Suneeta Reddy: Linking the Health and Wealth of a Country

India waits for concrete policy measures to create a health care system rooted in affordability, quality and accessibility

Published: May 23, 2014
Suneeta Reddy: Linking the Health and Wealth of a Country
Suneeta Reddy, Joint MD, Apollo Hospitals Group Daughter of Apollo founder Prathap C Reddy, she brought in the first foreign investment in Indian health care. She is also the chairperson of Aircel Cellular and the vice chairperson for Cellular Operators Association of India

Suneeta Reddy, Joint MD, Apollo Hospitals Group Daughter of Apollo founder Prathap C Reddy, she brought in the first foreign investment in Indian health care. She is also the chairperson of
Aircel Cellular and the vice chairperson for Cellular Operators Association of India.

The 2014 general elections have been extremely exciting. By all estimates, India may witness the highest voter turnout ever in its history, bucking the trend of general apathy of voters towards the electoral process. Having keenly observed the mood of the people over the last several months, I strongly believe they are yearning for national resurgence and change.

After years of slower economic growth, India needs a strong, stable and decisive government. The expectations of the citizens and the corporate world are at an all-time high. The new prime minister has to rebuild investor confidence, get the economy back on rails, increase foreign investment, curb the devastating inflation, generate jobs, and arrest the general sense of drift and decay in governance.

Whichever party comes to power after the elections, the economy has to be the priority. India requires investments, especially FDI, in key areas of infrastructure. We should strive to remove poverty from our land altogether but this cannot be done without a paradigm shift in governance. All the governments have been providing doles and sops as a way to eradicate poverty. This is like feeding people with fish without teaching them how to fish themselves.

It is equally imperative that Indians experience world-class health care standards as they deserve the best. One can recall the upgraded standards in Japan, as consumers once exposed to quality will always demand it. Quality clinical outcomes will emerge only at a price. As we have seen in the recent past, freebies and subsidies are actually counterproductive and will have no value. I believe the poor have to be empowered over the long term through education, jobs and world-class health care.

Indeed, one of the major differences between the developed and the developing nations of the world is the existence of a robust and equitable health care system. There is a strong correlation between the health and wealth of a country. In India, we don’t appreciate this linkage and the multiplier effect that health care has on the economy. Systems of Indian medicine with the acronym AYUSH [Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy] deserve special mention, being time-honoured and respected in health care.  

While the new government needs to continue with economic reforms, financial reforms should be complemented with health care reforms. We have to boost investments in critical areas of health care including physical and access infrastructure, as well a system of education and training. Over 60 percent of health care expenditure is out-of-pocket, paid for by the individual’s own resources. It is a leading cause of people slipping into debt. We need to move towards a health care system that is accessible and affordable to all.

Availability of doctors and nurses is a huge issue. India has just 6.4 doctors per 10,000 people compared to 8.3 in Pakistan and 14 in China. The incoming government needs to reduce entry barriers for medical education and allow setting up of hundreds of medical colleges. Seats should not be a scarce resource in a country like India. And medical education should be corporatised.

Suneeta Reddy: Linking the Health and Wealth of a Country
Image: Getty Images
The poor have to be empowered through education, jobs and world-class health care. There is a strong correlation between the health and wealth of a country

Many policy measures can be immediately taken to strengthen the health care system. For starters, it needs to be accorded the ‘national priority’ status, considering its importance in improving social indicators. This will help turn India into a manufacturer of medical equipment, devices and consumables while catalysing research and development.

A major cost incurred by the health care sector is from property lease rentals. The government has exempted educational institutions from paying service tax on property rentals. Since health care is also of high social importance, a similar exemption is necessary for health care service providers. In addition, the service tax on cosmetic surgeries performed on international patients needs to be reconsidered, as medical tourists are a valuable source of foreign exchange. A liberal visa regime would help the industry get more international patients.

I hope the new government extends the duration of the tax holiday scheme for new hospitals from five to 10 years; this should include facilities like eye hospitals and day-care surgery centres. The benefits of 150 percent tax deduction for new hospital projects comprising 100 beds should also be extended to 50-bed specialty centres which are focussed on non-communicable diseases (NCDs) such as cardiovascular diseases, cancer and diabetes.

These diseases have to be tackled on a war footing as they result in individual or familial poverty, posing a severe challenge to economic development.

There should be support in the introduction of the concept of health care Real Estate Investment Trusts (REITs) in India. These are common abroad. As real estate costs form a significant part of a hospital project, investors need to establish and assess returns from the project separately as “returns from capital invested on land” and building costs as well as “returns from assets” directly used in hospital operations such as medical equipment. Amendments in the existing tax policy framework will help ensure capital gains exemption for assets transferred to the real estate company; they will also enable stamp duty concessions on property transfers as well as exemption from dividend distribution tax.

The present annual limit of Rs 15,000 towards medical reimbursement for salaried employees was fixed in April 1999. Given the significant rise in cost inflation index since then, I believe this must be enhanced to at least Rs 100,000.

Similarly, the current annual deduction limit of Rs 15,000 towards payment of medical insurance premium should be increased to Rs 50,000 for self and family as well as for dependent parents.

Finally, the new government can empower the health care sector by including hospitals as an industrial undertaking under Section 72A of the Income Tax Act.

If such enablers are rolled out over the next few months, they could positively transform the health care landscape in India and constitute a lasting legacy for the new prime minister. We cannot become a world power unless we create the requisite health care infrastructure and invest in the health of our citizens. We are all equal stakeholders in this.

(This story appears in the 30 May, 2014 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)

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