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`Healthcare spending may cross Rs 2,00,000-cr mark'

The CII - McKinsey report perceives that private healthcare spend would continue to be the largest component in the coming years. It could rise further if health cover became available, from 5.2 per cent of GDP to 8.5 per cent by 2012.

L.N. Revathy


THE healthcare delivery market in India is expected to more than double within the next decade. The estimated spending, according to a CII - McKinsey Report, would cross the Rs 2,00,000 crore-mark by 2012 from Rs 86,000 crore in 2001.

Delivered by a multitude of public and private providers, the healthcare spending, though comparable with other developing countries, is considered still relatively poor on health outcome in coverage, purchasing and delivery.

India spends over Rs 1,03,000 crore on healthcare, of which the delivery market gobbles up Rs 86,000 crore, while the rest goes to the pharma market.

"As a result of the poor coverage, almost two-thirds of the spending is out of pocket, which is inefficient and inequitable. Though social insurance has been in place since the 50s, the coverage has been restricted to few employees. Hardly 3 to 4 per cent of the population are covered by social insurance, and quality care is a dream even for those covered under the scheme," states the McKinsey report on Healthcare in India.

In terms of delivery, private providers capture 63 per cent of the Rs 86,000-crore spend, although the public (Government) infrastructure is vast especially in rural areas. Not giving heed to this investment, most rural Indians go to private providers for their healthcare needs.

This is despite the fact that the private providers of healthcare, though numerous, are fragmented along a variety of delivery models; exposed patients to greater risk as unqualified practitioners dominated private practice. The report, however, seeks to reason this preference to better availability and perceived quality of private care.

Among private providers of healthcare, for profit hospitals and nursing homes captured more than 50 per cent of the spend.

The report perceives that private healthcare spend would continue to be the largest component in the coming years. It could rise further if health insurance cover became available, from 5.2 per cent of GDP (gross domestic product) to 8.5 per cent of GDP by 2012.

Considering the current situation and the expected changes over the next decade, the report suggests that the Government and industry should create a viable and effective healthcare system, as the `Indian healthcare system is seriously under-performing'.

To meet the rising demand, India would have to invest in infrastructure and create cost-effective facilities. For this, the Government should launch certain initiatives such as stimulating private investments, defining and enforcing minimum standards, facilitate supply of quality manpower, stimulate growth of private, social and community insurance and reform the Government's role as payer and provider, the report suggested.

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