We have been working on Jile Health for the past six months, and at this point, we believe we understand the nuts and bolts of India's Healthcare for 90% of Bhartiya (Excluding the top 10%). Also, we have been thinking and building everything keeping people - Patients, Health Service Providers, Health Facilities etc. - in the centre and using technology to make it affordable and accessible. We also believe the next world's biggest company will come from Healthcare, and India could be the origin (why?). The UnitedHealth Group (UGH) is the world's biggest Healthcare company - a market size of $449.54 billion - with the lowest NPS around 4. Imagine after paying millions, you are unsatisfied. :) I will let you all think why the next world’s biggest company could come from India. I hope this essay gives you a real picture of Healthcare in India in the next ten years.
Let’s get started…
This week NHA released “Nation Health Accounts 2019-20” report. We have used previous reports to understand Healthcare problems in deep and hence, I was excited to go through it. And it left me thinking deeply in fact forcing us to adjust our thought processes. Before we talk about that: let’s go through some of the key points from the report to understand Healthcare in India. Headlines from the reports are circling, but I don't trust any of them. One of the reasons, I don’t read newspapers or avoid taking headlines as truth is because I feel bad when found myself manipulated by wrong information. There is a story behind this, but that is for some other day. In almost all cases, I prefer to download data from the respective originators and take a look myself.
Summary of India’s Healthcare Expenditure:
The Healthcare expenditure on Primary, Secondary, and Tertiary Care
Key observations:
The government’s more than 50% of healthcare expenditures are on primary healthcare. You can visualize the quality because the gap between Life expectancy and Healthy life expectancy has been increasing. (I have explained this in detail below)
The Healthcare expenditures - tertiary - can push an individual into poverty, Government’s expenditure is just 6.4%. This might also be the reason behind the strengthening of PMJAY - state-sponsored Healthcare Insurance that covers Secondary and Tertiary expenditures.
On the Private expenditures, we can see a balance. However, in the coming time, we might record a higher % of expenditure on Tertiary (why?)
Even after spending just 41.14% of the total expenditure the Governance and Supervision expenditure by the Government is 6% which is 16,292 Cr. compared to Private which is just 31,023 Cr (Why?)
Healthcare Expenditure by Providers
Key Observations:
Almost 50% of the entire expenditure is on Hospitalizations - 46% - and private hospitals contribute almost 30%. This number is surprising for two reasons a. The distribution of Private Hospitals is limited in India’s top-two quintiles and even the Government’s Hospitals' densities are much higher in the urban top quintiles of India. And this demand is going to skyrocket in the coming days. This could be one of the reasons we have seen the recent M&A and private equity investment at 10X premium in the Hospitals chains - Manipal, Narayana, etc. There is a massive deficiency of Health Facilities across India that is not hidden from all of us.
I was surprised by seeing “Providers of Transportation and Emergency Rescue” contributes around 3.52% which is 20,879 Cr.
In simple lines, there are massive deficiencies in all types of Providers in India and in the coming few years, the demand will be much higher (why? - I have explained this below)
Health Expenditure by Functions:
Key Observations:
Inpatient curative care expenditure contributes more than one-third of the CHE, 34% precisely. Specialised is less than half of the total inpatient expenditure however, in the coming years, we can observe higher demand for specialised (why? - I have explained this below).
Outpatient curative care expenditure contributes around 19% of the CHE in the coming days we can expect higher demand in OPD.
This table is also signalling: why today is the right time to build in Healthcare for the masses, but I will not write here. I might tell you if you will ask me personally (lol).
Now that you have some sense of India’s Healthcare, we can move to part-2 of this essay.
We must start with Healthcare per capita since the above report is for 2019-20: the Healthcare per capita was INR 4,330, and based on the latest reports Healthcare per capita of 2022 is INR 5030 this is a total of 16% increase in the last two years. If you compare this with the USA's INR 8,76,838 and China's INR 42,800, India still has relatively much lower. However, the rise is inevitable. There are multiple forces behind this rise in Healthcare per capita however two forces are the root causes, and one is invisible to most of us. If this growth is constant the Healthcare per capita in the next ten years would be in 5 digits = INR 10,000 (And we must make sure we are not letting the healthcare per capita get higher than this at any cost).
Out of all the known forces, we have listed two of them below, and it seems one of them is invisible to many of us. And not knowing the root causes of the problem, we are creating new problems to solve this problem. I have explained this below.
Rapid growth in life expectancy
The relatively lower growth rate in Healthy Life expectancy
In one of my previous essays, I talked about the need for Healthcare based on the human life cycle and highlighted the need for Healthcare to be higher after 55+. This is because a human healthy life expectancy starts decaying after this age.
We, humans, have improved life expectancy massively in the past 100 years, and like most of the world’s countries, India’s average life expectancy is around ~70 years - the growth has been constant. However, the growth of Healthy life expectancy has been slow. Here is the data for the past ten years.
We have sourced this data from WHO, and you can validate this on the official website. We all need to be aware of this constant increase in the gap between Life expectancy and Healthy Life Expectancy. If you want me to be honest, the growth of this difference might be rapid in the coming years for multiple reasons. And let’s say the gap is 15 years: India’s Healthcare per capita will be unaffordable for more people. And believe me, that would not be a good picture. In fact, we already have the early signs of this. We can see the investments in Transition Care Centres (rehab-tech). But frankly how many Indians can afford INR 7000/day bed expenses? I let you decide. The solution should fix the problem not just move or create new problems.
The bottom line is at INR 5030 Healthcare per capita, Healthcare is unaffordable for the masses. And it is almost impossible to control the rise of Healthcare per capita in the coming years, however, if we can limit that to under INR 10,000 or around 10K and make Healthcare universal in India - it will be a model for the rest of the world. And I am not seeing any reason in failing to achieve that - that would be a real personal satisfaction!
Before we wrap up this essay:
I loved a16z essays on Healthcare, and the Podcast is also great. If any of you know someone from a16z directly, please suggest them - it is the time to start an India-focused fund especially when a lot of cross-learning can be beneficial for both country's founders, especially in Healthcare.
This year I have been fortunate to discover some of the best books, and based on my parameters: 90% of those are Great Books (One Great book is equivalent to 50 Good books and 100 average books). However, among 20+, one book that I want to read again and again is Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals. If I have to request all of you to read just one book this year, that would be the above book. If you have read this book, reread it, if you have reread, start applying. A book that should be on our desk. You can find the list of my 2023 books: https://bit.ly/Progress-2023
Thanks for reading my essay, I will see you all the next week :)
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