ROLE OF PRIVATE SECTORIN

HEALTH CARE

Healthcare SystemThe term healthcare system refers to a

country’s system of delivering services for the prevention and treatment of diseases and for the promotion of physical and mental well being

The Indian healthcare sector can be viewed as a glass half empty or a glass half full.

The challenges the sector faces are substantial, from the need to improve physical infrastructure to the necessity of providing health insurance and ensuring the availability of trained medical personnel with the opportunities available equally.

The healthcare sector comprises:

Hospitals

Diagnostics

Equipment and supplies

Medical tourism

Pharmaceutical

Medical Insurance

Private sector in healthcareIt is conventional to define “private sector” as

that which falls outside the direct control of government.

Informal Private Sector – 45% (usually small-scale providers including drug shops)

* Unlicensed and unregulated

Formal Private Sector – 35% (multinational, national enterprises, private qualified individuals)

* Legally registered and recognized by the government

Why the Private Sector Matters?

Scaling up the delivery of essential interventions to achieve international health targets is dependent on working with it.

The “private health sector” includes an enormous diversity

of actors, including providers, funders, and suppliers of physical and knowledge inputs for the health sector.

The effectiveness of health care delivery can be enhanced with use of innovative and flexible models and performance-based provider remuneration.

EVOLUTION

Merchants Company started hiring doctors

As early as 1880's these private students were competing with European doctors

for private market

British spread the Medical services

all over India

But many colleges also admitted

private students

Which required trained health care personal

Before the independence of India, the spread of infectious

diseases was very high

Independence 1947

Concentrating more on

preventive pgms1970's

.

Many committees were formed by the govt. to review the health care

sector

In mid 1970’s no. Ofprivate institutions

become more

Our pillars to the Construction of health

care sector is Bhore and Sokhey committee

In the mean Time govt.

We have less info.Regarding this

1940's BHORE COMMITEE

1961'sMUDALIARCOMMITEE

1967'sJUNGALWALLA

COMMITEE

Private practice doctors were more compared to theGovt. practice doctors

The primary responsibilityfor health care in the Indian constitution

rests with state

1974 to 1982 grants from central to the state govt. comprised of 20%

Following liberalization (1982-89) fell to 6%

In (1992-93) further fell to 3.3%

Finally it became just like the story of Arab

and camel( camel which pushed the Arab

out of tent)

Policies Liberalization in 1990’s

&national health policy

2002

Resulting in increasing theno. of private institutions( private sector growth

with the supporting handof the govt.)

BOOST to the private sector

NRI INVESTMENT

PRIVATE SECTORGROWTH

IN HEALTH CARE

PRIVATE PRACTICEBY

GOVT. DOCTORS

UNAFFORDABILITY OF

GOVT.

STEROTYPESFINANCIAL CONCESSIONS

GIVEN BY GOVT.

NEGLIGENCE AND

POOR QUALITY IN GOVT. HEALTH CARE

SECTOR

REDUCTION IN

FUNDINGS BY

CENTRAL &STATEGOVT.

Lack of proper monitoring sytem

Potential market

User fees

STEROTYPES

Disguise hand of private sector

SECTORS IN HEALTH

PRIVATE hospitals in different cities of India

Source: Business Monitor Report,WHO World Health Statistics 2011,Aranca Research

Hospitals

Long waiting time

Distance factor

Inadequate facilities

Unclean premises(hygiene)

Harsh behavior of staff

Suspected quality of drugs

Lack of privacyWhy private

hospitals not

the govt.

ones???

Ref: IJTBM : 2013 VOL no 2, issue no 3: ISSN: 2231-6868

AGAINST

FAVOUR

Dismal government performance in providing healthcare infrastructure

Growing demand for quality care and increasing ability to pay

Mounting instances of lifestyle diseases requiring hospitalization

Rapid growth of India as a destination

High start-up cost and capital expenditure

Shortage of medical professionals

FACTORS INFLUENCING PRIVATISATION

Medical tourism- medical travel valueMedical tourism market is expected to expand at a CAGR of 27 per cent to reach USD3.9 billion in 2014 from USD1.9 billion in 2011

• Cost of surgery in India is nearly 1/10 th of the cost in developed countries

• Presence of world-class hospitals and skilled medical professionals

Factors leading to an increase in the popularity of medical travel include:

High Cost

Long Wait Time

EASE AND AFFORDABILITY

IMPROVED TECHNOLOGY AND

STANDARDS OF CARE 

Diagnostic and PathologyMarket size : USD 600 million, 20 % annual growth

Growth Drivers

Steady rise in healthcare spendingIncreased consumerismDynamic healthcare scenario in the country

-Increasing incidence of lifestyle diseases

-Greater health related concerns

-Growth of Medical Tourism

-Increasing penetration of Health Insurance

ISSUES

LACK OF REGULATION

HIGHLY FRAGMENTED DIAGNOSTICS SECTOR

HUGE DISPARITY IN QUALITY OF CARE

POSSIBLE SOLUTIONS Expansion through hub and spoke model.

Alternatives- modifications of Hub and Spoke model.

Acquisitions of small labs by large players. Telemedicine

Private health insurance

• An alternative mechanism for financing health care.

• Liberalization since 1991 paved the way for privatization of insurance sector.

• Private and foreign entrepreneurs were allowed to enter the market with the enactment of IRDA in 1999.

• Penetration - 3% to 5% of population.• Market share - 1% of the total health

spending in the country.

Opportunities in IndiaTotal health expenditure in India, Rs 3

00000 crore, the spending on hospitalization accounts for Rs 100000 crore.

The existing level of health insurance premium was worth only Rs 10,000 crore, which means that a majority section of the Indian populace does not have an insurance cover.

According to World Bank Report, 99% of Indians will face financial crunch in case of any critical illness. Hence is the need for Health Insurance.

TURN OVER

GLOBALLY

USD$ 273.3 billion (2011)

Indian Market

USD 4.8 billion (2011)

Regulation body and policy: No specific body or policy( right now it's coveringunder CDSCO, central drug standard control organization.)

Most of the market in India of medical technology covers by the MNC's companies the role of govt. And domestic private sector is minuscule.

Medical Technology

Competition from MNC's

Lack of financialincentives

High capital investment

Customer relationshipmanagement

Trainedman powershortage

Adverse regulatorypolicies

challenges

Why govt. Or domestic private sector failed to grasp the market of medical technology?

Keep watching……….

Foreign Direct Investment

iNDIA & HEALTH SECTOR

• India – 2nd most important FDI destination (after China))

• Eight fold increase in its FDI

(< $1 B in 1990- to March 2012).

• fast-growing service sectors in India ( 12% per annum ) - contributing 6% of GDP - 0.78% of the total FDI

Mauritius

Singapore

Japan & U.K

Germany

Netherlands, Cyprus & USA

France

UAE

0 10 20 30 4034

17

11

06

04

02

01

SOURCES

service sect. (financial & non financial)

Telecommunications

Metallurgical

Misc. mech.

hotel &tourism

other sectors

0% 10% 20% 30% 40%19%

13%8%

7%6%6%

5%5%

3%3%

30%

DISTRIBUTION

•Before 2000-through FIPB•2000 onwards ,FDI –- through automatic route•Now also through ADRs and GDRs

aviation; 49%

Broadcast sector; 74%

multi-brand retail ; 51%

single-brand ; 100%

2012-GOI

REGULATIONS

PREFERENCES

urban area ;

75

Semi-urban area ;

20

Rural, 5

0

20

40

60Series 1

Series 1

The huge benefits and concessions granted by the government is the major factor for the flow of FDI in healthcare than Steady economic growth of Indian economy and availability of raw materials, like in other sectors.

• Hospital- improved Infrastructure, quality of cares (more specialized care), advanced diagnostic & treatment equipments, No.of private players

• Medical tourism- has grown from $350Million in 2006 to $3 Billion-2012

• Govt. Started encouraging this by incentives like lower import duties, higher depreciation on medical equipments and expedited visa for patients

IMPACT

• IT sector -more growth in health & hospital sectors• Tele -medicine has improved & became as a solution

for the difficulties in hospital acceptance (time, place &money ).

• Tele -radiology has emerged and many foreign hospitals are active in it .

• Bio-medical equipment manufacturing sector-has also improved.

IMPACT

CHALLENGES

EXTERNAL DOMESTICThe number of potential

overseas institutions are low.Entry as an independent

overseas institution is very difficult

Problems in partnerships, financial control , expectations , management styles etc.

Political and foreign exchange risks

Lack of proper infrastructure and set-ups

Corruption, red tape, social and political issues

Govt. - non transparency and uncertainty in policies, lacking clear vision,

lacking investment& business friendly environments

P.P.P

PRIVATE-PUBLIC PARTNERSHIPfundamental themes

1. Relative sense of equality between the partners;

2. there is mutual commitment to agreed objectives;

3. there is mutual benefit for the stakeholders involved in the partnership

PROS CONS

INFORMAL AccessibleClient-orientedLow cost

Poor quality careDifficult to mainstreamPoorly educated

NOT FOR PROFIT High qualityTargeted to the poorLow costInvolves the community

Small coverageLack of resourcesCannot be scaled-upAd hoc interventions

FOR PROFIT High quality (in selectdisciplines)Huge outreach / coverageInnovativeEfficientHigh Management Standards

Ad hoc interventionsHigh CostVariable qualityClustered in citiesLess concern towards public goal.

COLLABORATING WITH THE PRIVATE SECTOR IN HEALTH

(Source: Adopted from World Bank 2004)

PPP…Contracting out and Contracting in, is the

predominant model of private partnership.In almost all partnerships, the principal

public partner is the department of health and family welfare, either directly or through health facility level committees.

In terms of monetary value, the least valued contract provided dietary services at a rate of Rs 27 per meal for about 30 meals in a day(Bhagajatin Hospital, Kolkata);

The most expensive engaged a corporate hospital to run a government-built super-speciality hospital in Raichur, Karnataka (over Rs 600 million).

The oldest partnership (since 1996) is the Karuna Trust that adopted and manages primary health centres in Karnataka.

Role of NGOs in health sector

Evolving state-NGO relationships

Nature of activities and programmes undertaken

- supporting- antagonising or empowerment

Autonomy of NGOs through foreign funding

- control of foreign funds by introducing registration or permission

Formation of NGOs by political parties, retired bureaucrats & BM

-well connected members-entry of young professionals

Policies emphasizing greater control over NGO sector

-well-defined role--provision of services & service delivery

Donor influences on NGOs

Dependency on donors who seek value for money

Highly formalized and bureaucratic structures

Working env creates inequality & brain drain

Cost effectivene

ss & efficiency

Short term targets and specific goals neglect overall functioning of the healthcare system

Altering ngo- client relationships

What should be done to achieve better health?● Cooperation with the state- long-term plan of a

national health care system; making the government the main responsible party

● Nationalised institution for channeling aid- division without being stuck to short-term direct measurable goals.

● Training and employment of locals- preference over expatriates; providing the same salary as the national health care system does.

● Increasing donor confidence by eradicating corruption- ensure more involvement of such agencies with the state than with the international and local NGOs.

Influence of Globalization and Trade

WORLD TRADE ORGANISATION (WTO) 1995

GATT * - Goods • Medicines, Vaccines

GATS - Services• Health professionals; Patients; health

related investments

TRIPS - Intellectual Property • Patents; Trademarks; copyrights

NATIONAL HEALTH POLICY

NHP 1983

>2002

DECENTRALISATION

HUMAN RESOURCE

INFRASTRUCTURAL

STRENGTHENING

PRIVATE SECTOR

MoHFW

Food And Drug

Administration

Departments of Health in individual

states

The Indian Medical Council

Indian Medical

Association

Central Drugs Standard Control

Organization (Medical

Equipments)

Income tax exemption for a period of five years, for newly established hospitals (Finance Act, 2008).

Long term capital and Cheaper loans to PHI ( ITA 1961)

Foreign Direct Investment (FDI) in the hospital sector (100% )

Land allocation on subsidized rates, partial or complete wavier on stamp duty, electricity duty etc.

Medical Visa (M Visa) and Attendant Visa (MX Visa) mid 2005

Import duty on Medical equipment and technology

Reduced the customs duty on Medical devices

Insurance companies, Post liberalization (IRDA Regulation, 2001) Rastriya Swasth Bima Yojana, 2008

Relaxed the procedures to attract Non Resident Indian doctors .

Regulation Information Technology Act, 2000Bio-medical Waste (Management And Handling)

Rules 1998The Companies Act, 1956The Clinical Establishment (Registrations &

Regulations) Act, 2007Consumer Protection Act, 1986Pre-natal Diagnostic Techniques (Regulation And

Prevention Of Misuse) Amendment Rules, 2003Medical Termination Of Pregnancy Act, 1971 And

(Amendment) Act, 2002

FOOD SAFETY AND STANDARDS ACT, 2006

THE TRANSPLANTATION OF HUMAN ORGANS ACT, 1994 (RULES

AMENDMENT 2008)

BIOMEDICAL WASTE MANAGEMENT AND HANDLING RULES,

1998, AMENDED IN 2000

THE DRUGS (PRICE CONTROL) ORDER, 1987

INCOME TAX ACT, 1961

FINANCE ACT, 2008

SERVICE TAX OF INDIA, 1994

ENVIRONMENT (PROTECTION) ACT, 1987

Corporate Social Resposibility

GUIDELINES FOR CORPORATE SECTORCompanies included- Which are worth 500

crores or above / which have a turnover of 1000 crore/profit of 5 crore.

2% of company’s 3 year average income initially followed by 2% on company’s profit annually. SIGNIFICANCE IN HEALTH

SECTOR• CSR funds are being utilised in MDG

programmes - Health programmes for Maternal and Child health, Malaria ,HIV etc.

Salient features of the Company Bill, 2012Company should have dedicated CSR division

with experts from fields of social work and public health .

Government should play as a facilitator rather than a director.

TransparencyCompanies should present an annual report

relating to CSR.There should be an accountable authority to

monitor CSR fund utilisation.

HETEROGENEITY AND IT’S IMPACT

Definition

Heterogeneity refers to the diverse nature of healthcare systems and services provided to the society

HETEROGENEITY IN HEALTHCARETYPE OF

SETUPNGOs

CHARITABLE TRUSTCORPORATE

SETUP.

NURSING

HOME

AND CLINIC

S.

MEDICAL COLLEGES WITH

HOSPITAL.

HOME BASED CARE QUACK

S

SYSTEM

ALLOPATHICHOMEOPATHYAYUR

VEDIC

UNANI

SIDDHA

YOGA.TRADITIONAL HEALI

NG SYSTE

MS

EFFECTS OF HETEROGENEITYProvides ‘Last Mile Connectivity’.Improves the Health System by increasing

competition.Greater compatibility for all socio-economic

strata.Inclusion of indigenous systems of medicine

into the mainstream.Greater freedom of choice from the

beneficiary perspective.

Impact

WHAT?

The differences in the utilization of healthcare services arising out of the contrasts in the quality and accessibility of healthcare service providers.

UTILISATION DIFFERENCES

Rural Urban

WHY ?Determinants

Government Stance

Policy Drawbacks

Economic Reform

Low Insurance Penetration

Regulatory Failure

HOW?

RURAL –URBAN DIVIDE

POLICY DRAWBACKS

GOVERNMENT STANC

E

ECONOMIC

REFORM

RICH-POOR DIVIDE

LOW INSURA

NCE PENETRATION

HIGH COST

OF QUALITY SERVICE

REGULATORY

FAILURE.

QUALITY SEGMENTATI

ON &MALPRACTIC

E