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A Brief Introduction to the Indian Healthcare System

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Indian healthcare system is asymmetric at best. Despite being one of the largest revenue and employment generating sectors, it’s substantially privatised.



In the rural and the urban areas, private healthcare delivery is preferred to the public one because of the quality of service and easier accessibility.

Healthcare in India has a compound annual growth rate of 16.5%. By 2020, it's expected worth could go over $280 billion. However, this growth is mostly a result of the rapid privatisation of this sector.

The rural and urban areas recorded 58% and 68% private hospitalisation between January-June 2014 as opposed to the 42% and 32% pubic hospitalisations respectively, as per the 71st NSS survey. Undoubtedly, the rapid decline of public hospitals’ contribution in the sector is the prime reason behind said asymmetric behaviour.

The Absence of a Health Cover

How do you pay your doctor? Cash is the most common answer here. Cash is also the answer to why our healthcare is so messed up.

A World Bank report on Macroeconomics shows a total of 5% Indians who own a health insurance plan. Most Indians don’t have a payment agreement with their hospitals. The insurance market has morphed itself to suit the urban families with middle to high income band.

While people have grown more aware of the significance of health insurance, the rural population are at an apparent loss here. Several government schemes appear to be balancing the situation. The Community Health Insurance program covers the BPL (below the poverty line.) LIC India has policies for the aged people. Government employees also get a part of health expense cover.

However, the semi-urban and rural people stand at a disadvantage owing to lack of access to health services in their area and deplorable conditions of primary health care. A 2004 NSS survey revealed that 46.76% patients weren’t satisfied with their treatment in a government hospital. 20.81% believed the facility to be too far and inconvenient to visit.

Differentiating How the Rural and Urban Areas Receive Healthcare in India

70% of the Indian population resides in rural areas. They have limited access to hospitals and clinics. There go-to medical advice falls somewhere between faith healing, natural medicine, and the few NGO services and government programs that run in their villages.

The urban areas have an abundance of hospitals, most of which are private properties. They offer quality healthcare services, have better, more qualified doctors, and access to advanced technological tools and preventive medicines.

India invests only about 4.2% of its GDP in the healthcare services and goods at present. On the other hand, private hospitals spend incredibly well, and as a result, they are sitting on a mine of monopolistic power. An example of the advantage these private providers enjoy is the distorted pricing of medical treatments and medicines.

The asymmetry, in this case, arises from the uneven distribution of hospitals among rural and urban areas, terribly flat funding for the public hospitals, an abundance of private hospitals, and inadequate monitoring of their standards and statements.

Deteriorating and Dismal Primary Health Care Infrastructure

An internal study run in 2015 by AIIMS, New Delhi, held extreme poverty responsible for over one thousand deaths from head injury.

An urban house spends five times that of a rural home on diagnostics and twice the amount than a rural home over medicines and the clinical fee. It’s an example of out of pocket expenditure over medical aid.

Many patients don’t have money at all. Out of those who can access medical care, some have no money left for rehabilitative care. The rest rely on fate to get assigned to one of the limited numbers of beds where the patients get treated.

As per the World Bank Data of 2013, India spends about $61 on per capita healthcare expenditure. Hospitals’ bed density in our country was stuck since 2005 at 0.9 beds for every 1000 patients and has slightly improved to 1.2 beds per 1000 patients.

Villages lack adequate facilities. Many patients don’t receive medical care because of weak infrastructure. To top the misery, India has a recurring situation with HIV, Malaria, Diarrhoea, and Tuberculosis. The infant mortality rate and maternal mortality rate pushes us further back in the line.

Medical Devices Need Upgrading

There is an urgent need of cheaper yet effective diagnostic tools at local clinics that the masses can afford. Other medical devices like stents, valves, pacemakers, titanium plates for fracture, etc. have a huge profit margin. The hospitals benefit from the limited access patients get to these devices.

While still a small section of Indian healthcare, experts see this sector as the most promising future avenue. However, regulations will be required to ensure that the patients get the best deals instead of the hospitals.

The Pharmaceutical Sector Grows in Market and Prices

70% Indians spend all they earn on drugs and medical care. The rural and urban people spend 68% and 64% of the total medical expense respectively for buying medicines. People resort to self-medication under the financial burden of drugs. An NSS report found that 57% rural and 68% urban population didn’t approach medical care because of financial constraints.

As per Indian Brand Equity Foundation, our country is the third largest pharmaceutical products’ exporter. And yet, Cancer cases the best exhibit the consequences of high medicinal cost on treatments. Only 36% of the 1.1 million Indian cancer patients receive treatment because of the high prices of a good number of recently patented drugs, as reported by V. Shanta.

The government has resorted to issuing compulsory licenses to lessen the burden of medicinal cost. They have released reasonable public requirements for passing the licensure test.  

An Appropriate Solution Will Be Hard to Curate

The Indian healthcare scenario is bizarre. There is a lack of conclusive data. It’s near impossible to figure out the reason behind price divergence between private and public medical aid without appropriate analysis of data.

A solution may lie in enhancing government’s intervention in the sector, marketization of the healthcare service, fixing the hole-ridden necessary healthcare infrastructure, or a mixture of all these measures. Anyways, improving the healthcare industry is the only way India can transform its socio-economic course of development.

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