The Indian Healthcare

LandscapeJim Dockins, FACHERegional Director

Fortis Healthcare Limited

731-256-0585 (US)

Jim.dockins@fortishealthcare.com

Some FactsIndia

Hard Facts

According to May 2007 data, the per capita income of India was Rs 29,382 ($588) a year or Rs 2,448.5 ($49) a month

A third of the global poor now reside in India The World Bank estimates that 456 million Indians (42% of the total

Indian population) now live under the global poverty line of $1.25 per day (PPP)

The Planning Commission of India has estimated that 27.5% of the population was living below the poverty line in 2004–2005

Criterion: monthly per capita consumption expenditure below Rs. 356.35 for rural areas and Rs. 538.60 for urban areas

Two Faces of Indian Healthcare

Healthcare Industry in India

3 Types of healthcare providers Private (Out of Pocket) Public Public Industry (BHEL, Railways, ONGC)

Healthcare Industry in India

India is host to 17% of world’s population, 20% of all maternal deaths, 23% of child deaths, 26% of childhood vaccine preventable deaths, 30% of TB& 68% of leprosy, 20% of entire disease burden, and 8% of Doctors

Average per head spending on healthcare in India = US $94 - $100

United States = $5,711 per citizen Switzerland = $3,445 per citizen Norway = $3,083 South Korea = $931 Netherlands = $2909

Healthcare Industry in India

Healthcare is not a part of the concurrent list of constitution of India, every state formulates its own policy (28 states and 7 union territories)

Only few national programs are run by the Indian Government – NMEP, NACO etc

Healthcare Industry expected to reach from US $ 35 billion to 75 billion by 2012, and 150 billion by 2017, bulk of it will be by Private Sector (KSA Technopak)

Burden of Disease

Communicable, Maternal, Perinatal, and Nutritional diseases contribute 46% of disease burden

India accounts for 20% of world’s maternal deaths 40 million diabetics – expected to rise to 70 million by 2025

– every fifth diabetic in the world will be an Indian Huge burden of cardiac diseases – 38% Indians have high

cholesterol levels, making 2 out of 5 Indians susceptible to heart disease

28%

3%5%

7%

57%

Other diseases

Heart diseases

Sense organs

MuscoSkeletal

Acute Infections35%

4%8% 12%

41%

Other diseasesAcute Infections

Heart diseases

MuscoSkeletalSense organs

32%14%

13%

19%22%

Acute Infections

Other DiseaseHeart Disease

Cancer

Accidents / Injuries Acute

Infections

32%

18%

19%

17% 14%

Other Disease

Heart Disease

Cancer

Accidents / Injuries

2001 2012

20122001

USD 19 BnUSD 10 Bn

Outpatient Market size ( Private spend on Healthcare Delivery)

Inpatient Market size ( Private spend on Healthcare Delivery)

46%54%

…..life style diseases will become dominant

USD 6 Bn USD 18 Bn

Progression Graph - India

32

146

50

110

59

80

6356

0

20

40

60

80

100

120

140

160

Life Expectancy at Birth Infant Mortality Rate

1950-51

1980-81

1990-91

2005

Government Initiatives

Number of subcentres: 137,311 PHC: 22,842 CHC: 3,043 Government (Public) Medical Colleges & Hospitals – 138 Total number of Government Hospitals: 9,976

Total number of Beds: 482,522

Indicators India Brazil China USA

Beds/1000 population .86 2.6 2.2 3.2

Bed occupancy ratio (%) 72% 60-80% 72% 69.3%

Average length of stay (number of days)

10 4-8 10.6 6.7

IMR of 56/1000 (double of Brazil and China)MMR of 44/10000 (4 and 10 times of Brazil and China)

Additional Requirements 2008 2018 2028

Additional Beds required 1.1 million 3.1 million 2 million

Beds/1000 population 0.7 – 1.7 4 5

Additional Floor Space@ 800 sq feet/bed

880 million sq feet 2480 1600

Additional Land Area(FSI 1:1)

20,000 acres 56,400 36,400

- Private sector has 38% beds (FICCI & E&Y, 2008), but caters to approximately 80% of Indian population -Only 1-2% of Private sector beds are in hospitals of bed size > 200 beds

0.93

0.4

0.6

0.86

0.6

0.9

0

0.10.2

0.30.4

0.5

0.60.7

0.80.9

1

Hospital Beds Doctors Nurses

1996 2004

7% decline

42% growth

50% growth

Number per 1000 population

Average rate of population growth in India is 2% annually

Targets (2025)

Hospital Bed density = 2/1000 population Physicians per 1000 population = 1 Nurses per 1000 population = 2.2

54%33%

20%

39%

53%57%

7% 15% 22%

Mar - 95 Mar - 02 Mar – 07 E

Fastest growing Free Market Economy Fourth-Largest economy in the world in terms of

Purchasing power parity Higher services mix, Increasing Urbanization, growing

working population and a nascent consumer credit cycle are supporting India’s growth story

0.4%

3.4%

5.0%

5.0% 14.0%

Private Health Insurance

Social Insurance

Employer’s spend

Community Insurance

Total

$2,830$3,040

$3,290$3,540

$3,830$4,110

$2,500

$3,000

$3,500

$4,000

$4,500

2003 2004 2005 2006 2007 2008

Favorable shift in Demographics Exciting phase of Economic development

Insurance coverage Rapid growth in per capita GDP(PPP)

Upper Middle & High(> $ 1500 pa)

Upper Middle & Middle($500- $ 1500 pa)

Low(<$500 pa)

Percent of population, 2001

…reason for optimism

Increasing Private Expenditure

Public health expenditure has remained stagnant between 0.9 – 1.2% of GDP (of a total of 5.1%)

Public health expenditure in developed countries like USA is in the range of 8-10% of GDP

Private expenditure on HC has increased from 60% in 1990-91 to 80% in 2000-01

Private Sector - Phases

Phase 11947-83

Phase 21983-2000

Phase 3Post 2000

- Public sector focus

-None to be denied care, regardless of ability to pay

- State Responsibility to provide healthcare

- Private sector encouraged to provide healthcare services

- Access to public funded CHC expanded

- State’s role redefined to that of a financer of health services from that of a provider

- Liberalization of Insurance sector for health financing

Out-of-pocket expenditure on HC in India

34

18

44

4

24

64

6 5

0

10

20

30

40

50

60

70

Governmentexp on HC

Out-of-pocket exp

on HC

Private andSocial

Insurance

Other

Perc

en

tag

e

Global India4 times higher than the world average

Health Insurance

Health Insurance industry is worth US $1025 million, and is expected to grow at 30% annually till 2015 to US $5600 million, by which time insurance coverage would have increased to 10% from the present 2%

Insurance coverage in India was 12% in 2007 as compared to the USA where it is more than 85% In 2000 – 20% of all plans sold were retail insurance

policies, while the remaining were group insurance policies By 2008, the ratio has changed to 45% group policies and

55% retail insurance policies

Health Insurance Insurance companies need to focus on Below Poverty

Level segments Rashtriya Swasthya Bima Yojana – launched by the

government in 20008 Covers 300 million people living below the poverty line –

each member of such families will get a maximum health insurance coverage of Rs 30,000 ($600) per annum along with additional incidental benefits

Insured family pays roughly ½ a Euro annually Rajiv arogya sri health scheme Chiranjivi Project Rogi Kalyan Samitis

Potential to become the Global Healthcare destination Overview Cost & Waiting Time Advantage

Globally the Med Value Travel market is already estimated to cross $40 Bn.

Thailand, South Africa, Malaysia, Cuba, Cost Rica are some of the emerging destinations

In India the Medical tourism market is estimated at approx USD 0.33 Bn.

Various studies project the market in India to grow to USD 2.7 Bn by end of the decade.

Key drivers for the growth

Quality Healthcare at fraction of the cost Availability of Skilled Doctors & Hospitals Good reputation of Indian Doctors

Nature of Treatment Approx Cost in

India ($) *

Cost in other Major

Healthcare Destination ($) *

Approximate Waiting

Periods in USA / UK (in

months)

Open heart Surgery 4,500 > 18,000 9- 11

Cranio-facial Surgery and skull base 4,300 > 13,000 6- 8

Neuro-surgery with Hypothermia 6,500 > 21,000 12- 14

Complex spine surgery with implants 4,300 > 13,000 9- 11

Simple Spine surgery 2,100 > 6,500 9- 11

Simple Brain Tumor -Biopsy 1,000 > 4,300

-Surgery 4,300 > 10,000

Parkinsons -Lesion 2,100 > 6,500

-DBS   17,000 > 26,000

Hip Replacement 4,300 > 13,000 9 - 11

6 - 8

9 - 11

Issues

Poor Infrastructure of the country Low information levels on good Quality Hospitals Lack of accreditation of Hospitals

* These are average Costs not the actual cost which would be incurred

……. a $3 Bn opportunity in Med Value travel by 2012

Need for a Nano model for Healthcare

Price = 1470 Euros

Way Forward

Prevention of disease and promotion of healthy lifestyle Increase health insurance coverage PPP Government to become facilitator rather than provider for

tertiary care and higher secondary care Infrastructure status to healthcare Unshackle medical education

Prepared by Fortis Healthcare Ltd.

Thanks

Credits:- FICCI Ernst & Young 2008- WHO Statistics- Assocham Study- Government Healthcare Statistics