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India is increasingly being recognized as a promising destination for medical tourism across the world. It is growing at 27 percent a year and poised to be a more than (U.S.) $3.9 billion industry. The gleaming new buildings that have mushroomed in the large cities in India present a picture that India is fast catching up and taking its rightful place in the world’s health care arena.

Scratch the surface, though, and a vastly different picture emerges. India lags behind its peers in most health outcomes. As per the World Bank indicators for health in 2013, the maternal mortality ratio at 190, infant mortality rate at 41, and life expectancy at 66 years are far below the global averages and other low- and middle-income countries. Despite the government’s focus on the Millennium Development Goals and targeted reforms in the health sector, progress has been frustratingly slow. Poor health indicators combined with low public health expenditure and high individual out-of-pocket expenditure continue to pose critical challenges in the sector.

The problem is hardly the lack of knowledge and capabilities. As the world-class hospitals and medical practices imply, India has the know-how and the right ingredients to transform its health care scenario. However, access to affordable, quality health care still remains an issue for the 70 percent of Indians earning less than $2 a day.

The Private-Sector Solution

Health care spending in India is 4 percent of GDP, much lower than most other low- and middle-income countries. With less than 20 percent of health expenditure borne by the government, the bulk of the Indian health care system is in the hands of the private sector – one of the largest private sector spending shares in the world. This presents a huge opportunity and private sector companies can play a key role in meeting poor people’s needs directly by expanding access to goods, services and livelihood opportunities for those at the base of the pyramid through commercially viable “inclusive business models.”

A growing number of enterprises have developed innovative business models and technologies to tackle some of the toughest challenges in health care delivery. They are devising new and innovative products, services and business models to deliver affordable, quality health care at the last mile.

(Shamko Bai?, from a small village in the state of Rajasthan in western India?, using an Embrace device to warm her baby. Photo courtesy of Embrace Innovations on Facebook)

Low-cost hospital chains such as Vatsalya, Lifespring and Glocal are providing in-patient care at affordable costs. Disruptive innovations in medical technologies and devices such as infant warmers from Embrace Innovations and non-invasive anemia detection technology from BioSense are showing immense potential to scale and save millions of lives. In the field of first contact care providers, organizations such as Swasth India, SevaMob and Novartis’ Arogya Parivar and ambulance services such as Ziqitza and GVK EMRI are transforming primary health care delivery to the last mile. Mobile-based services such as Dimagi and MedicMobile are empowering frontline workers to improve health care delivery services. Large corporates such as Philips, GE and Bosch are increasingly driving frugal innovations in health care. The International Finance Corporation’s (Note: The author manages the IFC’s South Asia Inclusive Business Program) recent publication, “Landscape of Inclusive Business Models of Healthcare in India,” mapped an entire range of health care business models functioning in the country.

These examples are encouraging, but when it comes to scale, the record is underwhelming. While these enterprises have shown the way, only a handful have achieved a reasonable scale to plug the massive gaps in access to basic health care. Moreover, most for-profit enterprises are largely focusing on population segments earning $5 to $8 a day, while the lower-income categories are still dependent on donor funding and are not financially viable.

Providing quality health care while keeping the cost low is in itself a big challenge. But one then has to add the cost of awareness creation, distribution and outreach in the communities, the complexities arising due to underdeveloped and unreliable infrastructure, and the unpredictable nature of government policies, all of which require a lot more support from the ecosystem in which they operate.

A Unique Opportunity for Transformation

As innovative as the models above are, it would be impractical to think that these alone can change the face of health care in India. Yet, at the same time, they present a unique opportunity for all stakeholders, including the governments, investors and large private providers, to shape the health care landscape by leveraging and engaging these game-changing last mile solutions.

Impact investors and networks can support scale-up of viable business models by offering innovative financing products, investing in more early-stage ventures and offering mentorship and advisory services. Foundations and donors can offer grant funding and technical assistance toward creating awareness and defining standards. They also have an important role to play in advocacy through supporting research and working directly with governments in implementing reforms. And finally, the government’s support as a regulator, and as a vehicle for scale to overcome regulatory and infrastructure challenges, is essential to encourage and facilitate scale of inclusive health care business models.

Inclusive businesses need to leverage facilitation by forming strategic partnerships and engaging with ecosystem enablers. Many inclusive businesses are, in fact, working alongside government through public private partnership (PPP) models leveraging public systems and public financing to scale their work and impact.

India is a thriving hub for local innovations and business models. What is needed are systemic approaches to collaborate and engage these solutions in a meaningful way to be able to leverage respective strengths.

Given the government’s focus on universal health coverage, inclusive businesses cannot be ignored. They can enhance participation in governance and share knowledge to offer better, unique solutions to achieving universal health coverage. Amidst the natural gloom that exists when the health care system does not keep pace with the country’s needs, these innovations are green shoots which, if nurtured effectively, can transform the sector and effectively serve those at the bottom of the pyramid.

Pallavi Shrivastava is an inclusive business specialist with the World Bank Group, where she manages the joint International Finance Corporation-World Bank South Asia Inclusive Business Program.