NITI Aayog, the policy ‘Think Tank’ of the Government of India, has released a report giving an overview of India’s healthcare sector, including insights about its employment generation potential, the prevailing business and investment climate as well as the overarching policy landscape. The report touched upon the key factors which are drivers of growth and also elaborated the enabling policies and investment opportunities in 7 key segments, including hospitals and infrastructure, health insurance, pharmaceuticals and biotechnology, medical devices, medical tourism, home healthcare as well as telemedicine and other technology-related health services.
“India’s healthcare industry has been growing at a Compound Annual Growth Rate of around 22% since 2016. At this rate, it is expected to reach USD 372 Billion in 2022. Healthcare has become one of the largest sectors of the Indian economy, in terms of both revenue and employment. In 2015, the healthcare sector became the fifth largest employer, employing 4.7 million people directly. As per estimates by the National Skill Development Corporation (NSDC) healthcare can generate 2.7 Million additional jobs in India between 2017-22 – over 500,000 new jobs per year,” the report said.
Speaking about conducive policies, the report further said that the Indian government has allowed up to 100% FDI under the automatic route (i.e., the non-resident investor or Indian company does not require approval from the Government of India for the investment) in the hospital sector and in the manufacture of medical devices. In the pharmaceutical sector, up to 100% FDI is permitted in greenfield projects and 74% in brownfield projects under the automatic route.
As a result of the favourable FDI policies, transaction value in the healthcare sector has jumped over 13.5 times, increasing from USD 94 Million (2011) to USD 1,275 Million (2016).
Employment generation in the health sector
The healthcare sector became the fifth largest employer in 2015, employing 4.7 million people directly, according to a report by KPMG and FICCI. The NSDC estimates that the health sector will directly employ around 7.5 Million people by 2022, adding approximately 2.7 Million new jobs between 2017-22 – over 500,000 new jobs per year.
Human resources for health
The National Medical Commission Act 2019, which replaced the Medical Council of India, includes a provision for a Medical Assessment and Rating Board (MARB), which will rate institutions on the quality of education/training imparted. Similar reforms are also envisaged in nursing, dentistry and allied health fields.
In addition to it, the number of medical colleges in India increased to over 560 from 412 in FY16. The government is also implementing a scheme for establishing medical colleges attached to district hospitals. The number of registered medical doctors increased to 1,255,786 in September 2020 from 827,006 in 2010.
As far as the availability of treatment services are concerned, gaps exist as up to 60% of health facilities are concentrated in a handful of large cities across the country. Presently, 30%-35% of patients in India undergo surgery compared to 60%-65% globally. Similarly, only 15%-20% of patients in India undergo radiation therapy as against 40%-50% globally. Correcting the skewed spread and density of radiotherapy installations across Government establishments and encouraging the installation of linear accelerators in private institutes, in PPP mode, will help reduce the gap in overall cancer care.
India currently has 1.3 hospital beds per 1,000 population. There is also a shortage of skilled health workers, with 0.65 physicians per 1,000 people (the World Health Organisation standard is 1 per 1,000 people) and 1.3 nurses per 1,000 people.
Other factors driving India’s healthcare sector
There are several other important drivers of growth for India’s healthcare sector including enhanced adoption of telemedicine and other digital technologies in the post-COVID era as well as the emergence of PPP models in healthcare. Chains of private hospitals are increasingly foraying beyond the metropolitan cities into Tier 2 and Tier 3 cities as well. More and more private players are seeking accreditation and developing new healthcare models. Further, various States have launched innovative initiatives to attract PPP investments into the healthcare space.