Innovations in the Healthcare Services Industry in India

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Case Details:

Case Code : BREP001
Case Length : 15 Pages
Period : 1991-2004
Pub Date : 2004
Teaching Note : Not Available
Organization : Amrita Institute of Medical Sciences, Aravind Eye hospitals, Apollo Hospitals
Industry : Healthcare
Countries : India

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Evolution of the Healthcare Services Industry in India

In India, healthcare is delivered through both the public healthcare system and the private sector. The public healthcare system consists of healthcare facilities run by the central and state governments, which provide services free of cost or at subsidized rates to low-income families in rural and urban areas.

The government funds allocated to healthcare sector have always been low in relation to the population of the country, and in 2003 were as low as 0.9 per cent of the GDP.

In the private sector healthcare industry, healthcare facilities are owned and run by for-profit companies and non-profit or charitable organizations.

Healthcare facilities run by charitable organizations also provided services at subsidized rates or free of cost depending on the income of the patient or the patient's family. Initially, the government imposed high custom duties on imported medical equipment making it difficult for private individuals to set up hospitals that provided specialized care using sophisticated equipment.

As a result, there were very few privately run large hospitals but there were many small private practitioners who provided primary and secondary care.⁴ Another, limitation faced by the private sector was low penetration of medical insurance which meant that almost everyone paid out of their pocket.

Therefore, many could not afford to go to private hospitals, as the fees were much higher than the government run hospitals. Gradually, with the rising population and number of people suffering from diseases that required specialized care, together with the limited government spending on healthcare, the quality of services at government run hospitals suffered.

The existing government facilities were simply not enough to cater to the burgeoning population, whether it was primary, secondary or tertiary care⁵.The private sector investment in the healthcare industry really took off in the 1990s after the liberalization of the Indian economy. The number of privately run large hospitals and non-profit and charitable hospitals began to increase...

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4] Primary care is care provided by general phdysician at clinic. Minor ailments are treated and preventive care such as vaccinations is provided. Secondary care is provided by physicians who have specialized in various areas such as gynaecology, internal medicine, general surgery etc.

5] Tertiary care is highly specialized and is provided by specialists like ENT doctors, cardiac surgeons, neurologists etc. This type of care includes emergency and trauma care, organ transplants, neonatal care, etc.