Indian services sector juggernaut, needs a healthcare injection

Economic times (Prime) carried an interesting article a week ago, “Investors pick hospitals unlocking value through cost, capital efficiencies”. While the article analyzed the interest (rather fall) of PE investment into Indian healthcare for a variety of reasons – what caught my eye – was the great supply-side quality issue persisting in India on healthcare, primarily because the demand side remains fragmented. Here are a few examples from the ET research:

 

1.   The non-communicable disease starts at 45 years in India, as compared to a global average of 55!

2.   35% increase in cardiovascular disease accounting for mortality

3.   30% increase in the prevalence of the chronic obstructive pulmonary disorder

4.   0.7 doctors per 1000 Indians!

5.   10 > healthcare inflation rate

6.   Finally, over 70% of healthcare is funded by self


Combine the above with stories of patients feeling cheated by large hospitals and doctors during critical treatments, and you feel that in spite of producing some of the best medical talents, Indians end up getting a raw deal on the healthcare front. 


According to a PWC report “Presenteeism” (when a person comes to work but underperforms because of stress or illness) costs India Inc about 2% of its capital spending on the workforce. Put that into the context of our GDP contribution by the services Industry (we will speak on Health and Wellness for Manufacturing in some other article) @ 32%, we are in summary losing over 1.2% of our GDP only in the services industry due to Presenteeism. Take a micro-economic view, in an Indian household, a member suffering from a chronic disease ends up spending 15-30% of his/her income on healthcare.

 

The reasons for chronic illness are well-known with 2 major contributors being diet and inactivity. Taking a cue from the above data, some leading corporates (global MNC’s and Indian conglomerates) have started off investments into Employee Health and Wellness programs. In a survey launched by PWC, “33% corporates reported they are rolling out comprehensive wellness programs in multiple countries, while another 17% are rolling out a single wellness program in multiple countries. More than half of corporations expect to invest more in wellness initiatives in the next five years.”

The question then we need to think of is, how do corporates invest in Health and Wellness solutions in India and judge their effectiveness. Take any corporate CXO and ask him how will S/he measure a doctor’s performance in their company (and so the health and wellness program effectiveness) and the chances are high that you will get a blank. To compound the fact if you get into a debate on how will they cover their liability due to any negligence in the healthcare service provided on their campus and you may suddenly see them running away from the entire Health and Wellness agenda. 


Time however has come to our doorstep @ India Inc. on the services industry front, as we look at avenues of growth and profitability and a year on year increase in growth of our output which is dependent on our workforce, demanding a solution to address employee health and wellness to drive into the next decade.

Author- Neeraj Balani, MD India, International SOS 

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