James Militzer

All About India: A Health Care Market in Transition (Part 1)

Editor’s Note: This is the first post in a four-part series on developments and challenges in Indian health care. Subsequent posts will include:

The Indian health care system is in a crucial phase of its development. With low levels of public health care spending, skewed doctor/nurse ratios, a lack of rural health care providers and an unorganized private sector in primary care, the country has no shortage of challenges.

Yet it’s also home to a vast array of health care success stories, with enough thriving organizations, innovative business models and promising public initiatives to temper even the most pessimistic outlook.

Zeena Johar is uniquely positioned to analyze the current state of Indian health care. As the president and founding member of IKP Centre for Technologies in Public Health, and CEO of SughaVazhvu Healthcare (a network of seven micro health centers reaching 70,000 rural residents), she’s working at the front lines in addressing many of the country’s biggest challenges.

I spoke with Johar about what’s working (and what’s not) in India – and where the biggest opportunities lie for businesses and entrepreneurs. In this post, she identifies the growth areas in Indian health care, and discusses a potentially game-changing development that may be on the horizon.

James Militzer: What do you see as the main obstacle to health care delivery in India: Is it a shortage of providers, difficulty in reaching patients geographically, a lack of patient resources to pay for services?

Zeena Johar: It is actually a mixture of all of the above. You have like 70 percent of the country which is rural, and a reasonably small chunk of our country which is urban. But most of our medical infrastructure is urban, and most of our doctors are urban, because the opportunities are there. All of our tertiary care centers are based out of big cities. So you see a rural/urban divide which is very obvious.

The second very stark difference that we see is within the three broad health care categories: primary, secondary and tertiary care. The tertiary market within healthcare is very market-driven. There is enough competition, there are large players, there are market-driven models, and things are flourishing. It has its own challenges of ethical practice, clinical outcomes and all of that. But both within the government sector and within the private sector, the tertiary care market is very, very good.

And a lot of business models are bringing in innovation within the secondary care market – even in smaller towns. That is an industry that is growing by the minute. You see a lot of successful ventures in ophthalmology, dentistry, maternal child health hospitals, maternity homes, general clinics, general hospitals – they’re attracting a lot of investment. So the secondary market is doing very well.

So tertiary is established, secondary is growing well – but most of the primary care market is unserved. So now everyone is asking one simple question: How do you systemize primary care?

This question is relevant both from the public and the private sector, because there was a big report that came out through the Planning Commission, and big hype about providing universal healthcare in India. So now everybody is looking for models that provide integrated care.

And from a pure market perspective, this is a green field. We need social entrepreneurs, we need enterprises which look at this opportunity, and go out and create models which will provide care. But this is the hardest problem to crack, which is why it has taken the longest time.

JM: Why is primary care so much harder than secondary or tertiary care?

ZJ: When you go to a secondary care hospital for a cataract surgery, it’s straightforward. You go in almost unable to see anything, you have a three-hour surgery, you pay 10,000 rupees, and you walk out being able to see the world again.

Primary care involves a lot of preventive care. There is a lot of behavior change that needs to be done. The frequency of events which are involved in primary care is very high, which means you need to see your provider much more often. Hence the kind of business models which will have a successful footprint in primary care will be very different from the way the healthcare market has evolved until now.

JM: In primary care, how big a role do you see for private enterprise?

ZJ: That depends on how the market shapes. Because if you go back 30 years, there wasn’t even a single organized tertiary care player. All of it was completely controlled by the public sector. And if you had asked anybody then, they would’ve said that health care was something that has to be managed within the public sector.

Now in the last two to three decades, you have seen the emergence and maturation of the tertiary care markets. The secondary care market, as I said, is growing really, really rapidly. The primary care market is looking for models within the private sector which can be scaled. So primary care is where secondary care was, say, 10 years ago.

And if you look at the federal level, you are beginning to see a very interesting transition. When we got our independence and we were dividing up our public health systems, the government really wanted to play a very active role in providing services. They didn’t want any private player to come into the picture. Fast-forward 60 years, and the government has woken up to the fact that they don’t necessarily have to provide all the services themselves, they can be the payer for the services.

That is how the largest insurance scheme in India emerged, which is called RSBY, Rashtriya Swasthya Bima Yojna. In it, the government pays for below-poverty line people to seek secondary care services of up to 30,000 rupees within the private sector. It is a government-funded, private insurance-managed and private sector-implemented scheme. It aspires to get to almost 300 million below-poverty line customers, I think by next year, and they are really heading toward the target very fast.

This is how you see the government transitioning from being the provider themselves, toward systematically looking at financing mechanisms to provide care to the populations that they wish to prioritize. So 10 years from now, when primary care has systematic models which will have evolved, I would say the private sector will play a significant role.

JM: Could RSBY or similar government initiatives be expanded to cover primary care – and if they are, would you anticipate a huge opportunity for primary care businesses in the future?

ZJ: RSBY is currently experimenting with this, but only in very small pockets. If there is an opportunity like this, the players which are doing very well in the secondary care market would consider having primary care extensions as well. If there is some payment mechanism that pays for secondary care hospitals or providers to create their own networks, then the insurance companies will push for it, for sure.

Because why is it that the secondary care market is doing so well in the country? It’s because there is an obvious government-funded payment scheme that makes the environment much more congenial for these developments to happen. So if RSBY’s primary care experiments do well and they scale it up, of course there will be great opportunity which could be tapped through a market-driven model in primary care – absolutely.

But will that happen, and when will that happen? I’m not sure, because the results from the primary care experiment are kind of mixed. But that was also the case when they got started with just secondary care insurance. So they are quite some time away from scaling up their primary care learnings.

But when that happens, it will completely redefine the creation of the primary care market.

Health Care, Social Enterprise
public health, social enterprise