Ennovent, University Impact Fund Reveal New Research on the Business of Health Care in India: The industry will reach $280 billion by 2020
As India’s population has grown, health care has become one of the country’s largest sectors, both in terms of revenue and employment – and its growth is slated to continue. Estimates project that the current US $40 billion Indian health care industry will grow to US $280 billion by 2020.
Much of this growth will occur within the country’s low-income markets, where population growth has caused severe pressure on resources. This resource shortage has resulted in a lack of quality health care that is affordable and easily accessible. Insufficient government efforts and failing infrastructure both bear some of the blame for this shortfall. But while several health-focused NGOs are active in these low-income markets, their focus is primarily on sanitation, sexual health and prevention of infectious diseases.
Without access to a broader array of quality health care services, low-income communities are at an elevated risk. As a result of their limited options, families often experience high rates of mortality, lower earning potential linked to treatable diseases, and overall reduced quality of life.
Recognizing the importance of health care to low-income markets, in mid-2012, Ennovent partnered with the University Impact Fund, one of the world’s first student driven impact-investing firms, to research the opportunities available for entrepreneurs, investors, mentors and experts to add value to the Indian health care industry.
After conducting qualitative and data-driven analysis over a period of six months, they unearthed a wealth of information.
Major need = major business opportunities
First, although the Indian health care sector is projected to grow at 21 percent annually, that growth is taking place in a system that suffers from significant underdevelopment. India remains below most of the world in key health care indicators, including its distribution of services and health care professionals. For instance, while China has 30 hospital beds for every 10,000 people, India has only 12. The figures are even more alarming when looking at nurse staffing: There are 98 nurses per 10,000 people in the United States, and in India there are only 13. In fact, to reach the World Health Organization’s prescribed standard of 35 beds per 10,000 people, India would need to add 6 million beds by 2028.
Moreover, the findings show that the standard of care in hospitals is insufficient in India, especially in those managed by the government in lower-income areas where hygiene and staff quality are major concerns. Often, these hospitals attend to patients in unhygienic corridors by nurses and doctors that are overworked due to high rates of personnel absenteeism, which reaches 50 percent in some areas.
With the public health infrastructure crumbling and no clear solution on the horizon for improving affordability and accessibility, the Indian health care sector desperately needs reform. This need presents a major opportunity for innovative business models.
The impact potential of improved health care is greater in remote towns and villages than in urban areas. Since NGOs and non-profits are focusing on preventive health care (such as creating awareness about sexual health, HIV, vaccinations and sanitation), remedial health care – including the manufacturing and distribution of health care products and services – is where the true opportunity lies. And naturally, to successfully scale and address the staggering demand in India, business models must address the dual challenges of affordability and accessibility.
India is home to several organizations that meet these challenges through innovation. In the context of the country’s eye care sector – a subsector that is currently in strong need of practical solutions – the business models used by Vision Spring and Drishti Eye Care have had considerable success.
While Vision Spring uses the micro-franchise approach to create vision entrepreneurs who aid in the distribution of affordable reading glasses to BoP customers, Drishti Eye Care uses a three-tier hub and spoke model to establish telemedicine technology that provides access to cost-effective eye care. Both models are leveraging technology and distinct distribution approaches to improve service quality overall.
Primary care ripe for innovation
Another sector that’s ripe for innovation is primary care – including services provided by general practitioners and community pharmacies. Current health care programs focus disproportionately on specialist care rather than primary care, though primary care is arguably more important to meeting the treatable everyday needs of Indians, especially those in low-income markets.
To make an impact on reducing the cases of chronic diseases that are reported at the BoP, primary care needs to be brought into focus. Specifically, there is a clear need for providers that focus on holistic and preventive practices, offering innovative pricing options for products and services and are driven by the needs of specific communities.
To fully understand this need, consider this finding: by 2020 it is projected that chronic diseases such as diabetes, alcoholism and tobacco use will be responsible for seven out of every ten deaths in emerging markets such as India. Each of these diseases can be remedied by primary care providers in their early stages.
To successfully treat such diseases, India will need strong integration between primary and tertiary care providers, and the creation of cost-effective distribution channels where primary care centers are currently non-existent or ineffective.
Vaatsalya, India’s first hospital network that focuses on operations in remote towns and villages, is a great example of an innovative enterprise that works to reduce the primary care gap. Each of their hospitals employs only three to four full-time specialists coupled with 60 to 100 support staff, and each has strong referral networks with larger hospitals in urban areas. By hiring doctors who live in the local area and focusing less on specialist care, Vaatsalya is able to provide quality primary and tertiary care in remote areas cost-effectively.
The challenge of expanding access
Another opportunity for innovation lies in the increased distribution of health care through telemedicine, a process that enables doctors to monitor and diagnose patients remotely. With 72 percent of Indian specialist physicians living in urban areas, and 700 million Indians living in rural areas that lack such specialists, telemedicine has quickly become a US $500 million market – and growing.
Several major hospital networks across India already have telemedicine programs, including Apollo, AIIMS and Aravind Hospitals. The sector’s growth is being driven by technological advances and increased pressure on health care resources due to a growing population. But though India has already established recommended guidelines and standards for the use of telemedicine, the adoption of this concept is positively correlated with regional income, and some rural areas continue to lack the infrastructure to facilitate data transfer.
As India’s health care industry continues to evolve, it is clear that opportunities exist for entrepreneurs, investors and experts to have a positive impact on people living in low-income areas. Public/private partnerships will remain important, and innovations will be needed – funded by development agencies, incubators, private investment funds and foundations.
Accelerators such as Ennovent will continue to move innovations from concept to scale, working with the organizations mentioned above and others. Ennovent envisions a sustainable future for those living in low-income markets – and true sustainability requires access to quality, accessible and affordable health care.
To learn more about opportunities in India’s health care sector, connect with sector experts on the Ennovent Network.