A recent industry report forecasted a 15 per cent compound average growth rate (CAGR) for healthcare investments between 2006 and 2012. According to the same report, investment in healthcare will have risen to $78 billion in 2012 from $34.2 billion in 2006 with the private sector making a significant contribution of 80 per cent. Industry organisations in India estimate the ratio of beds per 1000 population to improve to 1.85 by 2012.
On the other hand, India’s population is slated to grow to 1.3 billion by 2017. This signifies that demand for healthcare will continue to outstrip supply. Moreover, the increasing life span is a reality which has given rise to a growing population of senior citizens. With rising prosperity, there are higher instances of lifestyle-related diseases such as heart ailments, diabetes and cancer. These diseases require expensive, long-term treatment. According to another industry report, lifestyle diseases will contribute 48 per cent to in-patient revenues in 2013, in comparison to a mere 13.8 per cent in 2008. All these factors put together will lead to a potential patient base of 115 million in India by 2017. Can our healthcare industry meet these demands?
A closer look at the industry figures reveals that 90 per cent of the patient base requires primary and secondary healthcare services. By primary, we refer to the basic healthcare facilities for common and minor ailments. Secondary healthcare represents the segment that requires constant medical attention, including short periods of hospitalisation. The remaining 10 per cent of the patient base required tertiary care i.e. treatment from specialised clinics and facilities.
Given the above picture, the need for affordable, accessible and quality healthcare is more important today than ever before. Latest medical equipments help in early detection of diseases and also ensure disease management and cure in a more non-invasive and efficient manner. This will result in both time and cost savings: time savings through a quicker cure and cost savings through lesser or no hospitalisation stay.
As technology advances, the dependence on medical equipment is steadily becoming a necessity for diagnosis, intervention and treatment to prolong and improve the quality of life. Evidently, there is a growing demand for high quality technology-driven healthcare options.
However, non-availability of high-end sophisticated medical and healthcare equipment in both private and government hospitals remains a challenge in the country today. Tier II and Tier III cities remain untouched by advancements in medical technology.
In such a scenario, healthcare equipment financing sector can help bridge the gap created by the lack of the 3 A’s – affordability, availability and accessibility – to drive technology to the most remote corners of India.
The medical equipment industry, which is an important part of the Indian healthcare industry, was valued at an estimated $3 billion in 2010, with the turnover expected to touch $5 billion by 2012. Although the industry is growing at a brisk CAGR of 15 per cent, it forms only a diminutive portion of the flourishing healthcare ecosystem and is yet to be explored fully by the healthcare financing community of the country.
Healthcare equipment financing can make a difference to India’s health burden by making it affordable and effective. It is an option available to growing healthcare facilities as they plan to grow their patient care capabilities. Spreading awareness of the healthcare financing segment can lead to greater levels of penetration, making medical technology accessible to smaller hospitals, medical practitioners and pathological laboratories.
There are several financial solutions available to growing healthcare service providers. Specific models of public-private partnerships pertaining to medical equipments have also emerged in different parts of the country. The government-run SMS Hospital in Jaipur is one such instance. The hospital administration had limited capabilities to handle and maintain high-end medical equipments. They collaborated with a private contractor to operate their own machine in the hospital premises with special concessions and even free services for the poor.
Apart from the public-private partnership model, the medical fraternity also has the option of loans and other structured finance alternatives. Leasing is another option with training in equipment installations and maintenance provided to the professionals. Giving equipment on rent or pay-per-use is yet another option which, apart from making it affordable, reduces the chances of any loss from obsolescence.
Healthcare equipments are complex and its financing requires understanding of the equipment’s lifecycle and the technologies involved. Healthcare financing requires understanding of the complex machinery, life of the equipment, chances of its obsolescence and accurate calculation of patient usage costs.
While medical equipments are an uncompromising need of the current healthcare scenario, their successful implementation and continued usage is based on the three fundamental aspects of purchase, repair and maintenance. Healthcare providers can ensure that they are taking full advantage of advancing medical technology by effectively partnering with expert financial service providers.
References:
Indian Healthcare & Medical Devices Industry: Challenges & Opportunities http://www.pppinharyana.gov.in/ppp/sector/health/report-healthcare.pdf
Medical technology industry in India: Riding the growth curve (Deloitte CII Report)