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Ways to better
healthcare delivery
Healthcare has played an important role in leading the Indian economy t...

  national id programmes and health informatics need          Deduction for preventive health: The IT Act sh...

                                Health status         Healthy Vulnerable      Affected     Sick       Sick  ...
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Post Budget Analysis : Kapil Khandelwal, EquNev Capital,


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Kapil Khandelwal
EquNev Capital

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Post Budget Analysis : Kapil Khandelwal, EquNev Capital,

  1. 1. post-budget Ways to better healthcare delivery Healthcare has played an important role in leading the Indian economy to a high GDP growth rate of 9 per cent per annum. However, the Indian Government needs to implement certain measures to improve healthcare delivery and ensure inclusive development. This article elaborates on the different kinds of fiscal reforms that could be implemented in order to give the healthcare industry an impetus. I ndia’s preliminary health risk (based on body While increased healthcare expenditures need not mass index [BMI], smoking, tobacco and alcohol necessarily result in better health outcomes, fiscal policies consumption and genetic biomarkers for Indian and measures would strengthen the government’s ability Kapil Khandelwal phenotypes) shows that in the next 5 to 10 years, a to enable the creation of social infrastructure through is an independent large proportion of the risks will be concentrated on the alternative models. board member of sections A, B and C segments of urban and semi-urban various companies India that contribute largely to the personal income Infrastructure development and founding tax kitty of India. While the spread of risks may not Healthcare infrastructure development has a long board member be uniform across various states, the issues would need gestation and longer break-even. Some of the areas for of Disease to be addressed fiscally to ensure that the health and policy measures include: Management well-being of India does not negatively impact India’s Tax holidays for establishing new healthcare Association of potential future growth. infrastructure and upgradation of the existing India (DMAI). The Budget ‘coalition politics’ is evidently behind us. infrastructure He is one of the However, to accelerate and address future health risks Creation of health zoning based on population health thought leaders & issues related to population health management, risks to create infrastructure that can create checks in healthcare India needs a different coalition of proponents across and balances in the overall healthcare system and and life sciences the healthcare & life sciences value chain. These could reduce overcrowding in urban hospitals IT in Asia Pacific be bound by cohesive fiscal stimulus & policies that the Investments in health informatics and information and Emerging Union Budget ‘hit and missed’ as far as fiscal stimulus and communication and technology (ICT) through Markets. reforms in the Indian healthcare sector are concerned. vertical applications on similar lines of the unique 24 M O D E R N M E D I C A R E Au g u s t 2 0 0 9
  2. 2. post-budget national id programmes and health informatics need Deduction for preventive health: The IT Act should to be budgeted address this in a small but effective manner by Governance models for health infrastructure unique allowing at least a token deduction of Rs 2,500 per to the state health risks and requirements family per annum for preventive check ups including Incentives for quality and accreditation of health cancer check ups under Chapter VI of the Act systems to create consumer confidence Increasing the limit for medical expenses deduction: In order to enable employees to avail quality healthcare Human resources capacity creation services the limit prescribed under section 17(2) of the Education and vocational education had been the Income tax Act for medical treatment should be raised thrust of the current Budget. Some of the measures that to Rs 50,000. In addition, the prescribed diseases and need focus on healthcare include: ailments that are covered under the Income Tax Act Encourage investments in healthcare capacity building need to be revised and the hospitals recognised by the for providing healthcare education & training through government need to be expanded PPP models and corporatisation of the health education sector Innovation and research Encourage international partnerships to establish About 90 per cent of the equipment is being commercially managed academic medical research currently imported. Hence, a greater thrust is required centres like the University Health Systems in the West. on innovation & research for import substitution of Some of the MCI norms for such institutions need to medical equipment, devices and consumables. While be revisited and revised China and other emerging Asian countries are one of Regulation and investments in skill building and the biggest threats to the sector, certain measures need accreditation of existing health workforce in India. to be taken to protect and encourage growth of the Encourage the use of ICT for virtual campus and domestic industry. One could be that fiscal incentives be international linkages and exchange programmes introduced to help develop India as a base for medical equipment manufacturing. R&D could be given an Infrastructure funding and insurance impetus if benefits under Section 35 (2AB) would be With over 80 per cent healthcare spending being extended to hospitals & medical centres engaged in out-of-pocket, there is a need to make this cost more in-house & collaborative/outsourced medical research affordable. Health insurance penetration in India is with/to medical colleges, centres for advanced medical significantly low and the bulk of India’s population is research for 10 years. still young. Policies that enable healthcare financing and savings can lead to better health financing in the future. The current global slowdown has several lessons for healthcare financing and insurance: Creation of a health development fund that will be matching investments made by funds and financial institutions in this sector Healthcare investment allowance: The healthcare service sector needs a fillip in the form of a specific allowance akin to the investment allowance under Section 32A of the Income Tax Act 1961 A healthcare upgradation and new investment fund (on the lines of Textile Upgradation Fund Scheme of the Ministry of Textiles) to be set up giving interest subsidy of 500 basis points for approved investments for upgradation or creation of new capacity in the healthcare sector Encourage healthcare real estate investment trusts (HREIT) (on the lines of the newly approved real estate investment trusts). Globally, HREIT has become an important funding channel to smoothen the investment in land and building ( This map is only for representational purpose) Incentivise consumer health and wellness spending by Population health risk assessment map of India bringing these under the tax-saving bracket Au g u s t 2 0 0 9 M O D E R N M E D I C A R E 25
  3. 3. post-budget Health status Healthy Vulnerable Affected Sick Sick Sick Comments/observation proponent (acute) (chronic) (terminal) Individual tax Savings in tax offset payer medical cost inflation Employer FBT and transfer of healthcare financing to employees Health Directed towards BPL. insurance Reforms in health insurance silent Health services Health services taxed. provider Divestment of hospitals Devices and Duties reduced on certain pharmaceuticals input/raw materials Life sciences Tax holidays and impact of and R&D duties reduction Others Increased government expenditure on education, etc Summary of the impact of the Union Budget 2009 Conclusion population health outcomes within the current tenure Unlike the healthcare and pharma industry where of the government’s five-year term. These could innovations take over 12 to 15 years to reach the mitigate some of the population health risks that final consumer and impact health outcomes, these would erode the global competitiveness of India due to innovative fiscal stimulus, measures and policies if poor health and wellness in the times to come. implemented, could have a positive impact on the ( 26 M O D E R N M E D I C A R E Au g u s t 2 0 0 9