Source: E-mail dt.26.6.2011


Management of Healthcare in India: Some Issues and Challenges


Dr.K.S. Srinivasa Rao


Institute of Health Management Research (IHMR),

Bangalore, India


Introduction:  The saying “Health is Wealth” even though it was a old one, but is a needy one in today’s changed environment due to various reasons.


World Health organization (WHO) was defined Health as a state of complete physical, mental and social well-being and not merely absence of disease or infirmity.  But after four decades, it re-defined Health as a resource for everyday life, not the objective of living by emphasizing social and personal reasons as well as physical capacities [1].


Basically, Public Health deals with Prevention of Diseases, Prolonging Life and Promoting Health through the organized efforts.  The country has well structured 3-tier Public Health Infrastructure, comprising Community Health Centres, Primary Health Centres, and sub-centres across rural and semi-urban areas and Multi-Speciality Hospitals and Medical Colleges located at urban areas.  The National Health Policy-2002 aims at achieving an acceptable standard health for general population of the country and it was reflected as the main objective in Eleventh 5-year Plan [2].


Healthcare deals with treatment and prevention of illness.  The Healthcare Sector includes the Hospital Management Firms, Health Maintenance Organizations, Biotechnology and a variety of Medical Products.  Alternative Medicine is a traditional healing practice like Naturopathy, Herbalism, Ayurveda, Meditation, Yoga, Hypnosis, Homeopathy, Acupuncture that doesn’t fall within the realm of conventional Medicine but popular in the society [1].


The Healthcare Industry in the country has registered a growth of 9.3 percent between 2000-09 and is projected to grow 23 percent per annum to touch US$77 billion by 2012 according to the market studies [3].  Both public sector and corporate India are making their efforts to meet the demand by expanding their business horizons and to grab the market [4].  This scenario attracted Foreign Direct Investments (FDI) and also leading to Mergers & Acquisitions in Healthcare Sector that pulled the competitors to different directions [5].


Impact of Globalization: Liberalization, Privatization and Globalization (LPG) has its impact on people in India and shown the other side of the coin by giving a good image about our country among the foreign nations.  We should proud to say that the Image of our country among the foreign nations has changed from a “Poor Country” to “Knowledge Hub”. 


The author attributes mainly “5- I” Factor for such a facelift to the country – (1) Information Technology [IT] usage, (2) Innovativeness in Businesses, (3) Intuitiveness in controlling the Economy, irrespective of political changes in the Government, (4) Inquisitiveness among people due to the free environment created by implementing the freedom by all means approved as per Indian Constitution and (5) Inherent Intelligence among the people because of the traditional culture and heritage of the country.


The penetration of IT usage made India a global business unit and made on-line business as the order of the day.   IT became a backbone to all businesses and used as a cost cutting strategy in order to withstand the competition.  IT sector created employment opportunities and forced the Educational sector to meet the demand by adopting new curriculum.


The businesses in India in different sectors are able to sustain to the global competition because of their innovativeness and creativity.  Because of innovativeness by the Indian Entrepreneurs, new products are coming into the market. Indian businessmen are competing with foreigners by entering into global bidding and acquiring foreign markets.  We can proud to say that Indian business companies are listed in foreign stock markets and doing a very good business. “Made in India” became a serious business perspective.

India is one of the Democratic countries in the world where political changes will affect the Economy.  Even though world economies were collapsed, India was able to withstand during the recent global financial crisis.  The Intuitiveness in controlling the Economy saved our skin inspite of lot of uncertainties in Indian politics and this is because of its conservative attitude that was inherent.


Inquisitiveness among people made India to be in the global market in different sectors be it Space Research or be it Bio-Technology.  Inquisitiveness comes only when the free environment is created and it is because in India we respect the Constitutional Rights.  One can notice that in any country where Constitutional Rights were not respected, the growth was not significant.


Even though we give credit to fertilizers and manures used, when productivity of a crop is high, but basically it may be due the fertility of the land.  Similarly, the people in India have shown their Inherent Intelligence in various fields of development and made the country to be proud of them.  This is because of the traditional culture and heritage of the country makes people to follow good practices in life which leads to a peaceful life.


The Role of Urbanization:  Urbanization made India to shift its focus from Agricultural Sector to Manufacturing Sector and now to Service Sector.   When we opened our economy, we invited not only the international businesses but also the issues related to them.  People were enjoyed when job market was open due to Outsourcing Business but people were realized later how it affected the life styles of them.  Society has shifted from single-earning member to duo-earning members and this had a positive impact in changing their Economic status from lower middle class to upper middle class but has a negative impact on personal front as they may be unable to adjust to work-life balance.  As people are unable to find time for direct social interaction, on-line social networks became popular. 


The change in the life styles brought new health problems to the people in India.  Fast food centres became more popular as people unable to find time for their own preparations.  Work pressure on employees has increased due to the competition in businesses.  Hypertension, Heart Diseases, Obesity became common even among the young-age people due to the stressful office activities.  Buying power of people has increased due to plastic currency (credit cards) usage and flexible EMIs of Bank Loans.  Traffic congestions increased due to increase in vehicle frequency but the road conditions are not improved in the same pace.  Pollution levels have increased in each city and other diseases due to pollution increasing.  The civic authorities are not able to manage the local governments due to the rapid growth due to urbanization.  This made the governments to work not in an isolated way but by networking with Private and NGOs with the concept of Public, Private Partnership (PPP).


Healthcare became an emerging sector and is making a good business in the market.  The awareness regarding healthcare among the people has increased.  In fact, the Healthcare businesses made it by creating the awareness.  To overcome from the problems related to change in life style, alternative medicines become more popular and this may be a kind of blessing in disguise.  Morning Joggers, Gym visitors, Yoga followers, Ayush Care Centres, Body Slimming Centres became the order of the day.   This scenario attracted a good business in Healthcare sector and private sector taken the opportunity and grabbed the market.  This made some foreign agencies to look at India and entering in Indian markets by Foreign Direct Investments (FDIs) and also grabbing the Indian businesses by Mergers & Acquisitions.


Development of Science:  The development of Science has a role even in Healthcare sector from Drug Discovery to Delivery.  The R & D labs are in collaboration with foreign companies and introduced new technology, modern instruments and new drugs.  Interesting point is that two decades back, may be due to lack of awareness, people used to suffer with diseases like Tuberculosis (TB), Leprosy, Cancer etc. but today due to increase in awareness, we are able to identify diseases AIDS, H1N1 Virus, Brest Cancer, Prostate Cancer, Superbug etc. 


Affect of Global Warming:  Everybody experiencing the affect of Global Warming directly or indirectly.  One side the average life span has increased due to good health practices and but due to natural calamities interms of Floods, Earthquakes, etc. heavy losses to human life is happening.  If natural calamities are God created in one side, the level of these activities are intensified due to man-made issues like cutting the greenery, construction activities without proper care, mis-use of natural resources, etc.


Medical Tourism:  With a “Feel-good” environment creased in India for the Healthcare Sector which attracting the businesses across, it also attracting the patients from other countries.  The main reasons are good branding with trust, availability of medical experts, low cost involved in the process, people-friendly environment in the country, and technology usage etc.  Medical tourism is expected to generate revenue of US$2.4 billion by 2012 [3].


Health Insurance:  The Indian Health Insurance market has emerged as a new and lucrative growth avenue for both existing players as well as new entrants.   The Health Insurance premium is expected to grow at a CAGR of over 25 percent for the period spanning from 2009-10 to 2013-14 [6].  Governments are encouraging the insurance players and so many schemes have come in the market.  Governments have realized that it is much better for them to offer healthcare insurance rather than healthcare services through hospitals.  Governments have introduced several healthcare schemes to poor people so that they will be getting the same corporate treatment for the diseases.  The central government has established Insurance Regulatory and Development Authority [IRDA] which is a statutory body to for the regulation of whole industry [7].


Affordability of Healthcare:  The basic issue is now on the cost of the Healthcare.  We are able get the required healthcare service from various players at par with a 5-star hotel.  Corporate hospitals have not only raised the bar for healthcare in India, but also eased the pressure off government hospitals dealing with tertiary care.  Waiting time for the patients has come down to almost zero in these private hospitals.  The rise in costs is because of modern technology.  The checks before an operation increase the safety in operation and it comes with some price.  This ensures the quality in operations and people are willing to pay more for such quality.  Hospitals are maintaining the quality standards like NABH / NABL in order to meet the competition [8]. 


Conclusion: Private sector hospitals are also started to come with the concept of Corporate Social Responsibility (CSR) by giving more subsidized rates so that the poor people can afford for the necessary treatment.  IRDA should focus on (a) checking the costs of medical care, (b) develop mechanism to check whether private insurance companies are providing same facilities to all categories like rich, upper middle class, lower middle class, and the poor by encouraging NGOs, and Cooperatives to enter into Insurance business.





[2] Annual Report 2008-09, Ministry of Health and Family Welfare, Govt. of India

[3] Report by India Brand Equity Foundation, July 2010 (

[4] Emerging Market Report-2007, Healthcare in India, Price Water House Coopers

[5] Rupa Chandra, Foreign Investments in Hospitals in India: Status and Implications, IIM-Bangalore

[6] Booming Healthcare Insurance in India, RNCOS, Apr. 2010

[7] Health Insurance in India – Opportunities, Challenges and Concerns, IIM-Ahmedabad, Nov. 2000

[8] Innovating around India’s healthcare Challenges, India Knowledge@Wharton, July 2010