April 21IssueOpinion

Healthcare Expenditure and Sustainability

In recent years, healthcare expenditure has been steadily rising in most countries around the world, as
it has in India. The government while focusing on increasing total expenditure on health is also looking at ways to sustained public spending on healthcare. Of course, there are many factors that drive up health costs and most of them are rooted deeply in a complex health system we follow. The government today is looking for ways to contain the rise in health care expenditure, without compromising the quality of care.

Health and wellbeing were on the priority list in this year’s Budget 2021-22 with the finance minister increasing
investment in health infrastructure by 137 per cent. The budget has allocated Rs 64,180 crore for the new scheme under PM Atma Nirbhar Swasth Bharat Yojana over the next six years to advance in primary, secondary,  tertiary healthcare and strengthen the existing national institutions. Under the scheme, the government will support rural and urban health and wellness centres, establish critical care hospital blocks in 602 districts and 12 central institutions, integrated public health labs in all districts and public health units in 11 states. The budget mentioned the operationalisation of 17 new public health units and the strengthening of 33 existing public health units at entry points viz airports, seaports and land crossings. Besides, the budget also mentioned the setting up of 15 health emergency operation centres and two mobile hospitals.


Following the COVID-19 pandemic, the medical sector was expecting a reduction in customs duty. However, the finance minister didn’t mention anything new and the rates were kept unchanged. It was announced that a revised customs duty structure will be implemented from October 1, 2021, and we hope that the new structure will be uniformly applied across all medical equipment/devices. An increase in FDI in the insurance sector
will ensure more investment and better offering, especially for the healthcare sector, which is a boon. Needless to say, this will increase investment in buying better and latest technologies by hospitals and healthcare  institutions.

The pandemic has exposed our healthcare system and we witnessed the haphazard purchase of medical
equipment like BiPAP, ventilators, ECMO etc. Of course, this was a unique situation as we never predicted the severity of COVID-19. It resulted in a shortage of beds, unavailability of critical medical equipment due to
conservative planning. As we are all aware that India has a lower beds/ population ratio, which is below the
global average and there is a huge gap between demand and supply. I see that more hospitals can be set up in Tier II and III cities, which can cater to the local/rural population.

Last year, we saw most hospitals had to shut down their surgical units thereby increasing the load on their operating rooms. Now with surgical admissions being started, hospitals have to be productive to cater to the huge backlog and existing load. Especially since there is pent-up demand, there is a valid reason to invest in better equipment and productivity-enhancing systems and operating rooms. Technologies like image-guided surgeries or you could say diagnostics in a surgical room will make treatment faster and safer.

In my opinion, this will create more opportunities for healthcare infrastructure like well-equipped operating rooms, critical, intensive care units with life-saving medical equipment and advanced diagnostics centres.

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