India budget 2023: Budget 2023: A Blended approach for India’s healthcare

The Union Budget for the financial year 2023-24 will be keenly watched for its commitment to the healthcare sector. In line with the assurance in National Health Policy 2017, the Government of India (GoI), through state and local governments, has been focusing on strengthening healthcare infrastructure and services at the primary care level by investing in health and wellness centers and making commitments under 15th finance commission (FC-XV).

Further, PM-JAY (Pradhan Mantri Jan Arogya Yojana) has provided the citizens with purchasing power to procure secondary and tertiary healthcare services. However, the availability of quality healthcare services especially in rural parts of the country is an area that needs improvement. It was expected that the private sector would meet the supply-side gap. The revamped Viability Gap Funding (VGF) scheme, which was launched to further catalyze private sector investments, has been serving more than 2/3 of out-patient and half of in-patient cases. However, more can be done here.
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Expansion schemes for healthcare

This budget may consider launching an expansion scheme for health care. Like the PLI schemes for industries, incentives for the upgrade of small clinics/nursing homes into 50-bed hospitals and smaller hospitals into larger hospitals may be launched. The support can be in the form of capital, taxes and operating incentives. This would not only increase the supply in the rural areas but also bring focus on the quality of care for these small healthcare service providers. The blending of private sector providers should be incentivized in a way that the services are complementary and supplementary to those provided by the public sector thereby not creating redundant infrastructure in the long run.

Incentives to boost medico-cities

Further, the budget may consider incentivizing the development of medico-cities in larger cities through capital incentives, the creation of common infrastructure, and the blending of the VGF scheme for individual units that set up institutions within the designated medico-city. These medico-cities may be given benefits on par with SEZ (Special Economic Zone). Such arrangements would not only create a hub-spoken model for tertiary care but also incentivize medical value travel (MVT) in the country. It would boost the economy, generate employment, and enhance the image of India as a destination for healthcare seekers.

Role of technology in healthcare
COVID-19 and the pandemic have shown the importance of leveraging technology for healthcare. Telemedicine was widely adopted in the healthcare sector. With Ayushman Bharat Digital Mission (ABDM) recently announcing a digital health incentive scheme to increase the uptake of ABDM, there is a need to unleash the private entrepreneurial and digital power by incentivizing the development, roll-out, and adoption of digital public goods. This blended approach to providing healthcare through digital and physical modes would go a long way in making healthcare affordable, equitable, and accessible to the larger population.

Focus on R&D

COVID-19 also established the importance of R&D focus in the pharma sector and the need to be a hub for medical equipment manufacturing. More than 4000 start-ups are registered in the healthcare space. The budget should create separate funds to incentivize R&D and scaling at a large scale with challenging fund-like initiatives. Manufacturing of equipment may be incentivized with lower import duty on necessary components. The regulatory mechanism should also be streamlined. With the disruption of the supply chain due to COVID and the fear of ensuing pandemic waves, R&D in the healthcare and pharma sector is important to ensure the availability of medicines including API formulations, equipment, and necessary consumables.

Significance of human resources


Apart from infrastructure creation, the focus must be on human resources. India has been doing well in the expansion of MBBS seats across the country. In this regard, the focus needs to be on the quality of education. However, post-graduate courses are still limited. The Budget may incentivize the setting up of DNB or PG courses in district hospitals wherever feasible. The incentive would be in terms of supporting infrastructure creation and funding for DNB & PG courses. Further, investment in nursing and paramedical quality education and upgrading needs to be another area of ​​focus considering the emerging challenges and technological advancements in the sector. India can be an exporter of nursing and paramedical services, provided quality of training is ensured.

The blending of the old and new

Last but not the least, the R&D focus on blending AYUSH practices & modern medicine needs to be accelerated. Patients suffering from various communicable and non-communicable diseases as well as requiring palliative care may benefit from such approaches. A strong focus on incentivizing such a blended approach to treatment is needed.

(The author is a partner – government and public sector at EY India. Views expressed are personal)

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