Healthcare expenditure to double by 2012 contribution to GDP to be 8.5%: CII-Mckinsey study
Our Bureau, New Delhi

The total healthcare market in India is expected to grow significantly and its contribution to the country's GDP will increase from 5.2 % at present to 8.5 % over the next ten years. The expenditure on healthcare will more than double by the year 2012 and the healthcare spending is expected to increase from Rs 86,000 crore at present to Rs 200,000 crore in the next decade, reveals a CII-Mckinsey study on healthcare.

According to the study, private healthcare will continue to be the largest component of healthcare spending and is expected to double from Rs 69,000 crore to Rs 156,000 crore by 2012. Moreover, if health insurance cover becomes operative, the private spending will further go up by an additional Rs 39,000 crore. The study further forecasts that public spending could also double from Rs 17,000 crore if the government increases its spending level from the present 0.9 % of GDP to the target level of 2%.

With the rise in lifestyle diseases such as cancer and cardiovascular, the spending pattern will change dramatically by 2012 with inpatient spending accounting for 47% of the private health care spending, up from the 39% at present, the CII-Mckinsey study has pointed out. The outpatient spending which accounts for 61% of the private spending at present will decrease in terms of share but increase in absolute terms to Rs 74,000 crore.

It also explains the current situation in the healthcare sector in India and has pointed out the poor performance of the sector in terms of coverage, purchasing and delivery in comparison to other developing countries such as Brazil, Thailand and Korea. Citing an example, the study has pointed out that India has only 1.5 beds per thousand people in contrast to the average of 4.3 beds per thousand in other countries.

In order to meet the growing demand of healthcare in the country, huge investments worth Rs 100,000 crore to Rs 140,000 crore need to be made in the infrastructure for providing cost effective facilities in the next ten years. The bulk of the investments made will need to come from the private sector, the study has suggested.

To facilitate private investment into the sector and to increase its annual investment level from Rs 4,000 crore to around Rs 10,000 crore by 2012, the CII-Mckinsey report has urged the Government to offer and launch a set of initiatives. An active government-industry association is required to for the growth and development of the healthcare sector, the CII-Mckinsey study has suggested. The Indian Healthcare Federation should work on a three-point agenda - creation and adoption of quality and accreditation standards for healthcare infrastructure and delivery, work with insurers to increase the penetration of health insurance and collaborate with the government on policy issues.

The study will be formally launched at a seminar on Healthcare in India : The Road Ahead, organised by CII and Indian Healthcare Federation on 26th October, 2002.