Healthcare Infrastructure and Services Financing in India Operation and Challenges

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1 15 September 2012 Executive Summary p2 /Introduction p4 /Health profile of India p5 /Financing mechanisms p12 /Recent investments p24 /Challenges for private sector p33 /Emerging PPP models p35 /Conclusion - the way forward p40 /List of Abbreviations p42 /Bibliography p43 Healthcare Infrastructure and Services Financing in India Operation and Challenges

2 Executive Summary India is at the crossroads of an exciting and challenging period in its history. Making healthcare affordable and accessible for all its citizens is one of the key focus areas of the country today. The challenge is immense, as nearly 73% of the country s population lives in rural areas and 26.1% is below poverty level 1. While on one hand, India lacks strong healthcare infrastructure, on the other hand, the country has several inherent weaknesses in its healthcare system. Though the overall level of funding allocated for healthcare nationally is comparatively high (4.1% of GDP 2 ), the government s funding is low (<1% of GDP 3 ) compared to other emerging nations. The health care delivery segment is dominated by the private sector in India, with 70% of the total delivery market in India catered to by the private sector. However most of the organized private infrastructure is confined to the state capitals or Tier I cities. Very few have made inroads in Tier II and Tier III cities. This presents the country with both a challenge and opportunity to not only increase the penetration of quality health services but also be the growth driver in these regions. The central government has given priority to healthcare and is making significant investments to improve the infrastructure and delivery mechanism jointly with the state governments (who will act as the primary implementer) through National Rural Health Mission (NRHM). Before NRHM, the healthcare system in India was marked with significant disparities between urban and rural areas as well as between different states. The 1 Census 2011, Ministry of Home Affairs, Government of India 2 WHO Health Statistics WHO Health Statistics 2012

3 public delivery system did not provide enough incentives for improvement. Under NRHM, a manifold increase in the allocation for the healthcare sector has taken place across all Indian states. The central government has also proposed the National Urban Health Mission (NUHM) scheme to improve the affordability and accessibilty of healthcare services for the urban poor with a focus on slum dwellers and other vulnerable groups. Several central sponsored as well as state sponsored health insurance schemes have also been introduced for the economically backward. In order to complement the skills, expertise and resources of each other as well as alleviate the financing burden for the growth and development of the healthcare sector, the private and public sectors are now working together at a varied pace and working model across the states in India. Some of the successful Public Private Partnerships (PPP) involve laboratory services (pathology, radiology, CT scan, MRI etc.), mobile medical units, PHC management, telemedicine services and hospital maintenance. The models that have been experimented with by the states are: contracting out, contracting in, lease, service agreements (outsourcing), buying of a product/ service, joint venture company, social marketing and franchising. In addition, service delivery through telemedicine, high end tertiary care, innovative models for delivery in rural areas, community insurance schemes are other opportunities where private sector will need to participate. The Government of India has decided to increase healthcare expenditure to 2.5% of the gross domestic product (GDP) by the end of the 12th Five Year Plan ( ). However, the government alone cannot meet the infrastructure, capacity and delivery shortages existing in the current healthcare system. There has to be increased participation of private sector in the PPP schemes for infrastructure, capacity development and delivery. Challenges do exist, some of the PPP initiatives have failed and discontinued due to lack of renewal of the services by the private service provider. The PPP budget allocation under NRHM as well as a number of PPP projects varies considerably across the states. This shows that the state governments are still apprehensive about the success and sustainability of these partnerships and hence not fully committed towards this avenue of development. The priorities for government for healthcare financing must be such it covers the three basic objectives: Affordability, Reach and Quality of services. Some of the way forward measures can be: There needs to be a clearly defined policy and set of guidelines for the successful implementation and sustainability of the healthcare PPP models. This will attract private investments in remote diagnostics, telemedicine services and operations of rural health services in the states. The healthcare sector should be given infrastructure status by the central government and declared as a priority growth area by the state governments. This has to be followed by a consistent policy that is inclusive of incentives and subsidies with respect to land acquisition, tax structure and an approval process. This will help to attract the private sector for investing in manufacturing of medical equipment, setting up training centres for medical professionals (nurses, paramedics etc.) in rural areas, superspecialty and multi-specialty care services, medical colleges as well as medi-cities in the urban and semiurban areas. Increase penetration of private health insurance and community based health insurance schemes in the rural and semi-urban market. At the same time prevent misuse of the existing government funded/ sponsored schemes by considering provision for selective user charges. The central government must intervene in the manufacturing, procurement and distribution of the pharmaceutical drugs industry. This can be done through stricter regulations, and monitoring and supervision, which would help to control the prices of essential drugs. Though the costs involved in the complete upgrade of the healthcare sector are huge, there are enormous pay-offs in long-term investments in this sector. This will not only raise the quality of life for all but can also make the healthcare industry in India, a key enabler for economic growth. Healthcare Infrastructure and Services Financing in India 3

4 Introduction Life in India, with a population of 1.21 billion 4 out of which 26.1% is below the poverty line 5, is rife with many challenges - high income disparity, lack of basic infrastructure and the incidence of diseases. As a result delivery of quality affordable healthcare is an enormous challenge. Improvements in the infrastructure and delivery system of health care, provision of manpower, equipments and drugs, improved inter-sector coordination, monitoring and evaluation, and other innovative approaches have been undertaken in order to improve the basic indicators of healthcare. Recognising the need to progressively address the challenges in achieving sustainable reforms, maintaining the required quality of care and accelerating human development, the central government has accorded priority to all three aspects of healthcare - prevention, treatment and discovery. However, this will require financing in different forms by stakeholders involved - as healthcare payer, as funding agency (private equity, long term debt, venture capital), as subsidy, as incentives, and as grants (e.g. Gates-Melinda Foundation, Clinton Foundation). This financing will need to overcome certain challenges: Infrastructure creation and augmentation (hospitals, diagnostics, specialty, telemedicine clinics to provide access to quality healthcare to both rural and urban masses) Enhancing access through insurance (government as a payer) Medical education and training; and Innovation and indigenisation (focus on implants and high-value medical consumables). An analysis of the current healthcare profile of India indicates the gaps and deficiencies in terms of service outreach, available resources, infrastructure and affordability as well as government expenditure, when compared to other developing nations. The emerging PPP models and innovations in healthcare financing outlined here concentrate on key areas affecting important indicators hoping that the success of these initiatives will have far-reaching implications towards better health of the common people. The focus of this report is to improve the synergy between public and private funding in order to overcome existing challenges and clear the way for adoption of a bigger role by the government in developing this social sector at a faster pace. Goals Synergise public and private funding in order to bridge the resource and infrastructure gap. Reduce the burden of healthcare costs on the rural and semiurban population by minimising out-of-pocket expenses and introducing customised and focused health plans. Improve the production and distribution of pharmaceutical drugs to make them more affordable and accessible to citizens Approach and methodology The methodology that has been followed is to first assess the current state of healthcare in India: the socioeconomic and health indicators in India, infrastructure and resource deficiencies, and the central government interventions including health programmes, schemes and funds, partnership with World Bank, DFID, Asian Development Bank and European Commission, and the various PPP initiatives currently undertaken. This is followed by the various modes and areas of financing from the private sector for the growth and development of healthcare in India. A section is also dedicated to the emerging PPP models in healthcare and the trends of various channels to infuse funds in this sector. These formed the basis to identify the most appropriate avenues for healthcare financing. 4 4 Source: Census 2011, Ministry of Home Affairs, Government of India 5 Source: Planning Commission, Government of India

5 Health profile of India With a population of 1.21 billion, India is the second most populous country in the world, next only to China. It comprises 28 states and 7 union territories and covers an area of 32,87,2631 sq km 6. Provision of health care to such a vast population needs sound planning and implementation of health policies by the government with the support of the private sector, local and regional bodies, NGOs and self-help groups. Nearly 72% of the country s population lives in rural areas. While substantial progress has been made in the provision of healthcare services in the urban areas, there is a need to improve the availability of services and enhance the quality of care in many rural areas. Demographic and socioeconomic indicators The demographic indicators of the country help in identifying areas requiring policy and programmed intervention, deciding priorities and setting short-term and long-term goals. The National Health Profile, 2010, compiled by the Central Bureau of Health Intelligence, reveals the following key demographic data: The sex ratio (females per 1,000 males) has shown a slight improvement in the last two decades, it was 926, 933 and 940 during the 1991, 2001 and 2011 census respectively. The birth rate declined from 26.1 in 1999 to 22.5 in 2009, while the death rate declined from 8.7 to 7.3 per 1,000 persons over the same period. Life expectancy at birth has increased from 59.7 years in to 62.6 years in for males and from 60.9 years in to 64.2 years in for females. The increase in life expectancy is leading to an increase in the number of elderly persons in the population creating a demand for specific health facilities. The IMR has declined considerably from 70 in 1999 to 50 per 1,000 live births in 2009 though the difference between rural (55) and urban (34) IMR is still high. The TFR has shown no deviation over the last two surveys conducted in India, being at 2.6 both in SRS 2008 and SRS It is 2.9 among the rural population and 2.0 in urban areas. Population trends in India ( ) Year Male (in lakh) Female (in lakh) Total (in lakh) Sex ratio Population density/sq.km % of Urban population , , , N.A , , , , , , , , , , , , , , , , , , Source: Registrar General of India The MMR has declined considerably from 301 in SRS to 254 in SRS and finally to 212 as per SRS This is an indication of better health awareness and medical provision in the rural areas. There are 593 districts, 5,470 sub-districts, 5,161 towns and 6,38,588 villages (including uninhabited villages) in India. Decennial change (%) 6 Census 2011, Ministry of Home Affairs, Government of India Healthcare Infrastructure and Services Financing in India 5

6 The increase in the percentage of urban population can be attributed to the movement of rural population to towns and cities for better livelihood and opportunities with respect to education, health and modern amenities. The information obtained from the Central Bureau of Health Intelligence and the Ministry of Health and Family Welfare reveals the following: The literacy rate in India has increased by 13.9% during the decade and by 9.56% during the decade Currently it is 74.04%, 82.14% for males and 65.46% for females (Census 2011). According to Planning Commission estimated for the year , 28.3% of the population in rural areas and 25.7% of the population in urban areas lived below the poverty line. The gross national income (GNI) for the year , at factor cost was 60,95,230 crore INR at current price and 44,64,854 crore INR at constant price (base year ); the net national income was 52,21,199 crore INR and 39,54,861 crore INR at current price and constant price respectively. The per capita net national product is 46,492 INR at current price and 33, 731 INR at constant price ( ) for the year The increase in per capita net national product during shows a steeper trend for current price than constant price. The poverty line at India level is obtained from the distribution of persons according to their expenditure class and the poverty ratio of the country, which is the weighted average of the state-wise poverty ratio. Estimated birth rate, death rate and IMR in India ( ) Year Birth rate Death rate Infant mortality rate Rural Urban Combined Rural Urban Combined Rural Urban Combined Source: SRS Bulletin January 2011, Registrar General of India, New Delhi 6 ICC - PwC

7 Population living below poverty line in India Year Poverty line (Per capita income in INR/month) No. of persons (lakh) Percentage of persons Rural Urban Rural Urban Combined Rural Urban Combined , , % 25.5% 37.2% , , % 20.9% 29.8% Source: Planning Commission of India Gross national income, net national income and per capita income in India ( ) Year GNI at factor cost (crore INR) Current prices Constant prices GDP at factor cost (crore INR) Current prices Constant prices NNI at factor cost (crore INR) Current prices Constant prices Per capita net national product Current prices Constant prices ,45,224 29,45,224 29,67,599 29,67,599 26,23,995 26,23,995 24,095 24, ,76,200 32,24,186 34,02,316 32,49,130 30,06,469 28,72,212 27,183 25, ,12,087 35,37,679 39,41,865 35,64,627 34,87,175 31,49,912 31,080 28, ,21,099 38,76,386 45,40,987 38,93,457 40,31,881 34,49,970 35,430 30, ,07,534 41,38,174 52,28,650 41,54,973 46,32,304 36,72,192 40,141 31, ,95,230 44,64,854 61,33,230 44,93,743 52,21,199 39,54,861 46,492 33,731 Healthcare Infrastructure and Services Financing in India 7

8 Disease burden indicators As India continues its economic development, the proportion of the elderly in India s population will rise and is expected to increase to nearly 11.8% by the year This will have several implications as the elderly population needs greater healthcare facilities, which will require higher health care expenditures than other population groups. In 2005, the National Commission on Macroeconomics and Health identified the major classes of health conditions that contributed more than 80% of the overall disease burden in India and require priority policy attention. The following table presents the disease-burden estimations for the identified health conditions: See Table above. The Reproductive and Child Health programme, part of the National Health Profile 2010, reveals the following: 52% mothers had at least three antenatal care visits for their last birth. 46.6% of child births were assisted by a doctor, nurse, ANM or other health personnel. 38.7% of institutional births were reported. 43.5% of children between the age of 12 and 23 months age were fully immunized with BCG, measles, and three doses each of polio/dpt. 5.1% of children between the age of 12 and 23 months did not receive any immunisation Disease burden estimations Disease/health condition Communicable Diseases Estimates in 2005 (lakh) Projected estimate for 2015 (lakh) Pulmonary Tuberculosis 85 NA HIV/AIDS Acute Respiratory Infection NA Diarrheal diseases (episodes/year) Malaria and other vector borne conditions NA Enteric Fever 6.95 NA Pneumonia 7.74 NA 7.32 Leprosy 3.67 Expected to be eliminated Otitis Media Non-communicable conditions Cancer Diabetes Mental health Blindness Cardiovascular diseases COPD and Asthma Other non-communicable conditions Injuries-deaths No. of hospitalisations Cases reported in 2010 (lakh) Source: Report of the National Commission on Macroeconomics and Health, National Health Profile Central Bureau of Health Intelligence Report of the National Commission on Macroeconomics and Health, 2005

9 Healthcare finance indicators The healthcare finance indicators provide an understanding of patterns of investments, expenditure, sources of funding and proportion of allocation against the total allocation. They also help us understand the health outcomes in relation to the expenditure. The below table shows the pattern of central allocation on a five-year plan outlay: The below data shows that the percentage of allocation for the health sector against the total planned investment in the country by the central government has increased to some extent in the Eleventh Plan when the Health Research Department was created and the NRHM schemes were started. Health expenditures in India on the basis of a selected list of the National Health Account indicators for the period is outlined below: Infrastructure indicators The healthcare infrastructure indicator(s) help us understand the healthcare delivery provisions and mechanisms in India and signify the investments and priority accorded to creating the infrastructure in public and private sectors. In the past few years India has made good progress with respect to both the service infrastructure as well as the educational infrastructure, which is evident from the facts revealed in the National Health Profile 2010, conducted by the Central Bureau of Health Intelligence: Pattern of central allocation (total vs. health sector) (crore INR) Period Total planned investment Health allocation Family welfare allocation AYUSH allocation Total for health sector Eighth Plan ( ) 4,34, ,494.2 (1.7%) 6,500.0 (1.5%) (0.02%) 14,102.2 (3.2%) Ninth Plan ( ) 8,59, ,818.4 (2.31%) 15,120.2 (1.76%) (0.03%) 35, (4.09%) Tenth Plan ( ) 14,84, ,020.3 (2.09%) 27,125.0 (1.83%) (0.05%) 58,920.3 (3.97%) Eleventh Plan ( ) 21,56, ,36, (6.31%) 3,988.0 (0.18%) 1,40,135.0 (6.49%) Source: Planning Commission of India Measured levels of expenditure on health in India ( ) Selected National Health Accounts indicators Total expenditure on health as a % of GDP General government expenditure on health as a % total expenditure on health Private expenditure on health as a % of total expenditure on health General government expenditure on health as a % of total government expenditure External resources for health as a % of total expenditure on health Social Security expenditure on health as a % of general government expenditure on health Out-of-Pocket expenditure as a % of private expenditure on health Private prepaid plans as a % of private expenditure on health Source: World Health Statistics 2010 There are 12,760 hospitals having 5,76,793 beds in the country. Under the department of AYUSH there are 24,465 dispensaries and 3,408 hospitals in April There were 148,124 sub-centers, 23,887 PHCs and 4,809 CHCs as per Ministry of Health and Family Welfare, Government of India, 2011 There were 2,445 licensed blood banks in the country in January The country currently has 314 medical colleges, 289 colleges for BDS courses and 140 colleges for MDS courses with total admission of 29263, and 2783 students respectively during There were 2,028 institutions for GNM with admission capacity of 80,332 and 608 colleges for pharmacy (diploma) with admission capacity of 36,115, in March Dept. of Health & Family Welfare merged in 2005 and the allocation includes Rs.4, crores for Health Research Department, newly created in Healthcare Infrastructure and Services Financing in India 9

10 Details of the medical and dental colleges between 2006 and 2011 are provided in the two tables below: Medical colleges and capacities in India ( to ) Year No. of medical colleges Male admissions Female admissions Total admissions ,449 10,609 28, ,208 12,082 30, ,486 14,329 32, ,224 15,860 34, ,299 14,964 29,263 Source: Medical Council of India As is shown below, there is large disparity in the healthcare infrastructure indicators across the Indian states when compared to the national average. The table shows the comparison of different infrastructure indicators between India, with respect to its best performing state and a poorly performing state. Beds per thousand Population Dental colleges and capacities in India ( to ) Year No. of dental colleges No. of admissions (BDS) ,120 1, ,910 2, ,650 2, ,520 2, ,547 2,783 Source: Dental Council of India No. of admissions (MDS) Source: National Health Profile, 2008 Moreover the doctor patient ratio in rural areas of India is 1:20,000, while the urban ratio is 1:2,000 against the statutory 1:250 ratio from WHO for which India requires 6,00,000 doctors Data was not received from 58 out of the 314 medical colleges

11 HR indicators The human resource indicator provide an overview of the availability of trained and specialized medical, nursing and paramedical personnel in India along with an understanding of the regional distribution and disparities. They provide the details of allopathic doctors, dental surgeons, AYUSH doctors, nursing staff and various paramedical healthcare workers in India. The key facts on human resources include the following: The number of allopathic doctors who possess recognized medical qualifications (under the MCI Act) and are registered with state medical councils for the years 2009 and 2010 were 7,93,305 and 8,16, respectively. The number of dental surgeons registered with central/state dental councils as on December 31, 2009 were 1,04, The total number of registered AYUSH doctors in India in January 2010 was 7,52, Ratio of government doctors to population served in 2010 States Govt doctors Govt dental surgeons Avg population served/govt doctor India 85,254 3,421 13,531 33,722 Andhra Pradesh 4, ,988 6,16,122 Bihar 3, ,174 35,46,461 West Bengal 9, ,407 2,27,356 Odisha 4, ,485 25,24,312 Karnataka 4, ,933 16,849 Maharashtra 4, ,540 20,57,741 Source: Directorate of State Health Services Registered Nurses and Pharmacists in India States Registered ANM Registered GNM Registered LHV Avg population served/ govt dental surgeon Pharmacists India 5,76,542 10,73,638 52,375 6,56,101 Andhra Pradesh 1,12,269 1,36,477 2,480 43,958 Bihar 7,501 NA 511 4,163 West Bengal 56,302 48,470 11,938 89,630 Odisha 49,170 63, ,312 Karnataka 48,509 1,36,421 6,839 79,508 Maharashtra 33,158 93, ,06,220 Source: Indian Nursing Council, Pharmacy Council of India 10 Source: Medical Council of India 11 Source: Dental Council of India 12 Source: Department of AYUSH, MoHFW, GOI Healthcare Infrastructure and Services Financing in India 11

12 Financing mechanisms The present inefficiencies and inequities in the public healthcare system in India have pushed forward the need for creative thinking and innovative solutions. Crippling health problems have raised a need for change in the existing structure of health service provision and risk pooling, both in public and private sectors. On a national level, there have been several efforts to reform the health system to improve the access to quality services for the poor. However all the central govt. efforts at influencing public health have focused on the five-year plans. On the other hand, the reforms brought on by the economic policies of the 1990 s, helped India attract a lot of interest and investment from foreign sources. Private equity, venture capital, external commercial borrowings, etc brought in new funding options besides long-term debt which was used as the primary mechanism to finance hospitals in India. Given the flurry of activity in the health care sector which includes the setting up green field projects, expanding existing hospitals and acquiring brown field facilities, there is a dire need for innovative funding mechanisms. Considering the huge need gap, rapid rate of growth and capital-intensive nature of hospitals, many players are looking for funding mechanisms beyond the conventional borrowing route. Currently the investment landscape in health care is predominantly characterized by debt financing. In addition, many private sector banks have developed a separate health care portfolio. 12 ICC - PwC Avenues for healthcare funding in India Private Public Others Debt financing - long term bank loan Annual govt budget for rural health Foreign donations Foreign direct investment Annual govt budget for urban health PPP project funding External commercial borrowing Govt. funding for community programmes Private equity funds Incentives and subsidies Individual investors Govt. sponsored schemes Foreign institutional investors Community based schemes Venture capital funds

13 Private sources Debt financing Debt financing from banks and financial institutions is the preferred route for raising capital for smaller health care providers. However large private players also routinely access funds through this route. With the growth in services sector and health care in particular, the role of banks and other lending institutions acquires a special significance. The healthcare business in India over a last couple of years has witnessed growth in terms of new facilities as well as acquisitions and expansion of operations. Banks, at present, do not focus on funding health care projects in Tier II and Tier III Indian cities but the growing presence of corporate players in these areas will encourage the lending institutions. Risk evaluation for healthcare projects seems to be a major concern for most banks making forays in health care delivery funding in these regions. Over 50% of long-term financing for hospitals is obtained through bank loans from nationalized banks. At present most banks have a healthcare portfolio. However they do not have a specific focus on healthcare delivery organizations. Their portfolios are mostly concentrated in pharma, biotech and clinical research sectors. Some of the key observations are presented below: The current environment is favorable for investments in healthcare delivery projects. The past experience in healthcare delivery has been good with negligible defaults. Banks have research teams for health care but no specific domain expertise in health care delivery. They mainly rely on public domain information and specific reports. Banks are actively thinking of developing portfolios in health care delivery. Foreign direct investment The growing Indian health care market and lucrative opportunities in the sector are attracting foreign investors. The foreign players are seeking to enter the Indian healthcare delivery market through various channels including capital investment, technology tie ups or some form of collaborative ventures with Indian counterparts in the area of medical technology, diagnostics, health care education and training. FDI inflows in healthcare sector (April 2000 to June 2012) Sector Amount (crore INR) Amount (million USD) %age with Total FDI (+) Hospital and diagnostic centers 6, , Medical and surgical appliances 2, Drugs and pharmaceuticals 45, , Source: FDI Statistics June 2012, DIPP, Ministry of Commerce & Industry, GOI The role of foreign financing in the various formats of health care is primarily governed by FDI policy which permits 100% foreign investments under automatic route. FDI under the automatic route does not require prior approval either by the government of India or the Reserve Bank of India. Investors are only required to notify the concerned Regional office of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors. Some of the issues that inhibit FDI are listed below: Lack of quality assets. Lack of size. Lack of adequate transparency. No public listing of most of the hospitals. Healthcare Infrastructure and Services Financing in India 13

14 External commercial borrowings The external commercial borrowings (ECB) mode of financing has been used only in a limited number of projects. Due to the complexity in the process of getting approvals from the Reserve Bank of India (RBI), the healthcare sector has not witnessed many ECBs. However, with the relaxation of rules relating to ECB s more hospitals will be willing to access this route. At present, entities in the services sector, which include hotels, hospitals and software sector, are allowed to avail ECB up to 100 million USD per financial year for import of capital goods, under the approval route. Further the government has now decided to permit entities in the hotels, hospitals and software sectors to avail ECB up to 100 million USD per financial year, under the automatic route, for foreign currency and/or rupee capital expenditure for permissible end use. One of the main reasons for popularity of ECBs is the lower interest rates in the US & European markets compared to India. Some of the benefits of ECBs over other sources of funds are: Cost of raising ECBs is much lower than that of domestic borrowings. Global financial market is a much bigger source of credit. Foreign lenders provide far more flexibility in terms of providing security for ECBs. The top deals in ECBs for the healthcare sector of India during 2012 are: Healthcare ECBs in India (Jan Jul 2012) Borrower Amount in million USD Purpose Maturity Period Shasun Pharmaceuticals Ltd 10.0 Modernization 5 years Medley Pharmaceuticals Ltd 5.6 New project 6 years 1 month Emcure Pharmaceuticals Ltd 10.0 Other 5 years Claris Lifesciences Ltd 10.0 Modernization 6 years 10 months Volunteers for Village Development 0.25 Micro finance 7 years 1 month Ranbaxy Laboratories Ltd 50.0 Rupee expenditure Loc. CG 5 years Apollo Hospitals Ltd Import of capital goods 9 years 10 months Ajanta Pharma Ltd Modernization 5 years Alexis Multi-Specialty Hospital Pvt Ltd 5.0 New project 7 years 2 months Amneal Pharmaceutical Co Pvt. Ltd 1.2 Modernization 6 years 7 months Elder Pharmaceuticals Ltd 15.0 Modernization 5 years Torrent Pharmaceuticals Ltd 5.0 Rupee expenditure Loc. CG 5 years Apollo Hospitals Ltd New project 7 years 1 month Claris Lifesciences Ltd 10.0 Modernization 5 years Cadila Healthcare Limited 6.67 Refinancing of old loans 1 year 10 months Degania Medical Devices Pvt. Ltd 2.0 Modernization 9 years 11 months Raichem Life Sciences Pvt. Ltd 6.0 New project 5 years Source: Database for ECB, Reserve Bank of India 14 ICC - PwC

15 Private equity Private Equity (PE) is now emerging as one of the most preferred form of funding. PE funds invest in the companies with a proven track record of profitability and sustainable growth. The fund brings in not only the capital but also the adequate strategic planning and management skill sets for growth. Most PE funds are keen on investing in the health care sector given the high growth and recession proof nature of the industry. However, the soaring real estate costs, issues relating to scalability, management bandwidth, workforce, lack of entrepreneurship etc are the major deterrents. According to Venture Intelligence, a research firm that tracks PE and venture capital (VC) activity, over 42% of the PE and VC investors recently surveyed sensed strong opportunity to tap the market for healthcare services in semi-urban and rural areas. Its report also stated that around 20% of new PE or VC fund corpuses are expected to be invested into the healthcare services. Currently the Indian healthcare market, particularly on the provider side, offers the following opportunities to PE funds: High need gap. Limited presence of network hospital system. Skewed bed: population ratio. Mostly privatized healthcare delivery leading to higher spend in the private sector; Recession-proof sector. Viable formats (secondary and tertiary care). Mix of brownfield and greenfield projects. Good operating margins. Good rate of return as compared to other industries. However, there are some existing challenges faced by PEs in terms of the following: Real estate cost. Scalability. Management bandwidth. Clinical, nursing and paramedical workforce. Lack of entrepreneurship. PE investments in the healthcare sector amounts to 749 million USD across 25 deals in the first half of 2012, as against 421 million USD and 498 million USD during the same period in 2010 and 2009 respectively. The top deals in healthcare in 2012 includes the following: Company Amount (million USD) Investors Date Care Hospitals 110 Advent International 12-March-2012 DM Healthcare 100 Olympus Capital 12-January-2012 Vasan Eye Care 100 GIC 12-March-2012 Specialty Hospital 77 Halcyon Group 12-February-2012 Super Religare Lab 66 IFC, NYLIM India 12-June-2012 Nova Medical Centers Source: Economic Times, 23 August, Goldman Sachs and New Enterprise Associates Individual investors Individual investors have set up healthcare facilities in the rural and semi-urban markets across several states in India in the form of nursing homes or medical centers or diagnostic facilities. These are mainly family owned business establishments, being started as an entrepreneurial activity by the individual doctors and healthcare specialists. 12-August-2012 Healthcare Infrastructure and Services Financing in India 15

16 Foreign institutional investors Foreign institutional investors (FII) are investment funds registered in a country outside India and include hedge funds, insurance companies, pension funds and mutual funds. They must register with SEBI to participate in the Indian market and are subject to regulatory compliance that places limits on FII ownership in Indian companies. There are quite a few foreign insurance companies like AIG, BUPA, and Allianz which have entered into a JV with Indian companies to invest in the private health insurance market in the country, catering to the urban population. Net investments through FII in India during 2012 Sector January February March April May Healthcare services Healthcare equipment and supplies Drugs and pharma Cr. INR Mn. USD Cr. INR Mn. USD Cr. INR Mn. USD Cr. INR Mn. USD Cr. INR Mn. USD Source: FII Sector-Wise Fortnightly Statistics, Securities & Exchange Board of India Venture capital funds These are companies that specialize in financing new ventures like bringing a new product to the market when the venture may need to attract financial funding. There are several categories of financing avenues. While smaller ventures sometimes rely on family funding, loans from friends or personal bank loans, more ambitious projects that need more substantial funding may turn to private investors who use their own capital to finance a venture s need. Public sources Annual government budget for rural health The central government has launched the National Rural Health Mission (NRHM) in 2005 to carry out necessary architectural correction in the basic health care delivery system so that the quality of life is improved. This initiative is intended to provide healthcare services to the rural population of the country with a special focus on 18 states. This mission is believed to be a reflection of the government s commitment to raise public spending on healthcare from 0.9% of GDP to 2-3% of GDP. Apart from strengthening sub-centers, PHCs, CHCs and disease control programmes and promoting publicprivate partnerships (PPPs) for public health goals, the NRHM also seeks to set up a task group to focus on new health financing mechanisms. This group will examine the introduction and rollout of the new financing mechanisms, including risk pooling for hospital care. The key elements of this mechanism are as follows: Payment of hospitals for services as reimbursement by the district health missions, on the principle of money follows the patient. Standardization of outpatient, in-patient and laboratory services and associated costs by a committee of experts in each state on a periodic basis. Monitoring of standards by a National Expert Group to give suitable guidance on protocols and cost comparisons. Payment of wage component for all existing CHCs on a monthly basis and reimbursement of other recurring costs for services from district health fund. 16 ICC - PwC

17 Monitoring of any credible community based health insurance schemes and providing subsidies to cover a part of the premiums for the poor by the central government. Create a district health accounting system to monitor the district health fund management and take corrective action. The funding arrangements that were envisaged for successful implementation of NRHM initiative are: The NRHM is conceived as an umbrella programme covering the existing programmes of the Department of Health and Family Welfare department of the central government; The budget head for NRHM is created at central and state levels with the vertical health and family welfare programmes retaining their sub-budget head under the NRHM; The outlay of NRHM for was around 6,700 crore INR. The NRHM anticipates an additional 30% over existing annual budgetary outlays, every year, to fulfill the mandate of the National Common Minimum Programme to raise the outlays for public health from 0.9% of GDP to 2-3% of GDP. The states are expected to raise their contributions to public health budget by minimum 10% every year to support the Mission s activities. Some key improvements and outcomes that took place at the national level over the last few years due to the NRHM initiative can be summarized as follows: Infrastructure As on March 2011, there were 148,124 sub-centers, 23,887 PHCs and 4,809 CHCs 13 functioning in the country with the CHCs upgraded to IPHS norms. Other infrastructural improvements and findings are presented below: Name Improvements/Findings No. of sub-centers (SC) Increased from 146,026 in 2005 to 148,124 in 2011 SCs in government buildings Increased from 50% in 2005 to 62.7% in 2011 No. of PHCs Increase of 651 PHCs between 2005 and 2011 PHCs in government buildings Increased from 78% in 2005 to 86.7% in 2011 No. of CHCs Increase of 1,463 CHCs between 2005 and 2011 CHCs in government buildings Increased from 90% in 2005 to 95.3% in 2011 Rogi Kalyan Samitis (RKS) 24x7 health facilities Mobile medical units (MMU) AYUSH 570 DHs, 4210 CHCs, 1125 other than CHC hospitals (above CHC but below DH), PHCs and 6795 other health facilities above SCs have their own RKS with untied funds for improving health service quality Total of 15,873 APHCs, PHCs, CHCs and other Sub District facilities 1,031 MMUs functional under NRHM to provide diagnostic and outpatient services 12,134 health facilities have co-located AYUSH services Rural population coverage by SCs Average 5,624 against the norm of 3,000-5,000 Rural population coverage by PHCs Average 34,876 against the norm of 20,000-30,000 Rural population coverage by CHCs Average 173,235 against the norm of 80, ,000 Source: Ministry of Health & Family Welfare, Government of India 13 Ministry of Health and Family Welfare, Government of India Healthcare Infrastructure and Services Financing in India 17

18 Human resources The key improvements and/or findings are shown below: Name ASHAs Medical staff AYUSH Programme management units Female health workers [HW(F)] / ANM in SCs and PHCs Overall shortfall of 3.8% of the total requirement Allopathic doctors at PHCs Overall shortfall of 12.0% of the total requirement General duty medical officer (GDMO) Staff shortfall at CHCs Improvements/Findings 8.09 lakhs ASHAs selected, 2.55 lakhs trained up to 5th module and 5.53 lakhs with drug kits in their villages Added 1589 specialists, 8648 MBBS doctors, staff nurses, ANMs Added 7,993 AYUSH doctors and 3,232 AYUSH paramedics on contract basis Added 584 DPMs, 568 DAMs, 533 DDMs, 633 DPMUs, 34 SPMUs, 3434 block managers, 3150 accountants and 3434 Block PMUs on contract basis Increased from 133,194 in 2005 to 207,868 in 2011, an increase of 56% Increased from 20,308 in 2005 to 26, 329 in 2011, an increase of 29% 11,798 GDMOs are available at CHCs as on March 2011 Overall shortfall of 63.9% specialists; shortfall of 75% of surgeons, 65.9% of obstetricians and gynecologists, 80.1% of physicians and 74.4% of pediatricians Source: Ministry of Health & Family Welfare, Government of India Annual government budget for urban healthcare The total urban population in the country as per Census 2011 is more than 377 million constituting 31.16% of the total population. There are a total of 468 urban agglomerations (UA)/Towns (increase of 18.8% from Census 2001), having 70% of the total urban population. About 15% of the urban population and 23% of the population living in UAs lives in the slums 14. In order to meet the health challenges of the urban population with a special focus on urban poor living in listed and unlisted slums, the Ministry of Health and Family Welfare had proposed to launch the National Urban Health Mission (NUHM), to Poor environmental conditions in the slums along with high population density make slum dwellers vulnerable to lung diseases like Asthma, Tuberculosis etc. They also have a high incidence of vector borne diseases with twice as many cases of malaria and dengue among the urban poor than the other city dwellers. The scheme would cover all the state capitals and 430 identified cities with a population of more than one lakh. The NUHM is aimed at strengthening the primary public health systems, filling the gaps in service delivery through private partnerships using a regulatory framework and also a community based risk pooling insurance mechanism, and making special provision for inclusion of the most vulnerable among the poor. The financial sharing ratio for NUHM between the central government and state will be 85:15 during the Eleventh Five-Year Plan and 75:25 during the Twelfth Five-Year Plan, with the 25% state contribution in the Twelfth Plan being shared between the states and urban local bodies (ULB) NUHM, Urban Health Division, Ministry of Health & Family Welfare, Government of India 15 Revised NUHM, Urban Health Division, Department of Health & Family Welfare, Government of India

19 It is assumed that the states would contribute 15% and ULBs would contribute 10%. Based on this financing pattern, the estimated contribution for the proposed NUHM are approximately 25,000 crore INR for the central government, 5,000 crore INR for the state governments and 3,000 crore INR for the ULBs, totalling up to the Mission grant of 33,000 crore INR. Government funding for community programmes In order to address the current disease burden for the Indian population, the key community health programmes initiated, sponsored and monitored by the central government are: Vector Borne Disease Control - Vector-borne diseases (VBD) are a group of communicable diseases transmitted by mosquitoes and other vectors, e.g. malaria, dengue, filaria, kala-azar, chikungunya. This programme is for prevention and control of these VBDs and aims to make the investments sustainable by developing robust systems and supporting the local capacity. Reproductive and Child Health Programme (RCH) - This programme aims to reduce the infant, child and maternal mortality by improving the quality, coverage and effectiveness of existing the family welfare services. This is a component of NRHM and works nationwide. TB Control Programme - Tuberculosis (TB) is an infectious disease caused by a bacterium and a single patient can infect 10 or more people in a year. The goal of this programme is to decrease mortality and morbidity due to TB and cut transmission of infection. This programme aims to achieve and maintain cure rate of 85% and detection rate of at least 70% of such cases. Blindness Control Programme - This programme was launched as a 100% centrally sponsored scheme to reduce the prevalence of blindness from 1.4% to 0.3%. The programme objectives are developing eye care facilities in every district, securing participation of voluntary organizations in eye care and developing human resources for providing eye care services. Leprosy Eradication Programme - Leprosy is a chronic infectious disease caused by mycobacterium leprae and is a leading cause of permanent disability. This programme is centrally sponsored but implemented by the states and supported as partners by the World Health Organization, and the International Federation for Anti-leprosy Associations. As of March 2011, leprosy has been eliminated in 32 out of 35 states/union territories. Iodine Deficiency Disorders Control Programme - This is a 100% centrally supported programme. The expected impact of the above programmes on health indicators are formulated according to the targets of the NRHM for the focus states, e.g. reduced IMR, MMR, TFR, and incidence of Tuberculosis, Leprosy and Malaria. Decreased malnutrition levels, with special attention to child malnutrition, reduced financial burden for the poor with regard to healthcare and positive impact on the present levels of poverty, are all among the expected outcomes of the implemented programmes. Incentives and subsidies Apart from the funding and/or sponsoring schemes from the central government for development of urban and semi-urban health, mostly in the Tier II and Tier III cities, there are some incentives provided by the Government to promote the private service providers in the healthcare sector: 100% FDI permitted under the Automatic Route. Five-year tax holiday for setting up hospitals in Tier II and Tier III cities from 2009 to Some of the incentives provided by the different state governments to promote private participation in the healthcare sector are listed below: Land (Odisha) Earmarking lands for hospitals in town planning. Providing land at concessional prices to private hospitals. Large Special Economic Zones (Karnataka and Tamil Nadu) Larger SEZs are required to have land allocated for healthcare purposes. For example, for an SEZ of 35 acres the developer is required to set up a healthcare facility on at least half an acre (larger healthcare facility for bigger SEZ). Therefore allocation of SEZs will ensure that developers bring some quality hospital infrastructure in the state. Karnataka has given approval for two SEZs for the development and growth of the pharmaceuticals industry, viz. KIADB Pharmaceutical Special Economic Zone at Hassan and Ozone SEZ Developers Pvt. Ltd. at Chikkaballapura. Healthcare Infrastructure and Services Financing in India 19

20 Tamil Nadu has given approval for two healthcare SEZs, Frontier Mediville at Elavoor near Chennai spread over 360 acres of land with a total investment of 1,000 crore INR and BioPure Integrated Health SEZ at Hosur taluk in Krishnagiri district spread over 900 acres. Government facilitations and removal of red tape (Andhra Pradesh, Tamil Nadu and Karnataka) In general it is difficult getting all the licenses and approvals required to establish a hospital. However states like Andhra Pradesh and Tamil Nadu have developed a single window system making it easier for private players to get approvals. For opening nursing, paramedical or any medical colleges, NOC clearance from state is needed while applying to MCI. States like Kerala and Karnataka have made the process of obtaining NOC easy and transparent and do it on priority basis. This has helped a large number of private players in opening healthcare-specific training centres and colleges in these states. Government sponsored insurance schemes Less than 10% of India s population today has any form of health insurance cover. A very small proportion has opted for voluntary health insurance, but most of the others are part of the employees state insurance scheme (ESIS) and central government health scheme (CGHS). Tier III cities and rural areas are marked by a negligible insurance coverage except for a few government administered schemes. The major initiative from the central government came with the launch of Rashtriya Swasthya Bima Yojana in 2008, which provided access to quality health care to the vast population living below the poverty line. Under this scheme a maximum of 30,000 INR will be reimbursed annually for medical treatments, where the central government will bear 75% of the annual premium expenses (subject to a maximum of 565 INR per family per annum) and the respective state governments have to take care of the remaining 25%. Two smart cards are being provided to each BPL family - one for the head of the family and another for rest of the family members. The beneficiary would pay 30 INR per annum as registration or renewal fee. Till date a total of 3,23,10,732 active smart cards have been given that were used for a total of 40,55,289 hospitalization cases (as of 24 August, 2012). States No. of districts In districts with enrolment Hospitals Selected Complete In progress Total BPL families BPL families enrolled Private Public Total Bihar ,50,11,570 73,98, Odisha ,91,971 32,78, West Bengal ,49,343 45,43, Mizoram ,299 43, Gujarat ,39,634 18,10,326 1, ,683 Maharashtra ,38,792 20,81,821 1, ,222 Karnataka ,71,204 16,80, Kerala ,11,319 17,48, Source: Rashtriya Swasthya Bima Yojna, Government of India Enrolment of beneficiaries and empanelment of providers for RSBY across eight states In addition to the RSBY scheme of the central government, the West Bengal state government, which has a large percentage of workers in the unorganized sector across 44 identified industries, has introduced a Samajik Mukti card to be given out to 30 lakh workers. This card would help those workers to get benefits on hospitalization in addition to accidental death cover, pension and children s education. Allowances up to 10,000 INR is provided to the workers for treating serious illnesses like cancer, cardiac problems, kidney problems, AIDS etc. and there is an allowance of 5,000 INR per year for medical expenses if the hospitalization for the worker lasts for more than five days. 20 ICC - PwC

21 Community based schemes Community health insurance (CHI) schemes, being actively promoted by the state governments, are slowly penetrating the rural markets with more than 25 schemes currently covering over 10 million lives all over India. These schemes are either provider based models, insurer models or linked models. Some good examples of CHI schemes operating in the rural areas and providing protection against catastrophic health expenditure are Rajiv Aarogyashri (in Andhra Pradesh); Arogya Raksha Yojana, Yeshasvini Cooperative Farmers Healthcare System and Karuna Trust (in Karnataka); Jeevandai Aarogya Yojana (in Maharashtra) and Vimo SEWA (in Gujarat). Some of the reasons identified for low penetration of health insurance in Tier II, Tier III cities and rural areas of India are listed below: Low awareness and inability to comprehend the benefits of health insurance coverage. Unavailability of the schemes addressing individualized needs. No mechanism available to the beneficiaries allowing for a systematic appraisal of the quality of services provided. Lack of insurer efforts to promote health insurance. Negligible number of providers in rural areas for availing the benefits of insurance. Other sources Foreign donations There are many international donor organizations active in India like Bill & Melinda Gates Foundation, Clinton Foundation, USAID etc. They work simultaneously with partners at both national and state-levels of government and their funding activities have a significant impact on the health care scenario in Tier II and Tier III cities as well as rural India. For example, the current operational plan of DFID ( ) expects the UK to contribute 173 million GBP on education and 248 million GBP on health related activities in India during the period from 2011 to Healthcare Infrastructure and Services Financing in India 21

22 Funding by international donor agencies Donor agency Name of project Project description Duration Bill & Melinda Gates Foundation Clinton Foundation AVAHAN India AIDS Initiative Since 2003 Project Sankalp HIV prevention programme covering high-risk populations in urban areas of 13 districts Project Corridors HIV prevention programme covering high-risk populations in rural and urban areas of 3 northern Karnataka districts Aravind Eye Care System 2008 Gates Award of 1 million USD for Global Health for providing affordable world-class eye care to the poor 2008 Center for Advanced Study of India (CASI) University of Pennsylvania received a grant from the BMGF to support CASI in developing a method for rating health care at Indian hospitals Stop TB Partnership Providing access to quality diagnosis and treatment as well as safe and reliable prevention through immunization Clinton HIV/AIDS Initiative (CHAI) Making HIV/AIDS treatment more affordable by implementing large scale integrated care, treatment, and prevention programmes Antiretroviral Therapy (ART) 2005 National Paediatric AIDS Initiative Negotiating with Indian drug companies to provide low cost treatment to children afflicted with the AIDS virus, where the foundation provided 15 million USD to subsidize the programme Working in Karnataka since 2007 USAID Project Samastha HIV prevention programme covering high risk and general populations in rural areas in 12 districts and 3 cities Ford Foundation European Commission DFID World Bank CONNECT Project Mobilizing private and public companies to begin workplace HIV/AIDS and TB programmes IMPACT Implementing AIDS Prevention and Care NFHS-1 (National Family Health Survey) CREA Study of Induced Abortions Health and Family Welfare Sector Investment Programme (SIP) Revised National Tuberculosis Control Programme (RNTCP) National AIDS Control Programme (NACP) I and NACP II; National Vector Borne Disease Control & Polio Eradication Support Project Developing a mechanism for collecting more accurate information on health indicators in India 1992 Running training institutes on human rights, gender and development in English and Hindi for community-based organizations Decision making, provider choice and subsequent morbidities in rural Maharashtra by collaborating with KEM Hospital Research Center, Pune Reforming the health care system in India focusing on primary health care services and first referral institutions Procurement of half of the drug requirement for RNTCP by Global Drug Facility with funds from the DFID Since 1997 HIV AIDS prevention and treatment programmes where the aims for NACP II were to reduce the growth rate of HIV infection in India and to strengthen India s capacity to respond to HIV/AIDS; the objective being to enhance the effectiveness of government response to control malaria, eliminate kala azar, and eradicate polio Since ICC - PwC

23 PPP project funding The most typical sources of funding 16 available for PPP projects are listed below: a. Financing from the central or state government i. Complete cover of capital expenditure inclusive of land ii. Viability gap funding (VGF) b. Financing from external agencies c. Financing from a private partner d. Annuity-based financing for healthcare infrastructure As one of the healthcare PPP project funding options, the central or state government can provide complete coverage of CAPEX inclusive of land while the private sector will bear the operating expenses. VGF or Grant means a grant one-time or deferred, provided under the Scheme for Financial Support to PPPs in Infrastructure with the objective of making a project commercially viable. The viability funding scheme will apply only if the PPP contract is awarded in favor of a private sector company in which 51% or more of the subscribed and paid up equity is owned and controlled by a private entity. The private sector company will be eligible for VGF only if it is selected on the basis of open competitive bidding and is responsible for financing, construction, maintenance and operation of the project during the contract period. The VGF cannot exceed 20% of the total project cost. Another avenue of financing that PPP s have been able to attract is from external agencies and multilateral agencies such as the World Bank, European Commission, DFID, COMSEC, IFC, ADB etc. Most often, these are in areas which are mutually goal-oriented for all agencies involved. Some of the observed benefits of participation from such agencies are listed below: Better loan terms and financial structure to improve project viability Mutually beneficial concession contracts Improved environmental and social risk mitigation Enhanced public consultation Improved corporate governance in the project PPP/NGO fund allocation by six identified Indian states States Financial (in lakh INR) Amount approved Actual expenses Amount approved Actual expenses Budgeted Bihar , , West Bengal 1, , Odisha Andhra Pradesh , Maharashtra Tamil Nadu , Source: NRHM PIPs for the States in , and The table below shows a comparison of annual fund allocation and usage by some of the Indian states for PPP or NGO initiative across a three-year period, as per their respective PIPs to meet NRHM objectives. The above table indicates that most of the states score very low in terms of utilization of their approved amount in support of PPP/NGO activities over the last couple of years. However the total budget for has been increased considerably by all of them, which shows their commitment to leverage PPP models in enabling the growth of this sector. 16 Source: CII & HOSMAC - Partnerships in Healthcare: A Public Private Perspective Healthcare Infrastructure and Services Financing in India 23

24 Recent investments A study conducted by PricewaterhouseCoopers to analyze the zonal characteristics in terms of the number of beds, doctors, provider size, occupancy and corporate facilities, reveals the following pattern: North and East are witnessing change: Most new hospitals are opening up in north and east India. In West Maharashtra and Gujarat have good healthcare infrastructure. Madhya Pradesh has scarce healthcare infrastructure similar to North and East East falls way behind all the zones in healthcare. But the utilization of private nursing homes is one of the highest, as it has very few larger private hospitals. South scores better in almost all the healthcare indicators than North and East India. This can be attributed to higher concentration and larger average size of hospitals 24 ICC - PwC

25 It is also observed that depending on the number of Tier I and Tier II cities in the different Indian states, there is a variation on the number of 100+ private bed hospitals in those states. The following graphs show the bed capacities across some comparable Indian states: Private hospital beds per thousand population Number of more than 100 bed private hospitals In the indicator of beds per 000 population, many states are lagging behind as compared to the national average, while for the indicator on number of 100+ bed private hospitals, there is significant disparities across the states. Currently, the central government policy provides a tax holiday of five consecutive assessment years to any service provider earning profits from the operating and maintaining a hospital in the rural area. According to ASSOCHAM, the healthcare sector should be accorded with twin benefits of infrastructure status and holiday schemes up to a period of 10 years. This will not only narrow down the gap between the current and required bed/population ratio in hospitals across the states but also enable setting up of more training centers for doctors, nurses and paramedical staff, and create more job prospects for them. Infrastructure development Infrastructure has always been a barrier to the growth of the Indian pharma industry. Poor energy and transport infrastructure has traditionally posed a problem for companies. Some areas lack basic hotel facilities, preventing reach and penetration. With the government gradually increasing investment in infrastructure, the situation is improving, but it is still seen as an investment opportunity in the country. A good example of this is a coalition between the Union Ministry of Health and Family Welfare, the pharmaceutical industry and private airport developers, (such as GVK and GMR) to set up specialized cargo zones for import and export of pharmaceutical products. Further, the CDSCO has taken up the initiative to form these zones at every Indian airports, the first being at the Indira Gandhi International airport, New Delhi. Currently the government has budgeted US$6 million for the formation of these zones. Besides, the private sector is also showing a keen interest in the healthcare sector. Sources: PwC Analysis, Health Information of India, CBHI, GoI, respective years; Census of India, Population Profiles (India, States and Union Territories), Office of the RGI 2004 Healthcare Infrastructure and Services Financing in India 25

26 The following investments have been initiated by the private sector: Bengaluru-based Narayana Hrudayalaya Hospitals plans to invest Rs 5,000 crore (US$ million) on setting up a chain of 100 low-cost specialty hospitals and at least three more health cities in the country Fortis Healthcare entered into a JV with DLF and tieup with Ansal Properties for Rs. 6,200 crores to set up a chain of bed hospitals in 31 cities in India within three to five years Apollo Group plans to set up a wellness center for the elderly in a tie-up with Lavasa Lake City for Rs. 200 crores Max Healthcare has made an expansion plan that includes hospitals in Dehradun and two PPPs in Tier III cities of Mohali and Bhatinda in the state of Punjab Columbia Asia offering secondary and upgraded secondary care services, has plans to set up upcoming hospital facilities in Mysore, Trivandrum, Pune, Ahmedabad, Chandigarh, Dehradun, Gaziabad, Jalandhar, Lucknow, Meerut and Patiala. Hinduja Group has a tie-up with Dubai Government owned Limitless LLC for around $1 billion to start a chain of hospitals in India Punj Lloyd Limited has invested in Global Health Limited for setting up the Medanta-MediCity Investments in health care facilities in India between Company name Year Investor Transaction Value (US $ Million) Vikram Hospitals 2008 ICICI Venture, India 24 Oyster & Pearl Hospitals 2008 Saviour Health Care 13 Rockland Hospitals 2008 IFC, USA 14 Health Care Global 2008 Premji Invest, India 20 Health Care Global 2007 IDFC PE, India 10 Apollo Hospitals 2007 Apax Partners, UK & IFC, USA ~ 100 Sahyadri Hospitals 2007 ICICI Venture, India 36 Fortis Health Care 2007 Trinity Capital, India 20 R G Stone 2007 ICICI Venture, India 10 Hiranandani Hospital 2007 Fortis Health Care, India ~ 6 Manipal Hospitals 2006 IDFC PE, India ~ 20 Max Health Care 2006 Warburg Pincus, USA & IFC, USA ~ 45 Sterling Hospital 2006 Actis, UK ~ Narayana Hrudayalaya 2007 AIG & JP Morgan, USA ~ 100 Medica Synergie 2008 ICICI Venture, India 16 Source: The Business of Health in Emerging India, IFC USA 26 ICC - PwC

27 Rural market penetration through telemedicine The advances in medical science and bio-medical engineering on one hand and telecommunication and information technology on the other are offering wide opportunities for improved health care in India. With its high rural population and moderate per capita income, the factors that are likely to drive the growth of telemedicine in India are the following: Inaccessibility of care for majority of the population; over 50% of the patients from rural areas travel over 100 kms to seek medical care A severe shortage of skilled and qualified doctors in the rural areas; large proportion of medical care in rural areas is provided by Quacks (estimated to be around 1 million currently in India); High cost of health care, particularly for secondary and tertiary care; Very high patient volume in the rural areas compared to the number of doctors, hospital beds and trained medical staff; Problem of retaining doctors in rural areas where they are required to serve and propagate widespread health awareness; Specialist doctors cannot be retained at rural areas as they will be professionally isolated and become obsolete and even monetary incentives cannot prevent it; Widespread availability of mobile network; and Rapid growth in the availability of low power, hand held medical monitoring devices. The services that can be provided through Telemedicine are shown below: Patient care Consultation Diagnostics and Reporting Mobile Clinics Education and Training Continuous Medical education for medical professional Vocational Training for nurses and paramedics Patient awareness Some of the major service providers in telemedicine in India are Narayana Hrudayalaya, Apollo Telemedicine Enterprises, Asia Heart Foundation, Escorts Heart Institute and Aravind Eye Care. Successful Programmes across the Indian States Some of the successful programmes happening across different states of India are: Narayana Hrudayalaya has a telemedicine network, managed through satellite connectivity provided free of cost by the Indian Space Research Organization and connected with about 100 telemedicine centers across India, that has conducted around 53,000 tele-consultations till date in the areas of cardiology, neurology, urology and cancer; Airtel has tied up with Healthforce and Fortis Healthcare as the knowledge partner to offer Mediphone services on non-emergency health problems to its customers around-the-clock at less than Rs. 50 for each consultation; Aircel and Idea have collaborated with HealthNet Global to provide services to subscribers through paramedics, who come with a laptop and medical diagnostic equipment and conduct consultations via video conferencing, in Chennai, Mumbai, Delhi and Hyderabad; Apollo Telemedicine Networking Foundation (ATNF), a not-for-profit organization has set up a rural telemedicine network of 150 centers for providing medical consultation to rural population on primary, secondary and tertiary care, with Apollo Hospitals providing the medical support by rendering quality healthcare through its key hospitals; World Health Partners (WHP), a US headquartered international non-profit, has set up 104 telemedicine centers in 13 districts of the state of Bihar to provide health care and reproductive health services by harnessing local market forces and connecting the patients to doctors at WHP s central medical facility in New Delhi via computers and webcam; CARE Rural Health Mission is a not-for-profit organization specializing in telemedicine solutions to link rural health workers in Maharashtra and Andhra Pradesh with doctors at district level hub and till date has served 1.1 million patients across 250 villages; Healthcare Infrastructure and Services Financing in India 27

28 DISHA is a telemedicine initiative by Apollo, Phillips, ISRO and Dhan Foundation that provides long distance healthcare to the underserved population through a mobile tele-clinical van, which offers super specialty and specialty tele-consultation, lab facilities, onsite consultation, and secondary and tertiary care; it has targeted to cover a population 275 million; and OTTET s Telemedicine network is an integrated health care service delivery model that has been established as a need based community-centric approach to promote and provide preventive health care and disease management services at the door steps of people living in over 51,000 villages of Odisha state; it is done in a PPP mode with the partners being MoHFW - Odisha State Government, SGPGIMS- Lucknow and various Technical Partners. Private hospital chains operating in rural and semi urban areas While 70% of India s population lives in semi-urban and rural areas, most of the hospital networks are in urban/ metro areas. Few hospital chains have come up in last few years that are focusing exclusively on rural and semi urban population. Glocal Healthcare, a rural hospital chain currently operating in West Bengal have set up 6 state of art hospitals at sub district level in Sonamukhi, Khargram, Katoya, Bolpur, Baharampur, Dubrajpur. Under the leadership of Dr. Sabahat Azim, Glocal aims to create largest rural healthcare delivery system in India. It is an ambitious venture to bring State of Art Healthcare to rural population in India through an integrated model of Block Level Comprehensive Primary & Secondary Care Hospitals, Health Insurance, Skill Development and Technology. As per Dr. Azim It is possible to develop a sustainable and a viable rural healthcare delivery model by standardization of processes, following a protocol driven rather than doctor driven approach and developing a complete ecosystem by integrating with the rural community. We estimate our investment, which covers the land, building and medical infrastructure and other variables, will not exceed Rs.2.5 crore (per hospital) once the expanded phases of the project is started. LifeSpring Hospital Chain has set up to provide high quality maternal care to low income mothers by setting up no frills, small hospital beds across Andhra Pradesh. According to its website, LifeSpring s model uses a market-based approach to achieve sustainability and scale. The first LifeSpring Hospital opened in 2005 on the outskirts of Hyderabad in Moula Ali; it broke even and became profitable in less than two years of operation. Through its process-driven model, each LifeSpring Hospital is easily replicable in other locations, ensuring scalability and supporting rapid expansion. Vaatsalya is another hospital network focused on Tier II and Tier III towns bringing affordable healthcare in semi urban and rural areas. Vaatsalya currently has seventeen hospitals across Karnataka and Andhra Pradesh. Vaatsalya hospitals are beds in size, with Neonatal Intensive Care facilities, Operation theatres, Maternity Room, Intensive care facilities, a mix of general rooms (dormitory style), and private/semi-private rooms. Medical equipment manufacturing The Indian market for Medical Equipment was valued at around $ 2.6 billion in 2011, witnessing a growth of 15.6 per cent over A rise in the number of secondary and tertiary care hospitals and advanced diagnostic centers and increased requirements for healthcare facilities has created a demand for low cost sophisticated devices and equipment. These devices and equipments must comply with global quality standards and provide accurate treatment to individuals. Historically the penetration of medical devices was low and inadequate, but owing to the current regulatory structure by the Government there have been an increase in domestic manufacturing of medical equipment in the last couple of years. The Medical Technology Parks proposed by the Government of India is also encouraging domestic manufacturing of medical equipment. International companies like 3M, Becton Dickinson, Hollister, Phillips Medical System, Abbott Vascular, Boston Scientific and GE Healthcare are also using India as a manufacturing base by either setting up facilities of their own or by acquiring domestic manufacturers. Some of the leading Indian manufacturers of medical devices and equipment are India Medtronic, BPL Healthcare India, Sushrut Surgicals, Trivitron Diagnostics, Nidhi Meditech System, Harsoria Health Care, Wipro Technologies, HD Medical Services and HCL Technologies. A few examples of innovations done by both domestic and international manufacturers with a primary focus on the Indian healthcare market are: Development of in-vitro diagnostic equipment through the R&D base in Mumbai by Transasia Biomedicals 28 ICC - PwC

29 Creation of an external fixator for the Indian market by the Sushrut Adler Group Development of a knee implant as well as a reusable stapler for use in surgeries at price points, which are acquiescent to the Indian market, by Johnson & Johnson Development of a screening device for cardio-vascular diseases, which is suitable for use in rural settings, by Roche Diagnostics Creation of a low cost ECG machine and a low cost Ultrasound machine for the Indian market by GE Healthcare Development and launching of a low cost Cath Lab for the Indian market through acquisition of domestic manufacturer by Phillips Medical Systems Medical Tourism is a major external driver for the growth of the medical devices and equipment market. With increased competition for healthcare delivery and promotion of Medical Tourism, International Quality at Reduced Price has become the key theme for survival. The National Accreditation Board for Hospitals and Joint Commission International operate accreditation programmes for healthcare organizations. The Indian Medical Equipment segment is having competition from the imports from European companies and Japan to cater to the needs of medical tourists in India with the most promising sub-sectors being Medical and Surgical Instruments, Medical Imaging, Electro-Medical Equipment, Orthopedic and Prosthetic Appliances, Cancer Diagnostics and Ophthalmic Instruments. However the significant rise in input costs, due to component procurement from outside India and rupee exchange rate fluctuations, and lack of test centers availability in the country are acting as key barriers to the growth of this industry, which has a very good prospect for exports apart from meeting the demand for low cost quality care and diagnostics for the Indian population. Development in the eastern and north-eastern states In line with the Look East policy of the central government for industrial growth and development, a number of private healthcare providers are either setting up their facilities or making future plans to tap the potential of the east and north-east India market. Till the recent past, most of the private investments in the healthcare sector in the east had been centered around Kolkata with big national players like Apollo, Fortis, Wockhardt, Columbia Asia, AMRI, MEDICA and Narayana Hrudayalaya establishing their presence here. The most recent ones are Global Hospitals, which tied up with the Sureka Group, to set up a 300-bed transplantation and tertiary care centre in Kolkata and the Europe-Israel Group of Israel, which has planned to set up million USD medical equipment factory in the vicinity of Kolkata in West Bengal. Kolkata was acting as the only healthcare hub for handling the regular stream of patients from all the north-eastern states as well as Bangladesh, Nepal and Bhutan and a part of the medical cases from eastern states like Bihar, Jharkhand and Odisha. To ease the pressure on Kolkata and decentralize the healthcare sector growth in this part of the country, recently three cities have been emerging as the future healthcare hubs in east and north-east India. They are Siliguri and Asansol in West Bengal and Bhubaneswar in Odisha. Siliguri Siliguri is rapidly emerging as a gateway to the northeast and a major healthcare hub in West Bengal. It is the entry to North Bengal region and hosts over 5,00,000 domestic and 15,00 foreign visitors annually. With the boom in five star hotels, banks, shopping malls, multiplexes, amusement parks and big housing complexes in Siliguri, more people are preferring to stay here from surrounding areas and these people would seek healthcare services more frequently. According to Sajal Dutta, the Managing Director of Desun Hospital, The population of the healthcare hinterland proximal to Siliguri is over 10 crore, more than the population of West Bengal. There is a huge untapped market, hence large hospitals are taking interest in setting up facilities. Till recently, the healthcare needs of Siliguri were catered to by nursing homes and polyclinics and government hospitals (North Bengal medical college and a district hospital). Most of the private healthcare facilities were being set up by doctors in an entrepreneurship mode like Dr Chhang s Super Speciality Hospital, North Bengal Neurology Research Centre, North Bengal Oncology Centre, Medica North Bengal Clinic, North Bengal Eye Centre, Anandaloke Hospital and Neurosciences Centre, Heritage Hospital, Paramount Hospital and Mitra s Clinic. The growing economy in Siliguri has also increased the incidence of lifestyle diseases and due to the lack Healthcare Infrastructure and Services Financing in India 29

30 of government hospital infrastructure and services, the urban population will look at the private sector for their medical care. Moreover Siliguri lacks in adequate tertiary care settings. To cater to this need, the existing players have made expansion plans, which are summarized below: The 60-bed Heritage Hospital is adding an eightbed ICU unit and a two-bed dialysis unit with future provision to start kidney transplantation. The 118-bed Medica North Bengal clinic is expanding their bed strength by 30-40%. It is also adding a sixunit dialysis center, a modern cath lab with modular OT facilities and a full-fledged neurosurgery unit with latest equipment. The 66-bed Dr. Mitra s Clinic is adding a new unit to the existing general hospital to offer and diagnostic services. It has also made plans to add a dedicated oncology center, focusing on breast and cervical cancer and an IVF unit. The 70-bed multi-specialty Paramount Hospital will add a cath lab and extend its ICU to become 20 beds. The 100-bed multi-specialty Anandaloke Hospital is expanding to become a 300-bed hospital by adding a gastroenterology super-specialty hospital, eye specialty hospital and new facilities like joint replacement, cath lab, nursing and paramedical training institute. There are quite a few corporate hospitals, which are making plans to enter the healthcare landscape of Siliguri. The different initiatives in the pipeline are as follows: Kolkata-based CK Birla/GP Birla Group that has BM Birla Heart Research Centre and the Advanced Medicare and Research Institute Limited in Kolkata, is setting up a tertiary care hospital at Dhaniakhali in Siliguri. This 100 crore INR project is coming up on a two-acre area and will be a super-specialty focusing on cardiac care. Kolkata-based Desun Hospital and Heart Institute, which runs a 303-bed hospital in Kolkata and coming up with another 200-bed in Bhubaneswar, has planned its third project in Siliguri. It will be a 300- bed hospital at an investment of 100 crore INR. Bangaluru-based Narayana Hrudayalaya is coming up with a 1,000-bed super speciality hospital at Himanchal Bihar in Matigara on a five acre land. The first phase of the hospital will have 250 beds at an estimated cost of 75 crore INR. The Ambuja Realty Development Ltd (ARDL), which owns Bhagirathi Neotia Woman & Child Care Centre, a super-speciality 83-bed hospital for women and children in Kolkata, has planned its second project in Siliguri. It will be a 250-bed hospital at Uttorayon in Siliguri. Kolkata-based, Advanced Medicare Research Institute Limited (AMRI), a joint venture between Emami and Shrachi Group of Industries, is coming up with a multi-speciality hospital, opposite North Bengal Medical College. This will be a 200-bed hospital in Siliguri at an estimated cost of 100 crore INR. The Apollo Hospitals Group is planning a 350- bed hospital in Siliguri. This hospital would be a greenfield project to be built at a cost of 40 crore INR to 50 crore INR and would provide secondary care and some high-end tertiary care. The entry of the big corporate hospitals in Siliguri will surely transform the healthcare delivery in Siliguri from being doctor-driven to institute-driven. Bhubaneswar Industrial and infrastructural development has boosted the healthcare market in Bhubaneswar, attracting corporate to set up base in the city. With a proactive Government in place and big investments coming into the state of Odisha in the private healthcare sector, Bhubaneswar is poised to become a healthcare hub of the eastern India. Till early 2000, the healthcare system in the city was mainly comprised of polu-clinics, nursing homes and state-run government hospitals. In the last decade, several multi-specialty and superspecialty hospitals have come up in the city like the 150-bed Apollo Hospital, 150-bed Kalinga Hospital, 100-bed Hemlata Hospitals and Research Center, 120- bed Ayush Hospital, 150-bed Kar Clinic and 100-bed Aditya Care Hospital. As more hospitals are being set up, more state-of-the-art technology will be introduced and more choices will be offered to patients. The city s first corporate hospital, Kalinga Hospital, now offers kidney transplantation, the LV Prasad Eye Institute is capable of dealing with complicated ophthalmic cases, while the high risk cardiac cases are dealt with by Aditya Care, Ayush Hospital and Apollo Hospital. The Hemlata Cancer Hospital now provides all three branches of oncology treatment to take care of the high cancer burden of the state. 30 ICC - PwC

31 The sector is witnessing significant growth and many hospitals with emphasis on super specialty or tertiary care are in the pipeline. As stated by Dr. Bikash K Mohanti, Medical Superintendent of Kalinga Hospital, The future of private healthcare providers is bright because the prevailing business climate, general economic outlook, as well as business enabling Hospital / Medical College Capital Hospital 750 Apollo Hospital 350 Kalinga Hospital 300 Hemlata Hospitals & Research Center 100 Ayush Hospital 500 Kar Clinic 300 Aditya Care Hospital 300 Kalinga Institute of Medical Sciences 750 Hitech Medical College and Hospital 750 Neelachal Hospital Pvt. Ltd. 300 Vivekananda Hospital 100 Sparsh Hospital and Critical Care 250 AIIMS 978 Narayana Hrudayalaya 750 Asian Heart Research Institute 400 AMRI 300 Global Hospital 300 Desun Hospital and Heart Institute 250 CARE 200 Vedanta Hospital 100 Source: Invest Bhubaneswar Proposed beds infrastructure will contribute immensely to the success of private healthcare. The existing medical capacity in the city is 5,030 beds that includes 2,000+ ICU beds, while the proposed expansion or new set up plans will add 10,000+ beds to the current capacity of the city. The big projects (both expansion as well as new ones), which are in the pipeline, are mentioned below: Initiatives in the other states In 2006, the Assam government embarked on a fiveyear investment plan for 60 billion INR to upgrade the facilities and other infrastructure of its three medical colleges at Guwahati, Silchar and Dibrugarh and recruit specialist doctors on high salaries to take on the challenge from the state s flourishing private healthcare industry. Continuing on the same line, current state government is initiating radical reforms to uplift the state s infrastructure, attracting private investors and augmenting the state s infirm healthcare facility. In April 2010 Assam was declared the best performing state in implementing the NRHM among the northeastern states. In March 2010, Assam had become the first state in India to provide a comprehensive right to health to every citizen of the state by clearing the Assam Public Health Bill. The bill seeks to make it mandatory for all hospitals, both Government and private, to provide free healthcare services for the first 24 hours to an emergency patient. In terms of initiatives by private healthcare providers, the clinics and nursing homes are mostly based on doctors initiatives and measures are being taken to scale up facilities and add latest cutting edge technology. However, the hospitals lacks expertise because of which patients mostly have to go outside the state for critical or advanced treatment. Very recently the Assam government expressed its desire to turn Guwahati into a regional hub for healthcare catering to patients from north-east as well as from neighboring countries of Bhutan and Bangladesh. As a first step, the government signed a memorandum of understanding with Narayana Hrudayalaya for a 300-bed super-specialty hospital in the outskirts of the city under PPP model. Half of the beds will run on government subsidized rates while the rest will be on private hospital rates. IFC, a member of the World Bank Group, is working with India s eastern state of Jharkhand to expand medical infrastructure through a public-private partnership model, expanding access to improved healthcare services for four million people. IFC will assist the state government in selecting a private partner through a competitive and transparent process. This partner will equip, staff, and expand the government-owned, 40-bed Sadar Hospital into a 500-bed facility to provide secondary and tertiary care. IFC will similarly assist the state s district hospitals and medical colleges to identify private operators who can provide advanced radiological imaging and pathological testing services. Both these projects are expected to raise about 75 million USD in private sector investments. The projects will include training of government staff to manage these programs and conduct similar transactions in the future. IFC will also explore the viability of setting up an associated medical college with private participation. IFC is also helping the north-eastern state of Meghalaya in implementing a universal health insurance plan to benefit the state s population of over three million, including those from low and middle income households Healthcare Infrastructure and Services Financing in India 31

32 32 ICC - PwC currently without health coverage. IFC will work jointly with the World Bank to assist the state in designing and implementing the insurance plan, including promoting private sector participation. It will broaden coverage for local families, allowing them to obtain quality healthcare and specialized treatment close to home. The project is also supported by the UK s Department for International Development. In the long term, the project will help address the shortage of trained medical and paramedical staff in the northeast region. The project will be implemented in two phases. In the first, the plan will extend insurance coverage to more than 80 percent of the residents not covered by Meghalaya s current program. The second phase will include coverage for a broader range of diseases and tertiary health care delivery, all under higher financial cover. This is the second intervention in healthcare by IFC in Meghalaya. Earlier in 2010, IFC had advised the state government on providing quality healthcare and training at the Shillong hospital and medical college.

33 Challenges for private sector Funding of healthcare projects Healthcare projects are capital intensive and have at times slower returns specially in smaller towns and rural area. There are not many funding mechanisms available for these projects. This has been one of the biggest hurdles for this sector to grow and reach to masses. Mostly the hospitals in tier II towns and rural areas are getting funded by bank loans which are at high interest rates of 13-14%. It is very difficult to make such projects viable. This phenomenon is highly prevalent in eastern states and has been one of the reasons for slower growth of healthcare there. Many sovereign funds and social funds (foreign pension funds) are interested in funding these kinds of project, but are not able to connect. Operations of Facilities Prices of services in the private sector is influenced by the source of capital and interest rates and prices of other inputs such as labour, rental, technology etc. However the competitive edge is determined by three factors - the experience of the practising physicians, effective use of technology and proximity of service location for the intended customer-base, which also act as barriers to entry. At times due to low bed occupancy at private hospitals, unqualified nurses and AYUSH doctors are appointed at far lower wages to stay competitive. Other practices generally used to remain economical and continue having a sustainable profit margin are: Combining medical diagnosis and treatment with the sale of drugs; and Earning commissions from diagnostic laboratories for every referral. Affordability of Care There are apprehensions in the mind of the private service providers regarding the affordability of population for secondary and tertiary care as majority of the patients earn a basic daily wage. The lack of sufficient public spending is substantially increasing the burden of private out-of-pocket expenditures on health. Moreover the financial protection against medical expenditures is far from universal with only 10% of the population having medical insurance. Out of that only a very small percentage of population is availing Voluntary Private for-profit Health Insurance scheme, while the remaining people are either covered by Community Based Health Insurance or mandatory Employer Health Insurance schemes like ESIS or CGHS. However experience from other countries suggest that the entry of private firms into the health insurance sector has to be properly regulated without which it can have adverse consequences for the cost of care, equity, consumer satisfaction, fraud and ethical standards. Some of the regulatory areas that pose challenge to the growth and penetration of the private health insurance sector in India are: Non-negotiable conditions included in the insurance policy contract, that are binding on consumer Rejection disputes due to minor technical reasons Clear documentation and demarcation between fair practice and unfair practice Knowledge and implications of pre-existing conditions Covering of risk for only that population segment who can afford to pay high premiums - unregulated reimbursements of medical costs by the insurance companies will push up the prices of private care leaving a large section of the population, who are uninsured, at a relatively disadvantageous position, having to pay more for the same private care. Availability of Healthcare Staff The key concerns expressed by the private healthcare providers for not making some of the Indian states (for example Bihar) as their preferred destination for setting up healthcare facilities are: Non-availability of medical, nursing and paramedical staff; Scarcity of Nursing Schools and paramedical colleges; Reluctance of qualified professionals to settle in those states; Lack of urban amenities required to attract qualified staffs like malls, multiplexes etc. Inadequate budgets, limited avenues and incentives for the teaching faculty to undertake research or introduce innovative teaching methods, etc. have had a demoralizing effect that creates a negative impact on the quality of education and commitment of the faculty. It is observed that there is a steady migration of skilled personnel from government to private and abroad, which could mean non availability of quality care to the poor who frequent government facilities or in States which have low incentives to work. If the progressive erosion in quality is not arrested, then it will affect India in a different way - while the best continue to go abroad or work in corporate hospitals that attend to the affluent sections of society, NRIs or foreign clientele, there is a danger of duality in quality and consequent inequity in care. Healthcare Infrastructure and Services Financing in India 33

34 Access to essential drugs and medicines Drugs are one of the main cost drivers of the health care system. On the demand side, drugs and medicines form a substantial portion of the out-of-pocket (OOP) spending on health by Indian households. In rural India, the share of drugs in the total OOP is estimated to account for nearly 83%, while in urban India, it is 77%. The share of drugs in the total inpatient treatment in rural and urban India is around 56% and 47% respectively. On the other hand, the component of drugs and medicines accounts for a mere 10% of the overall budget of both the Central and the State Governments. At present, only 76 drugs, accounting for one-fourth of the total drug market in terms of value are price controlled. Finally drug retail margins are extremely high in the pharmaceutical market. This becomes evident when one compares the market price vis-àvis the pooled procurement price of drugs. The State Governments of Tamil Nadu, Delhi and Rajasthan have been pursuing a transparent and efficient public drug procurement policy. This has resulted in substantial savings to the exchequer leaving them in a better position to buy more drugs within their limited budgets. Spurious or substandard drugs have been the hallmark of the Indian pharmaceutical market. Poor regulatory systems, due to inadequate and weak drug control infrastructure at the State and Central levels is the major reason for the existence and sustenance of substandard drugs. Specifically, the problem lies in inadequate testing facilities, shortage of manpower, non-uniformity in enforcement, etc. with only some States and Union Territories having drug-testing facilities. 34 ICC - PwC

35 Emerging PPP models A public-private partnership (PPP) in the healthcare sector is an approach to address the public health concerns through the combined efforts of public, private and development organizations. Each partner contributes in its area of special competence and comes together around a common cause, while simultaneously pursuing some of its own organization objectives or business goals. In order to increase the accessibility and affordability in health care across the country the government has been actively participating with the private sector, to achieve its health policy goals. Though PPPs are characterized by the sharing of investment, risk, responsibility and rewards between the partners, overall the Government remains responsible and accountable for delivering services that protects and promotes public interest. Current policies focus on PPPs and a transition of the role of the government from being only a provider towards a payer. Government owns majority of the health care infrastructure spread in Tier II, III Cities and Rural India, which is underutilized because of the absence of staff and quality of services. For the better utilization of the public hospitals, it is keen to partner with private players to improve operational efficiencies and infrastructure. Moreover with the advent of RCH and NRHM, there has been a change in the state-level strategy for large scale taping of the private sector potential. The NRHM strategy includes promotion of PPPs for gaining managerial efficiency and ensuring achievement of public health goals activities. Thereby it has initiated a number of PPPs to achieve the above goals which will also enable transfer of skills and expertise between the public and private sectors. According to CII-HOSMAC whitepaper Partnerships in Healthcare: A Public Private Perspective, there are a variety of PPP models available, with varying degrees of responsibility and risk allocation, to choose from depending on project complexity and need of the healthcare sector. A summary is provided below: However, the PPP models used by various state governments are increasingly becoming a combination of the best from each of the above basic types, depending on the needs of the target service delivery and population. Operations and Mgmt BOT DBFO Lease Concessions Joint Venture Contractual arrangement Facility ownership retained by public sector Skills of private sector used in service design and delivery, and operations Payment of performancebased fees for management of services Creation of a SPV company for private financing Purchase of predetermined amount of project output by the govt. Recovery of initial investment in a moderate amount of time Operating responsibility can be further contracted Variation of the basic BOT structure Responsibility of private sector to design, build, finance and operate Disparity in the degree of financial responsibility transfered to private sector Capital investments made by public sector Private sector provides service at own expense & risk Private sector responsible for quality stds and collection of tariffs Tariffs partly utilized for loan on facility financing Public sector regulates price and service quality Private sector responsible for all capital investment & expenditure and all assets Private sector payment for concession rights Public sector contribution to reduce level of commercial risk Joint ownership and operation of the facility Sharing of revenues, expenses and assets Technological expertise or technical service arrangements sought from private sector Healthcare Infrastructure and Services Financing in India 35

36 The various options availed by the different states for engaging in a PPP Project for the healthcare sector in India are shown below: Problem Area Working Model(s) Cost Effectiveness Implementation State HOSPITAL INFRASTRUCTURE & SERVICES Shortage/ absence of specialists Absence/ poor quality of diagnostic machinery Absence of 24x7 lab services Inaccessible super-specialist services in remote areas Low availability of doctors and medical services Low availability of medicines & surgical items Lack of Bio-Medical Waste Management Facility Urban Health Services Poor outreach and referral services Inadequate facilities Shortage of human resources Waterborne disease management in slums Appointment of specialists on contract basis over the weekend to ensure access to those services at hospitals Installation of diagnostic machinery (CT Scan, MRI, USG, X-ray) by private providers on contract basis within hospital premises Partnered with accredited and trusted labs in health sector on contracting basis Setting the telemedicine and tele-health system on contracting out basis to private service providers Corporate partnership for medical/dental education Social marketing type partnership to provide cheaper medicines and surgical in hospital premises Providing proper Hospital Waste Management & Disposal Services in all Govt Health Facilities starting from Medical Colleges to the PHCs on contracting out basis to private service providers Contracting out to private organizations the distribution of basic health products like contraceptives ors and clean delivery kits to the slum dwellers Establishment of additional UHCs though private service providers on a rental basis prioritizing districts with heavy patient load in the DHs Appointing MOs and ANMs on contracting in basis to alleviate the problem of retaining provider services in remote areas due to lack of accommodation and low salary Partnering with private service provider to improve the quality of water supplied and sanitation systems and reduce the incidence of waterborne diseases in urban slums Fund pooling from unused budget due to vacant specialists position to use for contracting purpose Services at reduced prices, free service for BPL patient & senior citizens, scheme for commission over a fixed no. of investigations/month/hospital No extra cost on stretching the lab services to round the clock, free service for BPL patients whose fees can be reimbursed from hosp. welfare committee Reduced travel and elimination of unnecessary patient transfer, low capital investment for establishing a care presence, and training & re-training personnel No extra burden on corporate and no running cost in BOT model State governments can provide standard stuff to the patients at reasonable price round the clock with no extra cost to the state Low capital investment for establishment Minimal charges for OPD cards including medicines for 3 days and emergency medical services, no staff liability, improved quality of services Low capital investment, low manpower requirement, reduced load on DHs leading to better quality of care No extra burden on infrastructure as funds can be pooled from the unspent fund due to vacant positions Gujarat (Narmada & Rajkot District) West Bengal (7 Medical College Hospitals, 19 RHs) Uttar Pradesh (Lucknow) Karnataka Delhi Karnataka Rajasthan (Jaipur) Bihar (Patna, Bhagalpur, Gaya) Delhi Delhi Bihar Bihar Uttaranchal Andhra Pradesh 36 ICC - PwC

37 Problem Area Working Model(s) Cost Effectiveness Implementation State Limited Ultra Modern Diagnostic Centers Lack of Medical Colleges Shortage/Absence of Hospitals and Trauma Centers NATIONAL HEALTH PROGRAMMES Family Planning National Programme for Control of Blindness Revised National Tuberculosis Control Programme National AIDS Control Programme Pulse Polio Reproductive & Child Health Programme RURAL HEALTH SERVICES Emergency Medical Services Establishment of Ultra Modern Diagnostic Centers at identified Medical Colleges/Hospitals by partnering with private service providers in a revenue sharing model Partnering with private sector to set up medical colleges either within the district hospitals or ready-to-use land Partnering with private service provider for setting up a super specialty healthcare facility on DBOT basis to provide affordable, quality and efficient care services Contracting with the NGOs to provide beds and surgical items and approve private hospitals for performing different contraceptives and sterilization services Contracting with the NGOs, who are given annual grants by the government for their recurring expenditure, to perform eye camps and surgeries in tribal areas and approved hospitals Partnership with private practitioner to give IEC on the DOTS scheme and to identify and treat the patients Partnerships with NGOs to spread awareness about HIV/ AIDS, implement targeted interventions, run counselling and testing centers Partnership with private doctors/ngos to conduct pulse polio camps and give pulse polio drops to the under five children Contracting with private hospital to undertake surgeries at reduced rate, where Govt services are not available; delivery may be handed over to NGOs already involved in RCH Setting up Emergency Network services by partnering with private service providers to provide prompt quality pre hospital care to accident victims, fire victims, pregnant women, and cardiac emergencies Land and/or basic infrastructure provided by the government; cost sharing model and/or government approved fee structure. Government will provide the land; charges set by the pvt provider; government gets an upfront consideration and a percentage of the gross revenue as annual concession fee. Govt provides basic services and pays for drugs charges, operating surgeon fees and compensation for sterilization acceptor NGOs can perform cataract surgeries and arrange eye camps where Govt provides finance Free of cost awareness campaign through private doctors, opening of labs for use by the private doctors enabled diagnosis and treatment of more TB patients With no extra cost, Govt can spread HIV/AIDS awareness and provide condoms to the people as well as care and support services for those living with HIV/AIDS No burden on existing infrastructure, involvement of private provider made the programme implementation more effective Effective and economic RCH & family welfare can be provided to the people, funds for the scheme will be provided from dept of health Services made available at reduced rates, free service for BPL patients, pregnant women and children, no infrastructure cost, reduced operational cost Bihar Bihar Kerala Maharashtra Odisha Uttar Pradesh Delhi Maharashtra Punjab Bihar Uttar Pradesh Andhra Pradesh Andhra Pradesh Gujarat Rajasthan West Bengal Haryana West Bengal Andhra Pradesh Bihar West Bengal Healthcare Infrastructure and Services Financing in India 37

38 Problem Area Working Model(s) Cost Effectiveness Implementation State Access of Healthcare for Population in Remote Areas Weak Management of PHCs Shortage of Generic Drug Shops Lack of Blood Banks/ Storage Units Inadequate Pathology Lab Facilities Shortage / Cost of Radiology Facilities Inadequate Access to Doctor Information High Expense of Dialysis Units Shortage of Dental Units Contracting with Private Service Providers to operate Mobile Medical Units for providing primary health care services in the remote rural areas of various districts of the states. Contracting out the management of identified PHCs with the private sector for adequate and quality staffing and free health care to all patients Setting up and operating fair price pharmacies in Govt hospitals to sell low cost generic drugs instead of costly branded drugs; the doctors are also advised to prescribe accordingly Contracting with Private Service Providers to supply equipments to the designated FRUs to operationalise the Blood Storage Centers Setting up of sample collection centers at SDHs and testing centers at DHs by contracting in to private service providers Setting up of X-ray and Ultrasound centers in the rural health facilities by contracting in to private service providers Making a scheme operational through private service providers where patients can avail medical assistance at their home at any time and get solutions to their complaints Installation of a number Haemodialysis Units in the Govt Hospitals through contracting with private provider under BOOT mode Contracting with Private Service Providers for setting up Dental Clinics in the rural areas of the States No capital investment for the Government, service rates fixed by the Government and quality and utilization monitored on a periodic basis Improved management with the same/low budget, Govt provides premises, initial equipment/supplies, and percentage of salaries and a fixed amount for drugs Space provided by government within hospital premises and procurement of drugs is arranged and monitored for the success of the program No capital cost to Government except for providing vacant space in FRUs to install the Storage Units Services are made available at Govt approved rates at PHCs, FRUs and SDHs, low capital investment, low requirement for manpower Services are made available at Govt approved rates, provides free service to BPL patients, low capital investment and manpower requirement Government has empanelled doctors and specialists for this Samadhan scheme, while the private service provider has arranged for a special toll free number of 1911 wherein patients can dial and call for doctors. No cost to Government except for providing space and approving rates to be charged to the patients No capital cost to the Government except for providing vacant space, rates and operation time fixed by the Government Andhra Pradesh Bihar Karnataka Madhya Pradesh Karnataka Odisha Bihar Rajasthan Tamil Nadu Bihar Haryana Bihar Tripura Uttarakhand Andhra Pradesh Bihar Delhi Uttarakhand West Bengal Andhra Pradesh Bihar Gujarat Andhra Pradesh Bihar Uttarakhand West Bengal Bihar 38 ICC - PwC

39 The table below shows a comparative analysis of the PPP projects in some of the Indian states in terms of promoting PPPs in the different areas and total costs incurred to alleviate the problems of healthcare delivery and infrastructure. Comparative Study of current Healthcare PPP Projects across 6 Indian States States Diagnostics Infrastructure Service Delivery Health Insurance Total No. Cost (Cr) No. Cost (Cr) No. Cost (Cr) No. Cost (Cr) Cost (Cr) AP , K taka M rashtra MP , Odisha Rajasthan Source: State websites for the respective PPP Cell Challenges of healthcare PPPs In spite of the initiatives and innovations happening in Healthcare PPPs, both from the State Governments as well as the Private Sector, there are some challenges that need to be addressed for success and sustainability of these projects on an on-going basis. These challenges are outlined below: Lack of direction from the State Governments in identifying areas where partnership is possible as well as coming up with area specific partnering models (in terms of sharing of risks, resources and costs); No policy to include to private sector participation in the PPP governing body, which is negatively impacting the equitable representation of both private and public sector interests; Insignificant involvement of the people at the grass root level in the decision-making process with shortage of patient-centric approach; Lack of public sector initiative to structure the PPP through equity participation or debt infusion at subsidized cost of borrowing and to make provision for an extended tax holiday; Unavailability of qualitative and quantitative benchmarks as well as key success factors for performance evaluation and monitoring of PPP projects, post-implementation, on a continued basis; and No specific plan to utilize the Unspent Budget of the Ministry of Health in the subsequent year to facilitate any large scale capital investment. Healthcare Infrastructure and Services Financing in India 39

40 Conclusion - the way forward Based on the current state of healthcare financing in Indian States through Government sponsored schemes, private sector interventions and the recent string of PPP Projects, it is understood that there is still a long way to go in terms of uplifting of the healthcare sector and reaching the desired health goals. It is very much evident that huge investment will be required in developing/ upgrading of healthcare infrastructure, in order to improve accessibility and quality of care. The private sector must consider this as business opportunity to establish their presence and expand their operations/ market share in the healthcare delivery market in India either by partnering with the different state governments or pursuing a pure private model. The government at the same time needs to understand the issues faced by private sector currently (working independently or in the existing PPP programmes) and take measures to improve the investment climate in the respective states. The states will need to put in place clear policies and guidelines in the healthcare sector which will enable to attract large private investments in the health care industry. The following areas can be considered as catalysts on this journey: Establishment of state-specific PPP policy and framework Leveraging the PPP policies and guidelines of the central government, all the Indian states must prepare and publish their own PPP Policy specifically for the healthcare sector along with a detailed framework for sharing of costs, resource, risks and responsibilities. This will definitely build more transparency in the process and give the private sector a greater confidence while engaging in discussions with the respective state governments for partnering in the healthcare sector. Refocus government expenditure to maximize healthcare gains Consider to focus the funding more on health promotion and disease prevention and primary health care for all, while reducing the Government s direct intervention in the secondary and tertiary levels of health care Allow an identified list of big Government hospitals autonomy and self-determination, which could be achieved through corporatization. Framework for user payment Segment the user population based on their economic condition and come up with a framework for their contribution towards cost of healthcare, when availing Government sponsored schemes; this contribution could be utilized towards maintenance of Government health centers/facilities. For example, use the Government expenditure only for providing free healthcare to the BPL community and identified vulnerable groups, and for priority health services as laid out under NRHM and NUHM like communicable disease control, immunisation, family welfare etc. The framework can also be achieved by designing packages for healthcare starting from basic and then moving up to the most advanced care needs and then pricing the packages accordingly for user proportion. Private sector incentive to augment government spending Encourage private hospital network for setting up bed healthcare facilities with basic health infrastructure in the rural and semi-urban areas through additional tax benefits; this has to be accompanied by a mandatory clause to provide quality and affordable care for the target population, which the government has to monitor and supervise. Come up with a clearly defined policy related to incentives, tax rebates, institutional loan interest waiver scheme, land acquisition, SEZ status approval and removal of red tape-ism in attracting big private service providers to set up large super specialty and multi-specialty facilities as well as medi-cities; and Leverage technology to streamline the request approval, license grants and work order release process, bring in more transparency and accountability and reduce the turnaround time for any dispute settlement, related to the ongoing pure private investment initiatives Incentivize the participation of for-profit or notfor-profit organizations for the operations and maintenance of an identified set of PHCs, while the Government will act as the facilitator and monitor the quality standards on an ongoing basis. Innovation in Health Insurance for Greater Coverage Promote private participation in community health insurance space like Rajiv Arogyasri in Andhra Pradesh as this would largely help in making the healthcare services more affordable to rural population; 40 ICC - PwC

41 Monitor and control the use of Central sponsored health insurance schemes for the BPL and unorganized sectors to prevent corruption and misuse - provision for selective user charges can also be considered; Use social media and technology enabled interventions to generate strong awareness and reach out to prospective health insurance buyer community; Design health insurance products that are more acceptable to the semi-urban population and help the private sector to penetrate the Tier II and Tier III cities across the States Introduction of Taxes for Government Healthcare Funds Similar to the Education Cess on Income Tax and Secondary and Higher Education Cess on Income Tax, the Government can consider introducing a health related component within the Income Tax structure that will act as a secondary source for Government Healthcare funds to be utilized in public health services Regulating the Prices of Essential Drugs Draw experience from the model used by the Rajasthan State Government and procure and supply medicines to various Government distribution centers as generic drugs instead of being branded; since the generic drug could cost times less than the same medicine sold under a brand, they could easily be made available to the poor free of cost. Leverage technology for setting up procurement and distribution channels and inventory monitoring mechanism for the regional pharmaceutical drugs warehouses in the districts to reduce corruption and over-pricing of essential drugs in the rural and semiurban areas. Building capacity for medical education Availability of qualified and skilled resources in the rural and semi-urban areas for ancillary healthcare services like the paramedic staff, OT attendants, lab technicians, radiologists and pharmacists is far behind the current demand in both the government setup as well as the private facilities. The respective state governments must take the initiative to come up with a PPP framework to either increase the capacity of existing institutes or set up new training institutes by partnering with qualified institutions. Invite & incentivize pure private model to provide health education/training for ancillary healthcare services by drawing experiences from the existing private medical colleges and nursing schools. The private sector must take this opportunity to enter this market that currently does not have much competition and deliver best-of-class training while the state governments need to monitor the quality of training and education, being imparted, against a pre-defined standard. This will help to improve the quality of care in the rural areas. Promoting the indigenous development of Medical Equipment market for cost-effective quality delivery Set up medical technology parks to encourage domestic manufacturing of medical equipment and reduce the proportion of imports, thereby reducing the cost of care. The state governments can give impetus to the medical equipment manufacturing industry by ensuring a regular and stable power supply and providing some incentives around land procurement and power tariffs. The government has reduced and rationalised the customs duty on medical technology imports in the Union Budget 2010 and started providing tax incentives for in-house research and development. However the respective state governments need to take the initiative in setting up a venture investment fund for the direct funding of medical technology research. Assist the existing and future Indian companies to remain competitive and sustain in the market. This can be done by upgrading quality systems of current players to adhere to international standards and setting up clusters of common facilities for calibration, testing and quality control to encourage and benefit future companies. It is felt introduction of a framework to attract and support private participation to set up healthcare infrastructure in partnership with government or otherwise will improve the quality of health and make the healthcare industry, a key enabler for the country s economic growth. Healthcare Infrastructure and Services Financing in India 41

42 List of Abbreviations ALSA Advance Life Saving Ambulances MFI Micro Finance Institutions ANM Auxiliary Nurses Midwives MIS Management Information System ASHA Accredited Social Health Activists MMR Maternal Mortality Ratio ASSOCHAM Associated Chambers of Commerce and Industry of India MMU Mobile Medical Units AWC Anganwadi Centre MO Medical Officers BLSA Basic Life Saving Ambulances MPW Multi-Purpose health Workers BOT Build-Operate-Transfer NABARD National Bank for Agriculture and Rural Development CHC Community Health Centres NFHS National Family Health Survey CSC Common Service Centre NRHM National Rural Health Mission DBFO Design-Build-Finance-Operate NUHM National Urban Health Mission DFID Department For International Development PHC Primary Health Centre DIPP Department of Industrial Policy & Promotion PPP Public Private Partnership DoHFW Department of Health & Family Welfare PRI Panchayati Raj Institute DOTS Directly Observed Treatment, Short-course PSP Private Service Provider GDP Gross Domestic Product RCH Reproductive and Child Health Programme GOI Government of India RDC Regional Diagnostic Centers HMRI Health Management and Research Institute RKS Rogi Kalyan Samithi ICU Intensive Care Unit RNTCP Revised National TB Control Programmeme ICDS Indian Child Development Scheme SC Sub Centres IDA Infrastructure Development Authority SPV Special Purpose Vehicle IMR Infant Mortality Rate SSA Sarva Shiksha Abhiyan JBSY Janani avam Bal Suraksha Yojana SWASTH Sector Wide Approach to Strengthening Health MCH Medical College Hospital SWD Social Welfare Department MDG Millennium Development Goals TFR Total fertility rate 42 ICC - PwC

43 Bibliography Healthcare October 2007, India Brand Equity Foundation Healthcare Financing in India, 7th Global Knowledge Millenium 2009, New Delhi by Abhishek Bhagat The Business of Health in Emerging India, International Financial Corporation Financing and Delivery of Healthcare Services in India by Sujatha Rao, National Commission on Macroeconomics and Health, GOI Report of the National Commission on Macroeconomics and Health Private Sector in Healthcare Delivery in India, National Commission on Macroeconomics and Health, 2005 National Urban Health Mission, Draft for Circulation, Urban Health Division, Ministry of Health and Family Welfare, GOI Dr. A Venkat Raman And Prof. James Warner Björkman(2008): Public/private partnerships in Healthcare in India Independent Comission for Aid Impact UK: (2012) Evaluation for DFID s support for Health And Education in India Ministry of Health and Family Welfare: Government of India (June 2010) : National Urban Health Mission Healthcare in India, Emerging Market Report 2007 by PricewaterouseCoopers Kaveri Gill: (may 2009): A Primary Evaluation of Service Delivery under the National Rural Health Mission (NRHM): Findings from a Study in Andhra Pradesh, Uttar Pradesh, Bihar and Rajasthan Handshake Issue #3 - IFC s quarterly journal on publicprivate partnerships Improving Health and Education Service Delivery in India through Public-Private Partnerships - The GOI ADB PPP Initiative The Emerging Role of PPP in Indian Healthcare Sector - CII in collaboration with KPMG Public-Private Partnerships in India, KPMG Public-Private Partnerships Reference Guide Version 1.0, World Bank Institute Policy for Public Private Partnerships in the Health Sector - Department of Health and Family Welfare, Government of West Bengal (January, 2006) Public-Private Partnership (PPP) Initiative in Health Sector in Orissa Presentation on Public Private Partnership, Government of Andhra Pradesh Master List PPP Projects in India as on January 31, Department of Economic Affairs, Government of India Partnerships in Healthcare: A Public Private Perspective - CII in collaboration with HOSMAC Investment in Healthcare Sector in India by Nishith Desai Associates Community Health Insurance in India - A Compilation of Case Studies by Dr. N Devadasan Community Health Insurance in India by N Devadasan, Kent Ranson, Wim Van Damme and Bart Criel Healthcare Vision 2018, A Roadmap for Bihar - CII in collaboration with PwC Technopak Analysis 2009 Glocal Hospitals, Srei Sahaj Pvt. Ltd, Vaatsalya Hospitals, Lifespring Hospitals, Can Telemedicine Alleviate India s Health Care Problems?: India Knowledge@Wharton ( upenn.edu/india/article.cfm?articleid=4675) Medical Devices and Equipment Sector Profile, FICCI Medical Technology Industry in India - Riding the Growth Curve, CII in collaboration with Deloitte Enhancing Access to Healthcare through innovation - Medical technology in India, PwC in collaboration with FICCI IFC Helps India s Jharkhand State Expand Public Healthcare through Private Investments, New Delhi, August 27, 2012 ( / Content/SelectedPR?OpenDocument&UNID=6B971446B1 D85B A A24) Assam Government to Invest Rs. 60 bn to Improve Healthcare Industry by Sreeraman, October 15, 2006 ( /news/view_news_main.asp?x=15082) IFC Helps India s Meghalaya State Extend Health Insurance to All - Shillong, Meghalaya, May 3, 2012 ( htm) Kolkata: Nucleus of the East by Rita Dutta, July 2010 ( /201007/market01.shtml) HEALTHCARE@ORISSA - The Rising Star of the East ( /201008/healthcare@orissa01. shtml) Siliguri: From Hill Station to Healthcare Hub, by Rita Dutta, November 2010 ( /201011/ market01.shtml) - - Guwahati to be health care hub - Press Trust of India/ Kolkata/Guwahati June 12, 2012 ( Healthcare Infrastructure and Services Financing in India 43

44 44 ICC - PwC Notes

45 Notes Healthcare Infrastructure and Services Financing in India 45

46 About ICC Founded in 1925, Indian Chamber of Commerce (ICC) is the leading and only National Chamber of Commerce operating from Kolkata, and one of the most pro-active and forwardlooking Chambers in the country today. Its membership spans some of the most prominent and major industrial groups in India. ICC is the founder member of FICCI, the apex body of business and industry in India. ICC s forte is its ability to anticipate the needs of the future, respond to challenges, and prepare the stakeholders in the economy to benefit from these changes and opportunities. Set up by a group of pioneering industrialists led by Mr G D Birla, the Indian Chamber of Commerce was closely associated with the Indian Freedom Movement, as the first organised voice of indigenous Indian Industry. Several of the distinguished industry leaders in India, such as Mr B M Birla, Sir Ardeshir Dalal, Sir Badridas Goenka, Mr S P Jain, Lala Karam Chand Thapar, Mr Russi Mody, Mr Ashok Jain, Mr.Sanjiv Goenka, have led the ICC as its President. Currently, Mr. Shrivardhan Goenka is leading the Chamber as it s President. ICC is the only Chamber from India to win the first prize in World Chambers Competition in Quebec, Canada. ICC s North-East Initiative has gained a new momentum and dynamism over the last few years, and the Chamber has been hugely successful in spreading awareness about the great economic potential of the North-East at national and international levels. Trade & Investment shows on North-East in countries like Singapore, Thailand and Vietnam have created new vistas of economic co-operation between the North-East of India and South-East Asia. ICC has a special focus upon India s trade & commerce relations with South & South-East Asian nations, in sync with India s Look East Policy, and has played a key role in building synergies between India and her Asian neighbours like Singapore, Indonesia, Bangladesh, and Bhutan through Trade & Business Delegation Exchanges, and large Investment Summits. ICC also has a very strong focus upon Economic Research & Policy issues - it regularly undertakes Macro-economic Surveys/Studies, prepares State Investment Climate Reports and Sector Reports, provides necessary Policy Inputs & Budget Recommendations to Governments at State & Central levels. The Indian Chamber of Commerce headquartered in Kolkata, over the last few years has truly emerged as a national Chamber of repute, with full-fledged offices in New Delhi, Guwahati and Bhubaneshwar functioning efficiently, and building meaningful synergies among Industry and Government by addressing strategic issues of national significance. New Delhi Sunil Patel Phone: Fax: /1441 Mobile: [email protected] Head Office - Kolkata Dr. Rajeev Singh Director General-ICC, Phone: Fax: , [email protected] Website: For IT & NE Investment assistance Ivy Majumder Deputy Director: Services Phone: Fax: / [email protected] [email protected] Bhubaneswar Sanjeev Kumar Mohanty Resident Director-ICC, Phone: Mobile: [email protected] Guwahati Ishantor Sobhapandit Regional Director, North East- ICC Phone: / Fax: Mobile: [email protected] Bihar Kamal Sahi Resident Director ICC Fax: Phone: Mobile No: [email protected] 46 CII - PwC Report

47 About PwC PwC firms help organisations and individuals create the value they re looking for. We re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at In India, PwC ( offers a comprehensive portfolio of Advisory and Tax & Regulatory services; each, in turn, presents a basket of finely defined deliverables. Network firms of PwC in India also provide services in Assurance as per the relevant rules and regulations in India. Providing organisations with the advice they need, wherever they may be located, our highly qualified, experienced professionals, who have sound knowledge of the Indian business environment, listen to different points of view to help organisations solve their business issues and identify and maximise the opportunities they seek. Our industry specialisation allows us to help co-create solutions with our clients for their sector of interest. We are located in these cities: Ahmedabad, Bangalore, Bhubaneshwar, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. Ambarish Dasgupta Executive Director Phone: [email protected] Dr. Rana Mehta Executive Director Phone: [email protected] Debopam Raha Associate Director Phone: [email protected] Healthcare Vision

48 pwc.com/india 2012 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in India), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity. MS 384- September 2012 Healthcare financing reort.indd Designed by:pwc Brand and Communications, India