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Healthcare: Shared Journey Ahead for Private and Public Sectors

June, 2017

CFO Insights in conversation with Suneeta Reddy, Managing Director, Apollo Hospitals, on how private and public sectors can engage in a way that plays to each of their strengths in healthcare

How can the recently approved National Health Policy impact the healthcare sector in the coming years?

The National Health Policy marks a clear statement of intent from the Government. The policy unequivocally articulates a vision for Universal Health Coverage. We are heartened by this, and are sure that the Government will announce a series of actions to make this a reality. We also welcome the commitment to increase public health spending to 2.5% of GDP, and the focus on preventive healthcare. These are steps in the right direction, and we look forward to this shared journey ahead where the public and private sector will work together to make healthcare affordable and accessible for all. We have always been focused on clinical outcomes comparable to the best in the world. So we are extremely happy with the intent to monitor healthcare standards, and to grade establishments based on benchmarked protocols. This will provide information relevant to decision-making for consumers, and rightfully so. They deserve to know their providers, and to make an informed choice.

How can private players make healthcare services more affordable and accessible to meet the unmet demand across urban, semi-urban and rural regions?

The work of building a healthier India cannot be that of the Government alone – in fact, over 80% of the new bed additions in the last decade have been from the private sector. We in the private sector are very conscious of our responsibility and are working towards the twin goals of affordability and accessibility in a number of ways:

- Expanding bed capacity, especially in under-served areas – Many large private healthcare providers have expanded into Tier II and Tier III cities, and will continue to do so

- Leveraging technology to take healthcare services to the doorstep of the patient – telephonic consultation, tele-medicine, e-ICUs etc. which make geography history

- Increasing health insurance penetration and continuously expanding the list of services covered to help the patient stay worry-free about medical costs

- Innovation in financing models – Working with financial institutions to innovate financing models that enhance the patient’s ability to pay – e.g. EMI based financing for key procedures

- Improving internal efficiencies – We are continuously working on streamlining our internal processes, and making our support systems most effective for the patients. All these savings are passed on to the consumer, and will result in making healthcare more affordable

- Cross-subsidizing care – India is a destination of choice for Medical Value Travel, not least because our cost of care is still less than a tenth of our western counterparts. Even at these prices, we can afford to purchase the best of equipment and technology for all patients, and can invest in infrastructure that will serve all

In what capacity can the private and public sector further engage to achieve Universal Health Coverage for India?

There are several avenues for gainful partnership between the private and public sector. I believe the best way is to engage in a way that plays to each of our strengths. I fully concur with the intent outlined in the National Health Policy – where the Government wishes to partner with the private sector to fill critical gaps in secondary and tertiary care. The gaps are many (India has among the lowest bed-density ratios in the world) and the private sector has proven execution capability. If the Government can step into the payer’s role, and ensure a fair price for services rendered, and an efficient payment mechanism, we can ensure that all citizens gain access to care.

In the preventive healthcare space too, there are opportunities to collaborate. Institutions such as ours have deep expertise in designing and executing preventive health checks across all age groups, in analyzing early indicators, and in advising key lifestyle changes that will keep our citizens healthy. No nation can afford to care for a heavily sick population, and so, our Government has indicated its focus on preventive healthcare. I believe the private sector, with the expertise and data at its disposal, will be the ideal vehicle to carry this program throughout the nation.

In primary healthcare too, the private sector can play a pivotal role. At Apollo, we have extensive experience with effectively running District Hospitals and both Urban and Rural Primary Centres.

Apollo’s Total Health program in Aragonda is also a model for collaboration with the Government - a model capable of immense scale. By working with communities, and focusing on holistic health and happiness, the program can lead to the well-being and transformation of our population, cutting across demographic groups.

As a leading healthcare provider, what are the policy enablers that you think would help unlock more capital in the Indian healthcare sector?

Truth be told, the private sector in India has learnt to deal efficiently with extensive licensing and regulatory requirements - quite akin to learning to run when both hands and legs are tied. One can only imagine what it can accomplish when it is unshackled - when the Government puts in place forward-looking policy frameworks and incentives to help the sector not only remain viable, but thrive, and help bring down the cost of healthcare services considerably for the patients. For the unshackling to happen, the following needs to be done:

- Accord healthcare National Priority status both as an industry and in budgetary allocations each year. This will enable the development of innovative long term financing structures for healthcare providers apart from creating an attractive environment for domestic production of medical equipment, devices and consumables. The “Make in India” plan for Medical Devices announced in the National Health Policy is a welcome step.

- Ensure that the industry is protected from disproportionate and crippling increases in cost, by retaining it under the “zero-rating GST” category. Also, provide a mechanism under which the industry can avail the benefit of input tax credit, which is currently unavailable, thereby partially negating the effect of the zero-rating.

- Create an Innovation Friendly Climate, and encourage extensive in-house R&D activity, which will provide genuine impetus and foster solutions that work for India. Ensure protection of Intellectual Property in Healthcare.

- Create specific funds for healthcare infrastructure and innovation which encourage entrepreneurship and newer business models, and infuse seed capital into these funds.

- Accord Priority Sector Lending status to loans taken for medical treatment, so that they are available at lower rates of interest

- It is time for the Government to introduce and implement mandatory health insurance for all citizens, as a measure of sharing risk. It is vital that these are at viable rates for the provider. 100% tax deduction should be provided for health insurance premium payments, including Outpatient and Investigations insurance.

What are the strategic interventions required for skill development of healthcare sector workforce at par with global standards?

The rise of healthcare as an industry in India has only been possible because of the dedication and passion of our medical professionals – be it doctors, nurses, paramedics or technicians. They have time and again demonstrated the ability to deliver healthcare on par with the best of global standards. Alongside, they have been supported tirelessly by service function staff. All this has been possible only because of the sustained investment in skilling, and the thriving work environment that employers have been able to create in this sector over time, and the commitment and sincerity of our workforce. It is no wonder that Indian medical and paramedical staff are heavily sought-after the world over, so much so that Indian healthcare providers are today facing a crisis of attrition.

Given the conundrum of jobless growth that is facing us today, healthcare as a sector can deliver exponentially high employment numbers per capita of investment. What’s needed is a timely intervention in education at the collegiate level – in terms of curriculum, training and evaluation. We need nurses and technicians who are job-ready on day one. Healthcare service providers also can come together to create job-oriented training courses (Apollo runs its own MedSkills program through its MedVarsity), which will create a funnel of resources for the sector.

While we do have some work to do in this respect, we do need to commend the compassion and caring of the Indian workforce, which is exemplary, and which we need to cherish and protect as the sector continues to expand.

How is technology and innovation redefining the Indian healthcare delivery?

Along with Telecom and Financial Services, Healthcare is the sector which has most dramatically adapted to the digital revolution, which has truly democratized healthcare in the following ways:

(a) Making healthcare delivery location-ubiquitous: The wide spectrum of remote healthcare solutions has made quality care universally accessible. Tele-Radiology and Tele-Cardiology are well-established practices now. e-ICU enables remote monitoring of critically ill patients to improve outcomes.  Common Service Centers (CSC), set up in rural India, function as Tele Clinics, providing primary tele-consultation, and further facilitating need-based speciality consultation.

(b) Using data and algorithms to develop treatment protocols: Clinical teams study treatment data in detail to deepen our learning and understanding of disease and cure. We develop patterns for successful treatment protocols and publish them, so that the efficiency of care constantly improves.

(c) Providing 24X7 access to care, even when on the move: Patients can find a doctor, seek appointments, obtain virtual consultation, download diagnostic results, and store all health records, simply through their mobile devices, thereby bringing healthcare right into their hands and homes.

(d) Empowering the individual to take charge of his or her own wellness – The true test of democratisation of healthcare is when every individual has the information they need to lead a healthy life. The next step in Healthcare’s digital journey is Personalised Medicine. Its components include pharmacogenetics, machine intelligence and predictive analytics and preventive care including lifestyle management and wearables. Preventive medicine is getting its due now, with patients increasingly realising that investing in health is better than paying for treatment.

How would the price control mechanism impact the quality of medical devices and instruments?

We fully agree with and support the Government’s mission to make healthcare more affordable – but we do not believe the way forward is to arbitrarily fix caps on the prices of medical devices or consumables. This is because mandatory price caps have the tendency to result in compromised quality – and we are already seeing this unravel in the case of stents. There are various categories of stents - of varying quality and clinical suitability, and the “one size fits all” approach has led to stent manufacturers withdrawing the highest categories of stents from Indian shelves. This has significantly impaired the ability of our doctors in choosing stents that best fit the individual patient’s needs, and has deprived patients of the ability to choose the best medical option for their well-being. We are only laying the foundation for reverse medical value travel out of the country.

Even in the case of generics, we believe that price caps and mandates in the absence of a quality enforcement mechanism which can ensure the safety of dispensed generics, is premature. We would urge the Government to put in place the quality framework first, and thereafter progressively transition to a price control regime. Otherwise, sadly, our policies only seem to disincentivise investments in quality, and that is not a favorable sign for a growing superpower like ours.