The healthcare market in India is largely an out-of-pocket market, so the onus of making choices about where and how to get care, as well as how much to pay for it falls directly on the consumer.
By Nikhil Chari
Healthcare has a large and secular growth potential in India. While the Government has done an excellent job in building out a deep primary care network, the private sector can play a big role in the further development of the healthcare sector. For instance, as a country we spend approximately USD 100 billion on healthcare for 1.4 billion citizens while the US spends almost USD 4 trillion on healthcare for 330 million citizens or almost 200x on a per capita basis – so the potential opportunity to serve Indians with better healthcare products and services is tremendous. Realizing this need, the Government has also recognized the healthcare sector as a priority sector both in terms of tax benefits to encourage further private sector investment as well as prioritize lending to the sector so that as a nation we continue to improve upon healthcare access and services to the masses.
The healthcare market in India is largely an out-of-pocket market, so the onus of making choices about where and how to get care, as well as how much to pay for it falls directly on the consumer. The recent pandemic has also highlighted the need for Indians to get high quality primary care access in an affordable, timely and reliable manner. In this setting, healthtech firms are playing a meaningful role in providing Indian consumers with deeper access and greater price and quality transparency. If we look at the three aspects of healthcare service delivery – namely access of care, cost of care and quality of care – a couple of areas that lend well for disruption by healthtech firms in the direct-to-consumer setting are Virtual Primary Healthcare and Pharmacy Services.
When it comes to care accessibility, India has a comparatively low ratio of doctors to population (per ‘000) of 0.8 versus 4 for more developed countries. The gap in availability of specialist doctors is more with a ratio of 0.2 compared to 2 in more developed countries and the differences are even more within India if we compare metros to the rest of the country. Healthtech firms such as Dhani Services, through digital video consultation services with access to both primary care and specialist doctors are helping bridge this accessibility gap significantly and in a way now provide family doctor support to millions of individuals and families who otherwise don’t have such support. Technology is also helping develop models where there is close coordination of care between primary care, diagnostics and secondary/tertiary care with telemedicine being the first point of contact triage care, as well as for follow up care post hospitalisations. This holistic management of patient care and digitization of health records driven by healthtech firms is also helping improve overall quality of care and patient outcomes.
Pharmacy services is another area where healthtech firms are leading the change. India has a unique market structure where channel margins are regulated by trade, which results in much higher channel margins when compared to trade margins in the rest of the world. These higher costs are ultimately borne by the consumer. Another uniqueness of the Indian pharmacy market is that since there is no mandatory generic substitution like in many developed countries, 90% of the market is comprised of off-patent branded products with unbranded generics only a small portion, often made by the same manufacturers. In this setting as well, healthtech firms are leading the change by bringing greater price transparency and choice of products so that consumers can make better informed decisions. Also, with more scale efficiencies and a customer centric approach, healthtech firms are able and willing to pass along more cost savings to consumers. Ultimately, the Indian consumer is the winner in these developments.
In the longer run however, for the Indian healthcare system to mature, further work needs to be done in three areas. The first is bringing affordable health insurance coverage to the masses. This can be done through a combination of the private sector and the Government especially for the poorer sections of the society. Second is to have a strong system of quality accreditation and regular quality monitoring of all parts of healthcare service delivery, including doctors, hospitals, diagnostic labs and product manufacturers. Third is to make sure we continue to foster an environment of innovation in healthcare products and services through progressive policies. It is encouraging to see that the Government is continuing to make progress in all these areas so the outlook is promising for the Indian healthcare sector and its consumers.
(The author is President Healthcare, Dhani Healthcare. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)