The Hindu Business Line : Insurance, key game-changer in spread of healthcare

We need a much higher level of penetration for healthcare to become affordable for the common man. Insurance companies must find ways to reimburse diagnosis and preventive care.

S. NANDAKUMAR, CEO, PERFINT HEALTHCARE PVT LTD, CHENNAI.

A healthy thought that Mr S. Nandakumar, CEO, Perfint Healthcare Pvt Ltd, Chennai ( www.perfinttech.com) has top on his mind is that India offers valuable and well-documented examples to the rest of the world in healthcare services. Narayana Hrudayalaya, Arvind Eye Hospital, and Jaipur foot are popular successes, he cites, as sustainable models that have been tested for several decades, with the Indian market at it core.

Several of them have now also secured JCI (Joint Commission International) accreditation and hence insurance companies around the world would find it comfortable and safe to advise their clients to consider hospitals here as an alternative to the more expensive centres in the advanced markets, Nandakumar informs, during a recent email interaction with Business Line. “These deemed export of services will definitely be more profitable than serving Indian customers.”

Cautioning against creating health service export corridors, which are inaccessible to Indian public either due to cost or regulation, he suggests that we look at this development as an opportunity to bring in the best of technologies and experts and also to subsidise healthcare for the deserving Indian. “You pay much less to visit the Taj Mahal as an Indian, than if you were to pay in US dollars!”

Excerpts from the interview:

What are the major obstacles to the absorption of technology in healthcare? Can insurance companies and regulation/standardisation contribute to making a difference?

India has found it easier to adopt the most recent technologies, compared to the more advanced societies — simply because we hadn’t invested much in the past, and so there is very little concern on the need to secure return on investment from outdated technology or write off earlier investments.

Quite similar to what we have been witnessing in the telecommunications industry, we see state-of-the-art medical equipment being installed in India within a few months of the launch in advanced markets. At the same time, we see practitioners in India are willing participants in shaping relevant products at cost levels that are appropriate for our needs.

Thus, in a way, there is a lot going our way; and it is up to us to grab the moment and demonstrate leadership in the delivery of quality healthcare at much lower cost. Disproportionate focus on cost invariably leads to diluted standards of safety and quality and that’s where a strong regulator like the USFDA is required here.

There are at least two sets of regulations that are being worked on — CDA (Central Drugs Authority) and MDRA (Medical Device Regulatory Authority). The quicker we implement regulatory standards the better it is.

At the moment, people like us rely on safety and regulatory standards and approvals such as a CE (Conformité Européene), or a UL (Underwriters Laboratories) marking. Similarly, we need standardisation in the way devices are tested before launch.

Insurance is a key game-changer. We need a much higher level of penetration for healthcare to become affordable for the common man. That’s obvious and everyone is working on it.

Insurance companies must find ways to reimburse diagnosis and prevention.

For example, our device assists in early stage cancer diagnosis. If diagnosed and treated early more than half those diagnosed can be saved. Now that reduces the overall cost of care and hence it should make a lot sense for diagnosis to be covered as a part of critical illness cover.

Today, unless a patient is admitted in a hospital, a biopsy procedure isn’t reimbursed! So there is little incentive for diagnostic centres to offer this service even as several millions report in with cancer every year. Of course there is an issue of misuse and that must be plugged creatively.

The benefits far outweigh the risks. And may be the regulator could facilitate the change by bringing together various people in the industry.

Your views on the role of education, financing and fiscal policies in promoting innovation and product development, especially in computing-related areas.

Education is exactly where we need to focus for medium- to long-term benefits. For the short-term, however, we need to actively engage in making reverse brain drain attractive. If markets are here and money is here, talent will follow, we need to accelerate that. Problem of plenty is only welcome.

Coming back to education, this is an area that everyone talks about but little action is happening on the ground. Our engineering colleges don’t really train students in computing.

They are trained in coding of the type that’s required for enterprise applications — not for technology or scientific applications. It’s all about employability.

If you are able to write or test a decent piece of enterprise software, you get hired by MNCs (multinational corporations) and Indian companies in the IT space.

If you are scientifically inclined you end up at the DRDO (Defence Research and Development Organisation) labs. So the choice is a no-brainer.

If you are really lucky then you are at the offshore R&D (research and development) centre of MNCs that really only service the needs of the US and European markets. It’s the minority that ends up here.
So, if ensuring employability is a guaranteed route to revenue, then engineering colleges focus on that; and thus students have been largely rendered unfit for any core technology or product company but effective enough for services companies.
The current slowdown must be seen as an opportunity to question these assembly lines on which students are manufactured. Investment must be made in top quality research in educational institutions. That doesn’t happen overnight. We have always had it lucky by starting late and allowing market access. Welcome FDI (foreign direct investment) in technical education but tie it to quality and quantity of research. Why can’t India be the hub of top quality education for all English-speaking students from the Middle East to the Far East?
Technology start-ups have to compete for talent with MNCs. Can subsidies be then made available to non-IT service start-ups that hire top talent, so these students are reassured? Can top talent that chooses to stay back in India and work in non-IT service companies, such as ours, be rewarded through personal tax exemption or in monetisation of options or be provided capital subsidy for acquisition of a car or a home? Can we make available research funds directly to experienced professionals and faculty from international institutions ready to come and work with start-ups here for, say, five years or more?
Start-ups can then hire local talent that can be trained by these people. We need to make it possible for start-ups to access talent and, at the same time, make it attractive for talent to work in high-tech areas and with start-ups. Also, many of the high-tech areas require substantial cross-domain research, we need to encourage that.
For example, can we incentivise experienced clinical specialists from the best medical institutions to take up full-time assignments with medical device start-ups for, say, three years? AIIMS, IIT Delhi and Stanford University, which are jointly running the Stanford India bio-design programme under the Department of Biotechnology, is one such initiative. We need several of these.
Risk capital: It’s heartening to see the Government making money available for cutting-edge work like the BIPP (Biotechnology Industry Partnership Programme) or SBIRI (Small Business Innovation Research Initiative) schemes from the Department of Biotechnology or funds from TDB (Technology Development Board).
Some of them act like venture capitalists, taking significant risks. That’s a great start. Some of them are going through the learning phase, so they tend to be slow. But schemes like these that could make a big difference if they adapt to realities of the industry quickly. For example, insisting on IP rights even after a loan is repaid is simply unviable. At least in the medical/healthcare industry, high quality projects have enough risk capital around.
Capacity creation: We need hubs that can address common needs at reasonable cost — in medical devices, for instance, you need high quality prototyping centre, reliability and safety testing labs, clinical trial facility, training infrastructure, teaching medical schools to co-work with, etc.
A medical technology park was talked about, but we are yet to see anything in the ground. It’s in these areas that we need a focused and results-driven approach by the various ministries of the government. Alternatively, private investment should be encouraged, say, through cost sharing. Or even better, allow FDI in these areas.

D. MURALI

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