Strong Medicine: A Case Study of the Indian Healthcare Sector

The Paradox of the Indian Healthcare Sector

For a country that prides itself on being a welfare state that looks after its many poor and underprivileged citizens, India spends surprisingly less on healthcare as a percentage of GDP or Gross Domestic Product than other developing and developed countries.

Indeed, India is among the countries with lowest spending per person by the government on healthcare and looking after the sick and needy. Thus, it is not surprising that India has one of the highest rates of unhealthy and sick people which contribute directly to the loss of productive capacities of such people.

Economists often refer to what is known as human capital or the tangible and intangible gains from productive citizens wherein such citizens who are well educated and healthy often lead to higher growth rates for the countries.

Indeed, the success of many hitherto poor countries in lifting people out of poverty is intricately linked to their education and healthiness and this is where India has a lot of catching up to do if it harbors ambitions of being a developed country.

Moreover, given the yawning gap in income levels and the inequalities and inequities, India presents a study in contrast wherein there is a Western and World class private healthcare sector and at the same time, it coexists with an underdeveloped and underfunded governmental hospitals and clinics where the stark differences in income and class play out.

Will the Strong Medicine Work?

Having said that, it is also not the case that the Indian government is not doing anything to remedy the situation.

Right from states such as Andhra Pradesh and Karnataka implementing a state sponsored healthcare scheme for their residents to the recently launched centrally funded scheme to cover all Indians, there are efforts being made to address the gap between the quality of healthcare provided in the governmental and private sectors.

Moreover, the private sector is doing its bit here wherein it also treats a certain percentage of people at subsidized rates.

Turning to the actual situation in the Indian healthcare sector, as previously mentioned, India boasts of a world class private healthcare sector where in recent times, it has also been attracting Westerners for treatment or what is known as Medical Tourism wherein citizens of the United States and other developed countries come to India to seek attention not only for the cost factor but also for the quality and the highly personalized treatment that they get here.

Thus, it can be said that the Indian Healthcare sector is coming of age and soon, there would not be any reason for either the wealthy to go abroad for treatment or for the poor to feel neglected.

In short, the Strong Medicine that has been prescribed and administered to the sector is having its effect and hence, like other sectors in India that are in the throes of change, it is the accepted view among experts that the Indian Healthcare sector too can soon play a part in the New India Story.

PESTLE Analysis

Political

Like any other sector that has a hybrid mix of private and governmental establishments, the Indian Healthcare sector is super sensitive to the prevailing governmental policies to do with regulating the sector.

Indeed, in recent years, the Private Hospitals and the other entities have resisted any attempts by the government to set their pricing and what they see is an effort by the government to dictate terms to them. This has taken the form of vociferous protests by the private entities on everything ranging from fixing responsibility and introducing accountability to asking them to be more transparent in their fee structures.

In addition, these entities are also thwarting the efforts of the government as far as the Pharma side is concerned by not capping the prices of medicines and other drugs.

Economic

Concomitant with the changing income levels of Indians, more and more Indians are taking to private entities in the healthcare not only because the governmental hospitals are ill funded and not equipped properly but also because the private entities are showing more inclination to reach out to as many classes and income levels as possible. This is partly out of the desire to become more inclusive and mostly also because they have realized that the Bottom of the Pyramid citizens in need of healthcare are also profitable if they are provided with quality healthcare in a matrix of pricing structures that do not hurt them too much. Moreover, with more people joining the middle classes, there is more affordability and disposable income some of which is often spent on health needs.

Social

For a country that has always had alternative medical and healing methods and systems, the Westernized form of treatment has now greater acceptability and visibility even among the rural poor and the vast class of Indians who swear by ancient treatment systems such as Ayurved and Homeopathy.

Indeed, with the changing aspirations among Indians towards Western consumerism, there is a tendency to visit the Mainstream medical entities rather than seek solace in traditional methods of healing.

Having said that, the fact remains that in India, the ancient and the modern coexist and hence, it is foreseen that for the conceivable future, these arrangements would continue. Of course, the fact that Yoga is popular worldwide is another reason why Indians need not give up on their traditional healing systems.

Technological

For a long time, surgery that is dependent on the latest advances in healthcare and on the cutting edge medical infrastructure was not available in India at least in comparison with Western countries. This is the reason why wealthy Indians used to go abroad for treatment and surgeries. This is no longer the case and the Indian Healthcare sector is now blazing a trail where it would soon match its global peers in the way in which it can provide best of breed treatments and complex surgeries due to the government relaxing the import norms and rules governing medical equipment and cutting edge technological systems. Moreover, with India moving up the technological curve, it is also the case that the latest advances in the West would come to India in no time.

Legal

This is a very important factor as far as the Indian Healthcare sector is concerned. As mentioned earlier, among the most important reasons why the private players resist and detest governmental regulation and interference is that fixing accountability and introducing responsibility often leads to patients using the legal route to sue them for alleged lapses and cases of medical negligence.

While the private doctors and the governmental ones as well have a point as far as undue harassment in the name of the law is concerned, it is also the case that the Indian Healthcare Sector has not matured to the level and the extent where medical negligence is under control.

Indeed, given the lax standards and operating procedures, many experts feel that the government should do more in reining in the Indian Healthcare sector if we are to aspire to global standards of excellence.

Environmental

Among the key problems that are plaguing the Indian Healthcare Sector are is the disposal of medical waste generated in the various hospitals. While there are guidelines and rules in place to regulate how medical waste is disposed of, they are followed more in exception rather than the norm.

Considering the fact that medical waste is a form of bio hazardous nature, it is the case that the Indian Healthcare entities must show greater responsibility in disposing of the same. While some hospitals in India do follow rigorous standards of disposal of medical waste, by and large, the majority of them often adopt a callous approach to this issue which in turn, has raised the hackles of activists and other consumer rights advocates.

Porter’s Five Forces Analysis

Power of Suppliers

While the players in the Indian Healthcare sector have a diverse range of suppliers some of whom are strong and big enough to hold sway over them, by and large, private hospitals and clinics often have more bargaining power over them. This is because the supplier base is dispersed and there are any numbers of entities who can easily replace any one or more of them.

Having said that, the doctors and the super specialists and the specialists have a much more powerful hold over the hospitals in a Pyramidal fashion where entry level doctors are dime a dozen and the power increases as we reach the top where a handful of specialists and super specialists in each city are much sought after.

Power of Buyers

It is the case that buyers have very little power especially in the rural and the semi urban areas where the number of hospitals is less. However, in the cities and especially the large metros, the buyers or the patients are spoiled for choice since there are any numbers of hospitals who can cater to them.

Having said that, it is also the case that with medical monopolies springing up everywhere, patients have little to no say in which hospital to go since even in the metros, there are only a handful of hospitals that have all the required infrastructure and facilities. Moreover, with affordability being a key determinant, patients sometimes have limited choices as far as frequenting hospitals are concerned.

Threat of Substitutes

As mentioned earlier, India is a country where ancient and traditional systems coexist with modern facilities and hence, it is a fact of the Indian Healthcare sector that many Indians often rely on such systems for their treatment.

Further, with the growing popularity of Ayurved and Homeopathy, many Indians are increasingly resorting to availing such alternative systems of healing for succor. Indeed, India might one of the few countries in the world where patients routinely seek substitute systems of healing as far as the mainstream Western medicine as the base is concerned.

Entry and Exit Barriers

While any doctor can setup a clinic or a small hospital, there are significant entry barriers as far as large hospitals are concerned. This is because large hospitals require significant investments as well as the promoters need to have extensive contacts with specialists and super specialists to attract them to practice there. Indeed, the high entry and exit barriers are what make the Indian Healthcare sector being a monopolistic one where a few large healthcare chains dominate.

Further, this is also the reason why the Indian Healthcare sector is skewed towards serving the wealthy and the rich as these monopolies have a hold on fee structures.

Competitive Rivalry

The Indian Healthcare sector is a study in contrast as far as competitive rivalry is concerned. For instance, in the metros and the large cities, there are a number of hospitals which compete with each other whereas in the towns and the semi urban regions, the competition is limited given the fewer hospitals and clinics. This is the reason why there is concentration of power among the players wherein large chains dominate and smaller hospitals hold sway in other regions.

Conclusion

As can be seen from the discussion so far, the Indian Healthcare sector is at a turning point where it has to evolve and transition to a more egalitarian model. Indeed, the present monopoly class conscious model of serving the few cannot continue in the interests of the nation as more and more underprivileged are left out of the ambit of healthcare.

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