal and stressful time to be in healthcare IT. IDC has made top 10 predictions for 2016. These predictions highlight the multitude of transformational innovations that will help us get to much-needed efficiencies through proactive personalized care, intelligence driven protocols, machine-to-machine learning, and scaling to deliver care outside provider settings. Downward pressure of the healthcare economy will increase risk-based contracting to 50 percent of provider payments by 2017, resulting in premium increases in the 2 to 3 percent range.
- By 2018, industry cloud creation will be the top market entry strategy for tech providers and industrial companies, as leaders of IT and industry domains unite to tear down traditional barriers to entry.
- By 2018, physicians will use cognitive solutions to identify the most effective treatment for 50 percent of complex cancer patients resulting in a 10 percent reduction in mortality and 10 percent in cost.
- By 2017, surgeons will use computer-assisted or robotic surgery techniques to assist in planning, simulating and performing 50 percent of the most complex surgeries.
- One out of three individuals will have their healthcare records compromised by cyber-attacks in 2016.
- By 2018, due to more frequent drug launches, pharma adoption of global launch sequence optimization solutions will grow by 50 percent, saving the industry billions in potential lost revenue.
- By 2018, 80 percent of customer/patient service interaction will make use of IoT and big data to improve quality, value, and timeliness. Virtual care will become routine by 2018.
- By 2018, 30 percent of worldwide healthcare systems will employ real-time cognitive analysis to provide personalized care leveraging patient's clinical data, directly supported by clinical outcomes and RWE data.
- Reluctantly, through 2017, healthcare IT services buyers will consolidate IT services spending in the hands of the 5-10 largest service providers for each sub-vertical at double industry growth rates.
- 2016 will see third platform - acute care HIS and EHR - begin to come to market and early adopters will get started on digital transformation in 2017-2019.
IT in the Driver's Seat in 2016
Indian healthcare providers have implemented solutions that have the ability to capture the patient demographic, test results, clinical summaries, and financial data. This data resides in the hospital information systems (HIS) as silos and there is a need to implement interoperability solutions that allow for the exchange of the patient data between the healthcare information systems and digital health solutions like CRM, mHealth solutions, medication reminders apps, appointment scheduling solutions, telehealth, etc.
Absence of interoperability between existing solutions in the hospital and other connected solutions required to enable an Integrated digital health experience for the patient, causes duplication of work, information silos, and data information errors. Interoperability should become a de-facto feature provided by the vendors with APIs and interface capabilities using standardized formats, i.e., HL7, CDA.
Since the billing and insurance information is being captured by most of the providers, there can be paperless electronic claims processing capabilities that can really drive the adoption of interoperability in Healthcare in India.
Moving to cloud. More enterprises and specialty clinics will put into place strategic partnerships toward enabling a cloud infrastructure. The needs of each of the healthcare providers are different and vary from specialty to specialty.
With the need to orchestrate between multiple systems, the healthcare providers will have to work on putting in place long-term strategic partnerships with solution developers and system integrators.
Such partnerships will allow for a continuous evolution of their digital health solutions that will enable the healthcare providers to Innovate in an agile way, while delivering a personalized experience and always operating in the real time for service delivery requirements.
Data and analytics. Digital health solutions will be implemented providing connectivity to the customers with the range of services offered by the healthcare providers.
With the availability of data, the healthcare providers will be able to personalize the offerings for each customer, since the requirements for a customer in need of a health checkup is completely different from a patient in need of chemotherapy.
With the availability of data, the healthcare providers will be able to continuously improve the offerings to each segment of customers by utilizing actionable intelligence.
Personalized health services. The patient of today wants faster access to services, personalized experiences, 24/7 access and connectivity, and access to these services from a host of devices. To meet these expectations, hospital providers in India will start to engage the patient via multiple channels by implementing patient-engagement services with a focus on a ΓÇ¿multi-channel approach required to deliver alerts, messages, video visits, and email.
More and more hospitals have started having their presence on the Internet and social media. In 2016, the hospitals will leverage this presence and offer a real Integrated and personalized digital health experience to their customers.
Integrated digital health platforms can provide specialized, focused, and personalized solutions for curative care and preventive care.
Health apps. Indian healthcare providers will offer their services via healthcare apps to provide an integrated digital health experience to their customers. These apps will be used to provide medication reminders, personalized healthcare advice, appointment scheduling for doctors and services, and telehealth for follow-up care. Healthcare providers will work towards implementing mHealth 3.0 services, the next level of mHealth capabilities.
Anytime, anywhere. Smartphones, connected medical accessories, and apps have been underutilized by the healthcare industry. In 2016, care will begin to shift into the palms of consumers' hands, helping to drive down costs, increase access, and fulfill the public's desire for anywhere, anytime monitoring, diagnosis, and treatment.
Primary care and chronic disease management are leading the way. Connected otoscopes, activity trackers, scales, algorithm-based symptom checkers, and on-demand e-visits are being offered directly to consumers. Clinicians are sending patients with chronic conditions home with connected pacemakers, ECG monitors, glucose trackers, and other remote monitoring devices. This move toward handheld medicine is occurring thanks to advances that have made the tools and their wireless links ubiquitous, reliable, and affordable.
As the health system moves away from fee-for-service, clinicians will tap virtual medicine to help power population health efforts and expand services in areas such as behavioral health. Employers will embrace connected tools to engage employees in wellness programs and chronic disease management; health plans will use the same to reduce spending. Drug makers have been creating apps - more than 700 so far - to help connect with their customers.
In 2016, the health industry will begin to lay down rough new paths to a more connected, transparent, convenient ecosystem. Eventually, these paths will develop into well-trodden trails, roads and highways. This hard work - forging of new ways of receiving, paying for, and delivering care - is a hallmark of the creation of a new health economy, an industry that is more digital, nimble, responsive, and focused on consumers. As organizations master these tools and services, they will combine them in new ways, form new partnerships, and ultimately transform the industry.