The new India The six-story building, constructed with ample amounts of marble and glass, has a tranquil atmosphere that one would not normally associate with an Indian hospital. Dozens of people dressed in garb that ranges from long kurta shirts to jeans, sit in an airy waiting area illuminated by soft lighting. For an anxiety-ridden patient, the clean, air-conditioned surroundings are comforting, particularly because the normal chaos of India waits just outside.
This is Max Hospital in the New Delhi neighbourhood of Saket, part of the Max Healthcare hospital chain started in 2000. There are eight Max facilities in the Delhi area that attend to about 400,000 patients each year.
About 2,400 international patients came to Max last year for cardiac care, orthopaedic surgery, neurological treatments and other procedures. “Medical tourism” in India is on the increase. At Max alone, overseas patients grew 80 per cent last year and the group expects 4,500 this year. Most came from Iraq, Oman, Afghanistan, Bangladesh, Africa and North America.
With healthcare costs climbing all over the world, India’s private hospitals can offer international patients affordable quality care. The fee for cardiac surgery at Max, for example, is roughly $6,000. The same surgery might cost $100,000 in the US for an uninsured patient, $20,000 in Thailand and $30,000 in Singapore or the United Arab Emirates, says Hari Boolchandani, Max’s head of international patient services.
The dramatic difference in cost is due largely to lower staff salaries in India and the absence of exorbitant medical malpractice insurance fees paid by doctors in the US.
Medical tourism will grow at an annual rate of 30 per cent in 2009-10, predicts the Associated Chambers of Commerce and Industry of India. Revenue from the sector will swell from Rs15bn ($301m) to Rs95bn by 2015.
But medical tourism has its drawbacks. Post-treatment care is a challenge, and there is the nagging concern about what happens if something goes wrong far from home.
For those who do seek medical service overseas, India has a growing number of private hospitals boasting modern facilities staffed by skilled doctors. Apollo Hospital, launched more than two decades ago in Chennai, has 43 facilities across India and one in Bangladesh.
Fortis, another big chain, has 27 facilities, including one in Mauritius. The group bought Escorts, a Delhi region hospital group that specialises in heart treatment, in 2005 for $127m.
Services are also in high demand from India’s growing middle class. But the country has a shortage of quality hospitals for its 1.2bn population. Free government hospitals tend to be overcrowded and shabby. In rural areas, healthcare is especially dismal.
India has 0.86 hospital beds per thousand people, compared with 3.2 beds in the far less populous US, according to a report from Ernst & Young and The Federation for Indian Chambers of Commerce (Ficci).
A growing population, increased reporting of illnesses, easier access to healthcare as a result of urbanisation and an increased focus on non-communicable diseases is likely to result in a 30 per cent increase in the number of ailments, reaching 1.5bn cases by 2015.
Ironically, increasing affluence has also led to a rise in “lifestyle” diseases such as heart disease, diabetes, asthma and obesity, and will also fuel the need for more medical care in India.
The country’s private hospitals may seem a bargain to patients from developed countries, but their prices are still beyond the reach of the average Indian citizen. With that in mind, LifeSpring and Columbia Asia, two new hospital groups, have emerged with low-cost models that cater to the base of India’s economic pyramid.
LifeSpring is a chain of small hospitals in southern India that specialises in maternal and child health. At LifeSpring, a woman can deliver her baby for Rs2,000, compared with an average cost of Rs12,000 at neighbouring private hospitals in Hyderabad. The average cost of a Caesarean birth is Rs20,000 versus Rs7,000 at LifeSpring.
LifeSpring targets lower-income Indians who previously had to choose between overburdened government hospitals or private facilities far beyond their means.
The idea for the model ironically came from Hindustan Latex, the public sector company that is the world’s largest maker of condoms.
It is a big change for Anant Kumar, chief executive of LifeSpring. His work has gone from “trying to stop babies to having more babies”, he jokes.
At Hindustan Latex, Mr Kumar saw an urgent need for maternal health services among his customers. India has both an enormous volume of births as well as high maternal and infant death rates, so Hindustan Latex began thinking about ways to offer quality, low-cost health services to a vast set of needy patients.
More than 100,00 women die in India every year from pregnancy-related complications. Many of these deaths could be averted with proper care. India’s infant mortality rate per thousand live births was 56 in 2007, double that of Brazil and China, according to Ernst & Young and Ficci.
Since LifeSpring established its first hospital in 2005, six more have been built in Hyderabad and elsewhere in the state of Andhra Pradesh. LifeSpring is a 50:50 joint venture between Hindustan Latex and Acumen, a US venture philanthropy fund that invested $2m in the company. With support from Acumen, LifeSpring plans a rapid expansion. It aims to have as many as 250 hospitals by 2012 and estimates that it will serve at least 82,000 women.
Today, LifeSpring claims 40-45 per cent share of all births in one district of Hyderabad, said Varun Sahni, India director of Acumen. So far, there have been no maternal deaths at LifeSpring.
Focusing solely on maternal health means LifeSpring’s costs are significantly lower than large rivals that house a range of specialists. LifeSpring hospitals are small buildings with efficient operations – pharmacy and cleaning are outsourced, for example.
Columbia Asia, a US hospital group with facilities in Asia, also operates on a low-cost model. “We were attracted to what appeared to be a vacant part of the market: the middle market,” says Rick Evans, chairman.
With a doctor’s consultation priced at about $3, Columbia Asia can barely keep pace with demand. Its facility in Bangalore was designed to see 300 outpatients daily but about 800 queue up each day. With a low-cost, high-volume model, it took 15 months for Columbia Asia’s first hospital to break even.
About 70 per cent of Indians pay cash for healthcare; few have health insurance. So Columbia Asia is scrupulous about keeping costs and, therefore, fees, low. Hospitals are located on the outskirts of cities near major roads. Its small two-storey 20- to 30-bed hospitals look like nondescript office buildings.
“We don’t over-construct our buildings. We maximise space so it’s very efficient,” says Mr Evans. The group has opened six facilities in India, mostly near Bangalore, since 2006. It will open two more in the next couple months in Mysore and in Punjab and another 12 are in development.
Rules on setting up hospitals vary from state to state but Mr Evans says that government bureaucracy is not a significant hurdle for building hospitals. Indian hospitals do not require a licence, though services, such as radiology, do. Also, there is no cap on foreign direct investment in healthcare.
By far the biggest obstacle is acquiring land and sorting through thickets of titles that may extend back centuries.
Nevertheless, Columbia Asia is bullish on India. “Standards of living are rising in India, so healthcare rises in priority,” says Mr Evans. “If you’re not over-extended and charging too much, demand is huge. India may be the best market in the world now to build healthcare facilities.”
Amy Yee is an FT contributor
