Master of Architecture Thesis Healthcare Project management "A Structure Approach"

HEALTHCARE PROJECT CONSTRUCTION MANAGEMENT “A STRUCTURED APPROACH” 1
HEALTHCARE PROJECT CONSTRUCTION
MANAGEMENT “A STRUCTURED
APPROACH”
DESIGN DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE
REQUIREMENT FOR THE DEGREE OF
MASTERS OF ARCHITECTURE IN PROJECT MANAGEMENT
BY
AR. ROHIT A. DIGRA
UNDER THE GUIDANCE OF
ARCHITECT KALYANI SALVI MA'AM
DR. BALIRAM HIRAY COLLEGE OF ARCHITECTURE (L.B.H.S.S.T)
BANDRA, MUMBAI
UNIVERSITY OF MUMBAI

DR. BALIRAM HIRAY COLLEGE OF ARCHITECTURE (L.B.H.S.S.T)
BANDRA, MUMBAI
UNIVERSITY OF MUMBAI
CERTIFICATE
This is to certify that ARCHITECT ROHIT A. DIGRA has satisfactorily carried out and
completed the Project entitled HEALTHCARE PROJECT CONSTRUCTION
MANAGEMENT “A STRUCTURED APPROACH” This work is being submitted for the
award of degree of Master of Architecture. It is submitted in the partial fulfilment of the
prescribed syllabus of University of Mumbai for the academic year 2017-2018.
……………………………… ………………………………
Ar. Nupur Lal | Mrs. Darshana Vyas Ar. Kalyani Salvi
(Course Co-Ordinator) (Thesis- Guide)
…………………………………… ………………………………
Ar.Sunil Magdum
(Principal |Study Centre Head) (External Jury)
Date: 24th
April 2018
Place: Mumbai

Declaration
I hereby declare that these Thesis Report Titled Healthcare Project Construction Management
“A Structured Approach” submitted by me in partial fulfilment of the requirement for the
degree of Masters of Architecture in Project Management course of Dr. Baliram Hiray
College of Architecture (L.B.H.S.S.T). India is a record of my own work. The matter
embodied in this report has not been submitted for the award of any other degree or diploma.
Name of student: Ar. Rohit A. Digra
Project Guide: Ar. Kalyani Salvi Ma’am
Year: 2017 -2018

DEDICATION
This Thesis report is dedicated to my loving
“FAMILY”
Whose blessing and prayers strengthen up, to do my project successfully.

Acknowledgement
I would like to dedicate this dissertation to all the patients across the world, for whom
attaining medical care is a far-fetched dream due to the non-availability of healthcare facilities
in India alone, the disparity between demand and supply of healthcare facilities is a difficult
fathom. The government is making efforts to overcome this difference, but the process is time
consuming. Through this dissertation, I have tried to offer a solution to make this process
more efficient and effective
The result that is here today would not have been possible without my guide Ar. Kalyani
Salvi., I would also like to Thank You Ar. Sunil Magdum Sir - Principal, Ar. Pranav Bhatt Sir
- Head of Department, and Mr. Anil Parab Sir - Office Superintendent of Dr. Baliram Hiray
College of Architecture (L.B.H.S.S.T.) for giving opportunity to take this course. I would like
to thank my college staff, both teaching and non-teaching for being patient with me through
the last seven years of our association. They were always ready with solution whenever we
were stuck.
The entire venture right from beginning has been learning experience has brought into light
the finer aspects of the healthcare industry and the efforts that goes into setting up a such a
facility to serve mankind, I take this opportunity to congratulate the healthcare project team
right from sponsor to the labourer for their hard work so as to make these facilities available.
Place: Mumbai
Date: 24th
April 2018

LIST OF CONTENTS PAGE NO
Research Proposal 08 - 12
The Healthcare Industry: An Overview 13 - 48
Working Definition 49 - 61
The Project Teams 62 - 67
Healthcare Project Management 68 - 79
Healthcare Project Lifecycle 80 - 91
Case Study: Asian Heart Institute and Research Centre 92 - 103
Case Study: Wockhardt Hospital, Mira Road 104 – 110
Implementation 111 - 115
Recommendations 116 - 117
References 118 - 119
List of Figures 120
List of Tables 121
Abbreviation 122 - 123
Appendix 124 - 132

ABSTRACT
Health care organizations need project and change management support in order to achieve
successful transformations. A project management helps support the organizations through
their transformations along with increasing their capabilities in project and change
management. The aim of the present study was to to formulate a framework of guidelines
to regulate the healthcare projects management, in order to achieve optimization of results.
This study is a descriptive case study physical approach and interview with the directors
and mangers of HOSMAC which conducted from October to December 2017 Participants
suggested a number of elements including carefully selecting the members of the
HOSMAC, having a clear mandate for the healthcare project management, having a
method and a discipline at the same time as allowing openness and flexibility, clearly
prioritizing projects, optimizing collaboration, planning for everything the Project
management will need, not overlooking organizational culture, and retaining the existing
support model. This study presents a number of factors ensuring the sustainability of
changes.

1. Research Proposal
1.1] Background of Study
Healthcare today, is no longer restricted to the sphere of medicine alone.it is one of the largest
business prospects in the developing world due to the vast disparity that exist between the
healthcare needs and the existing facilities. This potential has been sought to be exploited by
many international corporates. thus, management of such projects has a great scope in
developing countries like ours.
An efficient healthcare facility consists of coordinated efforts of Promoters, Hospital
Management Consultant, Facility Planners, Architects, Consultants, Engineers (Structural,
MEP, HVAC, Biomedical, etc.) Project Managers, Contractors, Labourers, Equipment
Vendors, Commissioning Consultants etc. to mention few. The roles of these specialist differ,
at various points of the project lifecycle. coordinating this individual expertise and aligning
them with the project objectives requires integration by the management process of Planning,
Organizing, Directing and Controlling.
1.2] Need and Importance
Project management and architecture have come a long way from the civilizations of the past
to the modern world today. Contemporary professionals implement project management
technique for the effective completion of the project at hand. This has helped project
management to evolve and advance as a science experience has been the key to establish the
norms of project management as a disciplinary
Health care project management is an emerging filed today. This has led many firms
internationally to offer expert services in this filed yet, there are only few institutes offering
specialized courses on this subject. Since there is very little literature available most of
strategies and techniques are acquired by experience on site. This makes it a vague ‘science’
and would imply that to ‘learn from your mistakes’ one would actually have to make a
blunder and that too at the risk of the project objectives. Thus, such an approach has
innumerable stumbling blocks
This thesis intends to create awareness towards the deficit knowledge pool in this challenging
area of expertise
RESEARCH PROPOSAL

1.3] Hypothesis
Healthcare project management is primarily based on experience on site, the documentation
of which is essential to develop a structured approach in order to optimize the healthcare
projects
1.4] Aim
To formulate a framework of guidelines to regulate the healthcare projects management, in
order to achieve optimization of results
1.5] Objectives of Research
The objectives of research are as under: -
1. to understand how project management is required to have a specialised approach with
respect to healthcare projects.
2. to study the typical projects life cycle of health care projects
3. to understand the roles and responsibilities of the different teams involved in typical
healthcare projects
4. to study the present approach towards healthcare project management
5. to study typical green field projects
6. to critically analyse project management strategies and techniques in green filed project
through case studies with respect to healthcare project management.
1.6] Scope and Limitation
The scope of study is manly directed towards documentation of the present-day approach
towards healthcare project management and giving recommendations for healthcare projects
based on study .it includes the investigation of the different factors influencing healthcare
project management.it studies the project team of various professionals with their different
knowledge pools, their roles and responsibilities and their integration to achieve the desired
objectives.
Healthcare project management is a nascent filed resulting in limited literary references. The
main sources of information will be the experience. The main source of information will be
the experience of health care project managers and their project teams. Healthcare projects
that are excited and those that are at the different phases of the project life cycle will be
studied separately for the green filed and brown field projects to extract the different aspects
of the proposed study. The scope of the study is directed towards investigating the evolution
of healthcare project management, understanding the present-day scenario. The projects will
be studied for green filed projects.
RESEARCH PROPOSAL

1.7] Operational definitions
1.7a] Healthcare
The preventions, treatment and management of illness and the preservation of mental and
physical well-being through the services offered by the medical and allied health professions
(The American Heritage Medical Directory by Houghton Miffin Company)
1.7b] Health Care Industry
The complex preventive, remedial and therapeutic services provided by hospitals and other
institutions, nurses, doctors, dentists medical admirations, government agencies, voluntary
agencies, on institutional care facilities, pharmaceutical and medical equipment manufacturers
and health insurance company
(Mosby’s Medical Dicitionary,8th
Edition)
1.7c] Healthcare Projects
A healthcare project is something that is new, has a beginning and an end, and uses limits
organizations resources with respect to the healthcare industry
(Project management for Healthcare by David Shirley)
1.7d] Greenfield Projects
A project development which is totally new and not associated with any existing
infrastructure
(http://s.pangonilo .com/index.php)
1.7e] Healthcare Project Management
The body of knowledge concerned with principles, techniques and tools used in planning,
control, monitoring and review of healthcare projects
(www.bussinessdictionary.com)
1.7f] Project Life Cycle
A project lifecycle is series of events a project undergoes from beginning to end.
(Project management for Healthcare by David Shirley)
RESEARCH PROPOSAL

1.8] Research Methodology
1.8a] Healthcare project manager
An employee who plans and organise the resources necessary to complete to healthcare
project
1.8b] Project team
The project team consists of the full time and part time resources assigned to work on the
deliverables of the project all of who will help achieve the project objectives. The project
team can consist of human resources within one functional organisation of it can consist of
members from many different functional organisation
1.9] Data Collection
The proposed study shall be carries out in following steps
1. Study the different phases of the project life cycle for green filed and brown filed projects
2. Study the roles and responsibilities of the members of the project team
3. Perform case studies of green filed and brown filed projects in different phases of project
lifecycle and compare critically analyse the strategies and techniques used
1.10] Chapter Plan
1.10a] Sources of Data
1.diffrenet stake holder on healthcare projects
2.case studies of different healthcare projects
3.various books and research papers of experts in related filed
1.10b] Data Gathering Tools
1. Primary Data Collection
a) interviewing the different stake holders
b) studying projects in different phases of the project lifecycle
c) interviewing the different members of the project team
2. Secondary Data Collection
a) reading books and research paper on healthcare project management and related fields
b) studying documents of already executed projects
c) opinion of experts in related field
RESEARCH PROPOSAL

The Chapter Plan for The Proposed Study Shall Be as Under
• Introduction-A Overview of The Healthcare Industry
• Working Definitions-Terms and Terminology
• Healthcare Project Management
• Project Team - Roles and Responsibilities
• The Healthcare Project Life Cycle
▪ Green Fields Project
▪ Intro
▪ Case study
▪ Case study
• recommendation
• references
1.10c] SUMMARY
This dissertation is divided into six chapters, with appendixes, a glossary and references.
Chapter One contains the RESEARCH PROPOSAL introduction, which discusses the
purpose, focus and objectives for this study. Following the introduction, a review of the
literature is presented
Chapter Two, THE HEALTHCARE INDUSTRY: AN OVERVIEW Theoretical
Framework, discusses basic concepts of organization, the design parameters, IT-enabled
design variables and measures of organization structure.
Chapter Three, WORKING DEFINITION Research Objectives and Methodology, presents
the statement of research objectives, research methodology and project selection criteria.
Chapter Four, HEALTHCARE PROJECT MANAGEMENT Research Analyses, presents
the case study projects and cross-case analyses of conjectures, measures, and the IT
documentary information questionnaire.
Chapter Five the Project Teams, it is all about the healthcare management team and
professional involved in health care project management
Chapter Six Healthcare Project Lifecycle
Chapter Seven discusses the findings, references, list of figures, abbreviations, appendix,
conclusions and recommendations for future research. presents a step-by-step methodology,
using the extended framework that construction management professionals can use, as another
tool for construction project organizational structuring
RESEARCH PROPOSAL

2. The Healthcare Industry: An Overview
2.1] Introduction
The health care industry is a sector within the economic system which provides products and
services like diagnosis, treatment and prevention of diseases, illness and injury. Health care is
delivered by practitioners from the fields of medicine, nursing, psychiatry, dentistry and
others. Allopathic healthcare 8, Ayurveda are the two main forms of healthcare practiced in
India. Homeopathy is also practiced but in comparatively lesser amounts.
Ayurveda. the oldest most comprehensive scientific discipline is known as the knowledge of
life and longevity. It has been preached and practiced since the ancient times. Ayurvedic
medicines have ways to totally rejuvenate the body and mind. All ayurvedic medicines are
botanical preparations and it's a holistic approach to well-being of an individual.
Homeopathy on the other hand is a science developed by a German physician. Rd. Samuel
Hahnemann. It is based on a principle life cures like-. It means that any substance which
produces symptoms in a healthy person can cure similar symptoms in a sick person.
Healthcare can be through products or services and can be provided privately or publicly.
Healthcare sector is said to be the sector which will largely influence the economic growth of
the country bang with IT and Education sector. ibis sector will generate 40 million new jobs
and 200 billion in revenue by 2020.
Private healthcare, with hospital chains exploring the markets in tier H cities and metros is an
emerging part of the healthcare sector. Also. the PPP model helps in improving the healthcare
provision of India through development and delivery of low cost basic health care services.
Since the healthcare industry is highly fragmented, the industry is divided among many
different companies. Price levels cannot be influenced by one player as no single Finn has
large enough market share to influence price.
The primary demand drivers of the industry are advances in medical care and technology.
increasing life expectancy, patients demanding more services and breakthroughs & population
growth rate. The drivers of profitability are effective management of patient demand,
obtaining grants and funds & referring patients to the most cost-effective providers.
Access to health care varies in different countries owing to the influence by the social,
economic and judicial influence. As in, the health care industry is distributed among market
participants in some places while its controlled by the Government at many. Anyhow,
according to the WHO (World Health Organization), for the smooth functioning of the health
care industry in any country, there has to be a robust backing on the financial grout.
International standard industrial classification
Health care forms the pillars of the national economy. Health care is one of the world's
largest and fastest growing industries. Our main focus for this project is Allopathic care in
India
2.2] History
India — A country of rich culture and heritage. Where there was man, there was need for
medicine. Medicine today is a cumulative knowledge gathered for centuries. India, due to her
ancient knowledge and practice initiated the system of healthcare not just through the
physical ailment of the patient but also the environment and other elements.
Unlike modern medicine during those times, medicines were dealt with plants, minerals,
stars. spirits and voodoo. Treatment was done mainly by pries., herbalists, sorcerers and
magicians.
The Healthcare Industry: An Overview

2.2a] Ayurveda
Ayurveda has its origin in the Vedas, particularly the Atharva Veda It is connected to the
Hindu religion. Ayurveda originated from the 114 hymns of the Atharva Veda. It possibly
dates back to 2000 BC. This system of medicine was received by Dhanavantari- the God of
medicine from Brahma. The present knowledge of Ayurveda is by the texts of Charka.
Suthruta and Vaghbata Homeopathy
Homeopathy was founded by Samuel Hahnemann. a German physician in 1790. It was based
on the law of sunhats. The law of similar was utilized by many cultures like the Chinese.
Greek Mayan. Native American Indians and Asian Indians. But it was Hahnemann who
developed a systematic medical science out of it. The first Homeopathic school was founded
by his students in the US during late 1800s. Homeopathy gained recognition because it
succeeded in treating disease epidemics like cholera, scarlet fever, yellow fever and typhoid.
2.2b] Allopathy
In the 1600s, under the reign of the Emperor Akbar, allopathy found its way in India.
However, after 300 years, recognition of allopathy, as a form of medicine came under the
Indian Medical Decree in 1960.
In between the 50s and the 80s, healthcare facilities increased substantially, but the number
of licensed practitioners per 10.000 individuals decreased due to fast population growth.
In the early 70s, vaccinations against diseases like polio and small pox became prevalent. By
the end of the 70s, small pox was declared to have been eradicated from the country.
The end of 80s saw the industry moving towards diagnosis before treatment. Medical
education increased and industry began to grow. This was the time the incidents of cancer
increased and posed problems to the medical community all over the world and the country.
There Were 128 medical colleges by the end of the 80.
we struggled with a mortality rate of over 80. in India. 90s saw a rise in health care. During
this decade. Indian healthcare grew at a CAGR of 16%. In 1991. India had 27.400
dispensaries 22.400 PHC's and 11.200 hospitals. The primary health centers relied mostly on
trained paramedics. Also. in 1991 there was uneven distribution of medical facilities in the
country. India, most populated sta. UP (over 139 minion) had 735 hospitals whereas Kerala
(29 million) had 2053 hospitals. In 19. there were 7.300 hospitals, out of which 4.000 were
owned and managed by the Go. Another 2.000 owned and managed by charitable trusts when
the other 1.300 were private sector hospitals and in turn, very small facilities. The major
hospitals were a pan of the Govt. medical colleges. Lack of sophisticated medical facilities was
common in private hospitals, but the pace of development was very quick. Today, it is the
largest service sector in India.

2.3] Healthcare Industry Analysis
The healthcare industry comprises of both products and services. the products are in the form
of drugs, health care equipment and health insurance. our study focuses on the service
segment of the healthcare industry. services in the healthcare industry can be diagnostic
services, small scale clinics & full-fledged hospitals.
The Indian healthcare industry is projected to grow 23 % per annum. There would be increase
in number of public and private healthcare facilities accounting for another 56.7 billion. This
industry will touch .8.76 bn by 2020.
The expenses of this industry comprise 5.25% of the GDP of the country. In a few years it is
projected to reach 6.2% within the next few years.
Growing population. cheaper treatment costs, creasing lifestyle related health issues thrust in
medical tourism. improving health insurance penetration. government initiatives. increasing
disposable income and focus on PPP are &lying fetors for the growth of healthcare sector in
India.
Research says that only 12% of the industry potential has been tapped in our country which
tens us that the scope for is very large.
The healthcare industry shows high opportunity for economic of scale. Narayana hrudayalaya
is the ideal example as to how economics of scale can be achieved in this industry. Through
low cost measures and continuous innovation, he has made it a big success
There is no target customer for this industry. The entire human population is their target.
There are hospitals at every income level targeting people accordingly. The sad, is that the
specialty service., are out of reach for a large amount of our population. Even basic health
services are rural population. The government is. taking initiatives but for a country like India
it’s not enough
Till few years ago. healthcare was the responsibility of private practitioners and doctor owned
hospitals. Large hospitals were run mostly by the government.

2.4] The Healthcare Industry in India
The Healthcare sector, in India, has become one of India's largest sectors - both in terms of
revenue and employment. The industry comprises hospitals, medical devices,
Pharmaceuticals, clinical trials, outsourcing, telemedicine, medical tourism, health insurance
and medical equipment. The Indian healthcare industry is growing at a tremendous pace due
to its strengthening coverage, services and increasing expenditure by public as well private
players.
The Indian healthcare delivery system is categorized into two major components – public and
private. The Government i.e. public healthcare system comprises limited secondary and
tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the
form of primary healthcare centres (PHCs) in rural areas. The private sector provides majority
of secondary, tertiary and quaternary care institutions with a major concentration in metros,
tier I and tier II cities.
The Indian healthcare industry is projected to continue its rapid expansion, with an estimated
market value of USD 280 billion by 2020, fuelled by increased population growth in India's
low-income communities. Large investments by private sector players are likely to contribute
significantly to the development of India's hospital industry and the sector is poised to grow to
USD 280 billion by 2020.
Rising incomes, greater health awareness, lifestyle diseases, and increasing insurance
penetration will contribute to growth. Healthcare spending in India accounts for over 4.2 per
cent of the country's GDP, of which the public spending is around 1 per cent of GDP. The
presence of public health care is not only weak but also under-utilized and inefficient.
Healthcare delivery and pharmaceuticals account for nearly 75% of the total healthcare
market. India has only 0.7 beds per 1,000 people, far below the global average of 2.6. India
needs to add 2 million beds to the existing 1.1 million by 2027 and requires immediate
investments of USD.
2.5] Healthcare Industry in India and GDP
In India, healthcare sector suffers from underfunding and bad governance. Yes, India has
made huge improvements since independence. But majority (70%) of the effort has been
private sector led. Still India accounts for 21% of the world’s burden of disease.
In fact, India has increased spending over the years. Also, the government plans to increase it
even further nearly by 2.5% of the GDP in the 12th five-year plan. The amount of public
fund that India invests in health care is very small compared to other emerging economies.
With 6% of GDP expenditure on Healthcare, India ranks among the bottom five countries
with the lowest public health spending globally.
Krishna Giri (MD) Health & Public Services, Accenture India said “Our report identifies the
importance of shifting from ‘infrastructure focus’ to ‘productivity focus’ to generate
corresponding improvements in India’s healthcare access. This can only be achieved if larger
fund allocation for healthcare is accompanied by effective and innovative interventions to
improve the existing healthcare ecosystem in order to achieve global standards”
The report points three major challenges hampering the growth of the healthcare sector and
therefore the delivery of healthcare services:
2.6] Substantial Gaps in Healthcare Infrastructure
Hospital bed density in India has stagnated at 0.9 per 1000 population since 2005 and falls
significantly short of WHO laid guidelines of 3.511 per 1000 patients’ population. Moreover,
there is a huge inequity in utilization of facilities at the village, district and state levels with
state level facilities remaining the most strained.

2.7] Low Healthcare Insurance Service Coverage
This leads to high levels of out of pocket spending: Nearly 80% of spend in India is out of
pocket, primarily due to with extremely limited insurance coverage, both personal and
government funded. Research has shown that the proportion of medical and healthcare
expenditure in overall personal consumption has risen considerably over the years.
2.8] Medical Manpower Remains Inadequate
India is currently known to have approximately 600,000 doctors and 1.6 Mn nurses. This
translates into one doctor for every 1,800 people. The recommended WHO guidelines suggest
that there should be 1 doctor for every 600 people. This translates into a resource gap of
approximately 1.4 Mn doctors and 2.8 Mn nurses. There is also a clear disparity in the man
power present in the rural and urban areas.
Krishna Giri also added, “Comprehensive adoption of Information Technology and
digitization of systems to improve access to these services is central to the success of these
projects”.
The report proposes five key measures that Accenture believes will have the most significant
impact on improving healthcare access in India:
• Implementing (HIS) Hospital Information Systems and record-digitization to improve
delivery of healthcare services to the public.
• Automating supply chain management is the cornerstone of all successful healthcare
systems.
• Empowering Citizens through Information Dissemination.
• Collecting data via handheld mobile devices, given the limitations of providing hard IT
infrastructure in the vast reaches of rural India.
• Analytics-enabled real time disease surveillance, with real time surveillance costs, and
‘time-to-reaction’ are significantly lowered, leading to not only economic savings, but a
much more efficient outbreak intervention mechanism as well.
These recommendations can address several inefficiencies in the healthcare value chain in
India, and provide increased healthcare access to citizens, without significantly increasing the
spending on the same.
2.9] The Growth Story
• A sudden in paradigm shift in the last five years. This shift has become visible only in the
last two years.
• A shift from an unorganized to an organized structure.
• It was earlier seen only as a social sector but now there is a move towards corporatization.
• Apollo pioneered the trend of corporate hospitals in India.

2.10] Factors for The Healthcare Boom in India
2.10a] Strong Indian Economy
The Indian healthcare sector is expected to increase from US$ 110 billion in 2016 to US$ 372
billion in 2022. Rising income level, greater health awareness, increased precedence of
lifestyle diseases and improved access to insurance would be the key contributors to growth.
58,000 job opportunities are expected to be generated in the healthcare sector by the year
2025.
The hospital industry in India stood at Rs 4 trillion (US$ 61.79 billion) in 2017 and is
expected to reach Rs 8.6 trillion (US$ 132.84 billion) by 2023.
The private sector has emerged as a vibrant force in India's healthcare industry, lending it both
national and international repute. It accounts for almost 74 per cent of the country’s total
healthcare expenditure. Telemedicine is a fast-emerging trend in India; major hospitals
(Apollo, AIIMS, Narayana Hrudayalaya) have adopted telemedicine services and entered into
a number of public-private partnerships (PPP). Further, presence of world-class hospitals and
skilled medical professionals has strengthened India’s position as a preferred destination for
medical tourism.
In December 2017, the Government of India provided grant-in-aid under the National
AYUSH Mission (NAM), to set up AYUSH educational institutions in States and Union
Territories where such institutions are not available in the government sector.
The Government of India aims to develop India as a global healthcare hub. It has created the
Intensified Mission Indradhanush (IMI) for improving coverage of immunisation in the
country and reach every child under two years of age and all the pregnant women who have
not been part of the routine immunisation programme. As of January 2018, Pradhan Mantri
Surakshit Matritva Abhiyan (PMSMA), a programme launched in 2016 to ensure
comprehensive and quality antenatal check-ups to pregnant women across India, has crossed
the 10 million marks.
2.10b] Increasing options for Healthcare Financing
• Health services financed broadly through private expenditure or public expenditure or
external aid
• Public expenditure includes all expenditure on health services by
• central and local government funds spent by state owned and parastatal enterprises as well
as government and social insurance contributions
• where services are paid for by taxes, or compulsory health insurance contributions either
by employers or insured persons or both this count as public expenditure.
• Voluntary payments by individuals or employers are private expenditure.
• External sources refer to the external aid which comes through bilateral aid programmed or
international non-governmental organizations
• The ownership of the facilities used whether government by government, social insurance
agencies, nonprofit organizations private companies or individuals is not relevant
2.10c] Increasing Opportunities in Healthcare delivery
• The current healthcare infrastructure in India is inadequate
• The overall number of beds, physicians and nurses is low compared to other developing
countries and international averages. The situation is worse in the case of tertiary beds and
specialist physicians.

• The quality of provision too is poor due to the dominance of unqualified practitioners and
sub- optimal size of facilities.
• Higher Investment in Training required.
• Meeting the expected demand in 2012 will require and investment of US$25 billion
• An additional 750,000 beds will be required (from 1.5 million today to 2.25 million in
2012), of which 150,000 beds need to be tertiary beds.
• The number of doctors and nurses enrolled in medical colleges and nursing schools will
have to triple over the next 10 years. Additional 520,000 student’s physicians will be
required by 2012.
• The bulk of the investment will need to be made by private providers
• Total Healthcare Market in India could increase from US$35 billion today to US$60
billion by 2012.
• Preventive Healthcare market is for over 160 million people largely funded by corporate /
government sector
2.10d] Better Profitability (15-20%)
Profitability and cost management is an imperative for healthcare insurance providers. This is
being driven by both regulatory requirements and competitive pressures. Effectively
addressing the challenges of profitability and cost management involves mastering a
methodology, understanding the business drivers, changing business processes, and
introducing a system that supports an efficient process. The impact of profitability and cost
management ripples through to all management processes and is a key component of an
overall enterprise performance management system.
2.10e] Earlier Break Even (2-3 years)
Break-even analysis is the use of a simple mathematical formula to determine the sales level
at which the business is neither incurring a loss nor making a profit. In other words, when the
firm’s total expenses equal its net sales revenue that is the break-even point for the operation.
1The break-even point (BEP) is, in general, the point at which the gains equal the losses. A
BEP defines when an investment will generate a positive return or also the point where total
costs equal total revenues. There is no profit made or loss incurred at the break-even point.
This is important for anyone who manages a business, since the BEP is the lower limit of
profit when prices are set and margins are determined. Break-even analysis, sometimes called
cost-volume-profit analysis, is an important analytical technique used to study relations
among costs, revenues and profits. Both graphic and algebraic methods are employed. For
simple problems, simple graphic methods work best. In more complex situations, analytic
methods, possibly involving spreadsheet software programs are preferable. Defining the
break-even point in mathematical terms is simply the point where:
Total expenses = Net sales revenue
The amount of sales revenue should be readily available on income as ‘Net Sales’. Net sales
revenue is all sales revenue (often called gross revenue) less any sales returns and allowances
or sales discounts. The break-even point represents the level of revenue that equals the total of
the variable and fixed costs for a given volume of output service at a particular capacity use
rate. Other things being equal, the lower the break-even point, the higher the surplus and the
less the operating risk. The BEP also provides non-profit managers with insights into
surplus/deficit planning.

2.11] Medical Tourism
Medical Tourism means the process of leaving home and going abroad or a different place for
medical care.
Medical tourism has become one of India's major sources of income it the past few years. India
with its well educated. English speaking medical staff, diagnostic conveniences, state of the art
private hospitals and comparatively low cast healthcare services, has emerged as a destination
for medical tourism. the fields in which India hospital excel are cardiology, joint replacement,
hip replacement, gastroenterology, ophthalmology, cosmetology, orthopedics and urology.
Medical Tourism is growing at the rate of 30%. It will be a $200 billion industry by 2015.
6.00.000 patients travelled to India last year for medical treatment. Corporate hospitals are
commenting that the figure is going up every year.
A Mckinsey Report says that only 9% of travelers seek lower costs as their prim,
consideration. 15% seeks faster medical services. 32% seek better healthcare. and 40% seek
advanced technology.
India offers medical services at 1/10th
the cost of an American or British hospital. A Business
world report says that a heart bypass surgery costs $144,000 in united states, $25,000 in costa
rica, $20,000 in Mexico, $24,000 in Thailand, $13,500 in Singapore and $8,500 in India along
with the cost factor, the quality Indian hospital provide is excellent.
Hospitals are not the only ones affected by medical tourism, hospitality, pharmaceutical and
medical equipment industry are greatly affected
Medical tourism Ayurveda has attracted thousands of tourists to our country. authentic and
monitored ayurvedic programme are sought to heal, cleanse, relax and rejuvenate. the most
common place for ayurvedic treatment in India is kerla. the benefits of Ayurveda are being
enjoyed by medical tourist coming from countries like the US. south America, UK, Germany,
France, Sweden, Canada, Netherlands & Europe. many other wellness seekers are also coming
from countries like Oman, Jordan, Egypt, Australia, New Zealand, Saudi Arabia, Kuwait,
UAE, Malaysia, Singapore, Korea, japan etc.
Combination of Ayurveda, yoga and meditation is the most common package available to
medical tourist’s package also takes the tourist through the beauty of the country as Ayurveda,
yoga and meditation centre are present mostly in the holiday destinations of the country.
2.12] Increasing demand from within the county
• The manpower demand of the healthcare industry would double up in the next 7 years. For
example, the current Marketing & Sales manpower in the healthcare and pharmaceutical
segment is 200,000 plus, which is expected to double up in the next 7 years. In clinical
research the current shortage is 10,000 personnel, which is going to increase to 50,000
personnel by 2012.
• At present there is huge shortage of trained healthcare & pharmaceutical marketing and
sales executives, medical representatives and managers.
• There is a major shortage of quality professionals for hospital services; service
professionals for bio medical equipment, diagnostics, pharma R&D professionals.
2.13] Indian healthcare review
• Conducive demographics: While the population growth rate for India has steadily gone
down, it is still at over 1.3 percent and is not expected to go below one percent in the near
future. Also, it is interesting to note that our population aged above 60 years is projected to
grow to around 193 million, compared with over 96 million in 2010. This change in the

population pyramid is expected to fuel the demand for healthcare in general, particularly
lifestyle diseases.
• Rising affordability: In the past decade, India has witnessed a rapid increase in levels of
wealth and disposable incomes. Coupled with a better standard of living and health
awareness, this has led to an increase in spending on healthcare and wellness.
• Increase in lifestyle diseases: Lifestyle-related diseases comprised 13 percent of total
ailments in India, according to a 2008 data, and this number is expected to increase to 20
percent by 2018. This is expected to trigger an additional demand for specialized
treatment, which in turn, will lead to increased margins for hospitals since these diseases
lie at the high margin end of the spectrum.
• Health insurance and medical tourism: While out-of-pocket spending remains the mainstay
of healthcare expenditure, health insurance is gaining momentum in India. The increasing
penetration of health insurance is expected to significantly increase the affordability of
healthcare services, driving up the demand for preventive healthcare and curative services.
Medical tourism is also driving the healthcare market in India.
2.14] Morbidity and hospitalization rates
The decade from 2004 to 2014 saw the Indian economy grow at an impressive rate. This was
also the time when the government brought sweeping policy initiatives into the healthcare
sector. New health schemes were introduced at the national level as well as state levels. After
a decade of experimentation, India is still faced with national and international criticism for
its low investments in healthcare and for overall poor health outcomes. This study aims to
systematically analyse health and morbidity in India during this time period. The NSSO data
from round 60 (2004) and round 71 (2014) make it possible for us to compare healthcare in
India over the 10 years. In particular, we analyse changes in health-seeking behaviour of
Indian households, changes in their out-of-pocket health expenditures and changes in their
major sources of healthcare financing, over time. We are able to map some of the major
healthcare initiatives of the government to these changes in outcomes of health-seeking, out-
of-pocket expenditure and health financing.
The years from 2004 to 2014 have witnessed many significant policy changes in the
healthcare sector of India. One of the overarching initiatives was the National Rural Health
Mission (NHRM)which later expanded into the National Health Mission. The main
investments in NRHM were for reproductive, maternal, new born, child and adolescent
health. It was also a timely response to the Millennium Development Goals with a special
focus on reducing maternal and infant mortality in India. The other significant policy
intervention was the launch of several publicly funded health insurance schemes in India.
While the central government rolled out the Rastriya Swasthya Bima Yojna, a national health
insurance scheme for people living below the poverty line in 2008, proactive states like
Andhra Pradesh launched the popular Aarogyasri insurance scheme a year earlier in 2007.
Several other states also followed with their own government funded health insurance
schemes. Besides large schemes the government also launched several National Disease
Control Programmes. New commitments were made to address water and sanitation
problems. The government also emphasised the need to have regular scientific evaluations of
different health interventions in the country.
In this study, we use National Sample Survey (NSS) data from surveys conducted by the
Government of India. These are recall-based household surveys on multiple topics, including
healthcare and consumer expenditure. More specifically, we use the 60 th and 71 st rounds of
the NSS which included a questionnaire focused on healthcare, with questions on morbidity
and the consumption of healthcare for all individuals within the surveyed households. Over
the 10 years, the similarity of information collected in the two rounds of the surveys, gives us

an opportunity to make scientific comparisons to understand the big changes in health and
morbidity outcomes for Indian households.
Our main results for health-seeking behaviour show that households still overwhelmingly
depend on private providers for healthcare services. While as much as 75 per cent of out-
patient care is exclusively private, 55 per cent of in-patient care is from private hospitals in
India. This dependence, however, is declining and more significantly so for in-patient care.
Indian households’ dependence on public care has risen by 6 per cent for out-patient care and
by 7 per cent for in-patient care. Most of these increases are driven by rural women seeking
more public healthcare, over last 10 years. More precisely, our analysis of the data shows that
the Janani Suraksha Yojana incentives led to a significant increase of 15 per cent in
institutional childbirth in India with a commensurate decline in deliveries at home. The
disaggregated data also shows that there was a large increase of 22 per cent in deliveries in
government hospitals, which was mirrored by an 8 per cent decline in childbirth at private
hospitals and a 16 per cent decline in childbirth at home. Given that the fundamental objective
of the JSY was to raise institutional deliveries, the NSSO data shows that the scheme
performed well over the 10 years. At the same time, it is important to note that our analysis
points to the increase in public hospitalisation being incentive driven, which does not allow us
to draw an inference about either the quality of services provided or the sustainability of the
increase.
The results also point to a significant association of health insurance coverage and
hospitalisation in India. We note that having insurance coverage is highly correlated with
being hospitalised. In particular, being insured is associated with a 17 per cent increase in
probability of being hospitalised in a government hospital and an 8 per cent increase in
probability of being hospitalised in a private hospital.
In terms of the out-of-pocket (OOP) health expenditure, a common measure of health burden,
we note that the overall OOP spending has risen significantly, and mostly from a rise in in-
patient spending and not from out-patient spending of households. The results show that there
was a significant increase in a household’s real total OOP expenditure of Rs.750, over 10
years. This amounts to an increase of approximately 20 per cent in households’ total OOP
over 10 years. Disaggregating the data further, we note that the increase in total OOP
expenditure was essentially from significant rise in in-patient, and not from out-patient
spending. At the household level, in-patient expenses rose by Rs.563 over the 10 years, while
out-patient expense did not see any significant change in this time period.
There are serious disparities across rural and urban households when we disaggregate total
OOP for an in-patient case into different components such as doctors’ fees, expenditure on
medicines and costs of diagnostics. Compared to a rural household, an urban household
spends five times more on diagnostics, 2.6 times more on medicines and 2.4 times more on
doctors’ fees. It is also important to note that the rural-urban differences were very small in
2004 with absolutely no difference in the average expenditures on medicine per in-patient
case. This has changed remarkably in the 10 years, with urban households paying 57 per cent
more for medicines per in-patient case than rural households. The biggest difference between
rural and urban areas has arisen from the increase in average expenditure on diagnostics per
in-patient case, where urban households pay more than 73 per cent of what rural households
pay.
Over time, we find that households with catastrophic health expenditures have risen
significantly for all three threshold levels (15 per cent, 25 per cent and 40 per cent), and
across both rural and urban India. Once again, this increase was much larger for urban
households than for rural households. In terms of impoverishment caused due to poor health,
we estimate that overall the percentage of Indian households that fell below the poverty line

due to OOP health expenditures has remained unchanged at approximately 7 per cent of the
population, over the 10 years.
In terms of sources of financing for healthcare expenditures, the data shows that households
are increasingly relying on their own income and drawing down their own savings to finance
their healthcare expenses. Reliance on borrowing, contributions from friends and relatives and
all other major sources have come down steadily over the 10-year period. This holds for both
rural and urban households in India.
From the healthcare financing perspective, it is important to understand the role of health
insurance, and in particular, the role of recent public health insurance programmes in reducing
health burden of Indian households. First and foremost, the data for insurance coverage shows
that while private health insurance is largely limited to the richer urban households, in
contrast, public insurance coverage is evenly distributed across all quintile groups. Overall,
the different regression analysis shows that having public health insurance coverage in India
has not been associated with lower health burden as measured by total OOP expenditure,
probability of catastrophic health expenditures or impoverishment caused by health
expenditures. However, we do find an increase in use of services associated with insurance,
and in particular a significant increase in hospitalisation. This could mean that people
suffering from ailments are more likely to be treated if they are covered by insurance. So, on
the whole, it appears that the public health insurance programmes have been ineffective in
lowering health expenditures of Indian households but have improved access to IPD care on
average.
The rest of the paper is organised as follows – section 2 describes the policy background and
context within which we must interpret health and morbidity changes in India over 10 years,
section 3 looks at health-seeking behaviour of Indian households and includes descriptive
statistics and hypothesis testing of specific interventions. Section 4 outlines the analysis for
changes in out-of-pocket health expenditures and includes the descriptive statistics, in-patient-
out-patient disaggregated analysis, changes in expenditures per case, catastrophic health
expenditures and impoverishment due to poor health. Section 5 outlines the analysis for
changes in health financing in India, and looks at the role of health insurance, particularly
public health insurance. Section 6 provides a brief analysis of inter-state variations in OOP
expenditures, government spending, insurance coverage and catastrophic expenditures at the
individual state level. Section 7 concludes the paper.
2.14a] Morbidity and Hospitalisation
• About 9% of rural population and 12% of urban population reported ailment during a 15-
day reference period.
• Proportion (no. per 1000) of ailing person (PAP) was highest for the age group of 60 &
above (276 in rural, 362 in urban) followed by that among children (103 in rural, 114 in
urban).
• Around 96% of rural and 97% of urban ailing persons were administered some treatment.
• Treatment without any medical advice was primarily attributed to financial constraints’
(57% in rural, 68% in urban).
• More than 70% (72% in rural and 79% in urban) spells of ailment were treated in the
private sector (consisting of private doctors, nursing homes, private hospitals, charitable
institutions, etc.).
• Relatively high percentage of treatment at public hospital was reported in the rural areas of
Assam (84%), followed by Odisha (76%), Rajasthan (44%) and Tamil Nadu (42%), and in
the urban areas it was Odisha (54%), followed by Assam (44%) and Kerala (31%).

• Higher preference towards allopathy treatment was prevalent (around 90%) in both the
sectors.
• A bout 4.4% of the urban population was hospitalized (excluding childbirth)
• any time during a reference period of 365 days. The proportion of persons
• hospitalised in the rural areas was lower (3.5%).
2.14b] Highlights
• Both in rural and urban areas highest proportion (around 25%) for hospitalisation
(excluding childbirth) were reported for ‘Infection’ (inclusive of all types of fever,
jaundice, tuberculosis, tetanus, diarrhoeas/dysentery and other infection).
• In treating the in-patients, private institutions dominated both the rural (58%) and urban
areas (68%).
• Higher amount was spent for non-hospitalised treatment of an ailment by the urban
population (`639) than the rural population (`509).
• Out of the total medical expenditure, around 72% in rural and 68% in urban areas was
made for purchasing ‘medicine’ for non-hospitalised treatment.
• The rural population spent, on an average, Rs.5636 for a hospitalised treatment in a public-
sector hospital and Rs.21726 for that in a private sector hospital.
• A s high as 86% of rural population and 82% of urban population were not covered under
any scheme of health expenditure support.
• Rural households primarily depended on their ‘household income/savings’ (68%) and on
‘borrowings’ (25%), the urban households relied much more on their ‘income/saving’
(75%) for financing expenditure on hospitalisation, than on ‘borrowings’ (only 18%).
2.15] Economic profile of consumers
2.15a] Hospitalization Stay
1 in 5 urban families forced to borrow to fund hospital stay
HIGHLIGHTS
• In rural India 65.6% of the poorest and 68% of the richest depend on household income or
savings to meet hospitalisation costs
• Average cost per hospitalization case in rural areas was Rs. 35,500 in Gujrat, over four
times that in UP

About a quarter of all rural households and one in five urban families in India are forced into
debt or sale of assets to meet hospitalization costs. This is true across income levels, revealed
the National Health Profile 2017 published recently by the central bureau of health
intelligence in rural India, about two-thirds - ranging
from 65.6% in the poorest to 68% for the richest -
depend on the household income or savings, while
27% of the poorest household and 23% of the richest
households depend on borrowings for hospitalization
costs. In urban India, 68% of the poorest and about
80% of the most well-off households depend on their
own income and savings.
As they get richer, their reliance on borrowings goes down from 22% among the poorest to
14% among the richest. In rural India, about 1% whether rich or poor meet hospitalization
costs through sale of assets. This is negligible among urban households. Roughly 5% of rural
and urban households are helped out by friends and relatives to meet the cost.
The data on hospitalization was from the health expenditure survey conducted by the National
Sample Survey Organisation from January 2013 to June 2014. The data also shows that
getting hospitalized was most expensive in Gujarat for rural households and in Assam for
those who lived in towns and cities.
The average cost per hospitalization case in rural areas was Rs. 32,500 in Gujarat, over four
times as expensive as in Uttar Pradesh. Similarly, each hospitalization in urban Assam cost on
an average about Rs. 52,368, nearly seven times as much as in urban Delhi. Next to Assam,
the urban areas of Goa and Himachal Pradesh were the most expensive places to get in-patient
treatment, costing over Rs 37,000 and Rs 35,200 per hospitalization case. Interestingly, in
states with very high total per capita spending on health, such as Himachal Pradesh,
Uttarakhand, Kerala and Jammu and Kashmir, the average expenditure on each
hospitalization was not among the highest. This could be due to higher spending on out-
patient costs. In many of these states, the presence of a robust public hospital network could
also be the reason for lower expenditure on hospitalisation as several of them also have the
highest government spending per capita on health.

2.15b] Infrastructure and technology
The infrastructure sector has become a focus area of the Government of India. Under Union
Budget 2017-18, US$ 61.92 billion was allocated to the sector.
Increased impetus to develop infrastructure in the country is attracting both domestic and
international players. Private sector is emerging as a key player across various infrastructure
segments, ranging from roads and communications to power and airports. In order to boost
the construction of buildings in the country, the Government of India has decided to come up
with a single window clearance facility to accord speedy approval of construction projects.
Significant allocation to the infrastructure sector in the 12th Five-Year Plan, and investment
requirement of US$ 1 trillion is expected to create huge demand for construction equipment in
India. The country needs around 55 new airports by 2030 with an investment of US$ 36-45
billion. In the road’s sector, the government’s policy to increase private sector participation
has proved to be a boon for the infrastructure industry with a large number of private players
entering the business through the public-private partnership (PPP) model. During the next five
years, investment through PPP is expected to be US$ 31 billion. India has a requirement of
investment worth Rs 50 trillion (US$ 777.73 billion) in infrastructure by 2022 to have
sustainable development in the country.
Sectors like power transmission, roads & highways and renewable energy will drive the
investments in the coming years. In October 2017, road projects worth Rs 6.92 trillion (US$
107.64 billion) were approved to build an 83,677 km road network in the country. In August
2017, a new Metro Rail Policy was announced to boost private investment in the sector. In
January 2018, the National Investment and Infrastructure Fund (NIIF) partnered with UAE-
based DP World to create a platform that mobilise investments worth US$ 3 billion into ports,
terminals, transportation, and logistics businesses in India. The Government is also working
on improving energy infrastructure in the country and investment opportunities worth US$
300 billion will be available in the sector in the coming 10 years.
2.16] Utilization pattern of hospitals
This chapter presents survey findings on utilization of hospitals in India. The utilization can
be measured in two ways: in the global context one can examine what proportion of morbid
population in a State are using hospital services; and at the facility level one can assess how
well the hospitals are utilized in different regions. The former gives an idea about the intensity
of use of hospital services in different States and the latter measure indicates how efficiently
hospital facilities are utilized. The chapter shows both the measures of utilization. In the
context of utilisation of hospitals, availability of medical personnel and their productivity are
also discussed in the chapter.
The concepts/measures used to assess the utilization are: Bed Days Utilized (BDU); the
Patient Turnover Rate (PTR); the Average Length of Stay (ALS); and the Bed Occupancy
Rate (BOR). The BDU per bed shows the days for which any given bed is occupied in a year.
Normally a bed can yield up to 365 BDU in a year11. The PTR indicates on an average the
number of patients using any given bed during a year. By dividing the BDU per bed with the
PTR (or total BDU with the total in-patients admitted in a year) one can get the ALS. The
ALS indicates on an average the number of days a patient stays in the hospital. The BOR,
which is considered as a summary facility level measure of utilization, is the ratio of the BDU
and the bed days available (beds multiplied by 365) expressed in percentage terms. Usually,
the BOR should be less than 100 but in the event of extreme congestion, when the BDU per
bed exceed 365, it can exceed 100.
As one can see, all these four measures are interring related and the knowledge of any two of
them will permit computation of the remaining two. Further, one can also notice that, the
value of BOR is not invariant of the ALS. For any given number of in-patient admissions, the

BOR increases as the ALS increases. Thus, the ALS plays a crucial role in determining the
value of BOR and hence one should analyse the BOR taking into account the ALS.
The ALS, which is an important indicator of hospital efficiency, depends on a number of
factors. Case-mix, case severity, and the prevailing treatment practices determined by the
medical technology are considered as primary factors determining the ALS. For example,
communities with a high proportion of infectious diseases tend to have shorter ALS and
chronic and severe episodes of illness require longer hospital stays. Thus, a hospital has little
control on the primary factors. Besides these, certain secondary factors also influence the
ALS. These are scheduling of diagnostic and surgical procedures; hospital cost
reimbursement procedures; recovery environment in the post hospital care; institutional
structure for taking care of certain chronic illnesses which require long term but low intensity
medical care; and permitting hospital physicians to do private practice. If the secondary
factors cause an increase in the ALS, it will be considered as a sign of inefficiency.
Among the secondary factors influencing the ALS listed above, hospitals have control on two
factors: the scheduling of procedures in the hospital and the physician behaviour. The
remaining factors fall in the realm of health care policy and any individual hospital can do
little about them. For instance, in societies where the in-patient hospital costs are reimbursed
on per-diem basis, the ALS tends to be longer as hospitals gain by keeping patients for longer
duration. This happens because the intensity of medical care falls with the length of stay; the
marginal cost of treating an in-patient also falls commensurately. On the contrary, if the
reimbursement is made as a fixed fee for each diagnostic related group, hospitals tend to
reduce the ALS and strive to increase the PTR, for that would maximise their net revenues.
Similarly, if low cost institutions are created to take care of chronic diseases that require long
term low intensity medical care, the ALS for the tertiary and secondary hospitals tend to fall.
For these reasons, the ALS varies considerably across countries. In Indonesia the ALS varies
between 5.9 to 9.4 days with an average of 6.6 days12. Zimbabwe too has a comparable ALS,
varying between 6.1 to 7.8 with an average of 7.1 days13. In contrast, the ALS in China is
extremely long, varying between 13.7 to 26.1 days with an average of 19.1 days14. While one
should expect China to have a higher ALS compared to other developing countries due to its
low fertility rates and lower incidence of infectious diseases, very long duration of stay is
attributed to the reimbursement mechanism based on per-diem cost.
2.17] Mode of payment
The government needs to allocate more funds for public health. The mismatch between the
declared objective of universal healthcare through the public health system and the actual
level of expenditure remains serious.
One of the three most important planks on which Barack Obama won the U.S. presidential
election was the country’s healthcare system, which he promised to fix. Indeed, the most
important legislative measure initiated by Mr. Obama so far is the health reform legislation,
titled the Patient Protection and Affordable Care Act. It was reported that the U.S.
pharmaceutical lobby has spent an average of $600,000 a day over the last six months
lobbying against the Bill, mostly seeking to curry favour with Congressmen and Senators.
The main reason for healthcare in the U.S. receiving so much attention is its political and
economic costs. The new U.S. legislation involves nearly $1 trillion over a 10-year period.
In India, meanwhile, problems related to the financing of healthcare continue to be politically
insignificant and publicly invisible. Healthcare has not been an important election campaign
issue except in 2004 when the United Progressive Alliance promised to raise expenditure on
healthcare to 2 to 3 per cent of the Gross Domestic Product. According to recently released
National Health Accounts (NHA) statistics, public health expenditure as a share of GDP
increased from 0.96 per cent in 2004-05 to just 1.01 per cent in 2008-09.

Broadly, there are three patterns of healthcare financing across the world. The National Health
Service (NHS) of the U.K. is a stark example of a state-run and publicly-funded system. As in
the case of the Scandinavian countries, the U.K. uses tax finances to pay for 80 per cent of its
healthcare spending. Elsewhere in Europe, social insurance schemes bear most of the
financial burden. The U.S. relies on private insurance, paid for mostly by employers: almost
half of the supersized health spending (16 per cent of GDP) is financed by tax money for the
care of the old and the very poor.
The NHS is relatively inexpensive, accounting for 8 per cent of GDP, even below the OECD
(Organisation for Economic Co-operation and Development) average of 9 per cent. The U.K.
and other OECD countries have better health indicators than the U.S., although they spend
less on it. The contrast between the health indicators of Cuba vis-À-vis the U.S. health
expenditure is even more striking. Cuba, with a per capita income that is less than a fifth of
that of the U.S., has a publicly funded system that yields better health outcomes than the U.S.
The William Beveridge Committee report (1944) formed the basis of the NHS. Beveridge
designed the NHS when Winston Churchill was in power, and there was little hope in hell of
his government ever implementing a National Health Service fully funded by tax money. But
after the War, the Labour Party headed by Clement Attlee came to power, and one of the first
major welfare schemes his government took up was the NHS. In the 1980s, the Conservative
government of Margaret Thatcher stripped the NHS of much of the funds and manpower. The
‘New Labour’ government of Tony Blair, however, restored the finances and infused new life
into it. The NHS today remains one of the world’s best healthcare models.
Parallel to the developments in the U.K., India had the Joseph Bhore Committee report which
came up with somewhat similar recommendations. The Government of India’s acceptance of
its major recommendations resulted in a nationwide healthcare machinery with reasonable
norms in terms of coverage, availability of personnel and institutional linkages. The Indian
public health system never reached NHS standards in terms of universality and access. But
following the Alma Ata Declaration and the first National Health Policy in the 1980s, an
attempt was made to strengthen it. This enthusiasm, however, was short-lived. Since the start
of the economic reforms in the early-1990s, systematic efforts have been made to weaken
India’s public healthcare system.
The share of health expenditure in total public expenditure peaked in the Indian States in
1987, but it has been more or less secularly declining thereafter. According to the
constitutional division of expenditure responsibilities, the principal burden of health
expenditure has to be borne by the States. In recent years, the Centre has stepped up
healthcare expenditure through various schemes. Nevertheless, the States’ share in health
expenditure remains above 70 per cent.
The Central theme of the Eleventh Five-Year Plan is to deepen the role of the market in
healthcare. The principal instrument suggested is Public-Private Partnership (PPP). Though
the professed objective of the National Rural Health Mission (NRHM) is to strengthen
primary healthcare infrastructure, in practice it has been pandering to the private sector.
Reviews of the NRHM indicate that its intended objectives are not being achieved.
An admired aspect of the U.K.’s NHS and European healthcare models is the presence of the
General Practitioner (GP), who acts as a gatekeeper for more expensive hospital treatment.
Though one of the main recommendations of Bhore Committee was the creation of a ‘Basic
Doctor’, Indian policy-planners did not carry it forward. The basic weakness of the Indian
system is the absence of an accessible basic doctor. Even today, 70 per cent of primary
healthcare is provided by unqualified practitioners.
Over 80 per cent of the health expenditure in India is in the private sector, while in most
developed societies more than 80 per cent of health expenditure is borne by the exchequer.

Our public-sector share is around one per cent of GDP: in this respect India’s peers are
Burundi, Myanmar and Sudan. Among the countries of the South Asian Association for
Regional Cooperation (SAARC), all except Pakistan have a higher proportion of health
expenditure in the public domain. India does not shine among its neighbours in terms of
health outcomes. India’s infant mortality rate at 56 per 1,000 live births in 2005 is better than
that of only Pakistan. It is a far cry from 12 in Sri Lanka. Similarly, life expectancy at birth of
64 years in India compares favourably only with that of 63 in Nepal. Again, it is a far cry
from Sri Lanka’s 75.
One of the reasons for cost escalation in the U.S. system is the nexus between private health
insurance companies and healthcare providers. The performance incentives in the private
sector boosts the expenditure in a commercialised context. Invariably expensive drugs and
procedures are prescribed. Insurance companies provide health cover to the young, the
employed and the rich, and avoid those who are elderly, unemployed and poor. There is a
cosy relationship between the insured, the insurance company and the healthcare provider.
In India, the share of healthcare expenditure borne by insurance companies is now less than 3
per cent. But there is a build-up for a significant expansion of the health insurance business.
Those think-tanks and economists who support this, forget certain facts. Most important,
insurance covers only the cost of hospitalisation and not expenditure on outpatient care. NHA
statistics show that close to 70 per cent of the out-of-pocket expenditure of the household is
for outpatient care, which will not be covered by insurance. Secondly, even in the U.S. about
50 million persons (over 15 per cent of the population) do not have any health insurance cover
as they do not have employers to pay their premium. In the Indian situation where a majority
of the people are self-employed, universal coverage will remain a mirage. Thirdly, many
villages in India do not have a hospital worth the name within accessible distance. What use
would insurance cover be for people living there?
For the same reason, even the publicly funded Rastriya Swasthya Bima Yojana (RSBY)
meant for the poor is unlikely to serve its purpose. Further, the present level of funding is
sufficient to provide insurance to only a small proportion of those who need it.
After 60 years of planned development, there is a serious mismatch in India between the
declared objective of universal healthcare through the public health system on the one hand,
and the actual level of public health expenditure on the other. This mismatch between
objectives and resources is at the heart of the inadequacies and inequities of the health system.
2.18] Hospital beds tariff rates
In some Indian hospitals, when a wealthy patient calls in sick, it isn't enough to plop him on a
king-size bed and get a bevy of your good doctors to fuss over him. Medical care in the
country is going extreme. Starting with room tariffs that can put the best luxury hotels to
shame, private hospitals are adopting the best practices in hospitality to satisfy the whims of
the truly demanding. For instance, some hospitals provide pick up and drop patients in luxury
cars. Others whip up gourmet fare for those who are fussy about their meals. Some even take
a huge leap of faith and play the Gayathri mantra in the labour room while a baby is being
born.
And there is a veritable technology arms race, with Wi-Fi enabled suites, extra-large LED TV
sets and ultramodern gadgets all vying for the attention of an unwell CEO, a minister, or just
someone with a packed wallet who would want to run his office from the superlative comfort
of his hospital room. The Apollo Hospitals Group, for instance, has a few Rs 30,000-a-night
suites that can house the patient and his entourage in luxury with interpreters, personal
attendants, a well-stocked pantry and the works.
Similarly, a suite in Fortis La Femme in South Delhi will set one back by around Rs 37,000
for one night. At that price, one can stay at The Oberoi, New Delhi, for two nights. A

presidential suite in Mumbai's Hiranandani Hospital costs Rs 30,000. Seven Hills Hospital,
where Bollywood actor Aishwarya Rai Bachchan gave birth to her child, charges Rs 20,000
for a suite. And the tariffs don't include medical charges. A two-day all-inclusive childbirth
package at Fortis La Femme can go up to Rs 4-5 lakh.
Says Dr Anupam Sibal, group medical director of The Apollo Hospitals Group, "Look at it
this way. We cater to patients from different parts of the world and they would have very
unique tastes. We can't be serving South Indian food to somebody from Moscow or for that
matter Mozambique. Similarly, for a Mongolian patient, we have to arrange an interpreter. It's
a different matter that getting interpreters who speak Mongolian is very challenging."
The challenge doesn't end there. Apart from helping outstation patients book hotels for
relatives, some hospitals also go out of their way to take care of their diverse religious needs.
"Healing and faith go hand in hand," says Sibal. "If a patient wants to pray in a Russian
orthodox church or in a synagogue, we try to get that arranged as well."
Contrary to the elite image of these hospitals, it is actually the low cost of treatments here that
is helping them rake in foreign patients. "A liver transplant in the US costs Rs 2 crore. We do
it for Rs 30 lakh and that includes airfare," says Sibal. According to him, the number of
foreign patients opting for organ transplants in Apollo is increasing at the rate of 20% every
year.
"It's not like 10-15 years ago when you had to go to a hospital and wait for the doctor.
Expectations of people have changed. Some facilities that we offer are best in the world," says
Dr Dilpreet Brar, regional director of Fortis Memorial Research Institute in Gurgaon. "Now,
it's also imperative for us to take care of the needs of the patient's family." Read: movie
theatres, food courts, spas, gyms and even a glitzy shopping arcade.
However, experts say that luxury medical services in India are in a nascent stage when
compared to the US or the Middle East where one comes across 5-star hospitals or complete
floors dedicated to luxury treatments. "Medical practices are getting globally standardized and
India is adopting these at a quick pace," says Amit Mookim, head of healthcare at market
research firm KPMG in India. "However, it's a small market and price points are big
impediments for it to percolate down to the masses."
In hindsight, if one has the dough, it would seem that falling sick these days could make for
memorable dinner table conversations.
2.19] Cost of manpower category wise perspective
Indian healthcare delivery system comprises of 152,326 sub-centres (SCs), 25020 primary
health centres (PHCs), 5363 community health centres (CHCs), 1024 sub-district hospitals
and 755 district hospitals. The sub-centres being the most peripheral units of health care
delivery caters mainly to preventive and promotive care with some curative services for minor
ailments such as fever, acute respiratory illnesses, diarrhoea etc being provided by auxiliary
nurse midwives (ANM) and community health workers (CHW). PHCs are referral centres for
sub-centres and are first contact point between community and the qualified medical doctors
in India. As per Indian Public Health Standards (IPHS), a PHC caters to a population of
around 20,000 in hilly, tribal and desert areas while 30,000 in better accessible plain areas. It
consists of medical officers, staff nurses, health supervisors like lady health workers, head
staff nurse and supporting staff to provide outpatient and inpatient care
Patients who require further specialist care are referred to next higher level of heath service
delivery called CHCs which cater to a population of around 80,000–100,000. These are
designed to be equipped with at least four specialists in the areas of medicine, surgery,
paediatrics and gynaecology along with the complementary medical and para medical staff
with facilities for 30 indoor beds; operation theatre, labour room, X-ray machine, pathological
laboratory etc

The extent of utilization of primary health care centres for antenatal care services among the
public health facilities in India is 22%. Nine percent of total institutional deliveries, i.e. using
a health facility with all the essential lifesaving amenities for giving birth to a child under the
supervision of competent health personnel and skilled birth attendant, happens at the level of
PHCs and 7% at CHCs. In terms of total public-sector spending for healthcare in India, 41%
is spent on primary health care and 15% on secondary healthcare. While some primary care is
also provided by the secondary and tertiary care institutions, however, the extent of primary
care provision in these two categories is relatively less. Moreover, nearly one-fifth (18.25%)
of all health care cost is constituted by the outpatient care provided through PHCs,
dispensaries i.e. health care facilities for the out-patient care where medical care and
medicines are dispensed and sub-centres. These facts suggest that there is a significant
volume of service provision at the level of PHCs & CHCs
Moreover, at national level, there has been an increase of 6300 sub-centres, 1784 PHCs and
2017 CHCs in 2014 as compared to those existing in year 2005, implying a 7.7% and 60.3%
increase in the number of PHCs (from 23236 to 25020) and CHCs (from 3346 to 5363)
respectively since the introduction of National Rural Health Mission (NRHM) in the country.
There has also been a significant increase in the number of manpower positioned in these
health facilities in the last decade with an increase of 63%, 35% and 15% in the numbers of
ANMs, allopathic doctors at PHCs and specialist doctors at CHCs respectively. These facts
highlight that considerable amount of resources are spent at the level of PHCs and CHCs.
Now, with the advent of National Urban Health Mission, health care delivery structure similar
on the lines of rural areas is being developed in urban India. So, there is a need for evidence
generation for the effective planning and allocation of resources for a large scale up
Also, there is limited availability of literature on costs spent per service delivery at level of
primary and community health centres and the present literature is more than a decade old
which limits its application. Most of the health costing studies in India highlight the cost of
delivering particular services like paediatric care, referral transport, new-born care in district
hospitals, specific diseases like respiratory diseases or typhoid and service provider like at
primary health centre or district hospital
With the commitment of Government to provide each of its citizen with universal health care,
it is important from the perspective of planners and policy makers as to how much cost is
being levied by the government per unit service delivered. This can also be used in terms of
equity research, i.e. benefit incidence analysis, and determining allocative efficiency of
Government health care services. In this paper, we reported the overall annual cost for
delivering the gamut of services at PHC and CHC level in public sector. Secondly, we
assessed unit cost of specific services delivered at PHCs and CHCs
2.20] Deficiencies in healthcare: Regional perspective
India accounts for a substantial part of the global burden of disease, with 18% of global
deaths and 20% disability-adjusted life-years (DALYs).1
While the growing burden of chronic
disease accounts for 53% of deaths (44% of DALYs), 36% of deaths (42% of DALYs) are
attributable to communicable diseases, maternal and perinatal conditions, and nutritional
deficiencies suggesting a protracted epidemiological transition.2
One-fifth of maternal deaths
and one-quarter of child deaths in the world occur in India.3,4
Life expectancy at birth is 63
years for males and 66 for females, and the under-5 mortality rate of 69 per 1000 births in
India falls behind the South-East Asia regional average.5

The above statistics, however, mask
the marked variation in the
distribution of health within India.
While health outcomes have
improved over time, they continue
to be strongly patterned along
dimensions such as gender, caste
(Side Panel 1), wealth, education,
and geography.6–8
For example, the
infant mortality rate among the
poorest and richest wealth quintiles
was 82 and 34 per 1000 births in
2005–6, respectively (Figure
1).9
Similarly, the under-5 mortality
rate among mothers with no
education compared to those with
secondary or higher education was
106 and 49 per 1000 births,
respectively. As shown in Figure 2,
typically the state variation in under-five mortality tends to be largely patterned along the
level of state economic development. Substantial geographic inequalities in health outcomes
in India, with life expectancy ranging between 56 years in Madhya Pradesh to 74 years in
Kerala; a difference of 18 years, which is higher than the provincial differences in life
expectancy in China,10
or the inter-state differences in the United States.
Many of these health inequalities result from a broad set of social, economic, and political
conditions which influence the level and distribution of health within a population.
Addressing these structural factors which constitute the social determinants of health (Box 1),
is important as some of these health inequalities may represent health inequities that result
from the unjust distribution of primary social goods, power and resources. Redressing any
inequities in health can be considered a primary goal of public policies, with health systems
having a specific and special role in achieving equity, alongside efficiency, in the distribution
of health in a population and the exposure and vulnerability to ill-health.14–16
Equity in health and equity in
health care have been a
longstanding guiding
principle, with commitment
to the serving the needs of the
poor and underprivileged
being central to health policy
documents. The ‘Health
Survey and Development
Committee Report ‘of 1946
led by Sir Joseph Bhore set
out a detailed vision and plan
for providing universal
coverage to the population
through a government-led
health service.17
Since then,
health policies and priorities
have been outlined in the “Five Year Plans”, developed as a part of India’s centralized
planning and development strategy. The first official National Health Policy, put forward in

1983, reiterated the need for universal comprehensive care.18
Influenced by the Alma Ata
declaration, the policy emphasized the primary health care approach, in addition to
recommending decentralization of the health system, improved community participation, and
expansion of the private sector to reduce the burden on the public sector. While the next
National Health Policy of 2002 continued to champion India’s vision, this was to be carried
out on the “basis of realistic considerations of capacity”.19
More recently, in 2009, the
Government of India drafted a National Health Bill proposing the legal framework to
recognize the ‘right to health and ‘right to health care’ with a stated recognition to address the
underlying social determinants of health.20
However, implementing policy commitments to
equity in health care remains a challenge given India’s institutional and implementation
capabilities,21
even though this is a challenge facing the global health community, and not
unique to India.22
In this review, we begin by describing the inequalities in access to health care. Using a
supply-demand framework, we discuss the key challenges facing the health system in its
pursuit of equity in service delivery and equity in health financing and financial risk. We
conclude by arguing for the need to explicitly incorporate and implement an equity
perspective in the development of a health care system in India and propose a set of principles
are necessary to ensure more equitable health care for India’s population.
Summary
Healthcare Industry of India.
is a project aimed at analyzing the Healthcare Industry of India
and its Future prospects? Healthcare can be Allopathic. Ayurvedic. Homeopathy. Unani.
Naturopathy etc. Our project focuses on Allopathy as that is a mainstream medicine in India.
Healthcare contributes to 5.25% of GDP expenditure. There is a very large market potential
in India. Only. 20% of this industry potential is tapped. The government cannot afford to
spend the necessary amount and hence it opens up a large area for private investors. The
factors for the boom of this industry are more options in healthcare financing. growing
economy. saturation of other sectors like IT and retail and the the different models of
healthcare delivery.
The key players of t. industry (on basis of number of beds) are Apollo, Fortis, Manipal,
aarving eye clinic care, max hospitals etc. The regulators of this industry are government
of India directory of heath and family welfare, ministry of health and family welfare,
Indian council of medical research, central drug standard control organization. Porter's Five
Forces Analysis, SWOT Analysis and PESTLE were done. In than environment provides a
very good opportunity for private players in healthcare. The growing population with a much
deeper pockets and low government participation has led to higher demands where Noble are
willing to pay high costs for proper medical care. India's unmet demand for healthcare
facilities. rapidly changing demographics. increasing private spending on healthcare. and a
readily available intellectual pool are Melling the growth of the healthcare industry and
making it highly attractive for investors
2.21] Interpretations and suggestions
2.21a] Solution to Indian Healthcare Problems
• Improve Budget:
Indian budget is very low it is not even above the average budget of world in health care and
when it comes to public spending it is less than 1%. But just spending high is not solution but
we definitely need to improve current scenario.
By improving budget, we can immediately resolve some of the problems which makes doctor
reluctant to go and work in rural area like giving 24/7 water and electricity and also providing
pain killers and some lifesaving drugs.

• Public-Private Partnership:
This model can bring some of the tremendous changes. We have many models working in
different states which we can study and use them for national purpose.
• Improve Healthcare
Workforce:
India has very few public seats
for MBBS and especially for MS.
And also, number of courses for
healthcare jobs should be
increased because workforce of
healthcare is quite different from
other. We need a specialize
dedicated team to train new
workforce.
• Education:
By educating we indirectly
improve some healthcare
problems like maternal mortality
rate and also educating rural
health workers to assist rural in
emergency times.
There is a health train which runs in India which performs surgery and also educate people
about healthcare.
• Insurance Scheme:
This is very important as this shows the concern of individual towards healthcare and also
helps a government sector to properly organize some health centre according to data
collected. Government both state and central are running many such schemes and they can be
game changer.
• Rashtiya Swasthiya Bima Yojana (RSBY)
RSBY (Rastriya Swasthiya Bima Yojana) has been launched by Ministry of Labour and
Employment, Government of India to provide health insurance coverage for Below Poverty
Line (BPL) families. Beneficiaries under RSBY are entitled to hospitalization coverage up to
Rs. 30,000/- for most of the diseases that require hospitalization. Beneficiaries need to pay
only Rs. 30/- as registration fee while Central and State Government pays the premium to the
insurer selected by the State Government on the basis of a competitive bidding.
• Yeshasvini
Yeshasvini is the world's cheapest comprehensive health insurance scheme, at Rs. 10 (20
cents) per month, designed by Shetty and the Government of Karnataka for the poor farmers
of the state. It is very well-used in Karnataka with 4 million people covered
• Conclusion
This analysis concludes on the note that Indian Healthcare Industry is an ideal place for
private players to invest in.
Its contribution to GDP is forecasted to increase to 6.2. within next few years. There is 80%
market potential left to tapped.

Sustenance in this industry is not very difficult as the potential is so large that for a long time
now there will be no internal rivalry. Player's survival will be easy if they approach the right
business model. There are various models available in the market like PPP, small clinics,
super specialty hospitals etc. The only criteria for success are the human resource involved.
Qualified Human Resource is available in plenty in India. There is an emerging threat from
substitutes like Ayurveda and Homeopathy but in our country these forms of medicine are
always taken as a last resort. Trends are changing but it will take time for them to become
perfect substitutes.
The weakness of this industry is basically the high delivery cost and hence the unavailability
of good specialized healthcare for the people low on the income scale. T. is the major factor
which counter reacts to the numerous strengths of the industry.
The government is encouraging investment in Healthcare which makes it easier for the
companies as the process will be comparatively hassle free. Every force is in favor of
investors.
These healthcare procedures save lives and improve quality of life. Millions of test
operations. and other healthcare services will happen regardless of world even., economic,
political, or otherwise. When people are sick, they'll do anything in their power to get better.
And it doesn't matter one bit what else is happening on the planet. It's one of the reasons
investors should love the healthcare sector. The population is aging and you don't need a
doctorate in demographics to know that older people consume more healthcare as they age.
If asked, we would say that investment in this industry is the right thing to do in the current
scenario. It is a sector not affected by economic cycles, where demand is much higher than
supply and a necessity for our country.
Investing in this industry will not only give enormous returns to the investor. It will also be a
great help towards improving the healthcare situation in our country.
Investment opportunities
• According to the Rural Health Survey report 2009, the rural sector has added 15,000 health sub
centers and 28.000 nurses and midwives in the past 5years. Primary Health Centers has increased by
84. increasing the number to 20.107.
• From$2.7 billion in 2008. Indian medical technology is expected to reach $14 billion by 2020.
• Frontier Mandeville, the country's first healthcare SEZ is being set up by Frontier Lifeline Hospital
at Elavoor, near Chennai.
• The substantial demand for specialty healthcare is driving players such as Apollo and Fortis to tier II
and tier III cities.
• Big groups are targeting new segments such as primary care and diagnostics
• The preventive healthcare segment in India is being driven by demographics, health awareness and
increasing capacityto spend.
• Organizations like Narayana Hrudalaya and the Mazumdar Shaw Cancer Center are entering into
computer —based bio surveillance projects. These generate data about diseases and create
healthcare databases in ruralareas.
• Medical Tourism is booming in the country with over 6,00,000 patients travelling to India for
health care.
• Narayana Hrudayalaya plans to expand its presence in the next 3 yrs. to 7 more cities which will
take the number of hospitals to 14

• An Australian medical devices company called Cochlear Ltd plans to set up its wholly owned
subsidiary in India Cochlear will provide better patient and product support. S15 million is the
investment planned.
• The drugs and pharmaceuticals sector has attracted FDI worth S1.70 billion between 2000 to 2010.
Hospitals and Diagnostic centers have received FDI worth 5786.14
• Wockhardt plans to invest up to $158.32 million and Fortis Healthcare plans to invest $146.81
million
•
GE Healthcare plans to invest US $ 50 mn to set up more facilities for developing diagnostic
services.
• Manipal Hospitals plans to invest US $ 45.23 million in the next three years to take its capacity up to
8000 beds.
2.22] Investment policy updates
Foreign Direct Investment
The economic reforms launched by the Government of India since 1991 have resulted in
substantial economic growth and the integration of India into the global economy. The pace
of reforms has gained momentum due to political stability and strong industrial growth.
Foreign investment into India is governed by the Foreign Exchange Management Act, 1999
(“FEMA”), the rules and regulations made by the Reserve Bank of India (“RBI”), and the
Industrial Policy and Procedures issued by the Ministry of Commerce and Industry through
the Secretariat for Industrial Assistance, DIPP.
The provisions pertaining to FDI are laid down in Schedule I of FEMA (Transfer or Issue of
Security by a Person Resident outside India) Regulations, 2000.
While the DIPP issues policy guidelines and press notes/releases from time to time regarding
foreign investment into India, it also issues a consolidated policy on an annual basis
(“Consolidated FDI Policy”). Currently, foreign investment is regulated by the Consolidated
FDI Policy of 2015.
100 percent FDI is permitted in most sectors under the automatic route, i.e., where prior
approval of the Foreign Investment Promotion Board (“FIPB”) is not required. Currently, FDI
is permitted up to 100 percent under the automatic route in the hospital sector and in the
manufacture of medical devices.9 In the pharmaceutical sector, FDI is permitted up to 100 %
in Greenfield projects and 74% in Brownfield projects under the automatic route and FDI
beyond 74% in Brownfield projects requires FIPB approval.10 Green field projects are new
projects that are coming up in India while Brownfield projects are existing projects in India.
The cap on FDI in the insurance sector has been increased from 26 percent to 49 percent
(under the Automatic Route subject to approval/verification by the Insurance Regulatory and
Development Authority of India (“IRDA”)) with the directive that the ownership of the
insurance company be retained in Indian hands. This should lead to a growth in the insurance
sector.
2.23] Foreign Venture Capital Investment
Another vital means of investment into the healthcare, as well as medical and surgical
appliances sectors is through venture capital investment by entities registered with the
Securities Exchange Board of India (“SEBI”) as foreign venture capital investors. While it is
not mandatory for a private equity investor to register as a Foreign Venture Capital Investor
(“FVCI”) under the FVCI regulations 11, there are some significant advantages to be gained
by registering as an FVCI. An FVCI is exempt from compliance with the pricing guidelines
under the Consolidated FDI Policy for the acquisition of securities at the time of entry as well

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