‘Spend 3-5% On Healthcare’

Norbert Hueltenschmidt, head, Healthcare Practice, Europe, Middle East and Africa, Bain & Company, tells BW’s Joe C. Mathew what the the government’s healthcare priorities should be

Q: What do you think of the healthcare scenario in India?
A: India is hit by two kinds of diseases. There are infectious diseases — you need to deal with that. Then there is a tsunami of non-communicable diseases (NCD) that accounted for more than 60 per cent of the deaths in India in 2012. There is good access to healthcare in urban areas, but this is limited in rural areas. India has only nine million healthcare professionals at present. In order to provide the whole country access to reasonable primary healthcare, you need 30 million more medically educated people.

Q: Where does India stand vis-a-vis other developing nations when it comes to healthcare investments?
A: India invests only 1 per cent of its GDP in healthcare; in comparison, Brazil spends 8.4 per cent. I am not saying that India should spend 8.4 per cent, but if you need to develop an effective and efficient healthcare system, you need to spend more. Somewhere between 3 and 5 per cent of the GDP is, from our perspective, a reasonable level of investment in healthcare. This will give India a healthcare system comparable with other emerging markets.

Q: Should investment in primary healthcare be a government priority?
A: No. Private sector can invest in primary healthcare in a much more efficient and effective way. The government doesn’t have enough money and needs to funnel private money into primary care.
 

Q: How can the healthcare sector become an economically attractive and viable option for the private sector?
A: The government can do different things. It can offer incentives to the private healthcare sector on the basis of population: Give the private player a certain kind of population (put them in charge of a certain area) and measure the effectiveness and efficiency (of healthcare) in terms of total outcomes. You can also incentivise technical solutions, which allow people to find ways to access healthcare. The third approach is to look at the basics the government needs to cover and at the next level — in terms of add-ons — what the private sector can cover.

Q: Which of these areas are the best investment opportunities?
A: We can’t predict the future, but there is a need for innovative models on the technology side to let people in rural areas access healthcare in a simple and cost-effective manner. On the pharmaceutical side, generic preventative medications are required. Appropriate nutrition is a business area. I see a lot of opportunities for insurance companies in this area.

 

(This story was published in BW | Businessworld Issue Dated 06-04-2015)