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Indian healthcare industry portrays contrasting pictures in metro cities and rural areas: Deloitte chief

Nandita Vijay, BangaloreThursday, August 25, 2011, 08:00 Hrs  [IST]

Indian healthcare industry is now portraying a contrasting picture. On the one hand, there is the presence of corporate hospitals in the metro cities, while on the other hand there is the grossly inadequate health infrastructure in the rural areas of the country.

Although the Indian health care industry is on a robust growth phase and expected to touch US$ 250 billion by 2020, the growth has been lopsided and restricted to urban regions. Only 13 per cent of the rural population has access to a primary healthcare centre and 9.6 per cent to a hospital. The   infrastructure to cater to the burgeoning demand falls short on various parameters including availability of hospital beds, physicians, extent of government spending on healthcare.

This limited supply is also skewed in favour of the metros and big cities while, small towns and rural India face a huge shortage making them rely almost entirely on the government health infrastructure, which is severely strained, Charu Sehgal, senior director, Deloitte Touche Tohmatsu India Private Limited told Pharmabiz.

The government healthcare expenditure is lowest in the world at 0.9 per cent and the private spending is highest among the BRIC (Brazil, Russia, India and China) countries.

“The biggest challenge before healthcare providers is to increase quality supply while at the same time ensure that it is affordable to patients in the economically backward category,” she added.

Related to this, the challenge is to increase and improve availability and reach of healthcare services. It is also important to address the affordability  for patients with innovative health financing mechanisms and ensure quality care adhering to ethically appropriate guidelines, she added.

The industry is also coping with the challenge of having to balance the inherent high investment in healthcare delivery by bringing in operational efficiencies and cost optimization.

The shortage of adequately trained human resources covering doctors, nurses and paramedics is likely to be a huge bottleneck in growth of this sector, she pointed out. However recent trends witnessed include frugal innovations to reduce cost and harness innovative technology to enhance mobile health.  Efforts by the government through social insurance can improve availability of healthcare through various public-private partnerships, stated Sehgal.

While the sector is attracting investments from venture capitalists and private equity firms, funding has been selective and backed by prudent due-diligence. The potential as well as the need for large investments required to bridge the demand-supply gap makes the health sector an attractive option for PEs and VCs.

However, value creation in health delivery is time-consuming making the investment ‘relatively longer-term’ for it to yield attractive returns and remain sustainable. In fact, PE and VC investments have been forthcoming across the healthcare value chain covering providers, medical technology companies, diagnostics and pharmaceuticals. These have been backed by a strong business and growth strategy, financial transparency and quality of leadership, stated Sehgal.

 
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