5 challenges the Healthcare sector in India faces

When viewed through the PESTLE lens of business analysis, there are several problems plaguing the healthcare sector in India. Most of the challenges have multiple dimensions – Political, Economic, Social, Technological, Legal and Environmental. Here is an attempt to identify the top five challenges.

1. Under-served Rural Market

Nowhere is the rich-poor and urban-rural divide as strongly evident as it is in the healthcare sector. While over 70% of Indians live in rural areas, a staggering 80% of all specialists are to be found in urban areas! So not only can the rural masses not afford critical healthcare, even if they happen to be able to, there just aren't enough doctors available to help them!

Due to the lack of suitably trained and qualified healthcare professionals, the rural masses typically turn to alternative treatment methods, quacks, charlatans or worse to help plug the gap. In most cases, these unqualified individuals end up doing more harm than good with their uninformed diagnoses coupled with dangerous remedies.

2. Lack of basic healthcare infrastructure

While India may be shining in terms of a stable economy, lower inflation rates and an increasing GDP, Healthcare as a sector gets less than 1% of the total GDP allocation. This is considerably less than what most of our neighboring countries allocate - let alone developed economies.

Even more startlingly, only about 70% of the allocated budget is actually utilized! Adding insult to an already miserable injury! What this means in real terms is that even the basic infrastructure available in rural areas are under-financed, understaffed and have pathetic standards of hygiene. A situation that is unlikely to change for the better anytime soon.

3. Lack of effective payment mechanisms

Less than 5% of Indians are estimated to be under the protection of a health-insurance plan. Logically, this would largely be applicable to urban centers. Which means the rural population is entirely paying out of pocket! A sure means to absolute financial ruin, even if a decent doctor or specialist can be accessed in time.

This is precisely why the bulk of money spent on healthcare goes to private entities. After all, why would one want to deal with lack of doctors, corrupt staff, doctored medical supplies and non-existent infrastructure if they had to pay out of pocket for it? It is bad enough a deal when offered free of charge!

4. Brain drain compounding a severe shortage of doctors

This is partly related to a supply demand mismatch. Firstly, we have a shortage of health care professionals (currently at .7 per 1,000 as against a WHO recommended minimum of 3.5 per 1,000). 

Secondly, the number of specialists getting trained each year is limited to 48,000 MBBS seats and 20,000 PG seats. Nowhere near sufficient to close the shortage gap. Even among these, the bulk prefer to practice in urban areas leaving rural healthcare centers critically understaffed.

The third and probably most critical factor is brain drain. This leads to an exodus of doctors to other countries. It doesn't help that other, more developed economies are openly discussing how they want to target and poach Indian Healthcareprofessionals!

5. Underdeveloped medical devices sector

Although the medical devices category in India is worth well over USD 3 billion, the sector suffers from severe limitations and insurmountable challenges. The foremost among these is the low spend on healthcare as a percentage of GDP. This results in a lack of tax incentives to promote indigenous manufacturing which in turn promotes a high import dependency which (frankly and quixotically) makes devices made in India higher priced when compared to low-cost, imported ones! 

Ironically, the Companies manufacturing these devices elsewhere are staffed with Indian born and educated talent which couldn’t find suitable opportunities in-country! The lack of a sufficiently-evolved payments and reimbursements system only compounds the problem.

Everything is not gloom and doom though! There have been some recent policies implemented by the Government of India as well as some radical innovations emerging from the minds of the entrepreneurial youth of the nation which hold out some hope for the sector. More on those in another post.

Disclaimer: While every attempt has been made to verify numerical data, the numbers presented herein are a collation from various publicly-available sources online. Readers are advised to conduct their own research for authenticity purposes.