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Health care needs priority in Third World

Published by The Straits Times, Singapore on 2004-07-31

NEW DELHI - When the new government of Prime Minister Manmohan Singh presented its first national budget earlier this month, there was considerable commotion over the allocation of US$1.5 billion for new health-care projects, especially in rural areas.

The brouhaha wasn't over the relatively modest amount in a country of 1.1 billion where there's only one hospital bed for every 1,200 people - as compared to one bed for every 250 people in the industrialized countries of the West, and one bed for every 150 people in Japan. Rather, there was astonishment that the government still saw itself as playing the role of main health-care provider when its record has been largely dismal. Moreover, access to even primary health-care is still spotty in a nation where almost 80 percent of the population lives in some 575,000 villages.

The twinned problems of inadequate health-care facilities and uncertain access to existing ones bedevil not just India but virtually all 134 other countries of the Third World. One would think that health-care and education would be the highest priorities for governments of any emerging state. But a vast majority of poor nations are crippled by stunted statist policies that emphasize defence and white elephant schemes such as dams and steel mills at the expense of social services. Third World leaders often forget that health and education are vital elements in promoting sustainable economic growth. A healthy and literate population invariably contributes to higher productivity.

That's why the enterprise of private-sector physicians like Dr Prathap C. Reddy of Chennai offers a timely solution to what the World Health Organisation says is a growing health-care crisis in the Third World. In barely two decades, the cardiologist has created a network of 37 hospitals in India, Sri Lanka, and Bangladesh, with associated facilities in Nigeria and the United Arab Emirates. The 72-year-old Dr Reddy is also in negotiations to open his Apollo Group hospitals in Cambodia, China and Vietnam.

"There's a huge opportunity for entrepreneurship in health-care," Dr Reddy told The Straits Times during a visit to his Indraprastha Apollo Hospital on the outskirts of New Delhi. "There's a big gap between demand and supply - it doesn't take a rocket scientist to realise this. So why aren't more private-sector people getting into the health-care business?"

Why not indeed? The growth possibilities are staggering. The health-care industry in India is estimated to be US$20 billion annually. Some 12 percent of the national expenditure is on health-care, but 82 percent of this expenditure comes out of the pockets of individuals. Employers account for only 9 percent, and the insurance industry about 5 percent.

The WHO says that India needs to add at least 80,000 hospital beds each year for the next five years. Even that figure would barely keep up with the demand in a country whose population grows by 19 million each year. The National Health Policy of 2002 sees expenditures on public health facilities rising to two percent of India's GDP of US$660 billion by the year 2010, from the current 0.9 percent. It also envisions the money spent totally by both public and private sectors on health-care increasing from 5.2 percent of the GDP to 6 percent in this period.

Such increases in spending are only likely if the private sector deepens its involvement in the health-care business. And there are encouraging signs that this may happen. Emboldened by Dr Reddy's success in creating state-of-the-art hospitals that offer multi-specialty services - including telemedicine - international companies like Fortis and Wockhardt have entered the arena. In addition, indigenous concerns such as Max and Escorts are also expanding their facilities.

There isn't much doubt that there's money to be made in health-care for the private sector. For example, the Apollo Group's annual revenues are in excess of US$100 million, with yearly growth projected at 20 percent, according to Ms Suneeta Reddy, one of Dr Reddy's four daughters. The company's market capitalisation is US$200 million. Ms Reddy is the company's director of finance, and spends a great deal of her time on the road wooing investors.

She has successfully brought in blue chip companies like Schroeders PLC of Britain, and Citigroup and Goldman Sachs of the United States - where she studied at Harvard University. She's also working with the International Finance Corporation - a division of the World Bank - to create Apollo facilities in Eastern Europe. Packed into her hectic schedule is the co-chairmanship of the health-care task force off the influential Confederation of Indian Industries, whose Director General, Mr N. Srinivasan, praises Ms Reddy's "energy and resourcefulness" in behalf of the health-care industry.

Speaking to The Straits Times just after she'd returned from a visit to Singapore, Ms Reddy said that in India, as in much of the Third World, there wasn't much of an alternative to letting the private sector develop the health-care industry.

"We know how to manage skills, we know how to build the infrastructure, we know how to run schools for doctors and nurses," she said. Indian institutions turn out 20,000 doctors and 35,000 nurses each year - but many of these emigrate abroad to seek more lucrative opportunities. (The US alone needs 150,000 new nurses each year.)

Ms Reddy's father added that the government's role should be limited to raising awareness of health issues, particularly HIV/AIDS, which is becoming a pandemic in India and other parts of Asia. "Why should government be in the service sector?" Dr Reddy said.

Both father and daughter are confident that the economic climate in India and some other Third World countries is improving because of liberalisation and reforms. Dr Reddy recalls that back in 1983, when he started the Apollo Group, he had to fill 12 applications for importing each piece of medical equipment. As a result of his own lobbying - and the assistance of the late Prime Minister Rajiv Gandhi - such bureaucratic hurdles have been almost eliminated.

"Ultimately, profits are the result of good work and doing things right," Dr Reddy said. "That explains the success of the private sector, certainly in the health-care business. Our idea is to extend and improve services, particularly for the poor, keep our costs down at the same time, encourage participatory insurance for all, and generate operational efficiency."

That seems as good a mantra as any for sustaining the health-care business all across the Third World.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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