The Indian government spending on health is amongst the lowest in the world in per capita terms. In fact of the sector that is estimated to be about USD 66 billion today, the private sector contributes 71 percent while the government chips in only 29 percent.
Dr Prathap C Reddy, executive chairman, Apollo Hospitals Group , considered to be one of the pioneers of the modern corporate healthcare movement in India, explains the stark realities and the optimistic expectations of the future of the healthcare sector in India.
Below is the edited transcript of the show on CNBC-TV18
Reddy: I agree that the Indian healthcare today is in a dire emergency. So for dire emergencies what needs to be done? Emergencies require not just immediate action but long-term planning and implementation. The Indian healthcare sector needs to be totally revamped to address current and future challenges. You have rightly pointed out that the private sector contributes over 70 percent to the healthcare sector with the government playing a very minor role. The government has promised increase expenditure on healthcare from the current 1.4 to 2.5 percent in the next Plan.
What is also needed is an effective integration of the public and private sector. Finally, I always feel that the participation of the people is also vital. So it should be public-private-people (PPP).
Q: The healthcare sector is growing rapidly and clearly lot more needs to be done. So what is keeping companies like you from even going faster?
A: One of the main challenges for the healthcare sector in the 21st century is the shortage of beds. Bed population- to0bed ratio is about one bed for 1050 people. In the US it is one bed for 250 people, the Japanese are luxurious with one bed for 85 people. Our challenge is to maintain a ratio of at least one bed for 300-400 people.
To meet this, the sector needs to add 100,000 beds per year for next decade at a cost of approximately USD 50 billion. In the Five-Year Plan, I had pointed this out to the Planning Commission when it announced that it needed to raise USD 500 billion for infrastructure development. But unfortunately, despite having brought the issue to the Commission's notice several times, it has been ignored as healthcare is neither considered as infrastructure nor as a dire necessity.
Q: Of the total investment required, how much do you think should come from private sector and the government?
A: Raising funds for healthcare in India is probably not going to be a major hurdle for two reasons. One, Indian doctors and the healthcare sector have proved to be able to deliver excellence. Second, private healthcare has proven that it is reasonably a good investment. In Apollo, more than 54 percent of our investors are foreign institutional investors (FIIs). Ideally, this is where the public and private sector can effectively partner and contribute significantly.
District hospitals maintained by the government and the public sector can offer services to the private sector. The government should open more medical colleges, dental institutes and encourage widespread paramedical training. If this is done, the country will be very happy and because people will jobs they are going to be productive.
Q: Today I think about 78 percent of all spends on healthcare are out of pocket.
A: The only way it can be reversed is via health insurance and health plans. The company should have health plans for its people and the society should have health plans for its people. I had a health plan for my village. I put up a hospital in my village. I thought to myself 'who is going to use this hospital?' The three families who could use have moved out of the village. So I introduced a scheme called 'Re 1 a day'. Believe me almost everyone became a member.
Q: How hurt were you when people told you that you were trying to make money out of the sick?
A: I have three principles - purity of thought, in this case purity of this purpose that we need to change the healthcare in our country. Second is patience and persistence. Patience allowed me to ignore these wrong comments and persist to see the things happen. It was not easy. I have always said that a million bricks in Apollo had million problems. But we got over all of that because ultimately everybody saw that there is something good that will happen when this comes in.
Q: How is getting industrial status help you in all of the problems that you discussed?
A: Hospitals don't turnaround in the first-second-third year. It has a gestation period. People need to have confidence. We need to have confidence of more and more specialists to come and join. This is why anywhere from 7 to 12-15 years loans are ideal for hospitals. We need tax exemption. The third is the long-term institutions IFCL, all of these will do and more importantly we need funding. To need funding when they see that the Government of India is looking to facilitate the growth of hospitals automatically investors will come. We have seven requests.
One is to give us the status. Second, unnecessarily I am holding the land is so expensive, why should we have land on my account. I could have a REIT, for that if they facilitate REIT automatically so much of funds will be released. For Apollo it will release couple of thousand crores. I can use these Rs 2,000 crore to build another 15 hospitals in one stretch. So there are many smaller things - it is a seven point wish-list.
For example, giving a tax holiday, five years is too little, it should be a 10 years tax holiday for hospitals then only it is meaningful. Thirdly, 21st century healthcare challenge is existing illnesses plus we have this huge burden of Non-Communicable Diseases (NCDs). We are the diabetic capital of the world, heart capital of the world, cancer capital of the world and infections. These four have become a huge set and the way they are focusing is phenomenal. So, we need to have a program, how do we bring awareness to this, how do we do preventive checkups and how do we increase the facilities for people who have this.
Q: Is the government doing enough on insurance, because that is the other key plank that we need to get people to afford to come to these hospitals?
A: There are good insurance companies today. There are nine insurance companies which have got good policies and what is needed is awareness and if they are given an exemption for this, increase relevance from Rs 15,000 to Rs 30,000 then more people will have total coverage for themselves and their families and for their elders.
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