India is facing a major problem on the healthcare front, particularly the huge shortfall of human resources. India needs to double the number of doctors, treble the number of nurses and quadruple paramedical staff or else will face a healthcare crisis. It is high time that the Union government accords a ?priority sector status? to the healthcare industry, which will enable a flow of funds into the country and help industry generate requisite manpower. It is also equally important for the government to float a dedicated fund for healthcare, with a minimum corpus of Rs 10,000 crore, says Preetha Reddy, managing director, Apollo Hospitals, in an exclusive interview with R Ravichandran. Excerpts:

An overall perspective of the healthcare industry in India?

The Indian healthcare sector is estimated to be around R2 lakh crore and is slated to touch R3 lakh crore by 2012.

To meet the healthcare infrastructure shortfall, we need 1 lakh beds to be created over the next 10 years and this requires an investment of R75,000 crore. India also faces a severe health manpower shortfall. To highlight the gap, the number of doctors needs to double from 7 lakh to 15 lakh, the number of nurses needs to be trebled from 8 lakh to 25 lakh and the number of paramedical staff needs to be quadrupled from 25 lakh to 1 crore. To address the huge shortfall, India requires 600 new medical colleges and 1,500 new nursing and paramedical colleges. If this capacity is created, India can generate fresh employment of 90 lakh.

First, the demand for healthcare is not related to consumer discretionary spending. Second, an increasingly affluent and educated patient population in India is demanding improved healthcare services. Third, the healthcare sector includes related segments such as diagnostics, pharmaceuticals, medical equipment, medical value travel and health insurance, and pharmacies, and India is one of the largest healthcare markets in the world.

Funding infrastructure, technology and medical equipment is not a major problem, but generating skilled manpower in such magnitude is. The situation is so alarming that it may lead to a major healthcare crisis. The government should look into this aspect seriously.

You have talked about the shortage of manpower in different fields. How can these issues be addressed?

Joint efforts by industry, government and the institutions concerned are required. The first step is to accord ?priority sector status? to the healthcare industry, which will help it attract huge funds from domestic as well as foreign institutional investors/PEs to create necessary infrastructure, including medical colleges, and will bring in joint venture collaborations to speed up growth with quality. Second is to seriously address the huge shortfall of skilled manpower. Third, like the IT and BPO sectors, medical colleges should also be allowed to have two shifts so that they can bring out more and more students to the field for captive purposes. Finally, the prevailing fee structure does not support investments being made into the infrastructure, so the government should revisit the fee structure.

India should also create a dedicated healthcare fund?on the lines of infra and other sectors?with a minimum corpus of R10,000 crore. India is among the list of countries that spend the lowest on healthcare?0.9% of GDP?just 20% of the total healthcare pie, while the remaining 80% is pooled out of individual pockets.

India is emerging as a major healthcare destination and the potential to grow is vast. Your comments?

Earlier, Indians used to travel overseas for medical treatment, but now the country attracts thousands of medical value travellers. The country provides incredibly low cost of high quality medical care and proven clinical outcomes. The cost of most interventions in India is as low as 10% as compared to the West. The success ratio for medical treatments in India is high, at 98%. India is also emerging as a low cost base of manufacturing medical devices for the global healthcare market. India is the fastest growing IT healthcare market in Asia, with 22% annual growth. The clinical trials market is growing fast and is likely to touch $630 million by 2012, up from $320 million in 2009, as the cost of conducting such trials is cheaper by 20-60%.

It is important to note that with a sharp pick up in healthcare insurance and healthcare-related tourism activities, the country will attract more medical tourists. It is estimated that close to 50,000 foreign nationals got treatment in India last year.

The country can attract investment worth R15,000 crore in the next two to three years.

It is a believed that by corporatising healthcare the poor and even the middle classes will find it difficult to access quality healthcare…

It is not true. Quality healthcare comes at a certain price because the hospitals have raised funds from PEs, banks, etc, to set up their infrastructure. There are other costs as well, including professions, staff, captive and service costs associated. Despite shortage across all fronts, hospitals are competing with each other in providing quality but affordable healthcare.

Coming to Apollo Hospitals, what went wrong with your acquisition plans? Are you still looking at such opportunities?

Apollo was never in the race to acquire hospitals for the sake of increasing bed numbers. We were looking at two hospitals in the UK but could not acquire them as we felt they were overpriced. Similarly, we were looking at Wockhardt but it couldn?t materialise as, geographically, it did not make sense (Apollo has hospitals in most of the geographies Wockhardt does).

Although we continue to look at strategic acquisitions, we have also drawn huge plans to grow organically. The biggest challenge is to generate skilled manpower and we are working on that.

Can you elaborate your growth plans?

Our ambition is to double our capacity ?from 9,000 to 18,000 beds?over the next five years. We want to reach out to smaller towns and also lease/manage hospitals. Currently, we own 50% of our beds and the rest are managed. We also want to grow our pharmacy business from 1,150 retail outlets now. Similarly, we have plans to reach out to villages through our Reach Clinics.

We also want to set up a medical college?either in Tamil Nadu or Andhra Pradesh?and we want to increase the number of nursing colleges from 11 to 15 over the next 12 months for our captive purposes.