The world’s governments are increasingly struggling to provide mass healthcare at affordable costs. This is an issue that has the potential to overthrow governments in the West. President Obama’s proposal to provide universal healthcare in America had to be significantly compromised in order to pass Congress and only partially met the original aspiration - and is now in the process of being changed yet again to become something quite different, with the recent tax cuts most likely making universal healthcare in the US even more unaffordable. Europeans have historically provided universal healthcare to their people through high taxes but rising costs have placed these systems under pressure, too. The UK’s National Health Service for example is estimated to be under-financed by up to US$3bn . In India, the provision of modern healthcare to 1.3bn people is one of the biggest challenges facing the country today and a priority for its government. Earlier this month the finance ministry made two flagship policy announcements aimed towards improving healthcare coverage in the country, launching a new health protection scheme that will aim to provide health insurance coverage to 100m low income families, and creating 150,000 health and wellness centres across India to improve preventative healthcare. While these policies are well intentioned, they are unlikely to have a significant impact on the state of healthcare coverage in the country, mainly because they are based on tried and tested solutions that the West has adopted and which ultimately have left them with the burden of an effectively infinite demand for healthcare services. In addition, India has its own problems - poor access to credible information, physicians pharmacies, inadequate hospital infrastructure, and the continued prevalence of fundamentally preventable life-threatening diseases - which represent systemic and significant fundamental challenges in a country where per-capita healthcare spending remains among the lowest even among emerging market economies. Solving these challenges in a timely and capital efficient manner will require developing a series of radical solutions, for which the variable that stands between failure and success is technology. This month’s Sign of the Times continues the series on the “digital shock” shaking societies, looking at healthcare in India through the lens of digital technology, rather than policy, to examine how tech can be used to address some of the biggest challenges facing governments. If India can effectively deploy technology to help provide mass, low cost healthcare for its own people, these solutions can surely provide the basis for solving the challenges faced by other countries around the world.
India’s Healthcare Challenges in Five Charts
So much has been written about India’s healthcare challenge that there is little need to repeat it in detail here. The evidence is clear, and five charts encapsulate some of the most important messages.
While governments around the world are struggling with healthcare provision for their people, India, as can be seen from the charts above, faces additional specific issues as a large, poor country. The ‘healthcare gap’ India needs to overcome accordingly is substantial. Current healthcare infrastructure and manpower supply levels are significantly below internationally acceptable standards. This in turn has forced a number of Indians to rely on self-medication, particularly in rural India, which despite accounting for c.70% of India’s population, have only 33% of the country’s doctors. The problem is further exacerbated by incomplete or inaccurate health awareness, and has resulted in India having the 5th highest number of per capita fatalities globally from preventable, communicable diseases.
Rising affluence and changing lifestyles have also seen the growth of non-communicable diseases (particularly, cardiovascular and respiratory diseases) within India’s overall disease burden, nearly doubling over the last three decades. However, almost 85% of India also does not have access to basic health insurance, which, when combined with a weak public healthcare system, means that most Indians are either forced to spend out of pocket on healthcare services, or, due to a lack of disposable income, seek low-cost, sub-standard health treatments.
The medicine supply chain in India is also broken. Nearly 95% of the country’s pharmacy market is unorganised in small ‘mom and pop’ stores which lack comprehensive inventory, forcing an overwhelming majority of Indian’s to visit multiple pharmacies in order to purchase required medicines, despite the fact that nearly 90% of purchasers have monthly or more frequent medical needs. In rural areas on the other hand, where medical supply stores are few and far between, patients often end up without any access whatsoever to the medicines that they require.
While their challenges are generally not ones of basic coverage like India’s, the US or the EU too face significant healthcare challenges, mainly around expanding the provision of services to undercovered segments of the population while needing to scale services to deal with increasing demand. These challenges are not to be underestimated, and they may well bankrupt nations that fail to address them sufficiently. India’s path today aims to follow the one taken by the West, and as such, if successful, may well reward it with the same fate, i.e. bankruptcy. To avoid this fate, India will need to design a very different solution, one that, once mobilised, is self-organising, self-sustaining and self-calibrating.
Digital Technologies Disrupting...and Enabling Healthcare
The challenges India will need to overcome to provide adequate healthcare to its 1.3bn people are clearly significant. Solving for these challenges will require devising a new healthcare system rather than a poor version of the one that is prevalent in the rest of the world. A traditional policy approach, centred around the creation of physical infrastructure - building more hospitals, clinics, medical colleges - across multiple states in India will likely be complex, time consuming and expensive, if not unaffordable, and although it may be popular in the short term, it will store up problems for the future. Previous Signs of the Times have highlighted the transformative power of digital technology, which is already disrupting sectors like financial services, government and retail. Generally speaking, technology provides a number of distinctive benefits that make it uniquely suited to transform healthcare as well, including:
- Mass Scalability. There are approximately one billion mobile phone users, and half a billion internet users in India today. Leveraging these networks to deliver important services and benefits to customers, patients and citizens is faster and easier than building physical infrastructure;
- Direct Access. Technological advancements, combined with the rollout of the Aadhaar digital ID , have made it possible for government and private organisations to directly reach out to intended beneficiaries without relying on middle men and archaic intermediated distribution channels;
- Flexibility. Mobile and web-based technologies are significantly cheaper to maintain than physical infrastructure and easier to upgrade to account for industry changes and/or innovations;
- Cost Effectiveness. Developing a mobile or web application that allows for the delivery of important services to millions of people is significantly less capital intensive than it is to build buildings and facilities across the country, and
- Transparency. Data on everything from personal records to performance metrics can be stored, updated and analysed digitally, and can be accessed immediately in order to identify and solve issues and problems.
In the context of healthcare in India, digital technology has the ability to have an equally transformative impact as it has had on other sectors in the country. A number of technology-driven innovations are in the early stages of re-defining the manner in which healthcare is being delivered globally, initially in developed markets but with even greater disruptive potential in an emerging market like India, where they can help address currently unmet basic healthcare needs. Five existing technologies – all are potential global disrupters to the existing way of delivering healthcare - are worth examining to find the opportunity for reinventing the healthcare system:
- Technology Disruptor-Enabler: Telemedicine. Telemedicine refers to the use of technology for remote diagnosis, monitoring and treatment. A physician sitting in an urban hospital can analyse the health data of a patient in rural India, consult a specialist if required, and diagnose and treat the patient via video conferencing. The cost of doing so would be 70-80% lower than the cost of treating a patient in an actual hospital in a rural area, and, the time saved in setting up telemedicine-related infrastructure (vs. traditional physical infrastructure) is also likely to be significant. Telemedicine is already being piloted in India, and in 2014, Apollo Hospitals (India’s largest hospital chain), in collaboration with the central government, announced the opening of 60,000 telemedicine centres , aimed towards improving healthcare coverage for millions across the country.
- Technology Disruptor-Enabler: Digital Health Information and Apps. The execution of healthcare awareness initiatives is gradually transitioning towards the digital medium. The traditional approach – particularly in developing and underdeveloped countries – that is centered around community outreach initiatives and the distribution of physical content (flyers, brochures etc.) is slowly but steadily being replaced by digital content, delivered via smartphones, computers and tablets. WebMD, the world’s largest producer of digital healthcare content, has already begun to tap into this opportunity, and today delivers information to more than 200m users globally via a series of mobile applications that provide self-diagnostic assistance, drug reference databases, wellness and nutritional information and other healthcare related services, thereby increasing diagnosis and treatment rates as well as promoting disease prevention.
- Technology Disruptor-Enabler: Big Data and Analytics. Big data refers to large and complex sets of structured and unstructured data that are generated on a daily basis by digital machines and applications, and which can be analysed to make accurate predictions about individual outcomes. Within the field of healthcare, medical and data professionals are collaborating globally to leverage big data analytics to improve the accuracy with which doctors are able to predict epidemics, cure diseases and improve the overall quality of life of individuals. The initial stages of this process appear to be underway in India: Wockhardt, one of India’s largest hospital chains recently partnered with QlikTech, a data and analytics company, in order to design and implement a business intelligence system that helps its doctors better analyse patient data, and deliver more affordable and personalized healthcare solutions to patients
- Technology Disruptor-Enabler: Wearable Technology. In 2017, it is estimated 310m wearable technology devices, such as fitness bands, smart watches and head mounted displays, were sold globally , with the market for these devices expected to double by 2021. Recent technological advancements have now made it possible for these devices to move beyond tracking fitness and nutrition levels to tracking heart and pulse rates as well a number of additional vital statistics, significantly increasing wearables’ relevance in providing healthcare. These devices are also increasingly capable of syncing with other medical equipment and are now able to transmit real-time health data of the user to doctors, hospitals and laboratories. The development of mass-market, low-cost wearable devices from manufacturers like Goqii and Xiaomi is resulting in their rapid adoption in emerging markets too, with over 140m users in China as of the end of 2017.
- Technology Disruptor-Enabler: Virtual Reality Medical Training. While virtual and augmented reality technology has been around for a long time in the form of simulators, expensive hardware and computing requirements made it inaccessible for mass-use cases. The recent development of lower cost equipment, compatible with smartphones, appears to have changed this, and today, virtual and augmented reality is increasingly being utilised by governments and corporations to train employees across a wide range of fields. In healthcare, virtual reality is increasingly being used to simulate real-time environments and situations provide training to doctors. Medical Frontiers, a UK-based healthcare technology company has already successfully leveraged Google Glass VR technology to simultaneously train 14,000 oncology surgeons across 113 countries in the world .
Of course, there are many other technologies and technology related solutions that can and will likely transform healthcare over time: online pharmacies have the potential to overcome some of the structural challenges facing the medicine supply chain, while increasingly affordable genetic testing is creating the foundation for next-generation personalised medicine. All of these technologies will help transform the global healthcare landscape over the next decade and beyond. Further, while the argument to use technology to drive healthcare reform is compelling, it is not without its own set of challenges. Many of these digital health solutions require the scaled adoption of technologies which today remain nascent, or the integration of existing technologies in complex and untried ways. Additionally, any mass-use of digital and distributed technology solutions invariably raises questions of data security and privacy, which will require the establishment and maintenance of appropriate audit and security standards. Finally, governments and private organisations will also need to ensure that providers delivering healthcare services via technology are held sufficiently accountable for their treatments and diagnoses. None of these challenges are insurmountable given sufficient planning and willpower but add an additional policy dimension to the successful adoption of solutions which could otherwise by driven by innovation and entrepreneurship, rather than government fiat.
Creating a New Healthcare System in India: From Technology Disruption to Technology Enablement
As India’s government considers leveraging technology to improve healthcare access, there are one of two paths that it could follow. The first is an incrementalistic approach, which promotes the old style physical model and would see digital-solutions being implemented piece-meal across the healthcare spectrum over time, with obvious and low-hanging fruits being targeted first to support an essentially traditional healthcare model. Given India’s overall track record of technology adoption and the level of technology innovation in the country today, this approach would appear to be an easier one to begin with. However, given the scale and significance of the healthcare challenges in the country the government should consider an alternate, “accelerated digitization” approach, focusing on more ambitious, big-ticket digital ideas that substantially transform the quantity and quality of healthcare coverage in the country. The country has successfully done this with the Aadhar program, which created unique biometric profiles of almost a billion individuals. There are obviously many lessons from this process that India can apply to large scale health-tech initiatives including telemedicine, digital health insurance distribution and virtual pharmacies, among others. With these in mind, the second more radical path would leverage the disruptive technologies to create a next-generation, digitally enabled mass healthcare system across the country. The key elements that underpin the architecture of the new healthcare system are:
- Delivery. Create a Nationwide Integrated Telemedicine Network Platform with 500,000 Physicians.It is estimated that India requires over 1,000 new hospitals over the next decade in order to adequately meet its citizens’ healthcare requirements. Rather than build physical hospitals, the central government should seek to leverage telemedicine to meet at least half of this requirement. While telemedicine has already been piloted in India, it has been done so in a fragmented manner, in individual states with limited co-ordination between the public and private sector. Instead the government should create an integrated telemedicine network, that brings together India’s largest hospitals, diagnostics companies and pathology laboratories to deliver technology enabled healthcare services to people all over the country. Medical professionals in each of these healthcare companies can be mapped to rural areas based on proximity, and subsequently deliver a plethora of healthcare services including diagnosis, testing and treatment to India’s underserved population via a unified technology platform. It is estimated that 500,000 physicians can provide adequate diagnostic coverage for over half of India’s 900m rural patients who currently lack adequate access to primary care.
- Doctors. Launch Virtual Medical Colleges, Training 80,000 Doctors Annually and other Medical Professionals. India needs to produce a little over 3m new doctors and 6m nurses to meet the WHO’s basic healthcare targets over the next 20 years, which in turn will require the creation of 600 new medical colleges. This physical build-out can hardly be achieved through conventional means. Instead, India should aim to launch the world’s first virtual medical college. To implement this, the government will need to offer the world’s most renowned medical schools (as well as leading private equity investors) the opportunity to create and deliver a medical education curriculum to hundreds of thousands of students across the country using low-cost virtual reality devices. A virtual medical college producing 80,000 doctors annually could replace the need for over 300 physical colleges, creating cost savings of up to US$15bn. This virtual medical college can also cater to existing doctors that are looking to enhance their capabilities but may not have the requisite financial resources to enrol in traditional post-graduate or diploma programs.
- Distribution. Launch a National Drug Distribution Network to Support E-Commerce. Fixing India’s medicine supply chain requires more than just solving the problems of its fragmented retail distribution. The solution requires a national drug distribution network that enables best in class e-commerce in partnership with one or more private sector pharmacy companies. The government can build on existing physical distribution networks that have access to rural India, such as the Post Office, with the (potentially multiple) privately run e-commerce front ends providing customer service as well as linking into healthcare providers and payers, with companies operating virtual pharmacies accessing the distribution network in exchange for annual fees (or revenue share percentage) payable to the Indian government.
- Data. Develop the World’s First US$5 Wearable Device - for A Billion People. At an average price point of US$190 , wearable technologies today are limited to the to the urban market in India, where disposable incomes are relatively high. Extending the potential benefits of wearables, of which the synergies with telemedicine are perhaps the most significant, to all Indians will require drastically reducing the cost of wearable technology throughout the country. The government would need to incentivise one or more private sector technology manufacturers to develop a range of wearable technology devices that measures user’s core healthcare statistics at the lowest possible price. This device should then be priced at US$5 so that it can be purchased by a larger share of the country’s population, with the government encouraging further subsidisation by other service providers such as insurance companies and banks to maximise adoption.
- Development. Development of Scaled Prevention and Well-Being Solutions. Finally, the ultimate goal of any healthcare system should of course not be the treatment of illnesses, but the maintenance of health. Prevention not only leads to better health outcomes, it is also significantly more capital efficient. Effective prevention and well-being will require the development of an entire wellness eco-system, beginning with health education and awareness through nutrition enhancement including vitamins and supplements, wellness treatments and to the adoption of active lifestyles. Health apps can provide part of the solution, providing health information and raising awareness, in addition to being powerful personal wellness tools when combined with wearables. However, traditional medicines and alternative remedies also have a potential role to play in improving health outcomes. India’s government will need to work with insurance companies and payers to develop comprehensive well-being solutions with quantifiable positive health impacts, leveraging technology to develop, implement and measure the success of these programs.
These five elements – Delivery, Doctors, Distribution and Data, and Development (The 5 Ds) - lay out the key aspects of the architecture of the new system. Innovations in technology will enable the system to be enhanced continually. Underlying principles will need to guide the build-out and include: integration, cost and affordability and performance. With rapidly advancing technology blurring the lines between sectors and applications, the potential uses of technology are effectively infinite. The limiting steps to technology transformation therefore are not technological but financial, social and political, with the cost of any technological solution typically decreasing exponentially over time. India’s government will therefore need to identify and prioritise initiatives that it can ‘afford’ on a realistic timeline and that it can justify politically and socially.
The prize for getting this right is significant. If India decides to adopt a traditional approach towards improving healthcare coverage we estimate that it would need to increase its healthcare spending as a percentage of GDP to at least 7.5% over the next twelve years, which while slightly lower than the global average of c.9%, is in line with healthcare spends of other emerging market economies like Brazil and Russia. This level of spending would finance a ‘traditional’ healthcare system (based on physical infrastructure) that meets the WHO’s recommended minimum levels of coverage. Implementing such a system by 2030 would result in India’s healthcare expenditure increasing by c.5x from US$110bn today to c.US$588bn at the end of the period. This massive investment outlay would result in an overall healthcare system roughly the size of Germany’s in absolute terms but still only half its size in terms of % of GDP, and of course only a fraction of the size in terms of spending per capita.
Technology will be critical in reducing India’s ballooning healthcare expenditure bill. By replacing traditional solutions with digital technology wherever possible and augmenting them where not, India can more quickly scale the delivery of healthcare while driving the system’s overall efficiency. By 2030, the cumulative healthcare savings enabled by technology could reach c.US$50bn – equivalent to roughly 2% of the country’s GDP, as captured in the table below.
Conclusions – Turning a Dire Challenge into an Opportunity to Lead
Most of the world would agree that there is no moral ground for not delivering healthcare and it is widely seen as a basic human right. The peculiar debate in the US on public healthcare provision has accordingly puzzled most of the world. For most of the developed world continuing to deliver great healthcare is a key challenge. For the developing world, in contrast, how to deliver healthcare at all is in many cases the main challenge. India, despite the enormity of its challenge of 1.3 billion people and no mass healthcare system, has many advantages in this respect. With a massive internet user base, market leadership in IT services, a diaspora involved in driving key healthcare technology developments globally, and a proactive government, India is well positioned to leverage technology in order to solve fundamental healthcare challenges. If the nation develops a vision for how to do so, it can create the architecture for a next generation healthcare system that others can learn from and emulate. Doing so is a key part of ensuring India’s ongoing longer-term economic development and transformation, and the prize for getting this right extends well beyond that: it is a “moral” mission to improve the lives of India’s poor, diseased and under-privileged. Beyond this moral mission, by transforming the quantum and quality of healthcare access that its population receives, India will secure for itself a healthier and more productive work force that drives greater economic growth, and helps the country truly realise its demographic dividend.
1 Source: NHS Improvement
2 Sources: NSSO, WHO
3 Source: PwC; India actual data benchmarked against the minimum levels recommended by the World Health Organisation to ensure an effective healthcare system
4 Source: Based on primary research interviews conducted BRIEF India across 4,600 respondents
5 Source: NSSO
6 Source: India: Health of Nation’s States Report 2017; The disability-adjusted life year (DALY) is a measure of overall disease burden, expressed as the number of years lost due to ill-health, disability or early death
7 Based on primary research interviews conducted BRIEF India across 4,600 respondents
8 Please refer to GPC’s February 2018 Sign of the Times, “Digital Shock: India’s Challenges are its Opportunity to Lead in Tech”
9 Aadhaar is a 12-digit unique identity number issued to all Indians based on their biometric and demographic data
10 Source: Apollo Hospitals press release
11 Source: Company financials
12 Source: Wockhardt Hospitals press release
13 Source: Gartner
14 Source: eMarketer
15 Various press articles
16 Based on WHO recommended physician density levels
17 Source: PwC
18 The cost of setting up a medical school could be anywhere from US$30m – US$50m, based on the location and quality of infrastructure of the school
19 Source: IDC
20 By way of comparison, a not-for-profit organization recently developed a digital necklace that tracks health metrics for children in rural India, for US$1
21 Assumes United States healthcare expenditure as a percentage of GDP is 20% by 2030, China’s healthcare expenditure as a percentage of GDP by 2030 is 7.5%, Germany’s healthcare expenditure as a percentage of GDP by 2030 is 15% and India’s healthcare expenditure as a percentage of GDP in 2030 is 7.5%. Sources: PwC, Various press articles
22 Incremental healthcare expenditure by 2050 calculated based on the assumption that India’s healthcare expenditure as a percentage of GDP increases to 9% (current global average) by 2050; Potential savings from technology calculated as 10% of total healthcare expenditure, based on McKinsey estimates for the United States; Sources: PwC, McKinsey, GPC Analysis