Private sector takes the lead in healthcare

The pace of privatisation of the Indian healthcare segment is expected to be the fastest in the coming years. It has already exceeded the level of commitments on health services the country has made to the World Trade Organisation (WTO) under the General Agreement on Trade in Services (GATS).

Out of the 10 lakh hospital beds expected to be added in the next five years, 88 per cent would come from private players, according to a recent study by Ernst & Young.

The predicted dominance of private healthcare providers is in stark contrast to the existing situation where the difference in the private-public share in bed strength is not that glaring - Out of 12,22,654 beds available, 5,39545 are in the public sector hospitals (44.1 per cent). Compared with this, the public sector's contribution to addition in bed strength will be just 12 per cent during 2007- 2012, the study says.

The investment pattern reflects the trend with 89.5 per cent of future investments in healthcare infrastructure expected to come from the private sector. While the government spend during 2007-2012 is expected to be Rs 36,000 crore, the private sector's contribution towards development of healthcare infrastructure - particularly hospital beds - is pegged at Rs 3,13,650 crore.

The diminishing role of the government as provider of healthcare infrastructure is much beyond India's commitment at GATS, New Delhi-based policy think-tank Centre for Trade and Development (Centad) has observed.

"India has autonomously liberalised its health sector to a greater extent than required under its GATS commitment....Even in developed countries, the government contributes a substantial share in the expenditures on the health sector. Hence further liberalisation without addressing equity in access to healthcare could worsen the situation," according to a Centad paper, "Health Services Liberalisation in India."

The latest analysis by CRISIL Research confirms the trend. According to CRISIL, Delhi and Chennai have currently the highest number of beds at 12,935 and 12,784, respectively. It predicts that among key cities, Mumbai, Delhi and Kolkata will face an acute shortage of beds, whereas Chennai is the only city which will have surplus beds (3,931) for patients from outside. The CRISIL analysis shows that currently, the percentage is the highest in Kolkata and Mumbai, at 64.5 per cent and 63.04 per cent, respectively. This is 39.8 per cent for Delhi, 31.6 per cent for Bangalore and 13.2 per cent for Hyderabad.

CRISIL's city-wise analysis indicates that over the next five years, Mumbai is expected to top the list with a shortage of 15,327 beds. Likewise, Kolkata, Delhi, Hyderabad and Bangalore will face a shortage of 10,785 beds, 8,171 beds, 2,704 beds and 651 beds, respectively.

According to Sudhir K Nair, head, CRISIL Research, "The healthcare delivery industry is all set to become the engine of economic growth with lucrative pockets of opportunity."

Interestingly, the National Commission on Macroeconomics and Health in its report in 2005 had indicated this evolution of India's health system. The commission had pointed out that India's health policy is shifting towards privatisation of services. It also noted that the role of the state was g redefined from being only a healthcare provider to a financier of health services as well.