India: India's National Health Protection Scheme: Ayushman Bharat - Growing Opportunities In Affordable Healthcare

Last Updated: 3 October 2019
Article by SKP   and Ravindranath Menon


Access to quality healthcare is a fundamental need of a country's citizens and lays the foundation for sustainable and equitable economic development. Over the last few decades, India has made significant progress on the primary healthcare front. However, a large section of the population still lacks access to critical healthcare services. The shifting disease pattern from communicable to non-communicable diseases has created a gap in the healthcare supply, increasing private sector participation.

The financial burden of attaining healthcare makes millions slip into poverty every year. Thus, healthcare needs in India are more complex and require a strong healthcare financing model with an efficient patient care pathway.

Universal Health Coverage (UHC) entails the availability and accessibility of preventive, curative, rehabilitative, and palliative health services, which are of adequate quality and do not place a financial burden on people availing services.

In 2017, the Indian Government introduced a National Health Policy (Ayushman Bharat or Healthy India) that aims to offer universal health coverage and provide the foundation for equitable healthcare. The National Health Protection Scheme (NHPS) initiative signals a shift in the Government's traditional role from the primary supplier of healthcare to a payer. Implementing such a large scheme in India is an ambitious task, and the long-term success will depend on many factors. As an enabler, the Indian government will need to invite participation from the private sector and not-for-profit organizations, while being prudent about regulations, technology assessments, pricing structures, quality of care, and infrastructure.

The success depends on aspects such as funding mechanisms, socio-economic factors, political will, focused implementation, and collaboration with the private sector to build the ecosystem. The government can mitigate some of these challenges by continuing to listen to the market, monitoring the situation, and adjusting the policy over time. Leveraging technology will be crucial not only in the implementation of the program but also in delivering outcomes and monitoring the system. From an industry perspective, the domestic market will see an increase in demand, which could trigger supply expansion. However, imports may increase if domestic manufacturing does not keep pace with the added demand. Such schemes with large scale implementation tend to increase the market size exponentially over the years.

In this paper, SKP examines the potential of the NHPS and attempts to study the impact it creates on healthcare accessibility along with opportunities created for various stakeholders in the industry. If successful, it will increase the healthcare spend per capita, ensure accessibility to India's underprivileged, and provide impetus to an already growing healthcare market. NHPS will be the beginning of a new era in universal health coverage in India. With the onset of UHC, the industry will benefit from a large patient influx, offering them a higher scale of operations. This will bring in more efficiency and quality control resulting in better health outcomes for patients creating a win-win situation. The scheme could be a game changer with "the power of a billion" bringing about a paradigm shift in the Indian healthcare ecosystem.

Executive Summary

The first step towards Universal Health Coverage (UHC) is a strong and robust primary healthcare network. Healthcare indicators in India show a marked improvement over time in the primary care ecosystem, resulting in reduced infectious disease, decreased infant mortality, improved maternal health, and increased overall life expectancy. Immunization drives have increased with better awareness and outreach programs.

When it comes to secondary and tertiary healthcare, India lags behind for reasons of accessibility, availability, and affordability. Some pressing concerns include a high disease burden, high out-of-pocket expenses, unregulated and fragmented healthcare delivery, inadequate skilled human resources, and infrastructure gaps. While India has made efforts to address some of these issues individually, a comprehensive policy framework or approach was lacking.

NHPS is a clear indication of the Indian government's commitment to focus on secondary and tertiary healthcare, particularly for sections of the population that do not have easy access. NHPS aims to address catastrophic health events that push 30-35 million people into poverty annually and reduce out-of-pocket expenditure for the target population. To date, NPHS has covered about 100 million eligible families, offering insurance coverage of ~USD 7000 for 1350 procedures across major therapies. Over 30 states and union territories have been covered so far, and almost a million people have benefitted in the first 120 days of the program launch.

NHPS is being seen as a stepping stone to achieving UHC in India. Implementing UHC is not an easy task. Countries have faced challenges at every stage, from planning to implementation. These include - identifying the population to be covered, defining standard treatment protocols, making the Primary Healthcare Center (PHC) network robust for referral management, developing and harnessing human resources, deciding package rates, identifying funding avenues, and creating a mindset of co-payment in the long term. The major challenges to NHPS include defining package rates, private sector participation, beneficiary identification, fraud detection and management, etc. Hence, the active involvement of the private sector and the usage of information technology would be critical to its long term success.

The Indian healthcare industry has been growing steadily over the past decade, and the upward momentum is expected to continue. NHPS is expected to provide an additional impetus for growth, with results over the next few years. NHPS will open up opportunities across multiple healthcare segments, with Healthcare Services expected to benefit the most, due to capacity addition and increasing occupancy rates. The Medical Devices and Equipment sector is also likely to be a big beneficiary, due to increased financial coverage of various procedures under NHPS. Medical devices will be required to diagnose and treat the increased number of patients, with increased demand for equipment, instruments, consumables, and disposables. Pharmaceuticals will also benefit from the inclusion of more chronic patients in the healthcare ecosystem, though this impact may be more gradual.

In the long run, NHPS provides the government with a unique opportunity to bring institutional reforms to a sector, where historically, change has been difficult to implement. NHPS is the first instance where the healthcare sector will receive significant financial support from the government. The program will bring a mindset shift for the target population by identifying healthcare as an important pillar in improving both quality of life and economic prosperity of the nation.

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