Saturday, July 12, 2014

The 2014 budget and the Indian healthcare industry

The healthcare industry was very hopeful that the 2014 budget would provide lots of incentives for health care service providers. There was a lot of buzz that the government would place a lot of stress on education and healthcare; and that they would make universal healthcare a reality for all Indians.

Unfortunately , none of that has come to pass, and hospitals, doctors and patients are quite disappointed. The only sweetener is the fact that healthcare checkups ( upto a cost of Rs 5000 ) have been made tax exempt. This is actually a regressive step ! It will only encourage people to get health checkups done. However, a lot of scientific medical research has shown that routine healthcare checkups for asymptomatic, well people are of no value at all . They only end up converting healthy people into the worried well, who sit and worry about every minor test abnormality, and go running to a doctor for reassurance – and often even more testing.

However, the fact that foreign direct investment ( FDI ) in insurance is being encouraged is actually a very promising step in the right direction for patients. So far, the most important people in the healthcare ecosystem have been the healthcare providers, because most medical care provided has been on a fee for service basis, where the patient pays from his pocket. 

However, payers ( healthcare insurers) will have an increasingly important role to play, as medical care becomes increasingly expensive . Most people will find hospitalization unaffordable , and will be forced to take out health insurance policies to protect themselves.

While hospitals and doctors make money when people fall ill, it makes business sense for health insurers to keep people healthy  and stop them from falling ill.  The health insurance sector in India is now very attractive, and as new players start coming in from all over the world and competition increases, they will understand the importance of putting patients first !

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