Getting the healthcare sector ready for NHPS

By: | Published: May 5, 2018 2:29 AM

Increased spending by the government on healthcare and greater participation by private players, coupled with tighter regulation, would help the healthcare sector gear up for effective implementation of NHPS.

healthcare, health sector, health industryCurrently, of the total government spending in India, 50% goes towards primary and preventive healthcare.

With the announcement of the National Health Protection Scheme (NHPS), India has embarked on the path of universal health coverage. The aim of the NHPS is to cover 10 crore families with medical insurance of Rs 5 lakh per household per year. India, currently, has a highly inadequate social security structure, and the situation is especially dire in healthcare. The country’s average out-of-pocket expenditure on healthcare is one of the highest globally, at 68%, and this means that of every Rs 100 spent by the public on healthcare, Rs 68 comes from their pocket (the rest is reimbursed by insurance or is provided by the government). In comparison, the out-of-pocket expenditure is much lower in China, at 34%, and in the US it is 11%. Due to this high out-of-pocket healthcare expenditure, 7% of the population in India is pushed below poverty threshold every year.

While the government’s intent on moving towards universal health coverage is a welcome step, effective implementation of the scheme will be a big challenge, given the scale involved. The NHPS will be one of the largest government-funded healthcare programmes globally. It will be critical for the government to strengthen the overall healthcare system-including the infrastructure, availability of healthcare professionals and even the regulatory environment-for the effective implementation of the NHPS.

With the NHPS enabling financing of healthcare for a large chunk of the population, there will be a big jump in the demand for healthcare. The government needs to ensure that the availability of infrastructure and healthcare professionals is spruced up to meet this increased demand. The supply of healthcare facilities is especially poor in rural areas, where 70% of India’s population resides. Many of the government hospitals in rural areas are defunct due to unavailability of doctors and other required facilities. In fact, even private healthcare facilities are limited or non-existent in these areas. It is estimated that, in rural areas, the gap between staff in facilities and those required was 52% for midwives and nurses, 76% for doctors, 88% for specialists and 58% for pharmacists.

An incentive-based model for the government hospitals will help improve their performance and ease some of the supply constraints. The government should purchase healthcare services from the private players, wherever the government doesn’t have the wherewithal to cater to the demand.

Increasing the supply of doctors and other healthcare professionals in a short span of time is a particularly challenging task. This is where providing basic training to select people from the local population for administering basic medication will be helpful. This concept is already there in rural areas in the form of ASHA, or accredited social health activists. This needs to be further scaled up. In fact, China also has had the concept of barefoot doctors, who were essentially farmers who had been trained in minimal basic medical knowledge for promoting preventive healthcare and treating common illness in the rural parts of the country.

While these measures will help in increasing the supply, there is no escaping the fact that the government needs to increase the overall spending on the healthcare sector. Today, the total healthcare spending-to-GDP ratio in India is around 4%, with the government spending-to-GDP ratio at a low of 1.15%. According to a World Health Organisation (WHO) report, unless a country spends at least 5-6% of its GDP on health-with the government expenditure being a major part-it is difficult to meet the basic healthcare needs of its population.

Among the developing countries, Brazil and Thailand have achieved close to universal health coverage. In Thailand, the government health expenditure, as a percentage of total healthcare expenditure, stands at 78%; in Brazil, it is 46%. In contrast, in India, it is at a low of 31%.

In addition, it will be important for the government to increase the spending on primary and preventive healthcare. This will, among other things, help reduce the demand for secondary and tertiary healthcare services. In fact, increased spending on preventive healthcare-such as sanitation and hygiene maintenance-will result in healthier population in the long run and also reduce the need for curative healthcare. This, in turn, will reduce the overall healthcare financing requirement.

Currently, of the total government spending in India, 50% goes towards primary and preventive healthcare; however, this needs to be increased further. The government has announced plans for opening up of 1.5 lakh health and wellness centres for covering comprehensive primary healthcare (including preventive healthcare). However, the budgeted sum of Rs 1,200 crore, implying Rs 80,000 per healthcare wellness centre, is a paltry amount for bringing about any meaningful change.

While the role of the private players needs to be increased to meet the jump in demand for healthcare in the country, it is equally important to tighten the regulation of the private players in the industry. The regulatory standards for private hospitals are not adequately defined and they are also poorly enforced. The quality of the service is questionable, and there is a lack of transparency on the pricing front. According to the National Sample Survey of 2015, the cost of treatment was four times higher in private hospitals as compared to that in the government hospitals. Tighter regulation of the sector will ensure a sustainable insurance model for all the stakeholders, including the government, hospitals, insurance companies and the public.

The NHPS will be easier to implement by the southern states like Andhra Pradesh, Karnataka and Tamil Nadu, given their better health infrastructure and the experience of running regional health insurance schemes. On the other hand, implementing the NHPS will be a bigger challenge for poorer states in north India, given their weak healthcare infrastructure.

The government, clearly, needs to bolster all the aspects of the healthcare sector for enabling effective implementation of the NHPS. Increased spending by the government on healthcare and greater participation by the private players, coupled with tighter regulation, would help the healthcare sector gear up for the effective implementation of the NHPS.

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