India's healthcare spending to cross Rs 200,000 cr by 2012

The CII- Mckinsey report says that 80 % of the investment would come from pvt sector.

India will spend a huge Rs 200,000 crore on healthcare in the next five years as the country, on an economic upsurge, is witnessing changes in its demographic profile accompanied with lifestyle diseases and increasing medical expenses.

"Changing demographics and disease profiles and rising treatment cost will cause the spending on healthcare delivery to over Rs 200,000 crore by 2012," a CII-Mckinsey study on 'Health in India' has said.

The healthcare sector contribution to GDP and employment is significant and it is one of the largest service sectors of the economy. Given the appropriate regulatory support and clearer roles for public and private healthcare delivery, the sector can play an even greater role, the report said.

"Revenues from the healthcare sector account for 5.2 per cent of the GDP and it employs over 4 million people. By 2012, revenues can reach 6.5 to 7.2 per cent of GDP and direct and indirect employment can double," it said.

The report suggests that to meet the rising demand, India will need to invest in infrastructure and create cost-effective facilities, "Investment would be needed for building a healthy base of hospitals and medical personnel. " An investment of Rs 100,000 crore to Rs 140,000 crore would be needed to create the desired capacity, it said.

Close to 80 per cent of the required investment should come from the private sector. The government's spending on healthcare is around 0.9 per cent of the total GDP, which limits the extent and effectiveness of the coverage it can provide.

Private healthcare will continue to be the largest component in 2012 and is likely to double to Rs 156,000 crore. It could rise by an additional Rs 39,000 crore if health insurance cover is extended to the rich and middle class.

The public spending could double if the government reaches its target spending level of 2 per cent of GDP, up from the current 0.9 per cent, according to the report. Coupled with the expected increase in the pharmaceutical sector, the total healthcare market in the country could increase to Rs 232,000-Rs 320,000 crore (6.2-8.5 per cent of GDP) in the next five years.

Outpatient care accounts for 61 per cent of private healthcare spending, of which maximum is on acute infections like fever, diarrhoea and gastrointestinal disease.

Inpatient spend is concentrated on groups like cancer, heart disease, accidents, acute infections and injuries that account for 85 per cent of private spending. Of the expected Rs 156,000 crore private healthcare spending in 2012, inpatient spending will account for 47 per cent. The growth will be driven by rise in diseases, especially cancer and cardiovascular disease.

Outpatient spend will decrease in terms of share but increase in absolute terms to Rs 74,000 crore, the report added. Private healthcare will continue to be the largest component in 2012 and is likely to double to Rs 156,000 crore.

It could rise by an additional Rs 39,000 crore if health insurance cover is extended to the rich and middle class. The public spending could double if the government reaches its target spending level of 2 per cent of GDP, up from the current 0.9 per cent, according to the report.

Coupled with the expected increase in the pharmaceutical sector, the total healthcare market in the country could increase to Rs 232,000-Rs 320,000 crore (6.2-8.5 per cent of GDP) in the next five years. Outpatient care accounts for 61 per cent of private healthcare spending, of which maximum is on acute infections like fever, diarrhoea and gastrointestinal disease.

Inpatient spend is concentrated on groups like cancer, heart disease, accidents, acute infections and injuries that account for 85 per cent of private spending.