TLR - Fostering Quality Healthcare For All

Fostering quality
healthcare for all
Fostering quality healthcare for all

2 Fostering quality healthcare for all
Table of contents
Introduction__6
Executive summary__8
Current healthcare status in India__16
Prevalence__16
Providers__26
Propensity__44
Way forward__64
Annexure__102
Acknowledgements__112
Fostering quality healthcare for all 3

Foreword
Amit Mitra
Secretary General
FICCI
Dear Reader,
Rapid growth of the Indian economy has led to change in urban and rural lifestyle that has brought about a major shift in the
prevalence of disease pattern from communicable to non-communicable. This has resulted in increase in the total disease
burden, which translates into huge economic loss for the nation estimated to be about 1.3% of GDP. Although in the next
decade or so, India would continue to have the demographic advantage over the rest of the world, a major concern of the
government and industry today is to sustain the 10% plus growth rate without a healthy and appropriately skilled population.
Hence the move by the government to accord health and education priority sectors in the XI Plan is indeed a welcome move
towards overcoming this constraint.
Federation of Indian Chambers of Commerce and Industry (FICCI) as a change agent has been working diligently towards
influencing the government to bring about requisite policy changes to give the right impetus to the growth of health services
sector and also facilitating integration of Industry and Government initiatives to achieve the national goals.
This joint study by FICCI and Ernst & Young evaluates the healthcare scenario in the country, showcases the national and
global trends and best practices, defines roles and responsibilities of the stakeholders and suggests an action plan to the
government to ‘foster quality healthcare for all’.
We are grateful to the Ministry of Health and Family Welfare, Government of India for supporting FICCI – HEAL 2008 on
August 7 & 8, 2008 in FICCI, New Delhi.
I thank all the participants for their cooperation.

Foreword
G Kali Prasad Muralidharan M Nair

Partner Partner
Ernst & Young Ernst & Young
Dear Reader,
In a country where sick care is not available to many, and quality sick care to a still fewer, the theme of “Quality
healthcare for all” seems a bit audacious. But this does not limit the relevance and urgency of the need in any way.
Given that quality healthcare is nearly a fundamental right of every Indian citizen; it would indeed be a grave apology
on part of policy makers and key stakeholders not to accord healthcare its due priority while India prepares itself to
become a global leader.
While India has made significant progress in key health indicators viz. IMR, MMR and Life Expectancy over the last six
decades, our achievement lags behind developed and many developing nations on these parameters. India’s
envisaged economic growth over the next decade will be accompanied by an expected rise in reported ailments by
over 30% by 2015 and a change in disease profile driven by rapid urbanization towards non-communicable diseases
that is likely to double by 2020. For a developing India to take pride in itself for having “Quality healthcare for all” is
thus a non negotiable imperative.
We believe a three pronged agenda can assist in fulfilling this aspiration:
► Preventive, promotive and early stage primary care should be the agenda of the government to minimize the
disease burden
► Well “regulated” private participation, both in providing sick care and medical education, should be incentivized
and encouraged to provide quality secondary and tertiary infrastructure to achieve a desired bed density of 2
per 1000 by 2025 that necessitates an investment in excess of $86 bn
► Propensity for health expenditure to be enhanced through extension of health insurance coverage from the
current 12% to 50% of the population by 2015. This can be achieved by making health insurance mandatory in
the formal sector through a phased approach, government sponsored health insurance programs for below the
poverty line families and effective product innovation in private and community health insurance
‘Fostering quality healthcare for all’, a FICCI- Ernst & Young initiative, is a comprehensive study assessing the current
state of the healthcare sector, its future imperatives and gaps restricting its achievability. This has been addressed
using Ernst & Young’s 3-P model: Prevalence, Providers and Propensity. The report suggests concerted and
implementable strategies - based on three critical indices of access, affordability and assurance – to assist the
Government, healthcare providers, industry and investors in achieving India’s aspiration of quality healthcare for all.
We encourage you to explore, invest and partner in Indian healthcare, which truly stands at the inflexion point.

Introduction

Quality healthcare is the foundation of any prosperous nation. However, "fostering quality healthcare for all” is still a partially
fulfilled dream for India. The Government of India has acknowledged that the Health Services domain is one of the priority
sectors in the 11th Five Year Plan, but much needs to be done to reach this goal. Various attempts have been made in the
past elaborating on the reasons for this aspiration remaining unfulfilled and on possible ways to achieve it.
Although this is a matter of paramount importance, this report does not concentrate on primary healthcare, since the
government has already undertaken positive initiatives under the National Rural Health Mission with the aim to (a) create
and implement a public primary healthcare infrastructure and (b) enlarge the secondary healthcare infrastructure in
the country.
This report, an effort by Ernst & Young and FICCI, aims to highlight the following:
► The characteristics of the Indian healthcare landscape and the gaps that exist between the healthcare needs of the
consumer and the existing delivery mechanism have been addressed by using Ernst & Young’s 3-P model: Prevalence,
Providers and Propensity.
“Prevalence”, as the name suggests, refers to the quantum and nature of the disease burden that drives the need for
healthcare. “Provider” comprises the physical and human resource infrastructure that provides quality health services to
those who need it. However, the extent to which providers can address healthcare needs depends on “propensity,” which
is the capacity and inclination of the consumer to pay for health services.
► Workable strategies that can improve the quality of healthcare for the Indian consumer are based on three dimensions:
Access, Affordability and Assurance. Such strategies are feasible since they are focused on certain specific goals:
► Minimizing the disease burden
► Improving access and assurance
► Improving affordability
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Executive summary

Executive summary
► During the past five decades, India has achieved remarkable improvements in the healthcare sector, resulting in doubling
of life expectancy at birth, a reduction in infant mortality by half, and total eradication of smallpox and guinea
worm diseases.
► However, this progress, though significant, is not adequate. Apart from missing its own goals for healthcare outcomes,
India also lags behind developing countries on key health indicators. Its infant mortality rate per thousand live births
(IMR) was 56 in 2007, which was double that of Brazil and China; its maternal mortality rate per 10,000 population
(MMR)was 44, which was 4 and 10 times that of Brazil and China, respectively.
► Every year, around 115 crore new cases of various ailments are reported, with nearly 3 crore cases requiring
hospitalization. This disease burden is estimated to reduce the expectancy of healthy life at birth by 10 years. It is
estimated that the reported number of ailments will rise by 30% to touch 150 crore cases by 2015. This increase will be
driven by the rising population, an increase in reported ailments due to better affordability, easier access to healthcare
facilities due to increasing urbanization, and a shift in the disease mix toward non-communicable diseases.
► According to a WHO study, the estimated economic loss for India due to the deaths caused by all the diseases in 2005
was 1.3% of its Gross Domestic Product (GDP). With an increase in the number of non-communicable diseases, this loss
will increase to 5% of GDP by 2015.(India’s GDP is estimated to be Rs.6,100,000 crore in 2015 at constant base year
prices of 1999-2000)
► While health outcomes leave much to be desired, it is also true that Indian healthcare management is plagued with
several limitations.
► Planning of the Indian healthcare system has been top down, making it largely unresponsive to healthcare needs
at the local level. This has resulted in an inadequate health infrastructure, which is inequitably distributed.
► The growth of the healthcare infrastructure in the last decade has not kept pace with the increase in the
population and the rise in reported ailments. During this period, the population increased by 15% and the number
of individuals reporting ailments per thousand population has grown by 66%. While the total number of beds has
gone up by 5.1%, bed density (number of beds per thousand population) has declined by 7%. This may be due to
lack of capacity building in semi urban and rural areas.
► Access to healthcare is hindered by inequitable distribution — across states and between rural and urban India.
► For the six states that comprise around 37% of the Indian population, hospital beds per thousand population
are less than two-thirds of the current national average of 0.86, which is one-third of the world average.
Further, the “effective” bed density could even be lower due to shortage of staff, which results in hospital
beds remaining under-utilized. These states include Madhya Pradesh, Orissa, Bihar, Haryana, J&K
and Uttar Pradesh.
► With around 20% of the country’s population, the four southern states have one-third the number of doctors
and almost 40% the number of nurses.
► Statistics reveal that although rural India bears three-fourth of the ailment burden, it has only one-ninth the
total number of beds and one-fourth the number of healthcare resources. This shortage is caused by two key
factors — a genuine shortage of infrastructural and inappropriate statistical classification of facilities.
► There is a shortfall of 30,000 facilities, comprising sub-centers, primary health centres (PHCs) and
community health centres (CHCs), against the population norm set for the public primary
healthcare infrastructure in rural India. There is also a 62% shortfall in number of specialists, 49% in
laboratory technicians and 26% in pharmacists. This shortfall is due to the number of posts
sanctioned being less than required and the unwillingness of qualified doctors to accept sanctioned
posts in rural areas because of tough working conditions and their not being able to fulfill their
career aspirations in such areas.
► Healthcare needs in rural India need to be addressed by a referral network with adequate health
care facilities such as those available in urban areas. Statistically, these facilities are a part of the
urban infrastructure, which partially explains the shortage in the infrastructure in rural areas.

Executive summary
► The Indian healthcare system, both public and private, is still not competent to provide assurance on the quality of
healthcare delivered. Adhering to a minimum level of standards requires investments — there is a cost pressure on
capital and revenue.
► The Health Policy of 1983 encouraged the private sector to participate in healthcare delivery. As a result of their
participation, of the 15 lakh healthcare providers in India today, there are 13 lakh private healthcare providers
of which 97% are in the unorganized sector and 37% are still not registered. This growth has been fostered in an
environment where there is an inadequate focus on the implementation of regulations, standards
and accreditation.
► According to the All India National Family Health Survey of 2004, 68% of Indians do not use public facilities since
they feel these are substandard in quality, while 47% cannot use these facilities because they are not located
nearby. The majority of the people opt for private treatment (80% of out-patients and 60% of in-patients) even
though it is costly as compared to public treatment (20-40 times for out-patients and 2-3 times for in-patients).
► In the rural public healthcare infrastructure, primary healthcare facilities lack drugs, well-trained personnel,
diagnostic facilities and proper management. At the same time, secondary and tertiary facilities provide low
quality of care due to a high patient footfall and overworked staff. They are also inconveniently located and
difficult to access. In rural India, a person has to travel an average distance of 19 km to reach an in-patient
healthcare facility. This is three times the distance a person would need to travel to a facility in urban India. The
underdeveloped infrastructure in rural areas also makes travel much more arduous.
► Around 70% of India’s healthcare expenditure is financed out-of-pocket with only 12% of the Indian population
being covered by health-related insurance schemes. This limits the capacity of Indians to spend on healthcare,
particularly in the lower and middle income groups, which comprise around 95% of the population. Since expenditure
is mainly out of individuals’ pockets, the incremental spend on healthcare is largely determined by incremental
changes in income levels.
► Healthcare expenditure as a percentage of the GDP has been increasing, with growth being driven by the rise in
private expenditure. In fact, the percentage of private healthcare expenditure in total healthcare expenditure in
India is the highest among BRIC nations. In India, the percentage of private healthcare expenditure in total
healthcare expenditure is 81%, while it is 56%, 61% and 38% for Brazil, China and Russia, respectively.
► Borrowing is the largest source of finance for out-of-pocket expenditure. It pushes nearly 3.3% of India’s
population to below the poverty line each year.
► Health insurance penetration in India is low on the whole. Major health-related insurance schemes (ESIS, CGHS,
group insurance, government schemes for the poor, community insurance and voluntary insurance) together
cover only 12% of the Indian population. Although private health insurance has grown at the rate of 40% per
annum, low awareness, high premiums, and an inadequate and inefficient backend infrastructure has kept health
insurance out of the reach of a large part of the population. This potential market needs to be
tapped innovatively.
► The high cost of inpatient treatment in the context of low insurance penetration and high out-of-pocket
expenditure places an undue burden on individuals and specifically on vulnerable sections of society — those
below the poverty line and the aged population.
► Some statistics suggest that overall only 12% of ailments remain untreated , which indicates limited untapped
potential in the area of healthcare. Some experts concur with this view and suggest that the issue relates more to
inequitable distribution rather than adequacy. However, we believe that in healthcare, a combination of prevalence
and propensity to pay for treatment converts latent need into actual demand. For example, Kerala has a per capita
Net State Domestic Product almost three times higher than that of Bihar. This has resulted in an almost threefold
higher rate of treatment in Kerala. Very often, sensitivity to ailments is a function of propensity.
In summary, there are four key challenges that need to be addressed for India to achieve its aspiration of “Quality
healthcare for all”:
What enhanced medical How can the inequity What are the measures that What are the initiatives
infrastructure is in the distribution of need to be implemented to required to assure
required to adequately healthcare facilities enable the majority of the consumers about the
take care of India’s be reduced? Indian population to avail of quality of medical
healthcare needs? healthcare facilities? care provided?

Executive summary
What needs to be done

In the journey towards “Quality Healthcare for All”, there would be 5 broad initiatives that would need to be undertaken:
1. Reduce the disease burden itself by promoting health and focusing on preventive care
2. Convert latent need into active demand for healthcare by enhancing affordability of healthcare services
3. To cater to the unleashed demand, focus on building adequate physical healthcare infrastructure which is capable and
is equitably distributed
4. Enhance assurance on the quality of healthcare delivered
5. To stimulate development of healthcare system capacity, generate periodic health intelligence information
at micro level
1. Reduce the disease burden by promoting healthcare and focusing on preventive care
Indicators India Brazil China USA
DALY rate per 100,000 population (1) 28,575 20,721 15,378 14,266
DALY rate for Communicable, maternal, perinatal and
12,958 4,361 2,847 941
nutritional conditions per 100,000 population
DALY rate for Non Communicable diseases per

11,824 13,113 10,217 11,938
100,000 population
(1) DALY rate per 100,000 population is a universally accepted indicator of burden of disease. It is a measurement of the gap between current health status and an ideal situation
where everyone lives into old age free of disease and disability. Source: Data on Mortality & Burden of Disease, WHO, 2002
► India’s disease burden (measured by the DALY rate per lakh of population in 2002) was around 37% higher than that
of Brazil and 86% higher than China’s. While the disease burden of non-communicable diseases in these three countries
differed marginally, India’s disease burden, resulting from communicable, maternal, perinatal and nutritional
conditions, was three to four times higher. Considering its size and population, India should aspire for a DALY rate that
is similar to that of China in 2025.
► Recommended role of the government:
► The government needs to create an adequate infrastructure to promote health. The world over, it is an established
fact that preventive care is a non-negotiable imperative for a better health outcome at minimal cost. Most of the
spending on preventive health may not yield desirable results until complementary investment is made to improve
living conditions. This requires comprehensive planning and implementation among the different government
entities on various programs for an effective health outcome. Five disease clusters — perinatal conditions, lower
respiratory infections, diarrheal diseases, tuberculosis and DPT — constitute two-thirds of the disease burden of
communicable diseases. A cross-sectoral task force should be constituted by the government to effectively
manage such diseases.
► Recommended role of the private sector:
► India’s disease burden of non-communicable diseases is likely to double by 2020. This alarming projection makes it
imperative to focus on promoting healthy lifestyles and standards of wellness. This is an opportunity for the private
sector to develop the wellness business and industry bodies to work toward nurturing this effort.

Executive summary
2. Convert latent need into active demand for healthcare by enhancing affordability of healthcare services
► Extend coverage of health insurance to 50% of the population by 2015. The following measures need to be adopted
to achieve this:
► Make health insurance mandatory in the formal sector, i.e., employment that provides regular wages, in a
phased manner to cover the entire sector by 2015. For example, South Korea mandated health insurance
for firms with more than 500 employees in 1976 and progressively brought within this ambit all firms with
up to 16 employees by 1982.
► The government should provide health insurance coverage to the entire “below the poverty line (BPL)”
population by 2015. A successful initiative is Andhra Pradesh’s “Rajiv aarogyashri community health
insurance scheme,” which targets this section of the population.
► Private and community health insurance should develop innovative and affordable products to cater to the
informal sector.
► Extend coverage of health insurance to 80% of the population by 2025
3. To cater to the demand, focus on building an adequate and equitably distributed physical healthcare infrastructure
► What is the number of hospital beds per thousand people required?
► There is no straightforward answer to this question and no mathematical model that can be used. The number of
hospital beds required depends on the prevalence of disease, the propensity to avail of healthcare services and
accessibility to providers offering quality services. Hence, we have based our forecast of India’s healthcare
infrastructure needs on the healthcare infrastructure of countries with a disease burden and affordability that match
that of India.

Beds per thousand population 0.86 2.6 2.2 3.2
Bed occupancy ratio (%) 72% 60%-80% 72% 69.3%
Average Length of Stay (In number of days) 10 4-8 10.6 6.7
Source: World health statistics 2008, WHO; Economic & Social Data Rankings; Health, United States,2007 – US Department of Health and Human Resources, Website of
“Chinese Center for Disease Control and Prevention” accessed on 25 June 2008, World Bank Report – 2008 titled “Hospital Performance in Brazil”.
► Given the current infrastructure status, we believe India should aim for a bed density (hospital beds per thousand
people) of 2 plus by 2025.
► The creation of this infrastructure would require investment in terms of funds and human resources for healthcare. It
must be borne in mind that even if funds are available to meet this aspiration, the limiting factor will be availability of
human healthcare resources.
3A. Human resource infrastructure:
► Additional medical colleges would need to be set up if there is a net addition (net addition = new doctors
produced — doctors leaving the system due to retirement or death) of around 17,000 doctors per year against a
requirement of 7 lakh additional doctors by 2025. India would need to proactively address some of the policy
impediments that have restricted the addition of medical education facilities in the country. Specific changes
recommended include:
► Currently, a minimum of 25 acres of contiguous land is required to establish a medical college. It is difficult
to find such a large area of land today. Therefore, it is recommended that this norm is relaxed to either two
well-connected pieces of land totaling 25 acres or to a combination of fewer acres of land with a large floor
area, so that the total space requirement can be achieved in a vertical structural set up.
► The norm relating to the student-to-bed ratio should be reduced from 1:5 to 1:4 for 100-seat colleges, since
the average length of stay (ALOS) has been reduced by as much as 50% over the last 10 years, especially
for surgeries. However, during this period, the 1:5 student-to-bed norm in colleges with 100 seats has
remained the same.
► Relaxation of occupancy rates from 80% to 60%
► The initiatives proposed here, if implemented promptly, would more than double the number of doctors by 2025,
thereby increasing the number of doctors from 0.6 to around 1.0 doctor per thousand population. This would be
closer to the target of 1.0 to 1.15 ( close to that of the current doctor density in Brazil and China) India should
aim to achieve by 2025.

Executive summary

► The government should partner with private players to set up 50-seat medical colleges that are attached to district
hospitals with a bed strength of more than 200. Considering the requirement of funds and the efficient management
of such medical colleges, it is proposed that private players are brought in to set up medical colleges that are
attached to district hospitals and the management of these hospitals are outsourced to them by the government.
This will serve three purposes:
► Provide a supply of healthcare specialists in district hospitals and sub-district hospitals
► Reduce the government’s expenditure on setting up medical colleges
► Increase the number of doctors, nurses and technicians in the state
► To meet the requirement of doctors for tertiary care by 2025, 196 additional colleges with 100 medical seats would
need to be made operational by 2015. The government should allow corporate players to enter the field of medical
education to set up and run such colleges.
► The government should implement the recommendation of the Task Group on Medical Education of the National
Rural Health Mission (NRHM) to introduce a new three-year course, Bachelors in Health Science, which will focus on
clinical conditions within the primary healthcare domain. It should introduce a similar course for non-allopathic
doctors who want to practice mainstream medicine in the primary healthcare sector. These initiatives would generate
an additional 1.15 lakh primary healthcare workers by 2025. However, appropriate steps would need to be taken by
the central government to implement the necessary regulatory changes.
► The government should also mandate that nursing courses are offered in all new medical colleges, so that a balanced
mix of health workers is created. As a facilitative step, it should consider relaxing norms pertaining to faculty, e.g.,
the norm to have seven MSc-qualified nurses in nursing colleges.
► The initiatives mentioned above can be further supplemented by the following:
► The government should allow more foreign-trained doctors with acceptable qualifications to practice and teach in
India. Currently, only Indian doctors with postgraduate medical degrees from the UK, the US, Canada, Australia and
New Zealand are allowed to practice in any public or private hospital in the country or teach undergraduate students
in medical colleges. Such policy changes need to be promoted effectively to target appropriate doctors.
► The government needs to change the leverage ratio in the utilization of human healthcare resources by the efficient
utilization of scarce resources. This would involve (a) establishing an effective referral network that can reduce the
patient load on specialist doctors, (b) setting up clinical pathways that will reduce the dependence on specialist
doctors, (c) reducing the ALOS, so that more cases can be treated by the same number of healthcare resources and
( d) providing improved access to specialist advice through better use of technology, e.g., telemedicine).
► 3B. Physical infrastructure

To reach the goal of two hospital beds per thousand population, an additional 17.5 lakh beds would need to be created by
2025. To achieve this, an estimated investment of Rs. 3,70,000 crores ($ 86 billion) would be required. A major portion
of this amount would need to be invested by the private sector with government funding being primarily diverted toward
improving preventive and primary care.
► Considering the inequity in the distribution of healthcare infrastructure, the focus would need to be on enhancing the
healthcare infrastructure in six states (Uttar Pradesh, Bihar, Madhya Pradesh, West Bengal, Maharashtra and
Rajasthan) that currently have the largest deficit in their number of beds to achieve the target of two hospital beds
per thousand population. These states would have almost two-thirds of the additional requirement of hospital
beds(11.6 lakh hospital beds).
► Given the huge investment required, the participation of private players is inevitable. The government needs to
promote investment by private players in non tier-1 locations by providing financial incentives, such as the
extension of the income tax holiday from 5 to 10 years, extension of the preferential rate of interest by financial
institutions for capacity creation, relaxation on taxation of venture capital funds investing in healthcare, as well
as increased floor area ratio (FAR) and ground coverage for hospital-related activities.

Executive summary
► Recommended joint role of the government and private sector:

► The government should develop workable Public Private Partnership (PPP) models to create and operate new
secondary and tertiary healthcare facilities. One possible model could be that the government provides the land
and constructs the hospital in a standard configuration. The operation and management could be outsourced to
private players on a competitive basis.
► Private players would need to focus on enhancing the value proposition in hospitals by cost-efficient utilization
of healthcare facilities.
► We expect that it can take up to 9 to 10 years by the time required regulatory changes are implemented, new
infrastructure is built and doctors from new medical colleges are deployed. Till that time, the acute need for healthcare
facilities can be reduced by optimally utilizing existing public and private facilities. Utilization can be optimized either by
increasing the bed occupancy rate or by reducing the ALOS.
► Since the average bed occupancy rate in India is around 72%, which is at par with Brazil, China and the US, the focus
should be on reducing the ALOS.
► The ALOS in India is around 10 days. For private players, it is around 7.5 days, while for major private tertiary care
providers it is less than 5 days. In the US, the UK and France, the ALOS is between 5.5 to 7 days, while in Brazil it is
between 4 to 6 days. There are approximately 9 lakh beds in India and a target of reducing the ALOS by 2 days over
next 5 years would make available 180,000 beds. This can be achieved by focusing on (a) enhancing quality
compliance in healthcare to reduce hospital-acquired infections, thus reducing complications and the ALOS, (b)
encouraging appropriate medical technology, such as minimal invasive surgery, and by incrementing day care
facilities in public and private facilities, (c) developing care paths to standardize pre- and post-operative care for
various surgical procedures and (d) streamlining hospital operations through the use of techniques such as “lean.”
► Recommended role of the government: Action is required in the following three areas:
► The government needs to implement a regulatory framework by making the registration of clinical establishments
mandatory and by deploying an effective implementation mechanism. These establishments would have to adhere to
defined minimum standards of service delivery, e.g., IPHS standards.
► The government would also need to ensure the technical competence of healthcare facilities through accreditation
(for healthcare quality). A market-driven approach to promote accreditation would have to be adopted to achieve
this. Simultaneously, consumer awareness should be created by the government, in coordination with accreditation
agencies, to educate consumers about accreditation and its benefits. Institutional customers, who outsource
healthcare for their employees, should be targeted to accomplish this. The stated preference of these institutions to
empanel accredited health facilities would actively drive accreditation.

Executive summary
► The following measures are recommended to enhance the technical quality of the human resources involved in
delivering healthcare:
► A credible accreditation for educational institutions needs to be implemented to formulate uniform standards for
measuring the quality of undergraduate institutes and incentives given to colleges to adhere to
high-quality standards.
► The mismatch between the existing curriculum design and prevalence needs should be eliminated by updating
the education system from focusing on lectures to adopting a more problem-solving approach and developing
clinical skills.
► Adequate provisions need to be implemented to update intellectual capital by making “continuing medical
education (CME)” mandatory for the re-registration of all human healthcare resources. Educational institutions
should be entrusted with the responsibility of conducting CME courses and incentives provided for this in the
accreditation model.
► To enhance the personal quality of healthcare resources, formal training on subjects such as ethics, quality and
safety should be included as part of all medical training curricula. It is recommended that a specially constituted task
force should explore the inclusion of a component of behavioral tests in the selection process of students for any
formal medical training to identify basic traits relating to service orientation.
5. Generate periodic health intelligence data
Recommended role of the government:
► Healthcare, like retail, is a localized phenomenon. To enhance equitable distribution, it is important to understand
local healthcare needs and respond accordingly. The government should create and publish a detailed district-wise
market assessment of healthcare demand and supply for all levels of healthcare. It should provide detailed
information on the healthcare market, which will encourage the participation of providers (public, private and not-
for-profit) to create an efficient healthcare infrastructure.
► The government needs to create an autonomous body to rate hospitals on a set of defined parameters that are
related to healthcare outcomes.
What it would require
Apart from investments, reorganizing the entire healthcare system would also require all the stakeholders to adopt a joint
strategy in the following three areas:
► Building awareness in society to demand quality healthcare
► Advocating right to quality healthcare at the political level
► Demanding legislative changes to facilitate the availability of quality healthcare

Current healthcare
status in India
Prevalence

Post independence, India has improved on key
health care indicators.
Post-independence, India has made remarkable progress on its key healthcare indicators. Life expectancy at birth has
doubled, infant mortality rate (IMR) has reduced by half and maternal mortality rate has reduced by two-thirds.
Performance on key healthcare indicators
160 146
140
110
120
100 80
80 59 63 56
50
60
32
40
20
0
Life Expectancy at Infant Mortality
birth(years) Rate(per 1000 live births)
1950-51 1980-81 1990-91 2005
Source: Economic Survey, National Health Profile – 2007, Data on Mortality & Burden of
Disease, WHO
India has been able to eradicate small pox and guinea worm disease. Further, there has been a significant reduction in
prevalence of diseases such as malaria, leprosy and polio.
Phase 1 Phase 2 Phase 3

► 45 thousand cases of small pox ► Small pox eradicated ► Guinea worm disease eradicated
► 7.5 crore cases of malaria ► 40 thousand cases of guinea ► 22 lakh cases of malaria
► 38 cases of leprosy per 10000 worm disease ► 3.7 cases of leprosy per 10000
population ► 27 lakh cases of malaria population
► 57 cases of leprosy per 10000 ► 265 cases of polio
population
► 30 thousand cases of Polio
1951 1981 2003

Source: Economic Surveys 2001-02 to 2005-06, 10th Five Year Plan

However, we have missed our own healthcare goals. We also share
a significant portion of the burden of global health problems and
lag behind our peers.
Our performance against the goals set for year 2000 by National Health Policy (NHP) 1983 is poor and we continue to
share a significant part of the burden of global health problems.
Current state of the goals laid down in NHP of 1983

Indicators Status in Goals set for Current status
1983 2000 by NHP (between years
1983 2000 and 2005) There are 8 goals that we
Goal (s) nearly missed have clearly missed. At the
IMR 125 Below 60 63 same time we constitute
TB (% of disease arrested cases 17% of the world’s
out of those detected) 50 90 86 population and that
Goals clearly missed contributes to…
MMR 4-5 (1976) Below 2 4.5
20% of maternal deaths
Blindness(%) 1.4 0.3 1.03 30% of TB cases
TT (Pregnant women) (%) 20 100 60.3 68% of leprosy cases
DPT (Children below 3 years) 23% of child deaths
(%) 25 85 46.6 26% of childhood vaccine
Polio (infants) (%) 5 85 58.9 preventable deaths
BCG (infants)(%) 65 85 67.7
Pregnant mothers receiving
ante-natal care (%) 40-50 100 62%
Deliveries by trained birth
attendants (%) 30-35 100 42.5%
Source: “Financing and Delivery of Health Care Services in India”, Background papers of the National Commission on Macroeconomics and Health”,
2005, 10th Five Year Plan
Further, we still lag behind other developing countries on key health indicators.
Maternal mortality rate per 10000 live births, 2005 Infant mortality rate per 1000 live births, 2005
45 56
11 28
6.2 23
4.5 2.8 5.8
11 10 12
India Brazil China Russia Malaysia Sri Lanka

India Brazil China Russia Malaysia Sri Lanka
Life expectancy at birth (Years), 2005
73
72 72 72
Healthy life expectancy at birth (Years), 2003
66 64
60 58 63 62
63 53
India Brazil China Russia Malaysia Sri Lanka India Brazil China Russia Malaysia Sri Lanka
Source: Data on Mortality & Burden of Disease, WHO

Every year, there are an estimated 115 crore cases of reported
ailments and approximately 3 crore cases of hospitalization –
reducing expectancy of healthy life at birth by 10 years.
Of the 115 crore new cases of reported ailments every year, 13 categories of diseases cause 82% of this
total disease burden.
Percentage contribution of key diseases in total disease burden

90% 3% 82%
3%
80% 3% 3%
3%
70% 4% 3%
5%
60% 5%
9%
50% 10%
40% 10% 100% = 28,575 disability
30% 11% adjusted life years lost per
20% lakh population in 2002
11%
10%
0%
Respiratory Infections
Malignant neoplasms
HIV/AIDS
Respiratory Diseases
Childhood-cluster
Total
Unintentional injuries
Digestive
Diarrhoeal
Maternal
Sense organ
TB
Perinatal
CVD
Neuropsychiatric
Note: Reported ailments here signifies commencement of new ailments

Source: WHO – 2002
Fourteen diseases contribute to 76% of approximately 3 crore hospitalized cases.
Percentage contribution of key diseases in hospitalization cases 24% 100%
3% 2%
3% 3%
3% 3%
3% 3%
4%
5%
8%
10% 100% = 2.8 crore
12% cases of hospitalization
in 2004-05
14%
Others**
*
kidney &
Joints & Bones

Gynaecological
Neurological
Cancer
injuries
Eye
TB
Diabetes
Respiratory
Asthma
Febrile
CVD
Total
Gastro
urinary
Disorder of
Source: Morbidity, Healthcare and condition of the aged NSSO 60th Round
*Febrile illnesses include malaria, diphtheria etc.; **Others include disabilities, skin and oral diseases, Sexually Transmitted Diseases etc
While life expectancy at birth is 63 years, healthy life expectancy is only 53 years – a gap in the expectancy of healthy life
at birth of 10 years.
Life expectancy and healthy life expectancy at birth
63 Year : 2005
53
Life expectancy at birth in years Healthy life expectancy at birth

in years
Source: WHO – 2006

Most of these diseases have a skewed regional/state distribution
of prevalence.
Maternal conditions Mental health

6 out of 35 states and UT’s have MMR more More than 70% of prevalence is accounted
than all India average for by 2 zones alone
Percentage cases of mental diseases
MMR per lakh live births
East North East
517 55 37 34
490
445
379 371 358 West South
300 27 17 West
North 12
South
9 5
UP Assam Rajasthan MP Bihar Orrisa India Crude rate per 1000 Locomotor disability
Source: National Health Profile – 2007 (Schizophrenia+ Mood disorder) (% cases of total)
Diarrheal diseases
7 states have one-third of the population but two-third of diarrheal burden

Percentage cases of diarrheal diseases 32% 100%
6% 5%
6%
6%
9%
16%
19% % cases = 67%

% Population = 37%
West Bengal Andhra Maharashtra Uttarakhand Karnataka Madhya Jammu & Others Total
Pradesh Pradesh Kashmir diarrhoeal
Source: National Health Profile – 2007
Asthmatic diseases
6 states have almost half the population but 62% of asthmatic diseases
Percentage cases of asthmatic diseases
38% 100%
% cases = 62%
% Population = 52%
6%
7%
9%
10%
12%
18%
West Uttar Maharashtra Andhra Bihar Kerala Others Total

Bengal Pradesh Pradesh asthama

Most of these diseases have a skewed regional/state
distribution of prevalence.
Diabetes
5 states have one-third of population but 55% of Diabetes cases
Percentage cases of diabetes

% cases = 55% 45% 100%
% Population = 32%
8%
9%
11%
11%
16%
West Bengal Andhra Tamil Nadu Kerala Bihar Others Total diabetes
Pradesh
Childhood cluster diseases

8 states have half of the population but 80% of the burden of childhood cluster diseases
Percentage cases of childhood cluster diseases

20% 100%
4%
5% 4%
6%
7%
8%
22%
% cases = 80%
24%
% Population = 46%
West A & N Andhra Jammu & Madhya Uttar Karnataka Kerala Others Total -
Bengal Islands Pradesh Kashmir Pradesh Pradesh Childhood
disease
AIDS
5 states have 29% of population but 85% of AIDS cases
Percentage cases of AIDS
15% 100%
3%
5%
18%
27%
32%
% cases = 85%
% Population = 29%
Tamil Nadu Maharashtra Andhra Gujarat Delhi Others Total - AIDS

Pradesh
Prevalence in India also varies across geographies,
gender and income class.
There is a significant difference in the Number (Per 1000) of person

prevalence of heart diseases and reporting ailment during a period
of 15 days
urinary/kidney diseases – their
prevalence being strikingly higher in 99
urban areas than in rural areas. The
major reason for this is the difference
in lifestyle. Also the prevalence of 88
communicable diseases such as gastro-
intestinal arising from absence of
sanitation and safe drinking water is Rural Urban
higher in rural areas.
Source: Morbidity, Healthcare and
condition of the aged NSSO – 2004
Persons reporting onset of ailments in last 15 days per 100,000 population
140
700 120
600 100
500 80
400 Rural Urban Rural Urban
60
300
40
200
100 20
0 0
gastro- respiratory whooping malaria accidents/burns/ cardio- kidney/

intestinal including ENT cough poisoning vascular urinary
diseases
Source: Report of the National Commission on Macroeconomics and Health – 2005
Prevalence of serious morbidity is slightly higher in females in India.
Prevalence of serious morbidity by gender per 1000 population

18
16 male female
14
12
10 Total prevalence per 1000 population
8
6 Male : 41.8
4
2 Female : 42.3
0
Malaria Coronary Jaundice Tuberculosis Others Others
Heart Specific
Diseases Fever
Overall prevalence of serious morbidity is higher in households with low standard of living. Prevalence of malaria, which is a
vector borne disease, is much higher in population with lower standard of living.
Prevalence of serious morbidity by standard of living per 1000 population
20 low high Total prevalence per 1000 population

18
16 Low standard of living : 46.9
14
12 High standard of living : 41.3
10
8
6
4
2
0
Malaria Coronary Jaundice Tuberculosis Hy pertension Others
Heart
Diseases

The number of new reported ailments is expected to increase
and their nature is expected to change.
The number of ailments is expected to increase by 30% in a decade.
Total number of reported ailments

150
115
2004-05 2014-15
Number of ailments in crore
Source: Morbidity, Healthcare and condition of the aged NSSO 60th Round, Report of the Working Group on
population stabilization for the Eleventh Five Year Plan (2007-12), NCAER 2005, EY research and analysis
The share of non-communicable diseases such as diabetes, hypertension is expected to rise.
Year 1990 Year 2020
Injuries Communicable, Injuries

15% Maternal, Child 19%
and Nutrition
24%
Communicable,
Maternal, Child Non
and Nutrition communicable
56% 29% Non
communicable
57%
Source: 10th Five Year Plan
Some non-communicable diseases that are seeing an increase in prevalence are mental health, Chronic Obstructive
Pulmonary Disease (COPD), Diabetes, cardio-vascular disease (CVD), blindness and cancers.
Projected number of cases in lakhs
800
Year 2005
650 640
596
Year 2015
460
405
310 290
141 130
8 10
Mental Health COPD & Asthma Diabetes CVD Blindness Cancers

The rise in population and income levels, as well as a changing
demographic profile, will increase the number of ailments requiring
treatment, thereby resulting in the need for an upgraded physical
infrastructure and skilled human resource providers.
The rise in the number of people with higher income will increase the total number of reported ailments
and treatments.
Reported ailments increase with increasing Rate of treatment increases with increasing
capacity to spend (MPCE*) capacity to spend (MPCE)
Number per 1000 of persons reporting ailment during the Rate of treatment Vs expenditure
last 15 days (Urban)
89%
405 85%
279
193 230 81%
79%
0-320 320-460 460-730 730+
MPCE Class (INR) 0-320 320-450 460-730 730+
Number per 1000 of persons reporting ailment during the MPCE class
last 15 days (Rural)
414
273
223
184
0-300 300-420 420-615 615+
MPCE Class (INR)
Source: Morbidity, Healthcare and condition of the aged NSSO 60th Round Source: Morbidity, Healthcare and condition of the aged NSSO 60th Round
Population to rise and proportion of people

with higher income levels are projected
to rise
Projected grow th in population in India (2001-2026)

140
127
103
Y 2001 Y 2016 Y 2026
9% 15%
26%
34%
65% 51%
2005-06 2009-10
<0.9 lpa 0.91-2 lpa >2.01 lpa
Source: Report of the working group on population stabilization for the

Eleventh Five Year Plan (2007-12), NCAER 2005
Note : MPCE is the Monthly per capital expenditure in Rs. as defined by NSSO

There will be higher proportion of people living in urban areas, where the propensity to seek treatment for an ailment is
higher. This indicates that there would be an increase in the total number of ailments requiring treatment.
Increasing urbanization
77% 74% 72%
23% 26% 28%
Rur al Ur ban
1981 1991 2001
Source: NCAER 2005
Higher rate of treatment in urban areas
Rate of treatment (% of ailments)
89%
82%
Urban Rural
Source: Report of the working group on population stabilization for the Eleventh
Five Year Plan (2007-12)
Increase in incidences of reported ailments

requiring treatment from quality providers
Source: EY research and analysis

Current healthcare
status in India
Providers

Healthcare infrastructure in the country has grown steadily, but
its growth has not kept pace with the growth in number of
reported ailments.
Over the last six decades, there has been continuous capacity building in the infrastructure
for healthcare services.
1.2
0.8
0.6 Doctors (per 1000

population)
General Nurses (per 1000
population)
0.4
Medical Colleges (per 50
lakh population)
Beds per 1000 population
0.2
0
1950-51 1960-61 1970-71 1980-81 1991-92 2004-05
Source: Indian Planning Experience: A Statistical Profile, Economic Surveys 2001 - 02 to 2005 - 06, Health Information of India – 2004, 2005
However, the recent growth has not kept pace with the increase in number of reported ailments, especially in hospital beds,
where density has fallen over the last decade.
100 Number per thousand population

91
e
7%
s
90 Dec
ea
line
cr
in
80 h
%
wt
66
70 1 0.93
% gro 0.9
0.86 42
0.9
60 55 wth
0.8
50 % gro
50 0.7 0.6 0.6
0.6
40 0.5 0.4
30 0.4
0.3
20
0.2
10 0.1
0
0
Hospital Beds Doctors Nurses
Persons reporting ailments
1996 2004 1996 2004
Source: Morbidity, Healthcare and condition Source: Indian Planning Experience: A Statistical Profile Economic Surveys 2001 – 02 to 2005 - 06,
of the aged NSSO 60th Round Health Information of India – 2004, 2005
There has been a 66% increase in morbidity rates in India. The number of persons reporting ailments in the last 15 days per
1000 population has increased from 55 in 1996 to 91 in 2004.
On the other hand, the number of hospital beds has come down and the growth in the numbers of doctors and nurses has
not kept pace with the increase in reported ailments in the same period.

Further, India has an inadequate number of providers and lags
behind other comparable countries on key healthcare physical
infrastructure indicators.
Percentage share of India in world health While India bears 20% of world’s disease burden, it has a
parameters lower share of healthcare providers. The situation is
20 worse in the case of the following:
► Nurses: The percentage of nurses registered, but not
9
practicing, is around 40%.
8 8
6 ► Lab technicians: India has only 1% of the lab technicians
1 in the world.
workers
Nurses
burden
Beds
Doctors
Lab
technicians
Disease
and health
Community
Source : WHO Statistical Information Systems 2008, Disease burden is from WHO 2002 DALY estimates
Availability of beds is less than one-third of the world average.
Bed density per 1000 population in India compared to the world

9.7
2.9 2.6 2.6

2.2 1.9
0.7
India Sri Lanka Brazil China Russia Malaysia World

Average
Source : WHO Statistical Information Systems 2008
Penetration of medical technology equipment is also quite low.
38.3 HI – High Income Countries -

Japan, Korea, Germany, USA
UMI – Upper & Middle Income Countries - Czech Republic,
Hungary, Slovak Republic, Poland, Turkey, Mexico
LMI – Lower middle & lower income countries –
14.7
Tunisia, Yemen, India
7.3
3.7 3
1.9 0.7
HI UMI LMI India
CT Scanners / Million MRI / Million

Source :The role of medical devices and equipment in contemporary health care systems and services, Fifty-Third Session of Regional Committee
for the Eastern Mediterranean, WHO, AERB estimates, EY research and analysis

India also lags behind comparable countries on the density of
human resources.
Density of registered doctors and nurses is less than half of the world average.
Density of registered doctors and nurses in India is 1.9 per ‘000 In Indian context, these comparisons could be
population, which is less than half of the world average of 4.1 and limited due to the following two reasons:
lower even when compared to global norms(5) as well as the
1. It compares only registered resources
norm of 2.25 set by NCMH
across countries – analysis shows that in
India, practicing resources are in fact 27%
Doctor and nurse density per 1000 population in India compared to the world
lower than registered in the case of
doctors and 40%(3) in the case of
nurses. The major reasons for this are:
14
12.0 ► Migration to foreign countries
12
Doctors per '000 ► Deaths not updated in the register
2.6
Density per '000
10 Nurses per '000

2. WHO compares only allopathic doctors
8 and not AYUSH – estimates show that
5.0 AYUSH(1) doctors are almost as many
6
4.1 as allopathic doctors.
9.4 1.2 1.9
4 2.4 2.5
1.3 2.25 Even if these limitations are corrected,
0.7 0.6 1.6
2
2.8
3.8 1.4 realistic density is 1.6 which is even lower
1.8 1.3
0
1 than the reported density of 1.9. This
World avg USA Brazil China Malaysia NCMH India India indicates that the shortage is even more than
Norm (adjusted) seen in the public domain.
Source: Global atlas of the health workforce [online database]. Geneva, World
Health Organization, 2008. Period of data is 2000-2006.
Human resources for healthcare comprise more than just doctors and nurses. India has 43 lakhs health team members,
which is 6.3 times the number of allopathic doctors.
The number of non-allopathic doctors in Composition of India’s human resources for health
India is slightly more than the number of
allopathic doctors. Pharmacists
100% = 43 lakhs
16%
Ayurvedic doctors are almost 63% of Lab
AYUSH doctors. technicians
0.3%
Nurses
General Practitioners constitute almost 34%
90% of total doctors.
Other allied
healthworkers
18%
Doctors Doctors Source: Global atlas of the health workforce

(AYUSH) (Allopathy) [online database]. Geneva, World Health
16% 16% Organization, 2008. Period of data is 2000-2006.
Notes :
1. AYUSH = Ayurvedic, Unani, Siddha and Homeopathy practices – % share in AYUSH is 63% Ayurveda,30% Homoeopathy, 6% Unani, 1% Siddha and 0.1% Naturopathy
2. Other Allied Health Workers include: Dentistry personnel, Environment and Public Health Workers, Community and traditional health workers, Other health service providers
3. Nurses includes midwifery personnel too. The gap between registered and practicing nurses is 40% according to Report of the National Commission on Macroeconomics and Health, 2005
page 67
4. Numbers for ‘other allied health workers’ are for the year 2004, all other data is for 2007
5. “Rockefeller Foundation” is a global health network that suggests that, on an average, countries with fewer than 2.5 health care professionals (doctors, nurses and midwives) per
1,000 population fail to achieve an 80 per cent coverage rate for deliveries by skilled attendants or for measles immunization.
6. Information is representative

Quality healthcare can only be delivered in a health ecosystem involving all members of the health human resources team.
Primary health care Community health care Tertiary care(6) As per norms, the number of
nurses required per doctor in
Doctors 1 1 1 primary and secondary care is 2
Nurses 2 2 5
per doctor, and paramedics
required is 0.5 to 1 per doctor.
Paramedics 1 0.5 1
Typically in a tertiary hospital,
Source: NRHM Bulletin for Rural Health 2005; EY research and analysis the ratio of doctors to nurses to
paramedics is 1:5:1.

Infrastructure is unevenly distributed across states and
presents a significant shortfall challenge.
To catch up with progressive states, lagging states (MP, J&K, Rajasthan, Orissa, Bihar, Haryana, UP and Assam) would
need at least 1.4 lakh additional beds.
Disparity in hospital beds

Beds per 1000 people for selected states Shortfall of beds in 2008 (lakhs)
0.86 6.8
0.8
0.71 0.7
0.51 0.54 0.55 0.59
0.46
0.35
1.4
r a a a
sa
m ha an &
K MP iss ha
n
ur UP dia
As Bi ry J Or ast rip In
Ha Ra
j T Scenario I Scenario II
Scenario I :Lagging States have beds per 1000 at least equal to national average
Scenario II :States have beds per 1000 equal to Gujarat
Source: Health information of India 2004, EY research and analysis
Possible reasons for inequitable distribution of infrastructure across states

► Inadequate spend on healthcare by respective state governments
Per capita Health Expenditure by state governments (2001-02)

(in Rs.)
207
176
163
132 134
92 84
Assam Bihar Haryana Madhya Orissa Uttar All India

Pradesh Pradesh
Source: National Health Accounts 2001-02
► Lack of central planning – Inadequate focus on states which are lagging behind
There is a lack of central planning with a bottom-up approach. Information from districts and states is not taken into
consideration while deciding on investments to be made in healthcare. For example. states such as Maharashtra, Tamil
Nadu and Punjab are well ahead in socio-economic and health development than most northern states. However, none of
the national health programs take cognizance of this factor in planning interventions and management.
► Sufficient incentives are not given to the private sector to increase penetration in lagging areas.

Distribution of human resources is also inequitable
across states.
India has a 20 lakh shortfall in the number of its human resources for health – states lagging behind include Bihar,
Jharkhand, Assam, West Bengal, Rajasthan, Haryana, Maharashtra, MP and Chattisgarh.
Disparity in human resources

Health workers per 1000 people for selected states Shortfall of human resources in the year 2008
(lakhs)
Year 2007
20
4.4
3.9
3.1 13.5
1.9
1.2
5.3
0.5 4.4 4.2
0.9
Tamil Nadu Kerala Gujarat India Bihar & Rajasthan Scenario I Scenario II
Jharkand
Health Workers Doctors Nurses
Health workers include registered doctors (allopathy), nurses and ANMs
Scenario I :Lagging States have resources per 1000 at least equal to national average
excl. UTs (except Delhi) and other NE states
Scenario II :States have resources per 1000 equal to Tamil Nadu
Source: National Health Profile, 2007, EY research and analysis
Possible reasons for inequitable distribution of human resources across states

► Disparity in distribution of educational institutions and faculty for healthcare professionals.
Disparity in educational infrastructure
Reqd. Available Reqd Available
120
30433
80
22570 20710 40
12341 0
8019 2995 6728 y y y . .
m og tr og
y
ed ed py R
2210 to ol is ol M M ra PM
na y si em ac s ic
ity the
A h o
Ph oc ar
m
re
n un di
Bi Ph Fo m
m Ra
India Category I Category Category o
C
States II States III States
Category I – Karnataka. Maharashtra, Andhra Pradesh, Kerala, Tamil Nadu, Pondicherry, Gujarat
Category III – Chattisgarh, Jharkhand, Rajasthan, Assam, Orissa, Madhya Pradesh, Bihar, West Bengal, Uttar Pradesh
Category II – 11 Others
Source: Report of the National Commission on Macroeconomics and Health 2005, Medical Council of India, Medical Colleges – Required is based on norm of 1
medical college per 50 lakh population assuming 100 seats per college – The Mudaliar Committee.1962
There is a large state disparity in medical colleges. India needs an additional 5613 medical college seats in its 11 category
III States. There is an acute shortage of faculty for medical colleges and for specialties such as Anatomy, Physiology and
Forensic medicine; faculty available per year is only 28% of required. Similar disparities are observed not just in medical
colleges but also in training institutes for nurses, paramedics, etc.
► The root causes for the inequitable distribution of human resources and educational institutions, classified as
‘accessibility issues’ for health sciences are:
► Lack of an integrated strategy for development and deployment of healthcare human resources.
► Lack of incentives to increase penetration of educational institutes in focus areas.
► Poor payment structures and working conditions.
► Apart from issues in accessibility of human resources, there are also issues in the quality of the human resources
available. These are classified as ‘assurance issues’.

Issues ailing development and deployment of human resources
for health.
Lack of integrated strategy for

development and deployment of
1
healthcare human resources
Pipeline to develop and deploy human

resources for health
Licensing/Certification
Potential workers
Accreditation
North East West South

Pool of Training
Selection Graduates Recruitment Rural Distribution and deployment
candidates institutions
of resources
Urban
2 Lack of credible 4 Lack of incentives to 5 Lack of adequate

accreditation for increase penetration of provision for updating
educational institutions educational institutes in intellectual capital
focus areas
3 Mismatch between existing Poor payment 6

Accessibility issues
curriculum design and structures and
Assurance issues prevalence needs working conditions
The primary issues ailing medical education are of two types:

Accessibility: Issues related to gaps in numbers and distribution of health human resources in the country
Assurance: Issues related to gaps in quality of human resources for health.
Please refer Annexure 1 for details of the issues and recommendations made in the past to tackle these issues.

There is also wide disparity across states in the primary
healthcare delivery system.
A recent study published by VHAI in “Health For The Millions” depicts wide disparity across states in terms of key
infrastructure indicators and key performance indicators.
Infrastructure indicators Performance indicators
Percentage of PHCs: Percentage of:

► Adequately equipped in staff ► Women who received full ante-natal care (ANC)
► Adequately equipped in infrastructure ► Institutional delivery
► Adequately equipped in supply of drugs ► Women whose delivery was attended by
skilled personnel
► Children who received full immunization
► Children who did not receive any immunization
There is a gap in terms of availability of infrastructure and performance, indicating an inefficiency in healthcare delivery in
few states.
Poor infrastructure Moderate infrastructure

Poor infrastructure Poor performance
Moderate performance Poor performance
► Bihar ► Bihar ► Chhattisgarh ► Rajasthan

► Madhya Pradesh ► Madhya Pradesh ► Orissa ► Uttar Pradesh
► Chhattisgarh ► Rajasthan ► West Bengal ► Jharkhand
► Orissa ► Uttar Pradesh ► Assam
► West Bengal ► Jharkhand
► Assam
► One of the most significant observations from this study is that the performance index of the whole region comprises of
the states of Rajasthan, Madhya Pradesh, Uttar Pradesh, Bihar, Jharkhand, Assam, Meghalaya, Arunachal Pradesh and
Nagaland is poor.
► This region has the maximum percentage of extremely poor performing districts on performance index, while there are no
such districts in southern states.
Source: Health Status of the Districts of India, Health For The Millions, 2007-2008, Voluntary Health Association of India (VHAI)

Inequity also exists due to differences in preference for
alternate medical systems.
While non-allopathic doctors constitute 48% of registered medical practitioners, only 25% of the population prefers them.
Distribution of registered medical practitioners Preference for different

by system of medicine systems of medicines
25%
48%
75%
52%
Doctors % of Population
Allopathy AYUSH Allopathy AYUSH

Source: “Financing and Delivery of Health Care Services in India”, Background papers of the National Commission on Macroeconomics and Health”,2005
AYUSH is preferred more in the North and East.
Number of AYUSH practitioners per 1000 population

2 1.9
1.8 The chart shows that northern and eastern
1.6 states, which lag behind on allopathic
1.4
1.4 doctor density, are more dependent on
1.2 1.0 1.0 AYUSH doctors.
1.0
1 0.9
0.8 0.7 The numbers of practicing AYUSH doctors
0.6 0.6 are highest in the northern and eastern
0.6 0.5 0.5 0.4
0.4
0.4 states like Bihar, Himachal Pradesh, etc.
0.2
0
Nagaland
Himachal Pradesh
Punjab
Rajasthan
Maharashtra
Andhra Pradesh
West Bengal
Karnataka
Tamil Nadu
All India
Madhya Pradesh*
Gujarat
Bihar *

Source: National Health Profile - 2007

Apart from differences across states, wide rural-urban
disparities exist with respect to access to healthcare facilities.
Rural India bears three-fourth of the population and ailments burden of India, but has only one-fourth of the human
resources for health.
Distribution of India population

Key reasons for the inequitable distribution of
healthcare infrastructure and human resources across
Urban the rural/urban divide
28%
► The primary reason for the low density of human
Rural
72%
resources in rural India is the poor payment
structures and working conditions in rural healthcare.
► Rural population accounts for an estimated 70% of
the total bed occupancy (rural and urban beds
included). This shows that while bed availability in
rural areas is lower than that in urban areas, rural
Source: National Health Profile 2007
population do opt for availing facilities at sub district
Healthcare distribution across Rural and Urban and district level for in-patient treatment. This has its
implication in terms of poor accessibility to
8 healthcare facilities for the rural population.
Urban Rural
3 3.3
2.5
1 1 1 1
Ailments ratio Beds per Physicians per Nurses per

'000 ratio '000 ratio '000 ratio
Source: WHO World Health Survey 2003, Morbidity,Healthcare and Condition
of the aged NSSO 60th Round, “Financing and Delivery of Health Care
Services in India”, Background papers of the National Commission on
Macroeconomics and Health”, 2005
A patient in a rural area travels 19 kms, as compared to 6 kms traveled by a patient in an urban area, for in-patient
services. This problem is compounded by the poor state of conveyance infrastructure in rural India.
Average distance traveled in KM for out - patient services

Average distance traveled in KM for in - patient services
5.9
18.6 18.7
Public Private
2.2
6.2
5.7
Rural Urban Rural Urban

Source: Utilization of Private Sector in Healthcare in India, South Asian Journal of Preventive Cardiology

The human resource infrastructure in rural India is inadequate.
The shortage of human resources for healthcare in rural areas ranges from 19% of ANMs up to 50% in the case of male
health workers when compared to set norms. The total shortage is 1.7 lakhs.
Shortfall due to not Shortfall due to Total Shortfall

Type of health resource sanctioned(%) unavailability (%) shortfall(%) number
ANMs/Nurse/Midwife/Health workers
Female/Health Assistants Female/Lady health
visitors at SC, PHC and CHC 9.2% 9.7% 18.9% 48,591
Lab technicians/Radiographers/Pharmacists at
PHC and CHC 12.3% 16% 28.3% 25,126
Health Workers-Male/Health Assistants-Male

at SC and PHC 28.9% 21.1% 50% 84,270
Specialists/Doctors at PHC and CHC 2.3% 25.9% 28.2% 10,659

Source: Ministry of Health and Family Welfare Bulletin on Rural Health Statistics India 2007
The doctor density norm is around 0.07 and nurses is 0.6 at CHC level. Thus, the norm in the public rural health system for
doctors and nurses is 0.67, which is way below the national norm target of 2.25 of NCMH. Despite such low norms,
shortages of doctors and nurses still exist.
Two reasons for the shortage are –
► Government sanctions are lower than the requirement (29% in case of Health worker/Assistant male and 12% in case of
technicians/pharmacists)
► Non availability of resources (21% for Health Workers/Assistants Male and 26% for doctors/specialists)
Note: NCMH – National Commission for Macroeconomics and Health; ANM – Auxiliary Nurse Midwife

The public primary healthcare infrastructure in rural India, despite
being inadequate, is also underutilized.
Shortfall of infrastructure with respect to the

Utilization of primary public healthcare facilities
set population norms…
Shortfall Usage (% Rural
Facility Coverage Number
25000 households)
22000
20000 As per 1991 population
Community Health
4 PHC’s 3190
Center(CHC)
As per 2001 population 20.5%
15000
Primary Health
6 SC’s 22,669
10000 Center (PHC)
5000 4500 3000 - 5000
5000 2500 3000
1500 Sub Center (SC) people/4.3 144,988 2%
0 villages
SC PHC CHC Source: National Family Health Survey 3
Source: Mid term assessment 10th Five Year Plan
► National Rural Health Mission has a target to increase the utilization of First Referral units from bed occupancy by
referred cases of less than 20% to over 75%. This can be achieved only with an increase in the utilization of primary public
healthcare facilities.
Community Health Centers (CHCs) are the first point of referral and specialty care in the public-rural
healthcare set up…
► 4045 CHCs are meant to provide secondary care to over 40 crore Indians (based on a captive population of
120,000 per CHC and 80,000 for tribal areas).
► As the CHC is also expected to execute all “National Health Program” initiatives, it has a key role to play in
disease prevention.
► In the absence of manpower, infrastructure and equipment, people either forego a procedure or incur higher costs
by traveling to district hospitals.
Source: MIS for NRHM as on 30 April 2008, Ministry of Health and Family Welfare
…but studies suggest that CHCs are inadequately equipped when compared to norms.
► A CHC should have(1) 30 indoor beds with one operation theatre, labor room, X-ray facility and laboratory facility to
provide preventive and therapeutic health care.
► According to WHO, around 80% to 90% of diagnostic problems can generally be solved using basic X-ray and/or
ultrasound examinations.
► A sample of 151 CHCs across 8 regions revealed that they were ill-equipped according to the norms set by IPHS for
infrastructure, equipment and manpower.
Source: (1)Indian Public Health Standards
Assured Diagnostic facilities to be Operating theater for Basic equipment for hygiene Basic Blood bank facility
services as present routine & emergency and usability of OT equipment
per norms & drugs as
per list
Facility to be Ultra- ECG X ray OT to be OT used for Generator and/or Sterilizer OT Blood Linkage
present as per sound available surgeries emergency light care/fumigation storage with blood
norm apparatus unit bank
% of sampled 92% 62% 36% 30% 60% 54% 59% 71% 66% 94% 87%
CHCs not
meeting the
norm
Source: IPHS Facility Surveys for CHCs conducted in 2006-07, Sample of CHCs from Chattisgarh, Uttaranchal, Haryana,
West Bengal, Goa, Manipur, Mizoram & Pondicherry, EY research and analysis
This is further exacerbated by the fact that 52% of the sampled CHCs do not even have any private healthcare provider in
their vicinity.
Note: CHC – Community Healthcare Centre; IPHS – Indian Public Health Standards

Due to changes in policy, the private sector has become more
active post 1983.
1947-83 1983-2000 Post 2000
Phase 1 Phase 2 Phase 3
► None should be ► Encouragement for ► Redefinition of the

denied care for want the private sector to role of the state from
Basis for health policy
of ability to pay. provide healthcare being only a provider,

► It is the responsibility services to a financier of
of the state to ► Expand access to health services. It
provide health care to publicly funded promoted utilization
the people. comprehensive of private sector
primary healthcare resources for
addressing public
health goals.
► Liberalization of the
insurance sector to
provide new avenues
for health financing.
Some of the key initiatives to encourage investment by private sector:

1983-2000:
► An estimated Rs 6500 crores of subsidy in terms of exemptions in customs duty for import of equipment, subsidized
inputs such as land etc were extended to stimulate private investment.
From 2000:
► Benefit of section 10(23 G) of IT Act extended to financial institutions that provide long-term capital to hospitals with
100 beds or more.
► Benefit of section 80IB extended to new hospitals with 100 beds or more set up in rural areas; such hospitals are entitled
to a 100% deduction on profits for 5 years.
► Customs duties on life saving equipment reduced from 25% to 5%, with exemption of CVD. Life saving equipment already
exempt from CVD, is exempted from ED.
► Reduction in import duty of medical equipment to 7.5%.
Source: Various budget documents
It is estimated that there are 13 lakh private healthcare providers in India, of which 97% are unorganized and fragmented.
Over a third of these entities are not even registered.
Percentage breakup of private providers

Physio, Nurses,
Non-a llopathic
Para etc
25% 100% = 13 lakh private providers
13%
Registered
Un-registered 63%
37%
Lab
Technicians
0.3%
Hospitals
3%
Physicians and
s pecialists
52%
Source: “Financing and Delivery of Health Care Services in India”, Background papers of the National Commission on Macroeconomics and Health, 2005

There is lack of a comprehensive framework to provide
quality healthcare.
Symptoms Reasons
• Adhering to a minimum level of standards requires

Substandard facilities - Poor investments, there is a cost pressure both on capital as well
infrastructure and shortage of staff as revenue: As the government is constantly poorly funded,
and private providers seek to save on costs to maximize
profits, low quality is an issue
Unresponsive staff and poor for both.
ambience in which the care • Lack of standards and mandatory accreditation: Adherence
is provided to standards makes the provider more accountable to the
system and the patient in particular. However, standards
framed by different states have little in common.
Large number of private • Inequitable distribution of providers: Having multiple
establishments operating without any providers in the same location does provide choice, but in a
licenses and registration small market space it could also lead to creating small
unviable units, each adopting unhealthy practices and
cutting corners on quality to
stay competitive.
Lack of reliability in availability or skill
of the provider – Large number of • Insufficient content of existing rules – most merely cover
doctors practice modern medicine registration. Revised draft for regulating of clinical
without being qualified to do it establishments is lying in parliament for quite some time
now.
• Ineffective implementation of existing regulations.
Irrational, ineffective and sometimes • Unquestioning attitude of patients regarding the treatment
even harmful practices used for being administered and the need for diagnostic tests being
treating conducted.
minor ailments • Low faith in enforcement of consumer protection laws:
Ineffective enforcement of malpractice laws against doctors
and medical institutions since peers refuse to testify.
Over treatment, unnecessary and • Lack of standard treatment guidelines.
expensive investigations • Access and Quality of Healthcare is still not seen as a key
political and election issue.
The health system in India consists of healthcare providers operating within an unregulated environment, with no controls
on what services can be provided by whom, in what manner, and at what cost, and with no standardized protocols to help
measure the quality of care.
Source: Financing and Delivery of Healthcare Services in India, Background Papers of the National Commission on Macroeconomics and Heath – 2005, Centre for
Enquiry into Health and Allied Themes, Mumbai, NABH, CRISIL, JCI, Hospital Infection Society, India, EY research and analysis

The growth in both private and public sector has been without
adequate provisions for regulations, standards and accreditation.
Quality of healthcare delivery is a function of three variables – Infrastructure, processes followed and healthcare outcomes.
Infrastructure - Does India have what it takes to deliver?

► Adequacy and quality of infrastructure and manpower
► Infrastructure – physical standards, availability and maintenance
of equipments
► Manpower – Quality and adequacy of personnel deployed
Infrastructure Outcomes
Outcomes – Are patients getting what they aspire for?
► Patient experience
Parameters ► Attitude towards patients
defining ► Overall surroundings in which the care is provided
quality in ► Degree of attention a patient receives
healthcare ► Clinical outcomes
Process - Do providers have processes that are scalable?

Process
► Standardized processes – clinical and non-clinical
► Patient access, information and rights
► Continuous quality improvement
However most healthcare facilities, both in public and private sector, would need to invest to meet these requirements.
Accreditation agency Type No. of hospitals who Remarks (if any)

have opted for it
National Accreditation Board Voluntary Accreditation 19 54 hospitals in process of

for Hospitals (NABH) getting accredited
Crisil Voluntary Rating 12 Year 2002
Joint Commission Voluntary Accreditation 10 To attract international

International (JCI) tourists
Source: National Accreditation Board for Hospitals (NABH), Crisil, Joint Commission International (JCI)

Despite the inadequacy, private healthcare providers are
preferred for both hospitalized and non-hospitalized treatment in
spite of privately incurred higher cost.
Distribution of hospital beds in India

Despite the fact that private
hospital beds are almost half that Public
of the public sector. 62%
Private
38%
Source: “Financing and Delivery of Health Care Services in India”, Background

papers of the National Commission on Macroeconomics and Health”, 2005
Sources of non-hospitalized treatment Cost per non-hospitalized treatment (Rs)

Nearly 80% of out-patients opt for
299
treatment from private providers 246
over public providers, even
78% 81%
though it is 20-40 times costlier.
22% 19% 11 7

Govt Private Govt Private
Sources of hospitalized treatment Cost per hospitalized treatment (Rs)

Nearly 60% of in-patients opt for 11,553
treatment from private providers
58% 7,408
over public providers even though 62%
it is 2-3 times costlier. 3,238 3,877
42% 38%
Govt Private Govt Private

Reasons for not using public health facilities

Reasons for not using public
58%
health facilities can be –
apprehensions about the quality 47%
of care, lack of accessibility, long
waiting time and absenteeism of
health personnel. 25%
13%
9%
4%
No nearby Facility Health Waiting Poor quality Other

facility timing not personnel time too of care reason
convenient often long
absent
Source: National Family Health Survey 3

In summary
Reasons for inadequacy of provider Impact on accessibility and

infrastructure and human resources assurance of healthcare
Lack of accurate information on number of human Inequitable

resources currently available across geographies distribution of human
Lack of integrated strategy for planning for human resources across
resource requirements ► States
Lack of incentives to increase penetration ► Rural and
in lagging areas Urban areas
Inadequate
Disproportionate focus on developing doctors and
instead of developing appropriate mix of health Inappropriate mix of inequitable
workers (Doctors, Nurses, Paramedics, health workers distribution of
Pharmacists) health workers
Migration of
resources to foreign
Gap between aspiration, needs and requirements of
countries and
Health workers with the existing offerings
Accessibility
reluctance to serve
in rural areas
Central planning without taking due cognizance of Inequitable Inadequate

district level requirements distribution of and
healthcare facilities
Inadequate spend on healthcare by state inequitable
across
governments of lagging states
► States
access to
Lack of incentives for private providers to increase ► Rural and
healthcare
infrastructure penetration in lagging states Urban areas facilities
Shortage of
Low utilization of funds in public facilities
equipment
Inadequacies
Non usability of in access to
Lack of skilled manpower for installation, available equipment technology for
maintenance and operation healthcare
Lack of financial
High cost of equipments feasibility for smaller
private providers
Poor quality of education at the institutions

► Mismatch between curriculum and prevalence needs Poor quality of
► Lack of provision for mandating continuous intellectual
deployed human
education
Assurance
► Lack of faculty in educational institutes resources Issues in

► No accreditation of educational institutions assurance of
quality of
Poor quality, healthcare
Non-standardized treatment protocols
inconsistent
Availability gap against set norms treatments

Current healthcare
status in India
Propensity

Despite steadily rising healthcare expenditure as a percentage of
GDP, India has a lower per capita expenditure and poorer health
outcomes compared to other developing economies.
Total healthcare expenditure in India accounted for 5.1 percent of the country’s GDP in 2006 and has been growing
steadily over the last decade.
6.00%
5.00%
4.00%
% of GDP
Health expenditure as a % of GDP

3.00%
2.00%
1.00%
0.00%
1 1 1 1 1 6 7 8 9 0 1 6
-5 -6 -7 -8 -9 -9 -9 -9 -9 -0 -0 -0
950 960 970 980 990 995 996 997 998 999 000 005
1 1 1 1 1 1 1 1 1 1 2 2
Year
Source: National Account Statistics – Government of India
Per capita healthcare expenditure in India is amongst the lowest in the world.
Per capita healthcare expenditure in India is only one-third to one-sixth that of developing countries.
Total Healthcare Expenditure

(PPP adjusted per capita expenditure)
Brazil China Russia India

(US $755) (US $315) (US $561) (US $100)
Per Capita Per Capita Per Capita Per Capita

Government Government Government Government
Expenditure Expenditure Expenditure Expenditure
(US $333) (US $122) (US $348) (US $19)
Source: WHO Statistical Information System 2008
Health outcome is lagging behind that of developing economies.
Country Total PCE on health, Govt. PCE on health, OPE as % of private exp. DALY (per 100000
2005 2005 on health, 2005 population)
Brazil 755 333 54.6 20721
Russia 561 348 82.4 27353
China 315 122 85.3 15378
India 100 19 90 28575

PCE = Per Capita Expenditure; OPE = Out-of-Pocket Expenditure; DALY = Disability Adjusted Life Years

Share of private expenditure has grown from 60% to nearly 80% of
the total healthcare expenditure over a decade.
Private expenditure is increasing over time, while public expenditure has been stagnant.
Health expenditure as a % of GDP

► After the economic 5.00%
reforms in 1986,
public health 4.00%
expenditure has
% of GDP
remained more or less 3.00%
stagnant between
2.00%
0.9% – 1.2% of GDP.
► Private expenditure on 1.00%
healthcare has
0.00%
increased from 60% in
1990-91 to 80% 1950-51 1960-61 1970-71 1980-81 1990-91 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2005-06
in 2000-01. Year
Private Public
Source: National Account Statistics – Government of India
India’s expenditure on private healthcare is the highest among other developing nations.
Private healthcare expenditure as % of total healthcare expenditure
100.0
% of Total Health
80.0
Expenditure
55.9 61.2
60.0 81.0 India’s expenditure on private
38.0 healthcare is the fourth-largest
40.0
20.0
as a % of the total healthcare
expenditure in the world.
0.0
Russia Brazil China India
BRIC Countries
Source: WHO Statistical Information System

Around 90% of private expenditure on treatment is borne
out-of-pocket.
Out-of-pocket expenditure forms a significant source of financing for healthcare. Insurance contributes to less than 6% of
the total healthcare expenditure in the country.
Breakup of total healthcare cost
Household Out-of-Pocket
(68.8%) Expense (90%)
Private
Firms Health Insurance
Expenditure
(5.1%) Premium (5-6%)
(74.2%)
NGOs
(0.3%)
Central
Government
(7.2%)
Total Healthcare Public Expenditure Local Government

Cost (23.8%) Bodies (2.2%)
State Government
(14.4%)
External Support
(2%)
Source: National Health Accounts, India, 2001 - 02, WHO
Out-of-pocket expenditure on healthcare in India is four times higher than the world average.
Composition of Healthcare Expenditure in India
70 64
60
50 44
Percentage
40 34
30 24
18
20
10 6 4 5
0
Government Exp. on Out-of Pocket Exp. on Private and Social Other
Healthcare Healthcare Insurance
Global India
Source: WHO Statistical information System 2008

Insurance covers only 12% of the population, primarily those
in the formal sector.
Insurance is mostly provided by employers or by the government.
► The below poverty line Scheme wise penetration of relevant market segments (Number of people in crore)
(BPL) population is the
target segment. This is
increasingly being given Government 2.8 36.1 Informal sector - below BPL
priority by the
government which CHI, NGO, Private 2.8 41.6 Informal sector - above BPL
recognizes healthcare as
one of the major causes of Private Retail 2.4 8.7 Informal sector - primarily self employed
bankruptcy in India.
CGHS, ESIS, Group 5.7 10.9 Formal sector
0 10 20 30 40 50
Current Market Untapped Market
Source: WHO - Financing Health of India; USAID – Private Health Insurance in India: Promise & Reality; Seminar On Awareness And Education Relative To Risks And
Insurance Issues - 13 April 2007, Istanbul, Turkey; Government Of India Ministry Of Health And Family Welfare - Lok Sabha Unstarred Question No 5934; Labor
Bureau of India and EY research and analysis
Insurance coverage under various insurance schemes

Overview of insurance coverage in India: Number of lives covered by major insurance schemes - 13.7 crore
Major Payor Beneficiary Provider Insurer Value No. of Contribution

insurance (~ Rs people from beneficiary
schemes crore) covered
(lakhs)
CGHS Employer Central CGHS & Central 503 45 Yes

Government empanelled Government
Employee list of
hospitals
ESIS Employer - Employee with ESIS Central 2411 329 Yes

Private < Rs 10000 hospitals & Government
empanelled
list
Group Private Sector Private Sector Private Public or 2200 200 No

Insurance Employer Employee Private
Insurers
Government Central and Poor Empanelled Government 1333 278 No

schemes for State list
poor including Government
BPL
Voluntary Self Self Private Public or 1800 240 Yes

Insurance Private
Insurers
Community Self Self Empanelled Self 1680 280 Yes

Insurance list
•Government schemes like Rashtriya Swasthya Bima Yojana, Aarogyashri etc.

•CGHS : Central Government Health Scheme, ESIS: Employees State Insurance Scheme
Source: WHO - Financing Health of India; USAID – Private Health Insurance in India: Promise & Reality; Seminar On Awareness And Education Relative To Risks And
Insurance Issues - 13 April 2007, Istanbul, Turkey; Government Of India Ministry Of Health And Family Welfare - Lok Sabha Unstarred Question No 5934; Labor
Bureau of India

Post liberalization, while private health insurance has grown
rapidly, premiums have still remained out of reach for the
majority of the population.
► Post liberalization, since 1999, the private health Private Health Insurance Premium collected in a year
insurance market is growing at the rate of 35% 4500
annually, primarily due to: 4000
► An increase in the number of private players (life 3500
and non life)
3000
INR in crores
► The entry of stand alone health insurance players
2500
► Growing interest of international players
2000
1500
1000
500
0
FY01 FY02 FY03 FY04 FY05 FY06 FY07
Source: IRDA
Percentage breakup of Group and Retail plans
2000 2008
20%
Group plans have dominated the health market in the 45%

nineties but retail plans are now gaining greater
significance. 55%
80%
Group Retail Group Retail

Insurance premiums constitute 20% and 12% of median annual per capita expenditure for urban and rural respectively.
However, the impact is even greater for the BPL and middle class population.
Average Insurance Premium as % of Median Annual Average Insurance Premium as % of Median Annual
Per Capita Expenditure Per Capita Expenditure
90 85 70
64
80
60
70
50
60
Percentage
Percentage
40
Urban
50
Rural
40 30
33
23
30
20 22 20
12 14
20 14
11 10 8
5
10
0 0
Average <225 225-380 380-525 525-950 >950 Average <300 300-575 575-915 915-1925 >950
MPCE categorization MPCE categorization
% of population 2.4% 27.0% 30.4% 31.5% 8.8% % of population 2.4% 27.0% 30.4% 31.5% 8.8%
Source: Morbidity, Healthcare and Condition of the aged NSSO 60th Round, Source: Morbidity, Healthcare and Condition of the aged NSSO 60th Round,
EY research and analysis EY research and analysis

Private insurance that primarily covers in-patient and allopathic
care is highly priced and has a significant scope for
product innovation.
In-patient, maternity and allopathic care are covered under various schemes. However, few schemes recognize AYUSH,
out-patient and preventive care for insurance coverage.
Scheme Chronic Maternity Preventive & AYUSH Out-patient In-patient

diseases Wellness care
CGHS 3 3 2 3 3 3
ESIS 3 3 2 2 3 3
Group Insurance 2 3 2 2 2 3
Retail Insurance 2 3 2 2 2 3
Community 3 2 2 2 2 3
schemes / NGOs
* Limited number of schemes cover since it provides an incentive for institutional delivery
The costs of CGHS and ESIS premiums are low and offer a wide range of services; in contrast, those of private insurance
are high and offer a limited range of services and a high level of exclusions.
Reasons for limited product innovation and high pricing of private insurance Average Premium rate
Rs
► Absence of morbidity reports: Data on incidence rates of various health
1400
events is available in a limited way at a gross national level. It is not
available by state, city or institute, making it difficult for insurance Rs 1150
1200
companies to predict risk. Risk-based pricing is not yet prevalent.
► Non-standardized treatment guidelines: Absence of standard treatment 1000
guidelines. No minimum rate card system exists.
800 Rs 750
► Variable treatment costs: There exist significant variations in the rates
charged by different hospitals for similar services, which results in
600
variability in the treatment cost for similar ailments.
► Incorrect pricing: Before de-tariffing, health plans were subsidized by 400
insurance companies from their more profitable lines of business. Although
tariffing has been done away with, the market has not yet witnessed a 200
Rs 15-150
correction in the pricing of health insurance.
0
► Plans like Mediclaim are very much commoditized. Hence, there is little CGHS ESIS Private and
that can be done by a particular insurer to change its price and design Group Retail
substantially. * Average premium as per Tariff Advisory Committee
and this varies with age and sum assured
► High commissions: High commissions are paid to distributors in the health Source: Private Health Insurance in India: Promise
insurance business. and Reality, Tariff Advisory Committee
► Service tax impact of 12.36%.

Cost of treatments, largely driven by private providers, has
increased healthcare expenditure as a percentage of total
household expenditure.
Healthcare expenditure, as a percentage of total household expenditure, has been increasing over the years.
Trend in Healthcare spending as a percentage of Household

Consumption Expenditure
7
6.5
6
5.5
5
%
4.5
4
3.5
3
1993-94 1999-00 2004-05
Year
Rural Urban
Source: NSSO Surveys of Consumption Expenditure 50th, 55th and 61st Rounds
The cost of out-patient and in-patient treatment has almost doubled in last decade.
Growth in cost of out-patient treatment (Rs) Growth in cost of in-patient treatment (Rs)
10000
350 326 8851
9000
300 285 8000
250 7000
6000 5695
200 175 5000
144 3921
150 4000 3202
3000
100 2000
50 1000
0
0
Rural Urban
Rural Urban
1995-96 2004-05
1995-96 2004-05
Source: Morbidity, Healthcare and Condition of the aged NSSO Source: Morbidity, Healthcare and Condition of the aged NSSO
60th Round 60th Round
A majority of patients seek treatment from higher cost private healthcare providers.
The cost of private in-patient care has grown at nearly four times the pace as compared to public
in-patient care.
Sources of out- Relative cost of Sources of in- Relative cost of

patient treatment out-patient treatment (Rs.) patient treatment in-patient treatment (Rs.)
299 11,553
246
7,408
58% 62%
78% 81%
3,238 3,877
11 7 42% 38%
22% 19%
Rural Urban Rural Urban Rural Urban Rural Urban
Public Private Public Private Public Private Public Private

The cost of drugs has risen at twice the wholesale price index
despite price controls.
Drugs are a significant component of out-of-pocket in-patient and out-patient expenditure.
Components of Out - Patient cost Components of In - Patient cost
Others, 10% Others, 10%
Diagnostics, 5%
Bed Charges, 15%

Doctor Fees, 15%
Drugs, 45%
Diagnostics, 10%
Drugs, 70%
Surgeon Fees, 20%

The rise in drug prices in the last decade has outstripped the wholesale price index for all commodities.
300 Wholesale price index on drugs and medicines and

► Price controls currently span 76 drugs covering 25% wholesale price of all commodities
of the domestic pharma formulations market.
250
► Formulations have grown @ 11% CAGR over the last
decade. 200
► This growth has been largely uneven as 10 of the top
25 drugs sold in India are non-essential, irrational or 150
hazardous.
100
► Only 25% of people access AYUSH treatment which is
more cost effective and safer. 50 Drugs & medicine All Commodity
0
1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003-
94 95 96 97 98 99 00 01 02 03 04
Source: Report of the National Commission on Macroeconomics and
Health 2005

The share of diagnostics has been increasing and the cost of
diagnostics and consumables form a significant portion of the
treatment cost.
11.80
The share of diagnostics cost as a percentage of in-patient and out-patient
care has increased by 143% and 300%, respectively, over 10 years.
► Increasing awareness, a growing trend of lifestyle diseases and the shift 6.95
from opinion-based to evidence-based treatment could further increase 6.4
the usage and related expenditure on diagnostics. 4.85
3.43
1.6
1993-94 1999-2000 2003-04
Share of diagnostic as % of inpatient care

Share of diagnostic as % of outpatient care
Source: Morbidity, Healthcare and Condition of the
aged NSSO 60th Round, NSSO Household Consumer
Expenditure in India, 1993-1994 and 1999-2000
The cost of diagnostics and consumables can form a significant portion of the treatment cost, depending on
the disease and level of care.
Cost of diagnostics and equipment Cost of consumables – Angioplasty
Trauma care & mgmt of injuries Angioplasty – cost of consumabbles is 57% of total cost
Rs 25191
Rs 18157 Drug Eluting

Stent
Consumables
51.1 50
Balloon
73% Catheter
Rs 2005 Rs 2897 77%
Wires
70% 78%
Solo physician 6-10 bed facility 30-100 bed >100 beds Other costs
clinic facility 2.8 2.6 13.5
Contribution of equipment & tests Remaining costs

(Cost in Rs. 000s)
Acute Myocardial Infarction Cost of consumables – Artificial hip replacement
Cost of treatment : Acute Myocardial Infarction Artificial hip replacement - cost of

consumables is 44% of total cost
Rs 29386
Remaining costs
70
Contribution of
equipment & tests
Rs 12718
90
59%
45% Artificial Hip Other costs (Cost in Rs. 000s)
30-100 bed facility >100 beds

Source: Medical Management & Costing of select conditions Source: EY research and analysis
(Armed Forces Medical College, Pune in association with Ministry of
Health & Family Welfare, Govt. of India & WHO Country Office India)

Although public providers are cheaper, people prefer private
providers due to better perceived quality, thereby incurring
higher costs.
The cost of diagnostic services at private providers is much higher than that at public providers.
Comparison of cost of brain CT scan across providers

Rs 5000
Rs 1500
Cost of Brain CT scan
Rs 800
Govt. medical college Private diagnostic centre Private Trust Hospital

The cost of some diagnostic services can constitute 30-50% of the average monthly per capita expenditure
of the population.
Ultrasound - lower abdomen

Figures in Rs
1500
1171
1095
800
600
350
Average Pvt diag chain, Pvt diag chain, Pvt Hospital, Pvt trust Multi-
MPCE in Delhi Mumbai Chennai hospital, disciplinary
2005-06 Mumbai 100-bed hosp,
(Urban) Kanpur
rd
A simple X-Ray exam costing Rs. 150 would be over 1/3 of the total monthly
per capita expenditure for 30% of the population
Source: NSSO 62nd Round, Household Consumer Expenditure in India, 2005-06, EY research and analysis

The equipment and devices used in diagnostics and procedures
are expensive due to the high proportion of imports from high-
cost countries.
Around 65% of devices are imported today due to a lack of initiatives to build indigenous
manufacturing capability.
Initial lack of capability Imports of high

for mfg. of high tech technology finished
devices & equipment goods &
components
Domestic Latest technology

Lower investment in Mfg available but at a
capability building by 35% high cost to
govt. & industry patient
Imports
65%
Lower
Lack of volumes
consumption
for domestic
per capita &
manufacture
fragmented
demand
Source: Opportunities in Healthcare – “Destination India” EY, 2006
Imports have increased at a CAGR of 20% over the last 10 years, and over 60% of these are largely from high cost countries
(US, Germany and Japan).
Others ► Imports of medical equipment, devices and implants

amounted to Rs 4731 crores in 2006-07.
Switzerland
► China’s share in India’s imports has increased steadily over
Korea the last six to seven years while the Netherlands has moved
out of the top five.
Netherland
► Domestic manufacture is in the low-end segments, e.g.
China disposables (surgical gloves, syringes, blood bags etc), and
2002-03 2003-04 2004-05 2005-06 2006-07
gradually in basic imaging equipment such as X rays.
Country wise imports of medical USA Germany
equipments classified under Chapter 90 in Japan
Indian trade classification
Source: Export & import data from Ministry of Commerce & Industry (Govt. of India), EY research and analysis
The import of completely built units, as compared to parts for local assembly, has had a marginal impact
on equipment costs.
Import of Colored Doppler Ultrasound (Finished Goods) Assembling of Colored Doppler Ultrasound using imported parts
(values in %) (values in %)
27 100 23
13 4
67 6
6 100
53
Assessable Duties Margin Customer

value of & cess & mktg costs price Parts Duties Local VAT CST Margin Customer
equipment
& Cess parts & & mktg price
Cost of parts are a major contributor to equipment costs Mfg costs
Source: EY research and analysis Overheads

Treatment and diagnostics costs to patients are high due to three
key reasons.
High costs of equipments, devices Low capacity Referral

and consumables utilization charges
► Lack of standard procurement methods

► Doctor’s influence on choice of latest equipment and
devices
Imports of medical
► Marketing costs for OEM
equipment, devices Difficulty in Low
► Equipment with features
and consumables from procuring spare availability
not customized for India
high cost countries parts because of of skilled
imports manpower
Higher cost of equipment, devices and consumables

Higher downtime of
equipment
Cost of medical equipment (as a % of total capital

expenditure of hospital)(1)
35% - 45% in Tier-1 cities
60% and above in Tier -2 cities
60-70% for diagnostic lab
Cost of medical consumables (as a % of total operating Lower capacity utilization Referral charges
costs - 20 to 25% for tertiary care (20-30%)
Higher cost of treatments and procedures Higher cost of diagnostics
Note (1)Figures for costs of equipment as % of total capital expenditure are indicative & will vary depending on type of hospital & location
Sources: EY research and analysis

Low insurance penetration and high out-of-pocket expenditure
place an undue burden on individuals, specifically the BPL section
of society.
A single hospitalization case could place an additional financial burden of close to half the annual household expenditure of
the lowest income class in both rural and urban India.
Cost of in-patient treatment as % of annual Cost of out-patient treatment as % of annual

household expenditure due to single household expenditure
hospitalization case
>950 24.3
Rural 8.83%
>950 3.6
525-950 19.9
31.50% 525-950 3.5
380-525 19.9
MPCE
380-525 4.7
MPCE
225-380 22.8
30.36% 225-380 5.0
<225 53.2
<225 16.1
Rural 20.4
26.95% Rural 4.2
0.0 10.0 20.0 30.0 40.0 50.0 60.0 0 10 20 30 40 50 60

2.36%
% population by MPCE Class
Source: Morbidity, Healthcare and Condition of the aged NSSO 60th Round, EY research and analysis
Cost of in-patient treatment as % of annual Cost of out-patient treatment as % of annual

household expenditure due to single household expenditure
hospitalization case
Urban 10.62%
>1925 29.7
>1925 3.6
915-1925 20.4 31.59%
915-1925 3.2
575-915 15.8
MPCE
575-915 3.7
MPCE
300-575 15.3 30.46% 300-575 4.4

<300 45.3 <300 19.9
Urban 17.1 25.30% Urban 3.4
0.0 10.0 20.0 30.0 40.0 50.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0
2.04%
Basis
The total household expenditure has been computed by multiplying individual MPCE by the number of persons in each
household.
Median household expenditure has been assumed as the denominator for household expenditures, to compute the cost of
treatment impact. However, the median for the highest MPCE class has been assumed at the lower limits, i.e., Rs 950 in rural
areas and Rs 1925 in urban areas, as the upper limits are not known. Thus, the impact on the highest MPCE classes is the
maximum.

Borrowings are the largest sources of financing out-of-pocket
expenditure.
According to national surveys in the country, loans for healthcare is the foremost reason why families, especially the poor,
are trapped into indebtedness.
► On average, rural India borrows 41% of the cost of in-patient treatment, and 17% of the cost of out-patient treatment.
► On average, urban India borrows 23% of the cost of in-patient treatment and 7% of the cost of out-patient treatment.
► The lower and middle income classes finance nearly 60-70% of healthcare expenditure through borrowings.
► The dependency on borrowing reduces for people belonging to higher MPCE Classes.
Source: Morbidity, Healthcare and Condition of the aged NSSO 60th Round
Rural 8.83% Sources of Finance - Rural
31.50% >950
525-950
30.36% 380-525
225-380
Population below
26.95% Poverty Line
<225
2.36%
% population by MPCE Class 0 200 400 600 800 1000
Distribution per 1000 total household expenditure on hospitalization
Household Income/Savings Borrow ings Others

Urban 10.62%
Source of Finance - Urban
31.59% >1925
915-1925
30.46% 575-915
300-575
Population below
25.30% Poverty Line
<300
2.04%
0 200 400 600 800 1000
Distribution per 1000 total household expenditure on hospitalization
Household Income/Savings Borrow ings Others


Unaffordability accounts for nearly 9-11% of ailments not
seeking care and remaining untreated for the lower section
of the population.
Financial problems are the key reason for ailments remaining untreated.
► In rural India, 16.7% ailments go untreated and in urban India, 11.8% ailments go untreated.
► Reasons of financial problem and lack of awareness contribute to 60% and 70% of ailments remaining untreated in rural
and urban respectively.
► In rural areas, percentage of people lacking treatment due to financial problems has almost doubled in the last 2 decades.
► In urban areas, percentage of people lacking treatment due to financial reasons increased from 10% in 1986-87 to 21% in
1995-96. However, the percentage has not increased in 2004-05.
► For the lower MPCE Reasons for ailments remaining untreated - Rural
% of untreated
classes, financial 30.0

ailments
constraints is the foremost

20.0 3.2
reason for not seeking 6.9
treatment for ailments. 10.0 11.1 6.8
9.0 5.7
5.1 3.3 6.6
► As affordability levels 0.0 1.3
increase, the percentage <225 225-380 380-525 525-950 >950
of untreated
ailments reduce. no medical facilities available in the neighbourhood lack of faith
longMorbidity,
Source: w aiting Healthcare and Condition of the aged NSSO 60th Round f inancial reason
► This trend is observed in ailment not considered serious others
both rural and urban India.
Reasons for ailments remaining untreated - Urban

% of untreated
30.0
ailments
20.0
8.6
10.0 5.9
9.0 4.9 8.3
5.0 2.9 4.2
0.0
<300 300-575 575-915 915-1925 >1925
no medical facilities available in the neighbourhood lack of faith

long w aiting f inancial reason
ailment not considered serious others
Source: Morbidity, Healthcare and Condition of the aged NSSO 60th Round
In the case of acute ailments of those “not seeking care when ill” among the bottom three expenditure classes,
as compared to the upper classes, there was a difference of 2.5 times, with the key reason being attributed to the
cost factor.
Source: Morbidity, Healthcare and Condition of the aged NSSO 60th Round; Census of India, Duggal, Ravi, Poverty and Health: Criticality of Public Financing, EY research and analysis

While the upper class can afford its healthcare needs and the
government takes initiatives to address the rural and certain
deprived sections of the urban population, the urban middle class
has to fend for itself.
This section of society (rural and urban) has

Population breakup higher capability to finance its healthcare needs
due to higher incomes and access to insurance.
Upper Class 9.3
The National Rural
Health Mission was
initiated in the year
Lower and
2005 to address the
Middle Class There are limited initiatives or focused
healthcare needs
61.9 efforts to make healthcare affordable for
(access and
the urban middle class.
affordability) of the
population below the
poverty line, as well as
the lower and middle
classes in rural India. The National Urban Health
BPL Mission intends to address the
28.8 healthcare needs of the slum
dwellers in urban India.
Rural Urban
Progress of the National Rural Health Mission
Key expected outcomes from NRHM Status as on 30th April 2008
► Reduce IMR to 30/1000 live births by the ► IMR – 57

year 2012 ► MMR – 301
► Reduce Maternal Mortality to 100/100,000 live ► TFR – 2.7
births by the year 2012 ► % of total identified CHCs where physical up
► Reduce TFR to 2.1 by the year 2012 gradation work is completed – 21%
► Upgrade all Community Health Centers to Indian ► % of total required specialist post at CHCs in
Public Health Standards position – 32%
► Engage 4,00,000 female Accredited Social Health ► No. of ASHAs in position with drug kits – 224951
Activists (ASHAs)
Progress of the National Urban Health Mission
Status as on March 2008: Not yet started

Source: MIS for NRHM as on 30th April 2008

In Summary
Reasons for relatively higher cost of Impact on affordability /

health care household finances
► Lack of morbidity data at

the local level
► Non-standardized
treatment protocols and
rates
► Poor reach and

Low insurance
underdeveloped backend
penetration
support infrastructure
► High premiums Reliance on

borrowings and
debt to finance
health care costs.
► Lack of awareness
Relatively high out
of pocket
expenditure on
► Perception of poor
healthcare when
quality
compared to
Preference for high cost household
private providers income*.
Ailments
► Lack of accessibility remaining
untreated
► Rising drug prices High cost of drugs
► High costs of equipment,

devices, consumables
High cost of treatments

► Low capacity utilization
and procedures
* Monthly per capita expenditure

► Referral Charges (MPCE) has been taken as a proxy
for household income

Issues of affordability faced by emerging economies are similar
and the measures initiated by them can be key learning for India
going forward.
The following issues related to affordability faced by Brazil, Russia, China and Mexico are similar to India
Provider
► Healthcare as a percentage of GDP lower than the international average of 9.4%
► High focus on in-patient care coupled with high Average Length of Stay (ALOS) with limited emphasis on primary care
► Declining usage of public healthcare systems
► Provider infrastructure concentrated in urban areas with low per capita spending in rural areas
► Focus on specialists and limited emphasis on general practitioners
Propensity
► High out-of-pocket expenditures (65-85% of private expenditure)
► Government spending on healthcare low and on a decline compared to OECD countries
► Low penetration of private and social insurance
► Wide disparity in healthcare provision which is limited to highest and lowest income households
► High proportion of drug expenditure in total out-of-pocket expenditure
Prevalence
► Large and ageing population with disease burden shifting from acute to chronic diseases
► Morbidity and treatment rates on the rise with increasing affluence and greater health consciousness
► Lag behind developed countries on all the key healthcare indicators such as Infant Mortality Rate (IMR), Maternal
Mortality Rate (MMR), life expectancy at birth and healthy life expectancy at birth
Measures initiated by these nations can also throw up significant learning for India
► Public spending on the rise with focused healthcare reforms
► Strong impetus being given to primary and out-patient care
► Preventive care being accorded national priority by almost all governments
► Increasing focus on enhancing utilization of the public healthcare infrastructure to reduce the inclination to seek costlier
private care and make healthcare more affordable
► Incentives being provided to general practitioners rather than specialists
► Inefficiencies being gradually weeded out – under performing hospitals under scrutiny and health workers being laid off
► Encouragement to insurance and social security to enable healthcare financing and reduce out-of-pocket expenditure
► Reimbursement lists, price controls and compulsory licenses introduced to manage the costs of drugs and promote
generics
Source: WHO 2004, EY research and analysis

Way forward

Way forward
Issues Way forward

1
► Higher prevalence of Reducing the disease burden itself by promoting health and
Prevalence
communicable, Maternal, focusing on preventive care
Child and Nutrition related
disease ► Create infrastructure for preventive care
► Disparityacross ► Initiatecomprehensive planning among different government entities
geographies, states, on various programs for effective health outcome
gender and Income class ► Invest in business models and develop the wellness industry
2
Convert latent need into active demand by enhancing
affordability of healthcare services
► Low insurance penetration ► Extendinsurance coverage to 50% of the population by the year
2015 and to 80% by the year 2025
► High
out-of-pocket
Propensity
expenditure ► Increasepreference for low cost public health facilities to

improve affordability
► Preference for high cost
providers ► Reduce state expenditure on drugs
► High cost of drugs ► Promote indigenous manufacturing of medical equipment
and implants.
► Highcost of medical
equipment / treatment / ► Promote usage of low-cost OEM refurbished equipment.
diagnostic services
► Createa unified regulatory authority in alignment with the Global
Harmonization Task Force for regulation of the industry.
3
Focus on building adequate physical healthcare infrastructure
which is capable and equitably distributed
► Overhaulthe healthcare system rather than bringing about

► Inadequate secondary and
tertiary healthcare incremental changes
infrastructure ►Add 26 lakh hospital beds, 10 lakh doctors and 20 lakh
► Disparity in secondary and nurses by the year 2025

tertiary healthcare ►Focus on facilitative changes for generation of required
infrastructure across human resources
states ►Use current facilities efficiently
Provider
► Inadequate and ► Deploy PPP models to create and operate new secondary and
underutilized primary tertiary healthcare facilities
health infrastructure
► Provide financial incentives to promote investment by private
players in non tier-1 locations
► Take measures to improve availability of appropriate medical
technology to a wider population
4
► Poor quality, inconsistent
treatments Enhance assurance on the quality of healthcare delivered
5
To stimulate development of healthcare system capacity,
generate periodic health intelligence information at micro level

1. Reducing the disease burden itself by promoting health and
focusing on preventive care
India’s disease burden (as measured by DALY rate per lakh of population, year 2002) was around 37% higher than that
of Brazil while it was 86% higher when compared to China. While for these three countries disease burden from non-
communicable diseases differed marginally, India’s disease burden from communicable, maternal, perinatal and
nutritional conditions was 3 to 4 times higher. Considering its size and population, India should aspire for a DALY rate
similar to that of China today by the year 2025.
DALY reate per 1000 population
28575
20721
15378
14266
13113
12958 11824 11938
10217
4361
2847
941
DALY DALY for communicable, DALY for non

maternal, perinatal and communicable diseases
nutritional conditions
India Brazil China USA
Source: Data on Mortality & Burden of Disease, WHO, 2002
Five disease clusters constitute two-thirds of the communicable disease burden. Preventing and managing these
effectively could reduce the disease burden significantly.
DALY rate Per 1000 population for five disease clusters
2,783
2,435
1,684
1,453
984
866
808
484 413 417

388 334
249
96 159
29 36 80 17 3
Perinatal Lower respiratory Diarrhoeal Childhood cluster

Tuberculosis
conditions infections diseases diseases
India Brazil China USA

Source: Data on Mortality & Burden of Disease, WHO, 2002

Promoting health and reducing the burden of disease would reduce
demand on healthcare infrastructure.
World over it is an established fact that preventive care is a non-negotiable imperative for better health outcome at
minimal cost. Preventive healthcare should form the backbone of the public healthcare delivery system because it requires
significant investment which benefits society only in the long run, typically making it economically unattractive for the
private enterprise.
PPP adjusted per capita Births attended by skilled Population with Population with
expenditure ($) on health, health personnel (%) sustainable access to sustainable access to
2005 improved sanitation (%) improved drinking water
total sources (%) total
755
77 91
97
47 28 89
10 0
India B ra zil India B razil India B ra zil India B ra zil
Environment and public Measles immunization Measles immunization

health workers density coverage among one-year- coverage among one-year-
(per 10 000 population) olds (%) rural olds (%) urban
9 0 .2
7 6 .5 7 1.8
10
5 4 .2
0 .8
India B ra zil India B ra zil India B ra zil
Promoting health and reducing the burden of disease reduces the demand on healthcare system capacity and also has
positive impact on life expectancy and on GDP. However, in the past (between 1990-2001), a lower priority has been
given to preventive and promotive health initiatives, with central spending on health being less than 0.5% of total public
health spending (1).
Impact related to Intervention Estimated increase in life Estimated impact on

expectancy (years) GDP
(in %)
IMR Reduction in IMR Up to 3.1 4 to 12
DOTS Fatality rates reduction from 60- 0.12 0.5

70% to 5%
CVD 50% reduction 1.3 2 to 5
Source: Background papers: Burden of Disease in India, NCMH, 2005; (1) – Report of the working group on communicable and non-communicable diseases,
September 2006

Preventive care is a non-negotiable imperative for better health
outcome at minimal cost.
Preventive healthcare should form the backbone of the public healthcare delivery system because it requires significant
investment which benefits society only in the long run, typically making it economically unattractive for the
private enterprise.
Hence the government should focus on:
A. Creating infrastructure to promote health: Health is impacted by the living conditions. Provision of good
living conditions includes provision of employment and income, water, sanitation, nutrition, basic
education and road connectivity. Most of the spending on preventive health may not yield desirable results
until complimentary investment is made to improve the living conditions. This would require coordinated
planning among different government entities on various improvement programs for effective health
outcome. This can be best done by government itself.
B. Promoting healthy lifestyles: India’s disease mix is likely to change with burden from the non-
communicable diseases likely to double by the year 2020. This would increase the stress on the healthcare
system capacity and also potentially have an adverse impact on healthcare costs due to high cost of
treatment. This would require government intervention for building awareness and for promoting
behavioral changes.
Role of government Role of private sector
► Creation of infrastructure for preventive care ► With the likely, alarming increase in the disease
► Complimentary investment to improve living burden from non-communicable diseases, it is
conditions imperative to focus on promoting healthy
► Comprehensive planning among different lifestyles and standards of wellness.
government entities on various programs for ► Invest in business models and develop the
effective health outcome wellness industry
► Constitute a cross-sectoral task force to ► Industry bodies should work towards nurturing
effectively manage the five disease clusters the effort to develop the wellness industry
constituting majority of disease burden
National Rural Health Mission has laid down the following expected outcomes and strategies for disease prevention.
Strategies Key expected outcome
► Developing capacities for preventive health care ► District Health Plan reflects the convergence
at all levels for promoting healthy life styles, with wider determinants of health like drinking
reduction in consumption of tobacco, etc. water, sanitation, women’s empowerment, child
► Preparation and implementation of an inter development, adolescents, school education,
sector District Health Plan prepared by the female literacy, etc.
District Health Mission, including drinking water, ► 30% by 2007
sanitation, hygiene and nutrition. ► 60% by 2008
► Integrating vertical Health and Family Welfare ► 100% by 2009
programmes at National, State, District and ► Facility and household surveys carried out in
Block levels. each and every district of the country.
► Reorienting medical education to support rural ► 50% by 2007
health issues including regulation of medical ► 100% by 2008
care and medical ethics.

2. Convert latent need into active demand by enhancing
affordability of healthcare services
Latent need for healthcare converts into active demand when there is a positive inclination to avail healthcare services for
the prevalent ailments. Inclination to seek treatment increases with enhanced affordability. The high cost of secondary and
tertiary healthcare is unaffordable to a large proportion of the Indian population. Due to the high cost of healthcare, it is
estimated that nearly 3% of the population slips below the poverty line. The share of private health care expenditure is
nearly 80%, of which around 90% is borne out-of-pocket. Insurance coverage is limited with only 12% of the population
being covered.
With focused effort and the key initiatives outlined below, coverage of health insurance can be increased to 50% of the
population by the year 2015 and to 80% by the year 2025.
Current
Target Section coverage No. of lives still
of Population to be covered
no. of lives Initiatives
(percentage of (percentage
population) (percentage of population)
population)
Formal sector 5.70 crores 27.6 crores ► Make Health Insurance mandatory for employees
Number of (5.1%) (24.9%) under formal sector.
members - 33.30 ► Health insurance premium to be borne jointly by
crores employer and employee. Leverage existing models of
(~ 30% of Employee Provident Fund and ESIS. Contribution to
population) be based on income but with uniform coverage
benefits.
Informal sector – 5.20 crores 41.42 crores ► Insurers need to introduce more innovative products
Above Poverty (4.7%) (37.3%) with attractive pricing to cater to the needs of this
Line segment.
Number of Potential to ► Encouragement of Community Schemes / NGO
members - 46.62 increase participation is critical in case of informal organized
crores penetration to groups.
(~ 42% of least 15-17% ► Government to promote specific schemes for
population) vulnerable section of society like old age people and
people on the border of Poverty Line.
► Service tax can be exempted or reduced.
Informal sector – 2.80 crores 28.28 crores ► In the 2008 budget, the Government has announced
Below Poverty (2.5%) (25.5%) a scheme, namely ‘Rashtriya Swasthya Bima Yojana’,
Line to cover 6 crore BPL families progressively in the
Number of next 5 years.Key features are:
Government has
members - 31.08 committed to ► The premium cost is to be shared by the union and
crores cover BPL under state government.
(~ 28% of Health Insurance ► Insurance coverage of Rs, 30,000 for the family.
population) ► Cost of treatment beyond Rs 30,000 is to be
borne by beneficiary.
► Since Rs 30,000 coverage may not be sufficient to
take care of secondary and tertiary healthcare needs,
the scheme may be modified to include:
► An add on package to enhance the secondary care
cover to be borne by insured.
► Medical savings accounts, in which regular
contributions by members can build financial
resources for the care of medical exigencies.
Source: Planning and Implementing Health Insurance Programmes in India - An Operational Guide by Institute of Public Health Bangalore, India In collaboration
with the WHO India Country Office, World Health Statistics 2008, Union Budget, 2008-09, Rashtriya Swasthya Bima Yojana, Ministy of Labour and Employment,
GoI, EY research and analysis

Case study on mandating insurance in the formal sector
Case study - Success of Korean healthcare insurance reforms.

In1976, the Republic of Korea initiated a program to assure universal health insurance coverage for all of its citizens by
1989. At that time, less than 10 percent of the population had any health insurance. Within the span of 12 years, Korea
went from private voluntary health insurance to government-mandated universal coverage.
Critical success factors for insurance penetration.

The success of the Korean health insurance program is based on the following three principles:
1. Phased approach: Universal health insurance was achieved through a series of laws requiring the gradual phase-in of
universal coverage.
► In 1976, Health Insurance (HI) was made compulsory for each firm with more than 500 employees, which was
brought down to more than 16 employees by 1982.
► In 1977, a government program for low-income individuals was established (Medical Aid) and in 1979, Health
Insurance was made compulsory for government employees and private school teachers.
► In 1989, Health Insurance covered 100% of the population.
2.Contribution based on income level: The compensation level is a fixed percentage of income; thus, individuals with higher
incomes pay more for health insurance.
3.Uniform benefits: The level of benefits is independent of the level of contribution.
Source: Gerard F Anderson, "Universal health coverage in Korea", Health affairs, Summer 1989 NHIC, Republic of Korea Healthcare reforms in south Korea,
Jong-chan Lee, International Perspectives Forum, Jan 2003EY research and analysis

Some successful case studied in community health insurance
Case Study 1: Rajiv Aarogyashri community health insurance scheme
Salient features
► The Government of Andhra Pradesh acts as financier of
healthcare services, for people BPL, by paying for the
insurance premium for healthcare costs up to Rs 150,000
(and an additional Rs. 50,000 under certain circumstances).
► An insurance provider from the private sector is responsible Insurance
Aarogyashri
for risk coverage; Star Health provides insurance policies for company
trust
the families. (Risk
(Regulator)
coverage)
► 183 hospitals form the provider network.
► TCS, a private sector IT service provider, provides technology
solutions by ensuring that monitoring, evaluation and
administrative procedures are efficiently handled. Software Rajiv Aarogyashri Network
► Health workers known as ‘Aarogyamitras’ are responsible company Community Health Hospitals
for spreading awareness about the program and for (Technology Insurance Scheme (Service
facilitating the effective implementation of the operational Solutions) Provider)
aspects of the scheme.
► MoU is signed between the partner hospitals and the State
Government of Andhra Pradesh, to ensure that the hospitals Self Help
are obligated to provide the services for which they have been Groups District
appointed or else face a potential enquiry. (Health Administration
Workers) (Mobilization)
► Network hospitals from the private sector benefit from
operational efficiencies due to the large volume of rural
patients to whom they can provide healthcare services.
► Public sector hospitals benefit as they receive charges from
the insurance company for the services rendered.
• During a period of 431 days, 2765 health camps have been held; 57,8908 people have been
Benefits /
screened and 59,821 people have been referred. The amount which has been claimed from
achievements the insurance partner, Star Health, amounts to 159.35 crores over the period.
Financing institutional deliveries in Gujarat, also popularly known as

Case Study 2: ‘Chiranjeevi’ model
Salient features
► In a pilot project, obstetricians in five districts were offered a financial package of approximately Rs 1.75 lakh for every
100 deliveries they conducted.
► The Health department pays Rs 1,800 per delivery to private nursing homes and contracts for 300 such deliveries. An
additional Rs 2 lakh is provided by way of infrastructural support.
Benefits / achievements
► Increase in institutional deliveries from 56% to 76% over a period of 2 years.
Sources: Report of the National Commission, 2005, The Financing and Delivery of Healthcare Services, Background papers of the Report of the National
Commission, 2005, EY research and analysis

How can affordability be further improved?
Issues Way forward
Enhance health insurance coverage by regulating

providers, developing innovative products and
Low insurance penetration in formal and
creating awareness to drive insurance penetration.
informal sectors
► Develop morbidity data.

► Implement STP and rates.
► Make accreditation of hospitals mandatory.
► Develop appropriate insurance products and
rationalize premiums.
► Create awareness.
Dependency for high cost Increase the preference for low-cost public health
private providers facilities to improve affordability.
Ensure mandatory accreditation of all public health facilities

(sub-district upwards) as per NABH norms to improve the
perception of quality of care, and increase preference for
public healthcare providers.
High cost of drugs a. Use centralized procurement systems to reduce

state drug expenditures.
b. Promote indigenous manufacturing of

High cost of medical equipment / medical equipment and implants.
treatment / diagnostic services c. Promote usage of low-cost OEM
refurbished equipment.
d. Create a unified regulatory authority in
alignment with the Global Harmonization Task
Force for regulation of the industry.

Regulate providers, develop innovative products and create
awareness to drive insurance penetration.
Current challenges Way forward
Formalize mechanism to capture morbidity and

Absence of reliable data demographic data.
► Electronic storage and sharing of data should be
done by all public and private providers and Third
Party Advisors.
Health insurance ► Tariff Advisory Committee (TAC) should
product design periodically release morbidity reports by city-
with inadequate wise, region, disease, etc.
coverage
Develop standard treatment guidelines and
rate cards.
► Professional bodies (such as Medical Council
Absence of standard (MCI), Quality Council of India (QCI) and other
treatment guidelines outsourced private professional healthcare
(STG) Lack of groups) promoted by stakeholders to develop
rationalized health standard treatment guidelines with rate cards for
insurance product major diseases.
pricing vis-à-vis ► All stakeholders to mutually agree to the same,
coverage which shall then form the basis of product pricing
Absence of defined & administration.
standards of service
quality for providers
Mandatory provider accreditation.
► Accreditation of providers for different level of
hospitals on the parameters of infrastructure,
Low customer quality of service to be made mandatory:
satisfaction ► National Accreditation Board for Hospitals &
Many exclusions Healthcare Providers (NABH) constituted by
► Domiciliary care Quality Council of India provides voluntary
accreditation.
► Chronic ailments
► With over 50,000 government and private
► AYUSH treatments
hospitals in India, only 17 hospitals have been
► Old age ailments accredited by NABH.
► Preventive Lower health
insurance
penetration Develop innovative products.
► For chronic and life style diseases
► For old age related and domiciliary ailments.
► Medical Savings Account (MSA), an individual /
Lack of awareness family account in which insurance contributions
are deposited, and out of which the individual /
family concerned makes expenditure on health.
Health insurance council comprising health

insurers to be formed with the objective of:
► Promoting health insurance.
► Creating awareness to increase penetration,
improve selection and utilization.

Effective government support is an imperative for the promotion
of health insurance.
Current challenges Way forward
High rate of indirect Reduction in taxes.

► Service tax of 12.36% applicable on Health
taxes
Less rationalized Insurance premiums should be either exempted or
health insurance reduced.
product pricing
vis-à-vis coverage Mechanism to cover old age people.
Lack of active ► Government should promote Health Insurance
government initiative to schemes for
provide health insurance old age population.
to old age people Low health
insurance
penetration Periodic rating of health insurance products.
► TAC should rate the performance of Health plans
on the dimensions of service and cost.
Lack of measurement
► Measure insured members' satisfaction with
and transparency of insurers, TPAs, and providers.
health products
Case study of health plan rating, US

► Healthcare Effectiveness Data and Information Set (HEDIS) was developed by the National Committee for Quality
Assurance (NCQA), which is a private, not-for-profit organization dedicated to improving health care quality.
► HEDIS is a tool used by more than 90 percent of America's health plans to measure performance on important
dimensions of care and service. Health plans also use HEDIS results to see their improvement efforts.
► HEDIS consists of 71 measures across 8 domains of care. HEDIS makes it possible to compare the performance of
health plans on an "apples-to-apples" basis.
► Employers, consultants, and consumers use HEDIS data, along with accreditation information, to help them select the
best health plan for their needs. To ensure the validity of HEDIS results, all data are rigorously audited by certified
auditors using a process designed by NCQA.
► HEDIS data also are the centerpiece of most health plan "report cards" that appear in national magazines and local
newspapers.
► HEDIS provides purchasers and consumers with the information they need to reliably compare the performance of
health care plans.
Source: National Committee for Quality Assurance, USA, EY research and analysis

Enhance quality of care at low-cost public health facilities to
improve affordability.
Mandatory accreditation of all public health facilities (sub-district upwards), as per high quality accreditation norms (like
NABH), is needed to improve the perception of quality of healthcare provided by public hospitals across India.
Invest to upgrade to high

Increase preference for Reduce out-of-pocket burden
quality accreditation
public facilities on healthcare
standards
Upgrade all sub-district hospitals Cost of in-patient treatment as % of

Utilization – Rural annual household consumption
and above to high quality
expenditure - Rural
accreditation standards
120% 22%
(e.g. NABH) – estimated costs
Rs 10200 crores 100% 20%
(Source: EY research 80% 40% 18%
and analysis) 55%
60% 16%
21%
Investments @ Rs 2.8 lakh per 40% 14% 18%
bed for 6066 hospitals 20% 45%
60%
12%
Sub-district hospitals and 0% 10%
Current Future
upward, with each hospital Current Revised Scenario
assumed to have 60 beds on an
average Public Private
Source: Morbidity, Healthcare and condition of the aged NSSO 60th Round,
On the basis of National EY research and analysis
Accreditation Board of Hospitals’
Gujarat budget of Rs 45 crores Cost of in-patient treatment as % of
for 8 district and 1 municipal Utilization – Urban annual household consumption
hospital covering 1856 beds expenditure - Urban
(Source: Health and Family Welfare
120% 18%
Department, Government of Gujarat)
17%
100%
(The government under NRHM is 16%
80% 15%
planning to increase the 58% 50%
60% 14%
utilization of CHCs from 20% 17%
13%
to 75%) 40% 15%
12%
20% 42% 50%
Aspiration of Government of 11%
Gujarat while undertaking NABH 0% 10%
Accreditation Programme: Current Revised Scenario Current Future

► Reduce IMR Public Private
► Reduce MMR Source: Morbidity, Healthcare and condition of the aged NSSO 60th Round,
EY research and analysis
► Stabilise population
► Address issues of adverse
sex ratio Currently there are 260 lakh in-patient cases, of which, 113 lakhs seek
treatment from public providers. Increasing utilization in both rural and
► Effective implementation of
urban India will result in a shift of 33 lakh cases from private to public
national health programmes
healthcare providers
► Enhancing satisfaction of the
people with health care (Source: EY research and analysis)
services
► Equity; quality; access and
Cost-effectiveness
Investments of ~ Rs 10,200 crore, in a phased manner, will decrease the annual out-of-pocket burden on in-patient
care by Rs 1600 crore each year.

Case study – Positive impact of mandatory accreditation on
increasing preference for public healthcare providers.
The Government of Gujarat’s resolution in January 2007 to seek mandatory accreditation for all government hospitals
within three years in three phases using state budgetary provision and financial provision under NRHM.
Average daily IPD increased by 100%, Average daily OPD increased by 27%.
Bed occupancy ratio increased from 77% to 89%, ALOS decreased by 25%.
Impact of accreditation for a 510 bed secondary care district hospital in Junagadh
27% increase
180 0
165 0
160 0 30%
140 0 increase
120 0 123 6
5%
100 0 increase 130 0
950
80 0 82%
510 50%
60 0 increase
48 4 increase
40 0
20 0
20 0 15
11 0 10
0
No . of bed s Average Dail y Average Dail y IPD Average Dail y Average lab
OPD deli veries investiga tion s
2006 -07 2007 -08

Source: Quality Assurance Programme (NABH Accreditation in Gujarat) by Ms Mona Khandhar, Dept of Health and Family Welfare, Government of Gujarat
Bed occupancy ratio Average Length of Stay

89% 3.2
90% 3.5
3.0 2.4
Units: In Days
85% 2.5
77% 2.0
80%
1.5
75% 1.0
0.5
70% 0.0
2006-07 2007-08 2006-07 2007-08
Source: Quality Assurance Programme (NABH Accreditation in Gujarat) by Ms. Mona Khandhar, Dept of Health and Family Welfare, Government of Gujarat

Reduce state expenditure on drugs through effective centralized
procurement of drugs and consumables.
Successful cost-effective public distribution systems implemented by Tamil Nadu and Delhi state governments can be
adopted universally across the country.
Impact on state expenditure on drugs

Rs. crores
5000 ~ Rs1200 cr
4000
4000
2800
3000
2000
1000
0
Current Suggested
Key Learning from case study of centralized drug procurement system by Delhi state government
Need for change Intervention – central procurement Outcomes
► Disparate procurement lists ► Centralized procurement agency set ► Around 30% savings in annual
of each hospital. up. drug bill – other governments
► Procurement from ► An ‘Essential Drugs List and Formulary’ procured drugs at 118-248%
government retail outlets at was prepared for hospitals and higher prices.
high prices. dispensaries. No drugs outside the list ► Improvement of availability of
► Procurement of irrational were purchased. drugs > 80% - stock out days
drugs ► Standard treatment guidelines were reduced from 110 to 24 days.
► Shortage of prescribed laid out for common diseases in adults ► Around 80% prescriptions from
drugs. and children. Essential Drugs List.
► 15-20% drugs reported to ► Procurement was based on ► Around 1% quality failure rate
be counterfeit. competitive bidding through tenders against a national average of 20%.
► Drugs nearing expiry were from manufacturers. Enabled the state ► Increase in accessibility of drugs.
being supplied. to procure drugs at a 35% cheaper ► Annually, 90% of the prescribed
price as compared to the other state drugs were provided free of cost.
► Doctors often prescribed governments.
expensive alternates. Previously, they were able to
► Quality control systems provide only 30% drugs free of
► Inadequate information institutionalized including GMP
provided to patients. cost.
inspections. ► Standard quality drugs were
► Rational use of drugs promoted purchased and distributed.
through several national and
international training courses.
Source: Quality Medicines for the Poor: Experience of the Delhi program on rational use of drugs – Chaudhary, Parmeswar, Gupta, Sharma, Tekur, Bapna (2005),

Promote manufacture of medical equipment and implants in India
to improve accessibility and reduce the cost of treatments.
Import substitution of high-cost medical equipment can be achieved through the adoption of appropriate policies as
demonstrated in the case of the Chinese medical equipment industry and Indian automobile industry.
Case
Case study
study Chinese medical equipment industry Indian automobile industry
► Local capability building ► Progressive indigenization of

Mandatory
Chinese localequipment
medical production for
industry automobile
Indian components
automobile industry through:
distribution of products prior to 2000. ► Requirement of actual production
► Enabling economies of scale of cars and not mere assembly
Enforcement of standards for minimum of vehicles.
Policy requirement of equipment in hospitals ► Indigenization of components up to a
and clinics generated large domestic minimum of 50% in the third and
volumes for manufacturers. 70% in the fifth year or earlier from
the date of clearance of the first lot
of imports.
Source: Pacific Bridge Medical Source: Department of Heavy Industries (Auto Policy),
Economic Survey 2007-08
► Chinese medical equipment and device ► Increase in domestic manufacturers

industry worth US $11.2 bn accounts for from 3 in early 80s to over 50
5% of the global industry. manufacturers in 2006.
► China exported US $3252 mn worth of ► US $15 bn auto components industry in
medical equipment in 2005 growing at 2006-07 growing at 19% CAGR from US
Impact 28% CAGR from 2000. $3.1Bn in 1997-98 with 500 organized
and 10,000+ unorganized players.
Source: Business Monitor International, ISI Emerging Markets Source: Department of Heavy Industries (Auto Policy),
Economic Survey 2007-08
Indian medical equipment companies have already demonstrated their manufacturing capabilities which further needs to be
promoted with the appropriate regulations & incentives by the government.
► Indigenous catheterization laboratories (cath labs) manufactured and set up in Hyderabad, Andhra Pradesh, at a cost of
less than Rs. 1 crore as compared to imported ones that cost Rs 3 crore.
► Indigenous manufacturing facility recently set up in India to manufacture stents & catheters at a 40% to 70% lower cost
compared to imported ones.

The cost saving can be in the tune of 20% to 50%.
Cost reduction of diagnostic equipment can improve access and affordability.

► Improved availability at providers due to increased viability (e.g. in tier II and tier III locations).
► Enable more frequent upgrades of equipment with improved technology.
► Lower payback period with some cost benefit that may be passed on to patients.
A 25-50% cost reduction has been demonstrated While some equipments that are only imported
through domestic manufacture for some classes or assembled in India, are candidates for
of equipment. indigenous manufacture.
Cost comparison of imported versus domestically ► High end diagnostic equipment installed in tertiary
manufactured equipments care providers and largely concentrated in
(Rs lakhs) urban areas.
► Reduced costs can improve penetration in tier
300
II and III towns.
200-300
250
16 12-14
200 14 Equipment Costs (Rs lakhs)
80-150 12
15 0 10
40-150 5-8
10 0 8
3-5
30-40
6
4 2.5 MRI 200 to 1000 Payback
50
2 period 3 to
0 0
Digital X Ray* Cath Lab* Ultrasound Color Ultrasound BW CT scanner 50 to 500 5 years
Doppler
Imported Domestically manufactured Automated analyzer 12 to 15

Mammography 12 to 15
* Domestic industry nascent

All prices are indicative and depend on model, technology and manufacturer of equipment / device
The impact of cost reduction for consumables (implants) can be passed on directly to the patient.
Cost comparison of imported versus domestically

manufactured devices/ consumables
(Rs 000s)
80-120
70 to 100 ► Benefits to the tune of 30 to 60% can be passed on
40-80 65-70
50-55 to the patient.
40
15** to 50 20-30
Drug eluting Pacem aker- Artificial Knee Artificial Hip

stent Single (uncem ented)
cham ber
Imported Domestically manufactured

** Price of Kalam-Raju Stent that was manufactured from 1998 – 2001 special steel developed by the DRDO.

Promote usage of OEM-refurbished equipment
OEM-refurbished equipment can reduce costs by 30-40% without a quality compromise. This is an already well-established
model in developed countries. The market for used imaging equipment alone is € 1.3 billion as per COCIR(1)
Challenges in using refurbished equipment.
► There is no regulation or differentiation today between remanufactured,

refurbished and used equipment. This has led to a thriving unorganized
business where used equipment of dubious quality is being imported with
Lack of regulation ease in the country.
for quality ► Owing to the lack of guarantees of quality or residual life, such equipment poses
health hazards – especially in rural areas, smaller towns and tier-2 cities where
they are typically used.
► In developed markets, the OEMs refurbish / re-manufacture used equipment and

supply them with the appropriate warranties / guarantees and after-sales support.
However, owing to lack of promotion, the OEMs are not actively involved in this
Lack of government business in India. Their involvement can reduce equipment costs by 30-40%(2) and
promotion and usage also ensure quality assurance.
► Hospitals usually go by the doctor’s / specialist’s decision on the equipment they

may need to procure. Specialist doctors typically choose the latest equipment as
opposed to older more cost-effective models . As hospitals would like to retain
Influence of doctors specialists who might move elsewhere in the absence of the latest equipment,
in purchase there is low acceptance of refurbished equipment.
The formulation of appropriate policies and regulations can enable use of refurbished equipment that can reduce the cost
of medical equipment, and thereby, the cost of healthcare in the country.
Source: (1) COCIR (European Coordination Committee Of The Radiological, Electro-medical And Healthcare IT Industry)
(2)EY research and analysis

Create a unified regulatory authority in alignment with the
Global Harmonization Task Force for regulation of the industry.
Development of a domestic manufacturing industry as well as promotion of refurbished equipment will require robust
regulatory support
► Creation of a unified body and quick implementation of proposed regulations is needed over the next 2 to 3 years, to
bring in compliance and provide the right incentives for domestic manufacture of devices and equipments.
► This will in turn help in increasing access and affordability of medical services.
► There is a need for the government authorities to partner with industry leaders and experts from the medical device
and equipment industry as has been the case for pharmaceuticals.
► Also, due to disparate nature of devices, consumables and equipment, different regulations for each segment are
needed.
► A phased approach is desirable, beginning with the life-saving and diagnostic devices that are most required for India
followed by the remaining categories.
Center to create unified authority and Global Harmonization Task Force to align with it to enable quick adoption of tried and
tested best practices.
► Conceived in 1992, GHTF is a partnership between regulatory authorities and regulated industry, and is comprised of 5
founding members: European Union, United States, Canada, Australia and Japan.
► It is an effort to achieve greater uniformity between national medical device regulatory systems.
► It was formed with the aim of enhancing patient safety and increasing access to safe, effective and clinically beneficial
medical technologies around the world.
Source: Website of the Global Harmonization Task Force www.ghtf.org

3. Focus on building adequate physical healthcare infrastructure
which is capable and equitably distributed
Issues Way forward
Phase 1: Up to 2015 Phase 2 : Beyond 2015
Enable the creation of medical educational

infrastructure to generate the required human
Inadequate resources Create equitable
secondary and physical infrastructure
tertiary Deploy PPP models to create educational
and human resources
healthcare infrastructure
to address inadequacy
infrastructure and disparity
Use current facilities efficiently to minimize
infrastructure requirements
Enable creation of physical health care infrastructure
a. Deploy PPP models to create and operate physical infrastructure
Disparity in b. Provide financial incentives to promote investment by private players in non tier-1
secondary and locations
tertiary
healthcare
infrastructure c. Establish cost-efficient utilization and creation of secondary and tertiary care
across states facilities by private players to enhance value propositions
d. Take measures to improve availability of appropriate medical technology to

a wider population
e. Use PPP as an effective tool to enhance availability of appropriate medical

technology
Inadequate and
Implementation of NRHM initiatives
underutilized
primary health
infrastructure Implementation of NUHM initiatives

Large latent need for healthcare in India indicates a need for
overhauling the healthcare system rather than bringing about
incremental changes.
► Despite higher disease burden, India’s health infrastructure is weaker when compared with Brazil and China. Higher
disease burden with weaker health infrastructure highlights a large latent need for healthcare which today may remain
unaddressed due to issues related to accessibility and affordability.
Country Disease burden Comparison of health infrastructure
DALY rate per lakh IMR per 1000 live MMR per 10000 live Physicians per Nurses per
Beds per 1000
population (2002) births (2005) births (2005) 1000 1000
India 28575 56 45 0.9 0.66 1.3*
Brazil 20721 28 11 2.6 1.15 3.84
China 15378 23 4.5 2.2 1.06 1.05
Global 2.6 1.23 2.56

average Source: World Health Organization report titled ‘World
Health Statistics 2008’, EY research and analysis
Source: World Health Organization – 2002
► What is the number of hospital beds per thousand people that we need?
► Number of hospital beds that is required is a function of disease prevalence, propensity to avail healthcare services
and accessibility to providers offering quality services. However, there is no mathematical model which can be used to
estimate the optimum bed requirement for the country. Hence, we have based our forecast of healthcare
infrastructure need of India on healthcare infrastructure of countries with disease burden and affordability that match
the set aspiration of disease burden and affordability for India.
Beds per thousand population 0.86 2.6 2.2 3.2
Bed occupancy ratio (%) 72% 60%-80% 72% 69.3%
Average Length of Stay (In number of days) 10 4-8 10.6 6.7
Source: World health statistics 2008, WHO; Economic & Social Data Rankings; Health, United States,2007 – US Department of Health and Human Resources, Website of “Chinese Center for Disease
Control and Prevention” accessed on 25 June 2008, World Bank Report – 2008 titled “Hospital Performance in Brazil”.
Considering the current infrastructure status, we believe India should aim for a bed density (hospital beds per
thousand) of two plus by the year 2025.
► For China, average bed occupancy rate in the year 2006 was around 72% (1). For Brazil, average bed occupancy rate was
between 60% and 80% (depending upon the autonomy enjoyed by the hospital) (2). It highlights that despite health
infrastructure being much larger in these countries, it is not underutilized.
► When compared to Brazil and China, India’s disease burden from communicable diseases is much higher while it is in
comparable range for communicable diseases.
► While India has poorer health outcomes, it has taken ambitious targets through National Rural Health Mission (NRHM) to
improve healthcare outcomes. Targets under NRHM aim to reduce the MMR to 10 Per 10000 live births, and reducing the
IMR to 30 per 1000 live births by the year 2012. These targets are similar to the current MMR and IMR level of Brazil.
► Based on the comparisons with peer group countries and world averages on health infrastructure and disease prevalence,
India should aspire to achieve the following targets by year 2025
► Hospital bed density - Bed density of 2.0 per 1000 population
► Number of physicians per 1000 population: 1.0 (Near to Brazil’s and China’s current doctors density)
► Number of nurses per 1000 population: 2.2 (Near to global average)
Source: 1. Website of “Chinese Center for Disease Control and Prevention” accessed on 25 June 2008,
2. World Bank Report – 2008 titled “Hospital Performance in Brazil”.

To meet this aspiration, India would need to add 17.7 lakh hospital
beds, 7 lakh doctors and 16 lakh nurses by the year 2025.
Healthcare infrastructure requirement for India to reach aspired level of

hospital bed and health workers density
Current State Additional requirement

Practicing Practicing
Beds Beds Doctors Nurses Investment
Doctors Nurses
(lakhs) (lakhs) (lakhs) (lakhs) (Rs. crore)
(lakhs) (lakhs)
Primary 11% 1.0 2.7 4.0 1.9 2.2 6.4 9,800
Secondary 78% 7.4 2.2 4.4 13.9 4.2 8.4 2,79,000
Tertiary 11% 1.0 0.3 0.6 1.9 0.6 1.2 78,600
Medical Seats 30000 medical seats 31,000 medical seats 1,300
Nursing
66600 nursing seats 31,000 nursing seats 1,300
Seats
Total 100% 9.4 5.3 9.0 17.7 7 16 3,70,000
Key assumptions:
►For the purpose of estimation, we have assumed different levels of health care as under:
► Primary care facility – Less than 30 Beds (Average of 2 beds per facility)
► Secondary care facility – Less than 200 Beds with limited specialist care (Average of 30 beds per facility)
► Tertiary care facility – Greater than 200 Beds, Multi specialty hospitals
►For estimation of human resource requirement, following ratios have been considered
► Doctors in secondary care facility: 50% with MBBS qualification, 50% Post Graduate doctors; Total number of doctors per
bed – 0.3
► Doctors in tertiary care facility – 20% with MBBS qualification, 80% Post Graduate doctors; Total number of doctors per bed – 0.3
► Nurses in secondary and tertiary care facility - 0.6 Nurses per bed
►Proportion of beds across different level of care has been assumed to remain same in future also.
►From the total number of doctors and nurses, balance practicing doctors and nurses have been assumed to be practicing
in a primary care facility
►Capital investment required to setup the facility on per bed basis: Primary – Rs.5 lakhs, Secondary – Rs.20 lakhs,
Tertiary – Rs.40 lakhs
►Additional investment for creation of Medical and Nursing colleges associated with existing hospitals – Rs.4 lakhs per seat
Almost 66% of new infrastructure creation would have to take place in 6 states of India
States wise additional beds required (in lakhs) by year 2025
6.1 17.7
1 1.2
1.5
1.7
2.1
4.1

Uttar Bihar Madhya West Maharashtra Rajasthan Others Total
Pradesh Pradesh Bengal

Rate of creation of secondary and tertiary care facilities would be
limited by availability of human resources.
Estimated density of doctors, nurses and beds per 1000 population by year 2025
Shortage of 4
lakh nurses
2.2 2.2
1.9
Shortage of Shortage of
3.8 lakh doctors 1.2 lakh primary
1.0 doctors 0.9
0.7
Nurses
Shortage of 7
density 1.3 lakh beds
Doctors
density 0.6 2.0 2.0
1.5
Bed density 0.9
Current Aspiration By year 2025, at By year 2025, including

Density on per 1000 current rate of HR recommendations for
population basis
addition addition of new medical
and nursing colleges (1)
► India produces around 30000 new doctors, 59000 new GNM Nurses and 7400 new ANM Nurses every year.
► By year 2025, opening of new medical and nursing colleges would reduce the demand supply gap in number of human
resources for health, but there could still be shortages
► Considering the requirement of Post Graduate doctors and GNM Nurses for the secondary and tertiary care facilities,
efforts to develop trained healthcare professionals would need to precede creation of physical infrastructure. Since
producing a batch of graduate doctors takes over six years, while creation of a healthcare facility takes less than two
years, the infrastructure creation would have to be accordingly phased out.
(1) Key assumptions

► Current ratio of net annual increase in number of post graduate (PG) doctors to graduate (MBBS) doctors ~ 1:2 (as
per ratio of PG seats to MBBS seats). Due to increased requirement of PG doctors in secondary and tertiary care, there
would be need to produce more post graduates. Hence the seats in PG should be revised. Ratio used for estimation 1:1
► 50 seat medical and 50 seat nursing colleges would be set up in 50% of the district hospitals (approximately 257
medical and nursing colleges producing 12850 number of doctors and 12850 number of nurses per year) over the next
five years.
► 100 seat medical and nursing colleges would be set up in 20% of the newly opened tertiary hospitals (approximately
190 medical and nursing colleges producing 19000 new doctors and 19000 new nurses per year) between the year
2011 to the year 2015.

Immediate focus needs to be given to bring about facilitative
changes for generation of required number of human resources
for health.
For this following measures would need to be undertaken
Create additional medical • Create additional medical education infrastructure in next 7 years
education infrastructure to produce more number of doctors and nurses
B
• The current average of doctors per bed in secondary and tertiary
care facilities is 0.3 doctors per bed. Out of which, 50% are post
graduate (PG) doctors in secondary care facilities and 80% are
post graduate doctors in tertiary care facilities. With limited
availability of post graduate doctors it will be imperative to
leverage the existing PG resources effectively. This would need
Change leverage ratio of
to be promoted at different levels, such as:
utilization of human resources
in healthcare through efficient • Across different type of health care facilities: Establishing an
use of scarcer resources effective referral network which can reduce the load on
specialist doctors considerably
• Within a facility by: a) Establishing clinical pathways that
could reduce the dependency on specialist doctors, b)
Reducing ALOS so that more number of cases can be treated
by same number of health resources
• Higher usage of technology (Tele medicine)
• Attract and encourage foreign trained doctors with acceptable

Promote policy changes to qualification to practice and teach in India: Currently Indian
allow Indian doctors with doctors with Post Graduate medical degrees from the UK, US,
acceptable qualification Canada, Australia and few other countries are allowed to practice
obtained abroad to practice and in any public or private hospital in India. They are also allowed to
teach in India teach undergraduate students in any medical college. The policy
changes need to be promoted effectively to target doctors.
Add new short term course to • Utilize existing AYUSH workers for primary healthcare
prepare human resource for • Introduce course to develop another category of trained service
primary care practitioners who could be given the responsibility over a domain
of primary health care

A. Challenges that would need to be overcome for enabling
creation of medical educational infrastructure
► To create additional medical educational infrastructure, following 5 measures should be undertaken:

► Synchronize development of all type of health workers in the system: Set up a central planning body with the broad
objective of developing all types of health workers in the system and to ensure their equitable distribution.
► Allow private sector to setup medical education institutions with a profit motive: The private sector can open
colleges in partnership with district hospitals and with to be established tertiary care hospitals.
► Use exiting secondary and tertiary public healthcare infrastructure to train health professionals: Private players to
set up medical colleges, nursing colleges and training institutes for paramedics associated with district hospitals.
This will reduce capital and time required for creation of facilities for medical education.
► Enable single window clearance for all regulatory approvals required for a medical college with the aim to reduce
time taken for acquiring approvals.
► Provide special focus and incentives to develop and attract faculty
Recommendations What is to be done? What would it require?
1
► Synchronize development of all ► As recommended by the draft national ► A centralized planning body with
type of health workers in the education policy of 1986(1), set up a adequate representation from
system: Determine number of central planning body that has the broad existing councils, health stakeholders
members of all the branches of objectives of estimating requirements of and renowned healthcare individuals
health sciences that are the members of all branches of health in the public or private sector.
needed and prioritizing sciences (doctors, nurses, lab technicians ► Robust health information systems to
locations at which the colleges and other allied health workers) in each analyze gaps in distribution, enabling
should be set up state, and ensure their equitable decision-making based on evidence.
generation ► Empowering the body to implement
steps at a national level.
2
► Allow private sector to setup ► The private sector should be allowed to set ► Implement pending recommendations
medical education institutions up colleges directly, especially in the for accreditation of colleges by
with a profit motive: Presently, states lagging behind. professional bodies.
only a government, trust or ► Colleges should have an optimal mix of ► (Please refer Annexure 1)
society can set up a medical capitation and nominal fee seats (based on
college in India and that too merit) to enable a return on investment.
without a profit motive
Source: (1)Draft of National Education Policy in Health Sciences, 1986 by Prof. J.S. Bajaj, EY research and analysis

A. Challenges that would need to be overcome for enabling
creation of medical educational infrastructure
Recommendations What is to be done? What would it require?
3
► Use exiting secondary and ► Private sector to set up medical colleges/ ► Possible Challenges
tertiary public healthcare nursing colleges/ training institutes for ► Typically district hospitals have less
infrastructure to train health paramedics associated with district than 500 beds.
professionals: hospitals. ► Land may not be readily available
► A 100-seat medical college ► The modalities of the public private near the district hospitals.
would require an associated partnership should be worked out that ► All facilities required for a teaching
hospital of a minimum of 500 aligns with the objectives of the parties institute could be established in a
beds (1). At an average cost of involved. District hospitals could charge vertical set up or even in two well
40 lakhs per bed this would fees from the college for providing its connected pieces of land totaling 25
require an investment of facilities and manpower. acres.
approximately 200 crore. ► Sub-district hospitals and community ► The average length of stay for
► Minimum land requirement of health centers can also be used to train surgeries has come down due to
25 acres of contiguous land.(1) students. improved processes and advanced
► A nursing college would require technology.
an attached hospital with beds ► In light of the factors given above,
in the ratio of 3:1 to the archaic norms for opening a medical
seats.(2) college needs to be relaxed, e.g.
► Relaxation of norm of 25 acres of
contiguous land to either two well
connected pieces of land totaling 25
acres, or to a combination of
minimum acres of land with higher
floor area ratio.
► Relaxation of norm relating to
student-to-bed ratio from 1:5 to 1:4
for 100 seat colleges, since ALOS has
reduced by as much as 50% over the
last 10 years, especially for
surgeries.
► Relaxation of occupancy rates from
80% to 60%.
(Please refer Annexure 1)
4
► Enable single window clearance ► Enable single window clearance for all
for all regulatory approvals approvals.
required for a medical college
with the aim to reduce time
taken for acquiring approvals.
5
► Lack of readily available ► Staff from hospitals trained and taken as ► Relax faculty norms such as the norm
faculty and other health team faculty. to have 7 MSc qualified nurses in
members. ► The private sector can set up the college nursing colleges.
and pay fee for using hospital ► Give incentives to attract faculty
infrastructure. from states with excess faculty to the
► Give incentives (tax rebates/ subsidy) for lagging states for brief stints or
investing in the education of other health attracting them from universities who
team members such as nurses and train faculty to teach abroad.
paramedics. ► Encourage merit-based promotion of
faculty.
► Revive teacher training institutes.
Source: (1)Medical Council of India, (2)Indian Nursing Council, EY research and analysis

B. Use current facilities efficiently to minimize further
infrastructure requirement.
Efficient use of current facilities can reduce the need to create additional healthcare infrastructure.
► In general, utilization of healthcare infrastructure is measured in terms of occupancy and efficiency of utilization by
average length of stay.
► The estimated average bed occupancy rate in India is around 72% - for public facilities it is 69% while for private
facilities it is 75% (1). Though some individual players operate at a bed occupancy rate of 85%, the average occupancy
of 72% for a country appears quite good indicating that at gross level, infrastructure may not be underutilized. Hence
ALOS could be a parameter to work upon to enhance utilization of current healthcare infrastructure.
► For India, ALOS is around 10 days. For private players it is around 7.5 days and for major private tertiary care providers
it is less than 5 days. ALOS for public sector could be higher since the provision of care is at a significantly lower cost.
► For US, UK and France, ALOS is between 5.5 to 7 days while for Brazil it is between 4 to 6 days. It indicates that India
needs to work on enhancing the efficiency of utilization.
► There are approximately 9 lakh beds in India, and a reduction of ALOS by 1 day from 10 days to 9 days would be
equivalent to the creation of around 90,000 beds. The ALOS target for India should be 8 days over the next 5 years.
► How can ALOS be reduced?
► By enhancing quality compliance in healthcare to reduce hospital acquired infections, thus reducing complications
and length of stay.
► By having dedicated hospital infection control committees which periodically reviews and advises on antibiotics
usage.
► By encouraging appropriate medical technology, like minimal invasive surgery, and more day care facilities in both
public and private facilities, e.g. 55% of NHS, UK surgeries are day care. By the year 2010, NHS estimates that 70%
of elective day care surgeries will be day care surgeries.
► By developing care paths to standardize pre and post operative care for various surgical procedures.
► By streamlining operations at larger hospitals since they tend to have higher ALOS owing to procedural delays
leading to trouble in delivering service quickly.
► With an increase in propensity, we expect latent need to convert to actual demand, thus creating pressure on
healthcare providers to reduce length of stay and promote domiciliary care.
Source: (1) Ernst & Young study titled “Business of healthcare”, EY research and analysis
Average Length of Stay for hospitals in New Zealand was 6.7 days for in-patients and 6.1
days for all patients in the year 1988/89. In the year 2005/06 these figures had declined to
3.9 days and 2.8 days respectively i.e. more than a 50% drop in the total figure. As a result
the bed requirement per 1000 population came down.
This was achieved by increasing throughput of the existing beds by the following methods:
Case study ► Increasing percentage of day surgery.
► Better management of the inpatient episode.
► New technologies (e.g. endoscopic surgery).
► Increasing provision of alternative community-based services to enable earlier
discharge.
Source: Trends in hospital bed utilisation in New Zealand 1989 to 2006: more or less beds in the future?,
Journal of the New Zealand Medical Association, 26-October-2007, Vol 120 No 1264

D. Introduce specific courses to strengthen the primary care
network and reduce the case load on higher care facilities.
► Even if medical colleges are opened in association with all the district hospitals with
more than 200 beds and in 20% of new tertiary hospitals, India would have a shortage
1.2 lakh graduate doctors for primary care
► Of the 7 lakh graduate doctors in the country as of 2008, only 28% are located in the
rural areas.
Issues
► Lack of access to qualified doctors result in substantial portion of primary healthcare
services being provided by untrained or quasi- trained practitioners.
► Further, with increase in number of secondary and tertiary healthcare facilities
availability of physicians would be a challenge for the primary healthcare.
► Implement recommendations of the Task Group on Medical Education of the NRHM, to

create another category of trained service practitioners, who would be given the
responsibility over a domain of primary health care.
► Some key suggestions of the task group:
► The course would be a 3 year B.Sc. (Health Science)
Add new short ► Focus to be on clinical conditions, situations and treatment regimens within the
primary healthcare domain.
term courses
► The short-course health practitioner to be licensed to practice in a notified package
of primary care only.
► The candidates selected for the course would be predominantly from rural areas and
preferably from the same district where the training institute is located. This would
encourage those passing out to continue practicing in the same district and thus play
a part in servicing the primary health care need of that locality.
► Apart from this, the NRHM is already looking into the possibility of providing primary
Utilize AYUSH health care in rural areas through practitioners trained in alternative systems of medicine
workers (AYUSH).
Source: Report of the Task Force on Medical Education for the National Rural Health Mission, EY research and analysis

Considering the huge investment requirement for development of
physical infrastructure, partnership of both Government and
private sector would be an imperative
All new public facilities (secondary and tertiary) should be created through PPP: The Government needs to create physical
infrastructure and lease out operations to private players.
Partner Role Impact and benefits

Government ► Lease public health infrastructure to ► Healthcare levels addressed:
private providers, ensure their Secondary and tertiary.
involvement in preventive and
► Geographies covered: Tier II and Tier
primary healthcare and pay
III cities.
community insurance premiums.
► Better utilization of new hospital
Private providers ► Deliver secondary and tertiary infrastructure.
healthcare services to local ► Address shortage of skilled
community. manpower by employing local youth.
In Karnataka, the super-specialty hospital constructed in Belgaum has been handed over to the
Case study 1 Apollo Group for management with some further grants for meeting a part of the recurring costs
during the first year.
In Chhattisgarh, the State Government gave Escorts a grant of Rs 12 crore to build and operate
Case study 2 a cardiac specialty center, subject to earmarking 15% of the patients, identified by the
government, who would be treated at discounted rates.
The management of 35 primary health centers (PHCs) (31 in Karnataka and 4 in Gujarat) has
Case study 3 been handed over to NGOs.
Source: Report of the National Commission on Macroeconomics and Health, MOHFW – 2005, The Financing and Delivery of Healthcare Services,
Background papers of the Report of the National Commission, 2005

PPP is an appropriate tool that can leverage the individual
strengths of public and private for achievement of individual,
as well as shared goals.
The appropriateness of the PPP model in the given context is strengthened by multiple drivers, which requires a
collaborative effort. The 5A-4E framework depicted below details the nature of demand-oriented drivers, i.e., from a
customer perspective (5As), and supply-oriented drivers, i.e., from a healthcare provider perspective (4Es).
Household expenditure on
Primary healthcare healthcare to be contained Readily recognizable Information – education –
facilities to be within a within a set affordability of symbol to be used that communication channels
travelling radius target, household expenditure. assures a minimum quality which demonstrate access,
e.g. within travelling time E.g. maximum of 2 to 3% of healthcare delivery e.g. affordability and
of 30-45 minutes. of the monthly NABH accreditation. assurance.
expenditure.
Demand side drivers
Advocacy and
Access Affordability Assurance
awareness
Operational efficiencies to
ensure optimal utilization Initiatives / ventures Optimal utilization of Returns to be proportional
of capital and human undertaken in healthcare healthcare infrastructure to efforts and
resources, which, in turn, to lead to better to service a greater investments, joint
ensure lower cost of healthcare outcomes, e.g. section of the patient decision-making, and
healthcare services., e.g, lower morbidity and infant population, e.g., higher operational and
lower average length of mortality rates. bed occupancy ratio. managerial autonomy.
stay.
Supply side drivers
Economies of
Efficiency Effectiveness Equity
scale

Key success factors for PPPs in Indian healthcare.
The concept of PPPs is based on collaboration and a reciprocal relationship between the participating
entities. The government and the private sector attempt to work towards a common cause while protecting
their individual interests. However, more often than not, they have differing interpretations and motives for
their participation. The key challenge is to develop and execute tactical strategies for implementation.
“Coming Together is the Beginning; Keeping Together is Progress; Working Together is Success”
07 01
Stability Equity, trust and autonomy

of political and legal Returns proportional to
environment, and presence efforts, joint decision-
of an enabling regulatory making, operational and
framework managerial autonomy
Transparency,
accountability and Governance and leadership
06 02
performance benchmarks Strong governmental
clarity of objectives, control, compelling vision
responsibilities, obligations Key Success and inspiring leadership
and mutual benefits Factors
for PPPs
Empowerment and
Involvement of Community Mobilization of resources
Obtaining buy-in from intended Timely allocation of funds and
beneficiaries human capital
Appropriateness
05 03
of partner (NGO or for-profit),
PPP format and
organizational structure
04
Access Affordability Assurance Awareness Advocacy

Provide financial incentives to promote investment by private
players in non tier-1 locations.
Government would need to provide the incentives.
Incentives that can be offered Requisites for incentives Benefits
► Extending the tax holiday from 5 years to ► Secondary and tertiary ► Reduced burden for the
10 years, as a 100-bed hospital providing health care facilities to private providers for
tertiary level care can at best become a be set up in non tier setting up new facilities in
tax paying entity after 5 years. 1 locations. non tier – 1 locations.
► Preferential rates of interest should be Healthcare Levels
granted by banking institutions. Addressed: Secondary and
► To encourage entrepreneurs to choose tertiary.
Healthcare Delivery as their preferred Geographies covered: Tier
investment, under section 10(23) FB, II and Tier III cities.
taxation of VC funds investing in
healthcare should be relaxed.
► Government can provide land at
reduced or subsidized rates only for
healthcare use
Sources: Report of the National Commission, 2005, The Financing and Delivery of Healthcare Services, Background papers of the Report of the National
Commission, 2005, EY research and analysis

Private providers should focus on enhancing the value proposition
through more cost-efficient creation and utilization of secondary
and tertiary healthcare facilities.
Reduction of capital expenditure to improve cost efficiency of creating a hospital.
Cost component Potential reduction in cost* Levers to minimize capital expenditure

Land ► Seeking governmental support/partnership
to reduce cost of land
Design and Architecture ► 10%-20% of project cost ► Designing according to business needs
► Increase in Floor Area Ratio (FAR) and
ground coverage
Civil Works ► 10-25% of Civil Works cost ► Using first principles for engineering design
instead of rules of thumb
► Planning facilities vertically rather than
horizontally
Engineering work ► 10-15% of engineering works ► “Total Cost of Operations” focus – choosing
expenditure “most appropriate” instead of “the best”
Medical equipment ► 5-15% of medical equipment ► Reduction in customs duty for high end
expenditure equipment
Project management ► Upto 30% of works cost ► Robust budgeting and planning to reduce
and control cost and time over-runs from “non-scheduled
items”
Note: Not exhaustive
*The savings projected are only indicative in nature and will depend on the respective hospital projects
Reduction of operating expenditure to improve cost efficiency of operating a hospital
Cost component Potential reduction in cost* Levers to minimize capital expenditure

► Purchases of drugs and 10-15% ► Develop formulary - rationalizing the number
consumables of Stock Keeping Units
► Maintenance of basic 7-7.5% ► Pooling expensive medical equipments
equipments, repairs and ► Operational costs to be taken into account
refurbishment during purchase of equipment to reduce
“Total cost of ownership”
Note: Not exhaustive
*The savings projected are only indicative in nature and will depend on the respective hospital projects

Measures that can be taken to improve the availability of
appropriate medical technology to a wider population
Issues impeding
Lack of appropriate equipment
access
Investment of Rs 1602(1) crores to make

the medical equipments available in the
Investment by network of Sub-centers, PHCs and CHCs
government ► Upgrade existing facilities
Rs. 656 crores
► Additional facilities Rs 946 crores
Source: (1) Data on current primary infrastructure from MOHFW website (MIS for NRHM),
estimates on additional facilities from NCMH report, EY research and analysis
Deploy innovative delivery models

► Outsourced diagnostic facilities with government reimbursement
Public-private ► Mobile diagnostic centers and medical units
partnership ► Telemedicine
For encouraging private participation in rural areas / tier II and tier III cities, government
should propose a policy to fund viability gaps similar to infrastructure projects
Investment in R&D
for Promotion of R&D by government to develop products that are customized to the needs and
“made-for-India” affordability of the Indian consumer
products
Case Study:
Examples of recent innovations by OEMs for improving access of population to health care
Features Benefits
Mobile battery operated ECG that can perform ► Suitable for rural India where
100 scans for a 3 hour battery charge electricity and infrastructure is often
Mobile ECG
not available
► Available at a price 20-50% that of
imported equipment
Flat panel, portable, generator operated

Portable cath lab
Cath Lab

PPP can also be used as an effective tool to enhance the
availability of appropriate medical technology to a
wider population.
Public Private Partnerships can be used effectively to create mobile diagnostic centers, and to also improve the
penetration and availability of equipment.
Type of PPP intervention Role of various stakeholders Impact and benefits
Outsourced diagnostic centers ► Government: Engage with ► Healthcare levels addressed:

private diagnostic centers and Primary and secondary.
pathology labs, and partly or ► Income levels covered: Below
wholly bear costs. Possibly tie-up Poverty Line (BPL) population,
with insurance companies for lower and lower middle class
the same. population.
► Private Players: Develop mobile ► Geographies covered: Tier II and
diagnostic networks to cover Tier III cities and rural areas.
suburban and rural areas. ► Ability to manage diseases at the
► Insurance companies: Provide primary level, thereby leading to
Mobile diagnostic centers insurance cover for diagnostic better healthcare outcomes
and pathology check-up costs. (low morbidity rates etc.).
► NGOs: Conduct awareness ► Entry portal for private providers
campaigns on the mobile into suburban and rural sectors.
networks and help private
players attain greater credibility.
Partnership for high-end ► Government: To encourage ► Healthcare levels addressed:

technology and capital private participation in rural Secondary and tertiary.
equipments areas / tier II and tier III cities, ► Income levels covered: Below
the government should propose Poverty Line (BPL) population,
a policy to fund viability gaps, lower and lower middle class
similar to infrastructure population.
projects. ► Geographies Covered: Tier II and
► Private Players: Provide access Tier III cities and rural areas.
to technologically advanced ► Access to improved medical
equipments at government technology and equipments in
hospitals in suburban and rural suburban and rural areas.
areas.
E.g. Wipro GE Healthcare Ltd.’s
recent partnership with three state
governments in India to set up
diagnostic facilities at major public
hospitals.

Case study – Telemedicine
Case study: Implementation of telemedicine in Andhra Pradesh spearheaded by Andhra Pradesh Vaidhya
Vidhana Parishad (APVVP).
PHC Network Expert Center
Medical imaging, conferencing
Radiology (X-Ray, Ultrasound,

CT-Scan, MRI, Mammography, etc,
Patients PHC Medical Pathology, ECG/EKG, Echo, Stress Receiving Experts
doctors equipment Test, Coronary Angiography equipment
(Siemens)
► Partnership between APVVP, private hospitals, OEMs and IT service providers

Model ► Project to connect the 23 district hospitals with 3 private hospitals in Hyderabad
► Pilot implemented in one district (Mehboobnagar)
► Medical tests conducted on patients in PHC transferred to expert centers

Operating ► Experts examine the digitally transferred reports and share comments with the PHC doctors
process
► More than 2,500 patients availed of telemedicine services at Mahboobnagar
Source: Planning Commission of India, EY research and analysis

Recommendations for improving assurance in healthcare are based on two key quality parameters.(1)
The first of them is technical quality, i.e., the level of competence with which an examination and/or treatment protocol is
implemented, be it medical examinations, diagnostic tests or the quality of administered drugs and medical care.
The second is personal quality which pertains to providers’ attitude towards patients, the surroundings in which healthcare is
provided, and the degree of attention a patient receives. Both these qualities need to be inculcated across the pipeline
generating healthcare human resources.
In effect, the following measures are required to enhance assurance in the healthcare domain:
A. Enacting an enabling regulatory framework.
B. Establishing the technical competence of health facilities to deliver quality care – through accreditation.
C. Enhancing the technical and personal quality of human resources involved in the delivery of healthcare.
Mandatory registration of clinical establishment:

► Legislation should be enacted by the central government to ensure uniformity across the states.
► This should cover all clinical establishments including diagnostic centres, dental clinics and should be
applicable for all systems of medicine, both in the private and the public domain.
► The registration database should be centrally maintained.
► To ensure efficient upkeep of the database, online filing with digital signatures should be encouraged. Filing
can be based on documents certified by licensed professionals.
Regulatory
► The registrations should be audited on a periodic basis with prohibitive penalties for non-compliance.
► Any changes made by clinical establishment that impacts the qualifying parameters should be updated in
the central database within a stipulated timeframe.
► Ideally, registration of health facilities should be based on defined minimum standards of service delivery,
and over-emphasis on standards relating to the infrastructure should be avoided. Implementation of new
facilities should be carried out in a phased manner. For all new health facilities, adherence to defined
minimum standards should be a pre-requisite for registration.
Accreditation of health facilities (both public and private) related to quality standards:
► Accreditation publicly recognizes achievement of technical competence in an organization, in terms of
accreditation standards and delivering quality services with respect to its scope. It goes beyond compliance.
Accreditation of health facilities
► However, considering the vast number of existing health facilities, making accreditation mandatory may not
be feasible. Hence it is recommended that the following measures be adopted for existing and new facilities:
► A market driven approach to promote accreditation.
► Consumer awareness created to educate consumers about accreditation and what it would imply for
them.
► Promotion targeted at institutional customers who outsource healthcare for their employees — their
stated preference to empanel accredited health facilities would drive accreditation.
► Some examples of accreditation standards which are already in use include NABH, NABL (through QCI)
and JCI
Note: (1)Recommendations for improving quality of healthcare human resources are based on 2 key themes according to a Harvard Team (year 2000)
NABH: National Accreditation Board for Hospitals, NABL: National Accreditation Board for Testing and Calibration Technologies, QCI: Quality Council of
India, JCI: Joint Commission International
Source: Planning Commission of India, EY research and analysis

Enhancing the quality of human resources involved in
healthcare delivery.
Improving assurance in the context of human resources for healthcare would require inculcating both technical and personal
quality across the pipeline generating human resources in the domain. The first of these is technical quality – the level of
competence with which an examination and/or treatment protocol is implemented. The second is personal quality, which
pertains to the attitude towards patients and the degree of attention that a patient receives.
Pipeline to generate and recruit human resources for healthcare.

Appreciation
Certification
Licensing/
Pool of Training Potential Rural
Selections Graduates Recruitment Distribution and deployment
eligibles institutions workers
Urban of resources
Update intellectual capital and train others
Changes in quality What can be done
Mismatch between existing ► Update education curriculum from focus on lectures to a

curriculum design and more practical application oriented approach.
prevalence needs ► Invest in faculty training and support its research aspirations.
Lack of adequate provision ► Make Continuing Medical Education (CME) and Continuing Nursing
Technical
for updating intellectual Education (CNE) mandatory for re-registration of all human resources
capital for health. Encourage senior nurses to take up management courses and
discharge administrative responsibilities.
► Entrust educational institutes with the responsibility to conduct CME
courses and provide incentives for it in the accreditation model.
Lack of credible accreditation ► Provide incentives in the accreditation models for colleges which ensure a
for educational institutions multidisciplinary environment with close linkages to regional healthcare
and delivery systems.
Any expenditure on this should not be treated as an expense but as an investment –

► Selection of students for any formal medical training should have a component of behavioral tests/ interviews/
group discussions to identify basic traits of service orientation. This has been a significant contributor (among
other initiatives) to success in prestigious institutes such as CMC Vellore and St Johns.
► Include formal training on subjects such as ethics, quality and safety as part of all health sciences training
curriculums. Subjects involving soft skills like communication, personal hygiene should also be included.
Personal
► Resources willing to work outside of the top 100 Indian cities should be given
► An allowance at least equal to their salaries. This can be paid, based on an innovative performance-based
financing method involving insurance companies and rely on the assessment from village panchayats.
► Proper habitable conditions such as potable water, soakage pits/ septic tanks, equipment, electricity or
backup generator sets.
► Other models, such as the one followed by Punjab Health System Corporation (PHSC), can be adopted
where appreciation letters were awarded to specialists who reached set performance benchmarks, which
resulted in an increase in work output (between 2000 and 2001) and in the number of patients — from
51 to 69 lakh patients.
Source: Recommendations for improving quality of healthcare human resources are based on 2 key themes according to a Harvard Team (year 2000)

5. To stimulate development of healthcare system capacity,
generate periodic health intelligence information at micro level
Healthcare, like retail, is a localized phenomenon. To enhance equitable distribution, it is important to

understand local healthcare needs and respond accordingly.
Role of government Joint role of all stakeholders
Building awareness in society to demand quality

Creating and publishing a detailed district-wise
healthcare
market assessment of healthcare demand and
Advocating right to quality healthcare at a political
supply for all levels of care
level
Creating an autonomous body to rate hospitals on a
Demanding legislative and constitutional changes to
set of defined parameters related to healthcare
facilitate availability of quality healthcare
outcomes.

Annexure

Annexure 1: Issues ailing human resources.
Annexure 1.1: lack of Integrated strategy.
Issue
► Healthcare is a state subject but medical education is a concurrent one. The responsibility for the healthcare
infrastructure in the country is distributed among the following bodies spread across center and state.
Ministry of Health and

Department of AYUSH
Family Welfare
4 independent councils – MCI, INC, Centre

CCIM CCH
DCI and PCI
State Ministries of Health
State
4 independent councils each
CCIM CCH
in every state– MCI, INC, DCI and PCI
► Within this structure , the councils operate with recommendatory powers while the ministries are responsible for
execution. Sharing responsibility in this manner dilutes the accountability aspect of decision-making.
► Apart from these bodies, there are various missions and committees that make recommendations, but these are not
able to follow up on their recommendations by identifying and mitigating implementation risks.
► This results in –
► There is an inequitable distribution of colleges across states.
► Further, it is difficult to maintain the quality of education across the country as de-recognition of colleges is
recommended by councils but decisions are taken by the states. Moreover, 55%(1) of the current college strength
in India is not bound by norms of quality set by councils, since these were set up before 1993.
Recommendations made/actions taken in the past.

► Recommendations to this effect have been made in the Srivastava Report 1975, the National Education Policy
formulated by Dr. Bajaj in 1986, and the Working Group on Medical Education of the Planning Commission in 1996.
These emphasized the need for a national and unified approach to health education and training. These
recommendations spoke about a permanent body which will work with all the other councils and will be based within the
Ministry of Health and Family Welfare.
► The recommendations have not been implemented till now as
► Each powerful body is operating in a silo to meet assumed objectives that are convenient but not necessarily
desirable to meet the country’s need to provide quality healthcare to all Indians
► The recommendations did not have a fixed timeframe for implementation
Note: MCI : Medical Council of India; DCI : Dental Council of India; INC : Indian Nursing Council; PCI : Pharmacy Council of India; CCIM :
Central Council of Indian Medicine; CCH : Central Council of Homeopathy

Annexure 1: Issues ailing human resources.
Annexure 1.2: lack of credible accreditation for educational institutions.
Issue
► The quality of existing institutions imparting education in health sciences is an area of concern.
► There are no uniform standards to measure the quality of undergraduate institutes but only minimum guidelines given
by Medical Council of India (MCI).
► There are no incentives for colleges to adhere to high quality standards.
Recommendations made/ Actions taken in the past.

► The MCI had proposed to the health ministry to set up an accreditation system in which an external body accredits
medical colleges based on the model followed in the USA and the UK. This proposal is still pending with the government.
► National Knowledge Commission (NKC) has recommended a Standing Committee within the structure of the
Independent Regulatory Authority for Higher Education (IRAHE), primarily to ensure that medical practice and
teaching are updated and revised regularly and minimum quality standards are maintained. This also includes
identifying agencies to give accreditation and the power to derecognize colleges. Further, an independent and
standardized National Exit Examination at the end of four-and-a-half years of study, is essential to conduct a national
level assessment of skills and knowledge.
► The Government of India established the National Board of Examinations (NBE) in 1975, an independent autonomous
body, functioning from 1982 for accrediting hospitals and institutions to conduct post graduate medical courses in 58
disciplines. It awards its own degree which is equivalent to the MD and MS degrees offered by Universities. Through
September 2007, the board had accredited 550 hospitals and institutions to carry out post graduate studies with an
intake capacity of 3500 candidates.
Annexure 1.3: mismatch between existing curriculum design and prevalence needs.
Issue
► The curriculum design of medical education, currently may not be aligned to the prevalence needs of the country.
► A study conducted by WHO-SEARO in 1995 noted a disconnect between the focus in the syllabus and the actual
morbidity pattern observed .This particular study revealed that only one of the nine prevalent ailments was being
covered by faculty during teaching as well as examinations (hypertension during teaching and Anemia
during examinations).
► Similarly the basic training for ANMs/health workers (female) in ANM training centres (ANM TCs) does
not make the ANM skilled enough to handle a delivery on her own in a house in a remote village-a reality in
most of rural India.
► There is very little service orientation in the curriculum with more focus on assimilating information than
on serving people.
► The curriculum is closely linked to a tertiary care hospital and, the graduates cannot function in a setting where
there is no multi-disciplinary support, or advanced diagnostic hardware. Development of clinical skills often takes a
back seat.
► The Medical education task force set up under NRHM as well as the draft proposal of the MCI recommended an
integrated problem based pedagogic methodology to link pre-clinical, para-clinical and clinical subjects. Further, the
task force has recommended that in order to equip students effectively, each college must take up the responsibility to
run one CHC.
► The proposed accreditation system by NKC would keep points for Institutions, which would ensure competent and
responsible faculties, a multidisciplinary academic environment and close linkages with regional health care and
delivery systems.
► An advisory committee to the US government had suggested that five core competencies are essential for all health
professionals.
Provide Patient- Employ Evidence- Apply Quality Work in Inter- Utilize Informatics
Centered Care Based Practice Improvement disciplinary Teams

Annexure 1: Issues ailing human resources
Annexure 1.4: lack of incentives to increase penetration of educational institutes in focus areas.
Issue
► One of the ways to increase penetration of human resources in focus areas is to set up educational institutes in those
areas. Unfortunately, archaic norms have increased gestation period for the much needed investments in these areas
both for state government and private players. Two outdated norms that are most capital intensive are discussed here:
Norm 1 : Minimum 25 acres of land.
► Having 25 acres of land is a pre-requisite to starting a medical college according to Medical Council of India norms. The
envisaged rationale was to promote new colleges to be set up in remote areas, assuming 25 acres of unitary land would
be difficult to obtain in urban areas.
1999 Number of Set up in top % in top

onwards colleges started 100 cities 100 cities
Government 21 7 33%
Private 84 40 48%
Total 105 47 45%
► However, the norm has not been able to meet its intended objectives for the following reasons:
► Around 80% of the colleges were set up by the private sector, where half of the colleges are in the top 100 cities of
India and not in rural areas, thereby highlighting the ineffectiveness of the 25 acre norm.
► In addition, two-third of the colleges are in south India, where there is already a higher density of colleges /doctors.
Norm 2 : 5 beds in hospital required for 1 student in the attached medical college
(also beds to have 80% occupancy levels).
► As per NSSO 60th round survey, the ALOS for Government hospitals is 10.9 days and for private hospitals it is 8 days.
These have been reduced by as much as 50% over the last 10 years, especially for surgeries. However, during this
period, the 1:5 student to bed norm in colleges with 100 seats has remained the same. Even if the reduction is assumed
to be 25% on average, each student can still get exposure to the same number of patients as before, even with a norm
of 1:4.
Recommendations made/actions taken in the past.

► All norms are supposed to be revisited by MCI every five years. While recommendations are made and discussed,
decisions are not taken for action due to non-alignment of the various bodies involved.
► The National Knowledge Commission has recommended further budget allocation by the government to assist
equitable college distribution.
Note: ALOS : Average Length of Stay; NSSO : National Sample Survey Organisation; PPP : Public Private Partnership
Source: COCIR (European Coordination Committee Of The Radiological, Electro-medical And Healthcare IT Industry), EY research and analysis

Annexure 1: Issues ailing human resources
Annexure 1.5: lack of adequate provision for updating intellectual capital.
Issue
► Continuing Medical Education - The efforts of the government to provide continuing education to doctors, nurses and
para-medicals have been inadequate and in some regions nearly non-existent. The estimates today indicate that
professional knowledge changes drastically within six to seven years and require regular professional updates.
► Re-registration - There is no provision for periodic re-registration of healthcare human resources. Although updating of
registered information is mandatory it is hardly done, and thus, doctors who are deceased or not in practice remain in
the count as "Registered”. A doctor’s name is removed only when a disqualification is made on grounds of malpractice
or fraud, and in rare cases when the death of an individual is reported to the state registry.
► Similarly, there is no record of doctors who have left India.
► Teacher Training - There is no requirement of training for the appointment of teachers in medical colleges in India. The
concept of teacher training is not popular in medical education in India.

► The MCI had made a set of recommendations to the Health Ministry suggesting that CME for doctors should be made
mandatory and should be a pre-requisite for re-registration.
► Some CME programmes have been organized intermittently by the IMA (Indian Medical Association); CMC Hospital,
Vellore; NIHFW, New Delhi.
► Faculty development began in India in1976 but its reach has been limited and is in need of funds. National Teacher
Training Centres (NTTCs), Medical Education units (MEUs) and Consortium of Medical Institutions for Reform in
Medical Education have been operational for long and have shown limited but successful results. Grants for NTTCs were
stopped in 2002.
Annexure 1.6: poor payment structures and working conditions.
Issue
► Poor payment structures have been a sore point with most doctors, nurses and allied health staff working in the public
health infrastructure particularly in rural areas. This is true for faculty as well.
► Sample studies indicated that 85% of the doctors belong to the top household income quintile(1) (Q5) and are nil in
the first three quintiles ( Q1,2,3). Further, 77% of the doctors have residences in urban India, which results in the
following–
► Lack of willingness to serve in rural areas.
► Migration to foreign countries.
► Migration is another issue in case of nurses who find better opportunities – pay and working conditions in
foreign countries.

► The National Knowledge Commission has provided faculty-retaining techniques in its recommendations. Some of these
that are linked to pay and research opportunities are practical and can help to reduce the faculty brain drain.
► However, not much is being done for nurses. Upgrading nurses’ courses has been recommended in the past to increase,
their role in hospital administration, but not much has taken place in this area as most nurses find immigration
opportunities more lucrative.

Annexure 2: Regional/State-wise distribution of prevalence.
Disease Focus Key metrics

Disease
distribution states* (Indicating provider/ performance)
Maternal UP
Conditions Assam
MMR Per Lakh Live Births
Rajasthan % Institutional Births % Birth assisted by medical personnel
517 490
445
MP 51% 58%
379 371 358
300
Bihar
34%
26%
UP Assam Rajasthan MP Bihar Orrisa India Focus states Other States Focus states Other States
Diarrhoeal WB Access to safe drinking water (%)

32% 100%
Diseases AP
Maharashtra 83%
5%
6%
6%
6%
9%
16%
70%
19%
% cases = 68%
% Population = 37%
West Andhra Maharashtra Uttarakhand Karnataka Madhya Jammu Others Total
Bengal Pradesh Pradesh & diarrhoeal
Kashmir Focus states Other States
Tuberculosis UP District Tuberculosis Centre per 1000 cases

Rajasthan
% cases = 54%
AP 1.9
45%
% Population = 52%
1.4
6%
100%
7%
8%
8%
10%
17%
Uttar Pradesh Maharashtra Rajasthan Andhra West Bengal Tamil Nadu Others Total - TB
Pradesh
Focus states Other States
Childhood West Bengal

cluster 20% 100% MP Vaccination %
disease 5% 4%
4%
AP 63%
6%
7%
8% 45%
22%
% cases = 80%
24%
% Population = 46%
West A&N Andhra Jammu & Madhya Uttar Karnataka Kerala Others Total -
Bengal Islands Pradesh Kashmir Pradesh Pradesh Childhood Focus states Other States
disease
AIDS TN
15%
100%
Maharashtra
Anti Retroviral Integrated Testing
18%
5%
3%
Andhra Therapy (ART) and Counseling Centers (ICTC)
27%
Pradesh centers per 1000 cases per 1000 cases
50
Gujarat 2.0
32% % cases = 85%

% Population = 29% 15
0.3
Tamil Nadu Maharashtra Andhra Pradesh Gujarat Delhi Others Total - AIDS
Focus states Other States Focus states Other States
Source: National Health Profile – 2007, Report of the National Commission on Macroeconomics and Health – 2005, EY research and analysis
Note ** Focus states are states with higher prevalence and poor performance on key metrics

Annexure 3: What other countries have done to address the
similar issues.
Integration of traditional medicine…
What India has

Case study Thailand Sri Lanka China Myanmar
done?
► Siam ► Ayurvedic ► Chinese Herbal medicine ► Four traditional ► Ayurveda

(including ► Accupuncture medicine systems- ► Yoga
Traditional Ayurveda, Unani ► Traditional Chinese Dessana, ► Unani
medicine and siddha) Massage Bethitza,Vessadara ► Sidha
► Deshiya Chikitsa ► Qigong and Netkhata ► Homeopathy
► Around 83.3% of ► Around 45% of the ► Around 40% of healthcare ► There are 14 ► More than 50% of the
regional general population seek in China is based on separate traditional total number of
hospitals and 67.8% indigenous medical Traditional Chinese medicine hospitals in medical practioners
of community treatment. Medicine (TCM). the country. are from AYUSH.
hospitals have at least ► There are 46 ► Every city has a hospital ► There are 237 ► Around 25% of the
Access one practitioner of provincial practicing TCM. The plan is traditional medicine population prefers a
traditional medicine. hospitals, 122 for every county to have clinics and 8000 non-allopathic system
• % Treatment
► There are nearly central one such hospital. practitioners of of treatment.
• % preference 15,000 traditional dispensaries and ► In 95% of the hospitals, traditional medicines.
/ coverage medicine 231 local there are TCM
• Providers practitioners in the dispensaries. departments. Around 40%
country. ► In addition, there of the medicines
are well-developed prescribed are traditional.
private hospitals. ► Around 25% of the
patients opt for traditional
treatment.
► In 2002, a new ► Sri Lanka was the ► Traditional Chinese ► Traditional medicine Department of AYUSH
department for the first country to medicine has its own in Myanmar has a under MOHFW
development of Thai establish a department at the Ministry separate department ► Initiatives by GoI
Traditional Medicine separate Ministry of Public Health and at under the Ministry of ► At the CHC level, two
and Complementary of Indigenous provincial and county Health. rooms shall be
and Alternative Systems of Bureaus of Public Health. provided for AYUSH
Systems of Medicine Medicine to practitioner and
Governing was established under validate traditional pharmacist under the
the Ministry of medicinal practices Indian Public Health
structure Health. and facilitate System (IPHS) model.
► The 2002–2006 Five- access to ► Single doctor PHCs
Year Plan for called traditional shall be upgraded to
for integration of medicines two doctor PHCs by
traditional medicine alongside modern mainstreaming AYUSH
into the primary medical practitioner at that
health care system. treatments. level.
► Five medicinal plants ► The Ayurvedic Drug ► A state drug ► Newer drugs are ► Development of
are used in the Formulary administration for Chinese being developed, Ayurvedic
Essential Drugs List Committee deals medicine was set up to especially for pharmacopoeia.
and 60 plants to treat with the safety and examine and approve common diseases ► Development of
25 minor diseases in efficacy of Chinese medicines and such as malaria, TB, Ayurvedic Formulary.
primary healthcare. Ayurvedic drugs. materials. dysentery and ► Drugs governed by
Traditional ► Pharmacopoeia is to ► All the drugs ► A quality check was diarrhoea. Drugs and Cosmetics
drugs be developed. available in the undertaken for Chinese ► Two departments of Act.
► There is a provision in market must have a medicines introduced to medical research for ► Strict regulation for
the law for the report on their the market. the development of schedule E drugs
registration of safety and clinical traditional drugs containing toxic
traditional and herbal efficacy. have been set up. ingredients.
drugs.
► Yes ► Yes ► Yes ► Yes ► Yes

Coverage in Law
Source: Legal Status of Traditional Medicine and Complementary/Alternative Medicine: A Worldwide Review, WHO 2001, Review of Traditional Medicine in the
South-East Asia Region, published by: WHO Regional Office for South-East Asia,New Delhi November 2004, IK Note No 83 written by Deepa
Srikantaiah, Consultant, Africa Region, World Bank based on the Sri Lankan Ministry of Indigenous Medicine Policy Report, Aug 2005, Report on
Traditional medicine , MOH, Myanmar, Health in China: Traditional Chinese medicine: one country, two systems, British Medical Journal, July 97

similar issues.
Disease Improvement areas

Maternal Lower Maternal Mortality Rate (MMR) and
conditions lower Infant Mortality Rate (IMR) in Sri Lanka
97%
can be attributed to the fact that: 92%
► Higher proportion of births are assisted by 42%

India
trained personnel 33% Sri Lanka
► Higher proportion of institutional births

% Birth attended by % Institutional Births
Mental Health ► 70% of the countries in the world have a trained personnel
substance abuse policy.
► The 17 mental hospitals in Thailand are
integrated with mental health outpatient Key Indicators
facilities, providing 1.4 beds per 10,000 W orld
population (India has only 0.2). 1.69
W orld
► In Thailand, the social insurance system 1.20
covers all severe and some mild mental
South East
disorders due to which 93% of Thai people India Asia 0.33
India South East
have free access to essential psychotropic 0.25 0.20 Asia 0.20
medicines.
Source: WHO AIMS Reports on Mental Health Psychiatric beds Number of psychiatrists
Systems (India and Thailand) 2006. per 10,000 population per 100 ,000population
Child Hood ► Thailand, Bhutan, Sri Lanka have achieved

Cluster Disease low mortality due to high vaccine
Measles containing vaccine (MCV)
– Measles coverage and inclusion of second dose as
coverage (percent)
measles and rubella
Source: World Health Organization (WHO), 96% 99%
90%
Measles control: Current trends and 59%
recommendations, Indian Journal of medical
research, Feb 2005.
Cancer ► Singapore has implemented a strong anti-tobacco program

India
that decreased Sri
Thailand
the prevalence
Lanka
of
Bhutan
smoking from 19% to 14% in the 80s.
► The Singapore cancer registry covers close to 100% for incidence, distribution and changing
patterns data.
► In Singapore, nationwide screening programs focused on cervical cancers are carried out by the
government, clinics, hospitals and NGOs.
► Singapore has a number of smoke cessation clinics.
Source: WHO Scaling up, prevention and control of NCD in the SEA region (2007), Japanese Journal of Clinical
Oncology (2002), Tobacco Control in Medical Schools of India, MoHFW.
Public Health ► Canada is transforming its healthcare system using E Health technologies and at current
estimates will be one earliest countries to achieve a country-wide transformation. Using its unique
strategic investor model it has invested significantly in the Electronic Health Records (EHR) &
Public Health Surveillance, which enables a Pan-Canadian system for tracking and monitoring
diseases.
► Australia has also identified a need for development of a healthcare system based on a E-Health
platform and its primary focus is adoption of EHR.
Source: Canada Health Infoway (www.infoway.ca): www.health.gov.au

similar issues.
Case Quality • Regulations act as a tool to achieve Quality in Healthcare…
• Underwrites training of health personnel.

• Defines working conditions.
• Regulates the quality of health service organizations.
• Monitors safety.
• Regulates the volume of health services supply.
France
• Legislations
• 1984 law requires hospital medical committees to issue annual report on quality evaluation.
• 1991 law requires hospitals to define and demonstrate internal quality systems.
• 1996 ordinance of 24 April requires mandatory quality improvement, hospital accreditation,
patient surveys in public and private hospitals.
Source: WHO - International Digest Of Health Legislation
Various sections of the Decree 1424, 1997, lays down the following:
• Implementation of the national program for quality assurance of medical care to be made
compulsory for all national health establishments.
• National commission for the accreditation of health establishments to be set up.
• Standardization of procedural manuals, production and performance standards for
Argentina health services.
• Formulation of standards governing the supervision and control of compliance
with the program.
• Evaluation of the quality of medical care services and accreditation of health services.
• Analysis of the impact of the results obtained and the degree of consumer satisfaction.
Source: Healthcare in France and Germany: Lessons for the UK, Civitas: Institute for the Study of Civil Society, London
Source: WHO - International Digest Of Health Legislation, Healthcare in France and Germany: Lessons for the UK, Civitas:
Institute for the Study of Civil Society, London

Acknowledgements

Acknowledgements
Abraham Kuruvilla C.V Ramana Reddy

Tax Manager Head – Medical Technology Parks
GE Health Care South Asia Indu Projects
A Babu D Raghavan
Chief Executive Officer Executive Vice President
Aarogyasri Healthcare Trust Siemens Medical Solutions
Government of Andhra Pradesh
Dr. D.K Srinivasa
A.L.N Prasad Former Consultant, Curriculum Development
General Manager Marketing and Business Development Rajiv Gandhi University of Health Sciences
Lab Diagnostic division
Piramal Healthcare Ltd George Varghese
Sr. Vice President –Diagnostic
Aloke Gupta Piramal Healthcare
Consultant - Health Insurance
Dr. Girdhar J Gyani
Anjan Bose Secretary General
Senior Director and Business Head Quality Council of India
Philips Healthcare (India, Bangladesh, Sri Lanka, Nepal)
Girish Mehta
Lt Col (Dr.) A.R.N Setalvad President and SBU-Head Lab
Secretary Piramal Diagnostic
Medical Council of India
Dr. G.S.K Velu
Ashok Kakkar Managing Director,
Vice President Trivitron Group of Companies
GE Health Care South Asia Metropolis Healthservice Ltd.
Binay Agarwala Jaya Qurvilla

Head Health Business & Corporate Strategy Dean
ICICI PruLife Hinduja Nursing College
Dr. C.A.K Yesudian Dr. J.P Dutta

Dean, Hospital Administration Course Chief Operating Officer
Tata Institute of Social Sciences Sahajanand Medical Technologies Pvt. Ltd.
Chandra Iyenger Kashmira Balsara

Addl Chief Secretary Principal
Public health and family welfare K. J. Somaiya College of Nursing
Chandra Shekhar C Dr. Krishna Reddy

Chief Marketing Officer Chief Executive Officer
Apollo DKV Insurance Co. Ltd. The Care Group of Hospitals
Dr. C.M Francis Dr. Kumar Dhawale

Member and Health Management Consultant Director
Society for Community Health, Awareness, Dr. M. L. Dhawale Memorial Homoeopathic Institute
Research and Action (SOCHARA)

Acknowledgements
Meera Ramakrishna Ravi Mathur

Marketing head Chief Executive Officer
GE Health Care South Asia GS1 India
Milind Shah Dr. Ravi Narayan

Managing Director Community Health Advisor
Medtronic India Society for Community Health, Awareness,
Dr. Narottam Puri
President – Medical Strategy and Quality Dr. R.K Kaushik
Fortis Healthcare Ltd. Chief Manager
New India Assurance Co. Ltd.
Dr. N.K Reddy
Director & Chief Executive Officer Dr. R.V Karanjekar
The Care Group of Hospitals. Associate Vice President
Head - Wockhardt Hospitals
N.K Sethi
Senior Advisor Dr. Sadanand Reddy
Health Planning Commission, Managing Director,
Government of India. Gold Star Health care
Dr. O.P Manchanda Dr. Santosh Gupta

Chief Executive Officer Radiology,
Dr. Lal Path Lab Hinduja Hospital
Dr. Partha Pratim Panda Shireesh Sahai

Vice President General Manager
Raksha TPA DI Performance Technologies
GE Healthcare – India
Dr. Priyesh Tiwari
Chief of Community Health & Wellness Program Sridharan
The Care Group of Hospitals General Manager Marketing
Philips Health care India
Dr. Rajan Ghadiok
Head of Medical operations group Sumati Ranadeo
Fortis Healthcare Ltd. Manager Regulatory affairs
Abbott Vascular
Dr. Rajesh Bhalla
Director- Medical services Dr. Sundararaman
Dharamshila Hospital and Research Centre Executive Director
NHSRC.
Dr. Rajesh Gothi
M.B.B.S, M.D (Radiology) Tapan Ray
Director General
Ranjit Roy Chaudhury Organization of Pharmaceutical producers
Former President – Delhi Society for the Promotion, of India (OPPI)
of Rational Use of Drugs (DSPRUD)

Acknowledgements
Dr. Thelma Narayan

Coordinator,
Society for Community Health, Awareness
Dr. Ved Prakash Mishra

Secretary,
Medical Council of India
Dr. Veera Prasad

Chief Operating Officer
Global Hospital
Dr. Vivek Desai

Managing Director
HOSMAC
Dr. Vivek Mishra

M.B.B.S, M.S (General Surgery)
Dr. Y.P Bhatia

Managing Director
Astron Hospital & Healthcare Consultants Pvt. Ltd.
Zubin Daruwala
Director Business Development
Johnson and Johnson Medical India

Notes

Notes

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TLR - Fostering Quality Healthcare For All

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Fostering quality

healthcare for all

Fostering quality healthcare for all

Fostering quality healthcare for all 3

4 Fostering quality healthcare for all

G Kali Prasad Muralidharan M Nair

Fostering quality healthcare for all 5

6 Fostering quality healthcare for all

In this report, you can look for answers to questions related to –

How can all get

disease conveniently can quality of

all avail quality

Market technology) Consumer point

Inclination of consumers How can quality healthcare be made

Fostering quality healthcare for all 7

8 Fostering quality healthcare for all

Fostering quality healthcare for all 9

10 Fostering quality healthcare for all

What needs to be done

Indicators India Brazil China USA

DALY rate for Non Communicable diseases per

Fostering quality healthcare for all 11

Indicators India Brazil China USA

12 Fostering quality healthcare for all

► Recommended role of the government:

► 3B. Physical infrastructure

Fostering quality healthcare for all 13

► Recommended joint role of the government and private sector:

14 Fostering quality healthcare for all

Fostering quality healthcare for all 15

16 Fostering quality healthcare for all

Performance on key healthcare indicators

1950-51 1980-81 1990-91 2005

Phase 1 Phase 2 Phase 3

1951 1981 2003

Fostering quality healthcare for all 17

Current state of the goals laid down in NHP of 1983

India Brazil China Russia Malaysia Sri Lanka

Life expectancy at birth (Years), 2005

18 Fostering quality healthcare for all

Percentage contribution of key diseases in total disease burden

Note: Reported ailments here signifies commencement of new ailments

Fourteen diseases contribute to 76% of approximately 3 crore hospitalized cases.

Percentage contribution of key diseases in hospitalization cases 24% 100%

Joints & Bones

Life expectancy and healthy life expectancy at birth

Life expectancy at birth in years Healthy life expectancy at birth

Fostering quality healthcare for all 19

Maternal conditions Mental health

7 states have one-third of the population but two-third of diarrheal burden

19% % cases = 67%

West Uttar Maharashtra Andhra Bihar Kerala Others Total

20 Fostering quality healthcare for all

Percentage cases of diabetes

Childhood cluster diseases

Percentage cases of childhood cluster diseases

Tamil Nadu Maharashtra Andhra Gujarat Delhi Others Total - AIDS

There is a significant difference in the Number (Per 1000) of person

Persons reporting onset of ailments in last 15 days per 100,000 population

gastro- respiratory whooping malaria accidents/burns/ cardio- kidney/

Prevalence of serious morbidity is slightly higher in females in India.

Prevalence of serious morbidity by gender per 1000 population