Looking at the Big Picture

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COVID-19 has made the planet realise and appreciate the importance of having a robust healthcare system, fully equipped and battle ready, not only as a positive public health service and a first line of defence, but also as the last resort. The UN describes National Security as the ability of a state to cater for the protection and defence of its citizenry. International relations, geopolitics, globalisation and other such preoccupations pivoted around defending us from one another, have resulted in one catastrophic failure. The failure to recognize an external threat which does not discriminate based on nationality, race, religion, sex, and so on. It is the ultimate failure to acknowledge healthcare as a national security threat, especially in today’s increasingly interconnected, interdependent, and interwoven world.

India’s healthcare predicaments

Healthcare is a serious National Security concern and we must commit ever-greater resources to the same. More glocally, however, India’s healthcare system, while extremely vast, is ridden with numerous pitfalls, a large part of which can be explained by the National Health Profile-2019 report which states that India spends roughly a meagre 1.28% of GDP on healthcare. Notably so, our government spending is substantially lower than those of most other countries, especially including some of our neighbours (Bhutan – 2.5%; Sri Lanka – 1.6%). Some of these engrained issues in our healthcare system can be embodied by the ‘Five A’s’: Lack of Awareness; Lack of Access; Absence of human power; Lack of Affordability; Lack of Accountability. Additionally, The Harvard School of Public Health also notes that our “underfunded health care systems…in many cases are inefficiently run.” Moreover, as was noted in a recent study by the C.D.D.E.P and Princeton University, the low figures of key healthcare facilities were unsettling. For instance, for over 130 crore people there are estimates “suggest[ing] approximately [only] 19 lac hospital beds, 95 thousand ICU beds and 48,000 ventilators” being available. Such deep-rooted and extensive issues make India frightfully vulnerable to any healthcare crises, just as the one we are currently experiencing. After hoping and assuming we power through this disaster, what’s next? What should be the course of action for India’s healthcare industry, to build it into a stronger, more resilient, and appreciably reliant operation? How should we now be armed against the next, inevitable health crisis?

Is increasing government spending merely just an ideal?

The first, most obvious, and foremost suggestion is for our government to increase its expenditure on healthcare, geared toward improving existing facilities as well as adding many more. Interestingly but unsuccessfully so, the High-Level Expert Group (HLEG) on Universal Health Coverage (UHC) – constituted by the Planning Commission of India in October 2010 – recommended that our government “should increase public expenditures on health from the current level of 1.2% of GDP to at least 2.5% by the end of the 12th plan, and to at least 3% of GDP by 2022.” Even just recently, the Chairman of the 15th Finance Commission said that “over the next 5 years, the centre alone should be able to spend at least 2.1% of GDP on health.” However, not only is that not as easy as it sounds, it has to be seen in the light of numerous other current contextual features.

For instance, while the pandemic continues to employ a large amount of government resources, an additional financial demand for improved healthcare – solely from the government – will immensely put a strain on our economy. Moreover, needing economic stability coupled with time for recovery post-pandemic, the government will surely hold off on immediately increasing its healthcare expenditure. Rajiv Ahuja, a leading economist, rightly points out that “if the GDP doesn’t grow at a desired pace…this will likely have implications on the government achieving its health spending goal.”  In addition to this, the question to be asked is ‘What is the cost to the government of the healthcare they provide?’ While this goes beyond the scope of this article, it’s important to note that the governments might be, overall, paying more for the same services that are provided by private hospitals – thus, the ultimate loss being borne by the taxpayers. For instance, private hospitals pay around Rs. 20-25,000 per month to their nurses, while government hospitals pay around Rs. 65,000. Similarly, a procedure such as a Liver Transplant costs the government somewhere around Rs. 18lacs, whereas the same at a private hospital would cost around Rs. 15lacs.

Is focussing on the private sector the way forward?

These conceptions consequently mandate our realization of the important role of the private sector. A realization that is, although, based on factual realties. It is imperative to recognise that the private sector not only accounts for “most of the health expenditures in the country” , but is also the “most important single source of treatment in both rural and urban sectors” – according to the National Sample Survey Organisation – and that “in fact, more than 70%…spells of ailment were treated in the private sector.” It is thus evident that the bed-rock of our healthcare infrastructure has become to be our private sector places, which is also why they need to be supported so as to bolster our country’s healthcare as a whole. But before we address those suggestions, it is key to understanding the already prevalent advantages of India’s healthcare industry upon which the future should be built. We have unique sets of benefits which serve us both, competitive and comparative advantages – a not-so-common occurrence in economics and economies.

India’s existing healthcare advantages

For starters, a few of our demand-side opportunities entail: an extremely underserved population, especially in the rural areas (since most large hospitals are in city-centres); an underserved population, however, of the world (with ever-increasing medical tourism); good quality healthcare especially when considering the highly reduced overall prices (speaking from personal experience, my emergency appendicitis surgery in Los Angeles had a bill [although, almost fully paid by insurance] of roughly Rs. 80lacs – a surgery which would cost around Rs. 1.5lacs here in India). On the other hand, some supply-side merits encompass: immense medical professionals’ manpower (for instance, according to WENR, India is the “largest supplier of migrant physicians in the world”, and the DGCIS surveyed that “Indian doctors and nurses have been major contributors to healthcare systems in both developed and developing economies”); robust generic pharmaceuticals which account for mass medication at relatively low prices; a substantial amount of medical education where, according to Dr. Rita Sood of AIIMS, “medical schools in India produce the largest number of doctors than anywhere else in the world” – which the government aims to further increase by the recent passage of the National Medical Commission Bill, 2019. While these benefits and attractions for increased investment in healthcare already do exist, India fails to aptly reap them resulting in a prolonged healthcare crises.

Prevalent impediments to harnessing these advantages

The underserved population of India keeps growing primarily because of the lack of investment into the healthcare industry, even as the population multiplies. For most regular health issues, the majority of our population is tended to by ‘Mohalla’ (extremely local) clinics that not only have very few resources but are also therefore unable to provide holistically dependable treatment. The poor, particularly in rural areas, have to travel very long distances to be able to access proper healthcare services. Moreover, our lack of infrastructure and low payment thresholds strip us of our medical professionals’ manpower and medical education advantages, as most of these individuals go abroad to the EU, the Gulf countries, the US and more. A senior official at one of the large hospital chains in India told me that they have a turnover of around 11,000 nurses every 18 months because they leave the country in pursuit of improved options. Additionally, since healthcare is part of the ‘State List’, the policies, bylaws, operating compliances, and other such concepts vary from state to state. This creates a great amount of uncertainty, deterring investors (domestic and foreign alike) and being counterproductive so as to thwart development.

For instance, as per The Drugs and Cosmetics Act, 1940 and Rules, 1945, some archaic compliance norms – formulated in an era not blessed with our technological innovations – that heighten operational costs and practical inefficiencies include the necessity of employing at least one exclusive, legally registered pharmacist wherever medicines are not only sold but also merely just exhibited or stored. Moreover, the granting of licenses for the storage, sale, and exhibition of drugs is based on a specifically demarcated area wherein each place/hospital (with many such areas) will require multiple licenses as well as pharmacists. Similarly, stark differences in building bylaws amongst states mandate completely new designing and construction operations. Such issues become even more burdensome when inexperienced bureaucracies with highly regulatory powers strive to mangle new development projects within red tape and technical issues. This lack of standardization takes away from the importance of the big picture of protecting our healthcare, particularly after seeing it through the lens of national security. This on-the-ground reality of the health sector entails a significant degree of regulation, thus posing as a counter-point impediment to our Prime Minister’s long-term vision of liberalization and deregulation.

The way forward

Most of these issues, however, have some sort of solution which the governments should adopt, with the end goal of protecting our national security from health-related threats – be it bio-weaponry, induced or naturally occurring epidemics. On the whole, building healthcare infrastructure should be the ultimate goal. If undertaking it directly is not yet an option for the government(s), easing the aforementioned issues and processes for private sector players should be the second priority. This infrastructural boon will not only carry immediate healthcare benefits but also those for the economy as a whole. For instance, it will be a significant source of employment since for every hospital bed installed, 5 medical experts of varying expertise are employed. Moreover, the increase in Foreign Direct Investment (FDI), the building of ‘war’ machinery, the support for the general economic slowdown, the increase in quality of healthcare, and many more such benefits can also be produced. In fact, bolstering of the healthcare industry will align congruently with our government’s focus on the ‘5T’s’: Tradition, Talent, Tourism, Trade& Technology.

To achieve the above, standardization is key. A stable policy framework (across states) to reduce, if not nullify, the uncertainty and its seriously detrimental effects is needed. This standardization has to be matched with a significant level of deregulation although, to avoid any misuse of this approach by the private sector a grievance cell comprised of independent experts should be set up (state-wise), based on which governments can take the necessary and appropriate action. Governments should be increasingly proactive in setting up hospitals, clinics, and other such healthcare facilities – for instance, by reverse auctioning land, reducing the red tape, and taking a strong stand against local troublemakers (for example, the local cop who wants his cut for the new hospital under construction, which he then halts leaving the company in a monthly 7/8 figure loss). ‘Health’ should also be moved from the State to the Concurrent list, as also rightly noted by a high-level group (HLG) constituted by the 15th Finance Commission.

In the urban areas, large hospitals should be set up on a Public-Private Partnership (PPP) basis. For instance, the Punjab government in Mohali took out a PPP tender on a revenue sharing basis, which the Max Hospital chain won and then created a super specialty centre. The land prior to this was dead land – with no beneficial output. After the PPP, not only has the hospital become a preferred place of healthcare for the locals but has also brought in a revenue, just in the past year, of over Rs. 14crore for the Punjab Government (the partnership has been on since the last 5 years). Countries such as the UK and Australia too have their own approach to PPPs, wherein they a focus on the “development/rehabilitation of facilities and facilities management”. The World Bank also correctly notes that “India…has adopted… more comprehensive service delivery PPPs, where not only are the facilities developed and improved by the concessionaire but services are provided.” The United Nations Economic Commission also recommends “the Use of PPP in universal health care delivery in support of the United Nations Sustainable Development Goals” since “the complexity of health systems around the world…requires private sector participation in health care delivery.” Such a Build-Own-Operate-Transfer (B.O.O.T) model would undoubtedly be holistically beneficial to all relevant stakeholders. In addition to that, however, the private sector players should also commit a certain, flexible percentage (e.g. 25%) of their entire treatment to the Ayushman Bharat (and alike) low fee/free rates that cater to the poor. This would allow the poor to make use of new health facilities too. Moreover, it is these private sector players who should then rebuild, restructure, and reinvigorate the ‘Mohalla’ clinics so as to promote healthcare directly in the rural areas.

A structure has to not only be put in place for the healthcare industry but also needs to be protected. Deregulation, Protection, Trust, and Grievance Redressal should be the guiding factors and mechanisms, whereas collateral damage and damage control should not be the bedrock for regulation making. We have great soft power for healthcare, and all our systems (be it economic, social, cultural, or any other) get a boost with improvements in the same. The necessity of it is self-evident, just as are the advantages a galore. So, one can conclusively say that healthcare is a national security concern and should undoubtedly be treated as so.

Edited version of this article has appeared in Firstpost