Democratizing Health Care

26th Nov 2012
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A transformation of the health care ecosystem is required to manage the numerous demographic and lifestyle changes that India is undergoing. India’s population is ageing faster than expected. There will be a rapid increase in India’s median age from just 20 years in 1980 to 31 years in 2026. The number of people between 60 and 80 years of age will increase by 326% by 2050 (from the year 2000)1. With an increasingly sedentary life, incidence of lifestyle diseases such as Diabetes is growing rapidly. Such dramatic changes in demography and lifestyle will impact our fragile healthcare system adversely unless we address the three overarching problems of quality, access and affordability that plague India’s healthcare sector today.Fewer doctors and hospitals make it difficult for low income families to access these facilities. 80% of doctors, 75% of dispensaries, and 60% of hospitals are situated in urban areas[1] – making quality healthcare virtually inaccessible to people who live in remote areas. Once sick, a low-income family will often delay going to the doctor and make do with local quacks till it is too late. Not only does this increase the overall cost of treatment but also causes a loss of wage also resulting in a major financial setback to the family. This can lead to a family member pulling out of school early to go to work or other members making other kinds of lifestyle changes. Nearly 39mn people fall back below the poverty line due to health related expenditure[2].

Why is the healthcare system so poor?

1. Availability of doctors across India: For a population of more than a billion people, India only has 7 lakh doctors. This situation is further exacerbated when you count the number of specialists available to treat the vast patient population. While the Government is implementing measures like enforcing a ‘return bond’ upon doctors who go abroad for higher studies, the problem is far from solved. Doctors in India are paid poorly – a freshly minted doctor with over 5 years of medical education is paid ~Rs. 15,000 per month. It is not rocket science to understand why most doctors prefer to work in urban hospitals that can pay much more rather than poorly stocked and staffed rural hospitals.

PHC in Andhra Pradesh. Photo Credit: Diana Sahu

2. Poor medical infrastructure: In 2011-12, the Central and the State Governments together spent only about Rs. 90,569 crore – approximately 1% of GDP on healthcare. The 12th five year plan proposes to increase healthcare spend by half a percentage point to 1.6% of GDP, ignoring the Planning Commission’s recommendation of 2.5% of GDP spend on healthcare. This has had a direct impact on the number of sub-centers, primary healthcare centers, community healthcare centers and direct hospitals that have fallen woefully short for the numbers of people they are expected to serve. The shortfall in the community healthcare centers ranges from 33%- 91% across Assam, Bihar, Karnataka, MP, Maharashtra, UP and West Bengal.


3. Poor health insurance resulting in higher share of private expenditure: Due to poor insurance penetration in India, Indians pay 60% of all healthcare expenditure, comparable to poorer countries – Central African Republic (63%), Nigeria (62%), Bangladesh 65% and Vietnam (58%)[3]. People in USA (12%), UK (10%), and Germany (13%) spend far lesser because of better social security coverage, deeper insurance penetration and higher state expenditure on public health. Although the health insurance market in India is one of the fastest growing segments[4], only 15% people are covered under health insurance, only 2.2% are covered under private health insurance, of which only 10% covers rural people indicating that there is a tremendous market to be tapped.

One success has been Rashtriya Swasthya Bima Yojana (RSBY), a state-run insurance scheme that relies on third-party administrators and technology to deliver cashless health insurance for hospitalization in public as well as private hospitals. The RSBY has enrolled 30 million families across 25 states, making it one of the largest health insurance schemes in the world.

Demonstrated solutions:


  • Building hospitals beyond the cities: Vaatsalya Healthcare has focused on setting up hospital networks in tier II and tier III towns. Each of Vaatsalya’s 17 hospitals provides care across specialties in addition to general medicine, trauma, and other services such as pharmacy and diagnostics. Vaatsalya is led by two young doctors Dr. Ashwin Naik and Dr. Veerendra Hiremath, who conceptualized the idea when they were students at Karnataka Medical College. Vaatsalya has received a total of US$ 17.5mn from Aquarius Investments, Aavishkar, Seedfund and Bamboo finance.

  • Devices that improve doctor efficiency: Forus Healthcare enables a minimally trained technician to detect an eye ailment using an ophthalmic device, 3nethra. It can detect five ailments causing 80% of all blindness. 3nethra can be deployed in remote locations for a fraction of the cost of other devices. Given that close to 90% of all blindness is preventable, widespread awareness and early detection can reduce the incidence of blindness.
  • Remote diagnosis: Neurosynaptic Communications provides affordable telemedicine solution that enables remote communication via video and audio and remote monitoring of vital stats like heart rate and blood pressure. The company has nearly 450 rural centers reaching nearly 7,000 villages.

  • Low cost solutions replacing specialized equipment: Embrace provides low cost infant warmers aimed at regulating temperature of premature and delicate newborns. The design looks like a miniature sleeping bag that incorporates a phase change material, which stays at a constant temperature for up to 6 hours. This low-cost solution maintains premature and low birth weight babies’ body temperature to help them survive and thrive.

  • Accessible diagnostics: Achira Labs, a Bangalore based diagnostic start-up, is building a micro fluidic platform that provides point-of-care diagnostics. Achira’s platform helps patients gain access to diagnostics and receive therapy in the same session. Achira Labs has developed ACHIRA 2000, a device that can be stationed on a table top and requires minimum space. This device is battery operated, easily transportable and requires minimal input from technicians, transforming the economics and treatment frameworks for medical conditions. Achira is also developing a fabric based diagnostic system that uses a silk fabric with appropriate reagents to detect ailments.
  • Building specialty chains that offer quality and accessible care: Of the 39mn blind people in the world, a third reside in India. In 2002, Vasan Eye Care started its first hospital Trichy and has grown to become India’s largest eye care network with 112 centers across India. Vasan Eye Care provides comprehensive ophthalmic treatment through the large network of centers that increases access and brings quality care to tier II and tier III towns.
  • Immediate healthcare finance: A stealth mode startup located in Mumbai has piloted financing treatments in a large hospital and has got promising results without a single default in payment. Bangalore-headquartered microfinance institution, Ujjivan Financial Services offers emergency loans to its customers and has created processes that allow for loan approval and disbursement within hours.

  • Anti-Drug counterfeiting solution: PharmaSecure has developed a system that uses a track and trace system deployed through SMS authentication of codes. A patient can send PharmaSecure an SMS of a unique number present on the medicine and will receive a notification whether the drug is fake or authentic. A simple and cost-effective solution to the dangerous and massive problem of counterfeit drugs especially in developing countries. In October, PharmaSecure imprinted secure verification on its 300 millionth package and is currently eyeing the global market for expansion.

Disclosure

Unitus Capital has investment banking relationship with Neurosynaptic Communications.

These authors’ personal views do not necessarily represent those of Unitus Capital.

About the Authors

Jeevan Kumar is an investment professional working with Unitus Capital, a boutique investment bank focused on raising capital for companies that impact the low-income population. At Unitus Capital, he has advised several companies, across healthcare, financial services, and energy sectors, on raising capital. Jeevan was also part of the initial team at Unitus Seed Fund, contributing significantly towards its four maiden investments. Prior to Unitus Capital, Jeevan was part of SunGrid team, an experimental cloud based initiative at Sun Microsystems.

Jeevan is a graduate of XLRI Jamshedpur and has a computer engineering degree from NIT Surathkal. Jeevan has a passion for entrepreneurship and enjoys working with innovative early stage companies.

Priya Nadkarni works with Unitus Capital, a boutique investment bank focused on raising capital for companies that impact the low-income population. At Unitus Capital, she has worked on diverse transactions in the micro insurance, micro pensions and the micro finance industry. Priya also has a keen interest in education and tracks the sector. Prior to Unitus Capital, Priya wrote for the Business Standard newspaper in Mumbai.

Priya is a graduate of the Indian School of Business, Hyderabad, and has a diploma in journalism from the Asian College of Journalism and a Bachelors degree in Economics and Statistics from St. Xavier’s College in Mumbai.


[1] Deloitte: Medical Technology Industry in India

[2] Selvaraj S, Karan A. Deepening health insecurity in India Economic Political Weekly 2009; 44: 55-60.

[3] WHO: World Healthcare Statistics 2012

[4] RNCOS report

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