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OSG Industry Insights

Insights from our team that can help you transform your business

Indian Healthcare System – A booming sector but with its many faceted challenges!

By Sunitha Anandan |

September 12, 2018

India’s healthcare system is diversified and vast, and continues to be one of the fastest growing sectors. The rise in communicable and “lifestyle” diseases, growing & ageing population, and growing demand for affordable healthcare have resulted in a surge in the Indian healthcare industry to touch USD 372 billion by 2022.

According to the India Brand Equity Foundation (IBEF) report:

  • By 2023, the hospital industry is expected to reach USD 132.84 billion from USD 61.79 billion in 2017
  • By 2022, the Indian diagnostic market will grow at a CAGR (Compound Annual Growth Rate) of 20.4% from USD 5 billion in 2012 to reach USD 32 billion
  • By 2020, the pharmaceutical market will expand to USD 55 billion from USD 36.7 billion in 2016, growing at a CAGR of 15.92%
  • During 2015-20, the in-patient market is expected to grow at a CAGR of 13%

But despite this growth, the Indian healthcare industry is facing a plethora of challenges. Some of them are:

Poor Healthcare Infrastructure

India has 0.7 physicians per 1000 individuals, compared with the WHO’s norm of 1:1000 and 1 bed for every 1050 individuals resulting in acute shortage of resources and doctors.

Disparity in Urban and Rural Healthcare

Private healthcare sector delivers about 80% of all outpatient care and 60% of all inpatient care. Majority of the hospitals and doctors are located in urban areas, leaving rural areas under served.

Out-of-Pocket Expenditure

Despite the private healthcare sector delivering about 80% of all outpatient care and 60% of all inpatient care, a majority of population below the poverty line continue to rely on the low-funded and short-staffed public sector for its healthcare needs.

Low Government Spending

Of the total healthcare expenditure, India’s government spending on health is only 1.2% – which is much lower than the WHO recommendation of 5%. Thus, most Indians pay out-of-pocket expenses to cover their healthcare needs. India’s out-of-pocket expenditure on healthcare is one of the highest globally, at 68%.

Lack of Healthcare Monitoring

A 2017 Comptroller and Auditor General (CAG) report showed that the Health Ministry’s real-time Health Management Information System (HMIS) portal lacked basic infrastructure data of the healthcare facilities and had wide-ranging discrepancies in the reported data.

However, the Government of India has been taking initiatives to promote the Indian healthcare industry:

  • The Ministry of Health and Family Welfare plans to spend more funds, over and above the current sanction of USD 148.22 million, to tackle lifestyle diseases such as cardiovascular disease (CVD), hypertension, obesity and diabetes in India
  • They have launched several computer and mobile-based m-health and e-health initiatives such as LaQshya, e-RaqtKosh, India fights dengue
  • As per Union Budget 2017-18, National Health Mission was allocated USD 4.21 billion and the government plans to increase the public spending to 2.5% of GDP by 2025
  • Insurance penetration by launch of schemes such as Rashtriya Swasthya Suraksha Yojana

In addition to government initiatives, active collaboration of all stakeholders and use of innovation to bridge the gaps will enhance the penetration of healthcare to all sectors and at a much more affordable price. The existing challenges create an avenue of vast opportunities for companies, especially private players, thus making India one of the leading destinations for healthcare investment globally.



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