Healthcareinindia Seth

EXPORT OF HEALTH SERVICES
The Indian Experience
Dr. Sumit Seth

Second Secretary
Embassy Of India
Dr. Sumit Seth Embajada de la India

s.seth05@mea.gov.in http://www.embajadaindia.org/
Over-View
• Health Care Market

• Health Care Trends-Past, Present & Future
• Trends Favoring Health Service Exports
• Medical Infrastructure-Demand-Supply Gap
• Health Services Export-Opportunity
• Quality Control & Accreditation-New Trends
• Public Private Partnership
• Future of India’s Health Care
• India-Colombia Partnership

The Indian Healthcare Market
India Spends US $ 22.7 Billion

* On Healthcare

Sectorwise Distribution
Sector Direct employment Revenues/GDP
Million, 2000-2001 Per cent, 2000-2001
Healthcare
4.0 5.2
Education 5.3 4.8

Healthcare is the
Retail banking 1.0 3.5 largest service
industry in
Power
1.2 3.0 terms of
revenues and
Railways
1.6 1.8 the second
largest after
Telecom 0.8 1.4 education in
terms of
Hotels, restaurants 1.7 0.9 employment
IT 0.4 1.7
By 2012, the Healthcare sector could account

for 7- 8% of GDP and provide direct and indirect employment to 9 million
Healthcare Market (2005 vs 2025)
Healthcare is the third largest growth

* segment in India

Investment in India (Estimates)
Healthcare
23-32
Investment
needs of the
healthcare
Power 99-131 sector are
comparable to
other
infrastructure
sectors
Telecom
41-53
Roads 25-35
Healthcare in India will grow at 10.8% annually to reach USD 190 billion

Share of the wallet
McKinsey : Healthcare share of the wallet in India will be very close to China.

Healthcare trends in India

Broad trends favoring Health Services
Exports
• The first is the globalization of business which is characterized by

introduction of market forces, freer trade, and widespread
deregulation. This means international trade and investment play a
much greater role .
• The second trend is the revolution in information technology which

has shrunk geographical boundaries and made the world ‘a global
village’. The IT revolution has ensured emergence of demanding &
aware consumers and globalization has enabled these discerning
consumers to access world standards.
• Both these factors have come together to usher new era for Indian
healthcare.

Growth Drivers
• India is now the second fastest growing major

economy in the world.
• Third largest economy in the world
• Indian healthcare has emerged as one of the
largest service sectors in India.
• Healthcare spending in India is expected to
rise by 15% per annum.
• Healthcare spending could contribute 6.1% of
GDP in 2012 and employ around 9 million
people.

Factors favouring Export of Health
Services
Shift from socialized to private providers

Booming economy and High literacy rates
Shift to lifestyle-related diseases
Easier financing
Increasing life expectancy
Recognition by government priority section

Shift from socialized to private providers…
• The majority of healthcare services in India are provided by the

private sector
• Private sector in India is one of the largest in the world:
• 80 percent of all qualified doctors,
• 75 percent of dispensaries
• 60 percent of hospitals in India belong to the private
sector.
• Government expenditure on healthcare has been on the
decline in relative terms and is currently at 0.9% of the GDP.
• The average for developing countries as a whole is around 3% of
GDP and for high income countries, 5% of GDP.

Booming economy and High literacy rates.
Capacity to Spend
• The capacity of the people to pay has increased,
• When families move from middle income to rich,the highest growth in spending is
recorded in healthcare.
• The top 33 per cent income earners in India accounted for 75 per cent of total
private expenditure on healthcare.
• The proportion of households in the low –income group has declined
significantly and the “Great Indian Middle-class” has come of age.
Literacy
• Per-capita expenditures on healthcare rise with higher education
levels.
• Households that have higher education levels tend to spend more per illn

The Demographics
Middle Income Class in India to grow to 400 to 500 Million by 2015

Shift to lifestyle-related diseases
• The shift in disease profiles from infectious to lifestyle-related diseases

is expected to raise expenditures per treatment.
• Lifestyle-related diseases are typically more expensive to treat than

infectious ones.
• India’s disease profile is expected to follow the same pattern
as in developed economies.
• Diseases - cardiovascular, asthma and cancer have become the most important
segments
• Inpatient spending is expected to rise from 39% to nearly 50% \
• The share of infectious diseases is expected to decline from 19 per cent in 2004 to
16 percent in

Easier financing in a capital intensive
Industry.
The Indian healthcare industry has gone through the entire cycle of financing
1. Government funded socialized system

2. Privately funded ‘Mom & Pop’ shops (small nursing
homes)
3. Non Resident Indian & Foreign Investment funded
enterprises
4. Financial markets.

Increasing life expectancy
“ Increase in healthcare spending increases life

Expectancy which cyclically further drives increase
in Health Care spending “

Recognition by government as a priority section.
• The government of India has also identified Healthcare as the priority section for focused
attention.
• Measures taken by the government to stimulate market development in the
healthcare sector
• § Reduction in Import duty on medical equipment
§ Depreciation Limit on medical equipment increased
§ Customs duty reduced
§ The Government has announced Income tax exemption of the

Income Tax for the first five years, to hospitals set up in rural areas
§ US$ 56 million will be earmarked for HIV/AIDS control programme through

the use of primary health centers, prevention of drug abuse etc.

Healthcare : Demand & Supply
90 % patients need primary and secondary care

Global Healthcare Infrastructure
Beds Physicians Nurses
Countries Per ’000 population Per ’000 population Per ’000 population
Distribution is skewed towards

Urban/ Metro Areas
0.9
1.5 1.2
India
1.6
Low income 1.5 1.0
(e.g., sub-Saharan Africa)
4.3 1.8 1.9

Middle income
(e.g., China, Brazil)
High income 7.4 1.8 7.5

(e.g., US, Western Europe)
World average 3.3 1.5 3.3
Total expenditure in India as percentage of GDP : 5.0 (2007)

Gap Analysis

Areas of Opportunity
• Health services outsourcing

• Telemedicine
• Medical value travel
• Clinical Trials
• Miscellaneous
• Health Insurance
• Medical Equipments etc.

Why India?- Hub for Health BPO
• Low cost and reliable high bandwidth communications for both voice and data.
• The internet technology revolution that enables shared processing of transactions

and information across locations and time zones.
• Very large labor cost arbitrage
• The availability of highly skilled English speaking workforce in India.
• The lack of governmental interference
• Strong tax incentives

Need for Outsoucing in US, EU
.
• Spiraling healthcare costs,
• Unbearable squeeze on margins
• Process inefficiencies
• Acute talent shortage
• Aging population
• Cost savings to the tune of 20-30
per cent.

The types of services offered
• Data capture– Reporting of diagnostic tests and Radiology reporting
• Documentation– Data coding, Medical Transcription, Billing and Data migration
• Commercial– Invoicing, Disbursal, Expense Reporting, Procurement, Cash management,

General ledger and Receivables management
• Administration– Claims processing, Adjudication,Mailroom services and Records management
• Human resources– Employee assistance, Training and payroll
• Customer care– Dispatch and Activation services, Technical support companies are further
involved in various functions such as Converting existing data to HIPPA format, Scanning written
documents, converting them into an electronic format, and sending them back.
• BPOs are further involved in claims forms processing for health insurance companies.

Health Care BPO: The Indian Companies

Outsourcing of pathology and laboratory
tests
High cost differential in India.
Example
Thyroid profile blood test costs anywhere from US$ 30-50 in the US, while the
same can be analyzed by Indian companies for less than US$ 5 per patient.
The outsourcing opportunity from UK alone is about US$ 800 million .
Case study
Metropolis Labs has inked a partnership with a US-based consortium to bid for
outsourced pathology work from the National Health Services (NHS) of the UK.
Metropolis would be investing approximately US$ 1 million technology up-
gradation in its Mumbai lab for handling outsourcing jobs.

Tele-Medicine

• “Telemedicine today has given
the capacity to the ordinary doctors to do
extraordinary things”

Telemedicine: The Promise
• Taking modern healthcare to remote areas

• Majority of diseases not requiring surgery conducive to
telemedicine
• Training of medical personnel across the country
• Last five years price and complexity of this technology

has decreased making T.M economically viable

Benefits of Tele-Medicine

Tele-Radiology
• The global demand for radiology services is growing rapidly while the supply of
radiologists is not growing in tandem. Such professionals are in short supply the
world-over.
By outsourcing Teleradiology to India, overseas hospitals are assured of :
• Competent & trained professionals,

• Time zone advantages
• Skill set availability
• Patients can be diagnosed and effectively treated round-the clock services.
• Need to recruit night shift personnel is minimized.
50 per cent of the 6,000-odd hospitals in the US still do not have the technology
for tele-radiology, and this represents a huge potential market to be tapped.

The estimated opportunity for India
50 per cent of the 6,000-odd hospitals in the US still with

the technology for Tele-radiology
One in every seven radiology positions in the UK is vacant.

On the other hand, in India, there is a relative abundance.
Currently---- US$ 3.7 billion
2012----US$ 7.4 Billion
Employment for 200,000 people

India presents First World Treatment at Third
World Costs.
The India Advantage
Excellent network Well-developed

of research laboratories base industries
Rich biodiversity Extensive clinical trials

opportunities
Trained manpower
and knowledge base

INDIAN HE ALTHCARE CAPABILITY
FACT#1: Proven Indian healthcare system
 Over 60,000 cardiac surgeries done

per year with out comes at par with
international standards
 Multi organ transplants like Renal,

Liver, Heart, Bone Marrow
Transplants, are successfully
performed at one tenth the cost.
 Patients from over 55 countries

treated at Indian Hospitals.

Indian Healthcare : The Changing Scenario
Cost Advantage
PROCEDURE COST (US$)
US
US THAILAND
THAILAND INDIA UK
Heart Surgery 40,000 7,500 6,000 23,000
Bone Marrow Transplant 2,50,000 ------- 26,000 1,50,000
Liver Transplant 3,00,000 ------- 69,000 2,00,000
Knee Replacement 20,000 8,000 6,000 12,000
Cosmetic Surgery 20,000 3,500 2,000 10,000

INDIA HAS THE OPPOURTUNITY TO PROVIDE THE BEST OF
THE W E ST & EASTERN HEALTCARE SYSTEMS
Indian System s Of Medicine “ Staging a Com eback”
 Ayurveda recog nized as an

official healthcare system in
H ungary. India’s Gift to the World
Ayurveda
 D octors in the west are
increasing ly prescribing Indian
Systems of M edicine Y og a
Siddha
 M ore than 70% of the American
population prefer a natural
approach to health
 Americans are said to spend

around $25bn on non-
traditional m edical therapies
and products *

Medical tourism: High Reward for
government
Medical value travel pushes up quality of Healthcare

in India
Tourism & Employment will get an extra boost
Win-win situation: as healthcare companies also

benefit

Oppurtunities…
• The Clinical trails market with an estimated

expenditure of $ 1.27 Bn in 2012
• Profit margins of 20-25% , unfolds one of the

most gripping chapters of Indian healthcare.

Strengths & Weakness

KEY ACHIEVEMENTS
India has the 2nd highest India’s huge population

number of qualified doctors and the prevalence of a
in the world. Of every six wide spectrum of disease
medical doctors in the US, conditions offer a wide
one is Indian patient-resource for clinical
trials
While clinical trials cost

approximately $300 to
350 million in US, they
cost only about $25
million in India Indian companies are offering
Investigational New Drug custom synthesis services at
stage costs about $100 to 30-50% cost savings compared
150 million in US, but to global costs
costs only around $10 to
15 million in India 700,000 science and
engineering graduates &
1500 PhDs qualify annually.
Over 15,000 scientists

Clinical Trial: A Model

Health Insurance
Private Health Insurance to cover 20% to 25% by 2020

Quality Control and Accreditation
• Patients are the biggest beneficiaries. Accreditation results in high quality of care
and patient safety. The patients get services by credential medical staff. Rights of
patients are respected and protected. Patient satisfaction is regularly evaluated.
• Accreditation to a Hospital stimulates continuous improvement. It enables hospital
in demonstrating commitment to quality care. It raises community confidence in
the services provided by the hospital. It also provides opportunity to healthcare
unit to benchmark with the best.
• The Staff in an accredited hospital are satisfied lot as it provides for continuous
learning, good working environment, leadership and above all ownership of clinical
processes. It improves overall professional development of Clinicians and
Paramedical staff and provides leadership for quality improvement within medicine
and nursing.
• Accreditation provides an objective system of empanelment by insurance and other
Third Parties . Accreditation provides access to reliable and certified information
on facilities, infrastructure and level of care.

Certification or Assessment of quality
• Advantages
– Makes the organization quality driven
– Provides measurable parameters
– Removes ambiguity in operations & increases efficiency
– Builds patient confidence & credibility

ISO v/s NABH
Limitation of ISO Certification
1. ISO is more documentation oriented and hence a certification does not

guarantee level of implementation.
2. ISO is a certification where the examinee pays the examiner to get certified.
3. ISO does not involve the customer

Latest Trend : Health Quality Control
• NABH (National accreditation board of

hospitals)
• National Accreditation Board for

Hospitals & Healthcare Providers
(NABH) is a constituent board of
Quality Council of India, set up to
establish and operate
accreditation programme for
healthcare organizations. The
board while being supported by
all stakeholders including
industry, consumers, government,
have full functional autonomy in
its operation.

Latest Trend : Health Quality Control
• NABH (National accreditation

board of hospitals)
• It is an institutional member
of ISQua
• It is alsomember of ISQua
Accreditation Council.
• NABH standards for hospitals
has been accredited by
ISQua.
• Accreditation system close to
JCI
• More and more Hospitals are
seeking NABH accreditation
Public Private Partnership will enhance
healthcare services

Service Contract Model
• In Maharashtra, the
contracting out of
ancillary services is very
common particularly in
Mumbai. The Bombay
Municipal Corporation has
been contracting out
services such as catering,
laundry and hospital
maintenance

Management control Model
• In India, under the World Bank

assisted Andhra Pradesh Urban
Slum Health Care Project, the
State established the Urban
Health Centers and contracted
them out to NGOs and/or
service providers. Each UHC is
assigned a definite slum area,
clearly demarcated in terms
of boundaries and average
population of 15,000-20,000.
In addition to drugs and
supplies, a grant in aid of Rs.
2.80 lakhs per annum is
provided to the NGO to cover
operational cost

Chiranjeevi Yojna
• “Chiranjeevi Yojna” has been

implemented by the state of
Gujarat with the intent of
encouraging private medical
practitioners to provide
maternity health services in
remote areas .The scheme
aims at improving the
institutional delivery rate in
Gujarat thereby providing
financial protection to poor
families.

Case Studies-PPP
Tamil Nadu:
» Management of Primary Health Centres by Corporate houses
» Outsourcing of high technology services in major

teaching hospitals
Gujarat:
» Management of a PHC by SEWA (non-profit
organization)
Karnataka:
» Outsourcing of cleaning, maintenance and waste
management of 82 hospitals
UttarPradesh:
» Outsourcing of diagnostic services of teaching hospitals

Huge Growth Potential
US $ IN BILLION at 2000-2001 prices
60.0
51.0 17.0
43 8.0
8.0
19 43.0
43.0
Government 3.76
spending
35.0
Private 15.24
spending
2001 2012 2012 2012
Scenario 1: Scenario 2: Scenario 3:
Baseline increase Baseline with insurance Baseline with insurance
in private spend in middle class and high government
Government spending
Key Assumption* Spending 1% GDP 1% GDP 2% GDP
Majority of the spending in Private Sector

HE ALTHCAR E ….THE SUNR ISE INDU STR Y
“Physicians, Nurses, Medical Technicia ns and Other Scientific

Occupations will Becom e G rowth Industries to Rival the IT Sector within
the Next Decade”
- India Vision 2020 Report

INDIA-COLOMBIA PARTNERSHIP
• Scholarship Programmes
• Participation in Health Fairs
• Memorandum of Understanding
• Statergic Alliance between Indian
& Colombian Health care Industries
• Health experts from India can
learn from Colombia’s experience

Thank You
Sources:
MINISTRY OF HEALTH& FAMILY WELFARE
FICCI
EARNST & YOUNG REPORT, PWC REPORT
Dr. Hemant Bakhru,Dr. Kapil Jain,Dr. Ruchi Bhatt


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EXPORT OF HEALTH SERVICES

The Indian Experience

Dr. Sumit Seth

Dr. Sumit Seth Embajada de la India

• Health Care Market

Dr. Sumit Seth Embajada de la India

India Spends US $ 22.7 Billion

Dr. Sumit Seth Embajada de la India

Education 5.3 4.8

By 2012, the Healthcare sector could account

Healthcare is the third largest growth

Dr. Sumit Seth Embajada de la India

Dr. Sumit Seth Embajada de la India

Dr. Sumit Seth Embajada de la India

Dr. Sumit Seth Embajada de la India

• The first is the globalization of business which is characterized by

• The second trend is the revolution in information technology which

Dr. Sumit Seth Embajada de la India

• India is now the second fastest growing major

Dr. Sumit Seth Embajada de la India

Shift from socialized to private providers

Dr. Sumit Seth Embajada de la India

• The majority of healthcare services in India are provided by the

Dr. Sumit Seth Embajada de la India

Dr. Sumit Seth Embajada de la India

Middle Income Class in India to grow to 400 to 500 Million by 2015

Dr. Sumit Seth Embajada de la India

• The shift in disease profiles from infectious to lifestyle-related diseases

• Lifestyle-related diseases are typically more expensive to treat than

Dr. Sumit Seth Embajada de la India

1. Government funded socialized system

Dr. Sumit Seth Embajada de la India

“ Increase in healthcare spending increases life

Dr. Sumit Seth Embajada de la India

• § Reduction in Import duty on medical equipment

§ Depreciation Limit on medical equipment increased

§ Customs duty reduced

§ The Government has announced Income tax exemption of the

§ US$ 56 million will be earmarked for HIV/AIDS control programme through

Dr. Sumit Seth Embajada de la India

90 % patients need primary and secondary care

Dr. Sumit Seth Embajada de la India

Distribution is skewed towards

4.3 1.8 1.9

High income 7.4 1.8 7.5

World average 3.3 1.5 3.3

Total expenditure in India as percentage of GDP : 5.0 (2007)

Dr. Sumit Seth Embajada de la India

Dr. Sumit Seth Embajada de la India

• Health services outsourcing

Dr. Sumit Seth Embajada de la India

• The internet technology revolution that enables shared processing of transactions

• Very large labor cost arbitrage

• The availability of highly skilled English speaking workforce in India.

• The lack of governmental interference

• Strong tax incentives

Dr. Sumit Seth Embajada de la India

Dr. Sumit Seth Embajada de la India

• Data capture– Reporting of diagnostic tests and Radiology reporting

• Documentation– Data coding, Medical Transcription, Billing and Data migration

• Commercial– Invoicing, Disbursal, Expense Reporting, Procurement, Cash management,

• Administration– Claims processing, Adjudication,Mailroom services and Records management

• Human resources– Employee assistance, Training and payroll