Replies to This Discussion

Permalink Reply by Raj K Bhalla on June 26, 2009 at 11:43pm

Christin

A noble idea indeed, yet lacks insight into India’s system, conditions in rural India on one hand and lack of market dynamics on the other.

India is not a poor country by any stretch of imagination, neither there is any scarcity with the government to take care of basic healthcare of its people. Given that, a lot of Indians live in pathetic conditions, yet it has to do a lot with the system. We honesty are a very corrupt, slow and inefficient system for the common man in India. Resources meant for the people are free meat for all along the chain, hence the intended beneficiaries get very little of it.

Second, the market dynamics in a globally competitive business is not going to take kindly on all the new taxes imposed. If new taxes are imposed these can end up in the hands of the very people who have pocketed public resources in the first place.

The bigger question is, is medical tourism good of bad for India.
India has plenty of surplus doctors and uncounted thousands join them every year. At times they find it hard to get a good job. I know doctors who have taken 10-15 years to establish themselves. With a bigger medical care market, these doctors can find more work opportunities. India’s healthcare facilities are growing fast and due in-part to medical tourism. Many world class new ones are being added at a fast pace. These new facilities do draw best of talent from around the world including many expatriates willing to come back to their homeland due to better working condition compared to public funded healthcare system. All this adds to world class standards, training of human resources, quality standards and results in overall better work culture in the market.

Growth will only bring competition and price pressure to everyone in the market that will make it more affordable to majority of local population. It will create more facilities, employment, competitive manufacturing of inputs, more efficient and trained workforce that fuels more revenues to the government and growth of the economy as a whole. It indirectly creates jobs in Aviation, Tourism, Transportation, Food, and pharma and other vendors to healthcare system (to name a few). All these contribute to economy and the tax base.

If your intention is to do more the rural population, one has to be proactive citizen and raise a voice against the corrupt and inefficient system. It is painfully slow and frustrating yet with dedication one can make a difference (no pun intended). We Indians pay a lot for inefficiencies indirectly and any new taxes are only going to choke the growth potential of Medical Tourism in India.

Permalink Reply by Sadaf on June 27, 2009 at 7:10am

India's corporate hospitals are meeting the requirements of international standards, with the cost of treatment about one-eighth to one-fifth of that in the US or the UK. Therefore, many foreigners are flocking to India to get affordable and high-quality health care. Treatment in India is 'cost-effective' for patients from rich countries because there is no clear-cut differentiation between Indian and foreign patients in place in India, and medical-care costs are exorbitant in their home countries.
Though the boons are loudly proclaimed, nothing is mentioned of the banes. Multi-specialty hospitals are getting generous incentives like free or very cheap land, tax holidays, rebates in customs tariffs, low-interest loans from public sector banks etc. in acknowledgment of their key role in revenue generation.
Many of the private hospitals are registered under the Public Trust Act. They are obliged to provide free service of up to 20% of their capacity and are therefore exempted from income tax.1 However, in the case of Indraprastha Apollo Hospital, New Delhi, one of the premier players in the medical tourism arena, it was found that the agreement had been undermined. This hospital was built in 1996 on 15 acres of prime land worth an estimated $2.5 million given by the Delhi government free of cost (at a token lease rent of 1 rupee per annum). The Delhi government invested $3.4 million in construction of the hospital and contributed $5.22 million as equity capital. Tax and duty waivers on import of equipment etc. were also given. The agreement was that treatment for one-third of the beds would be made available free of cost to poor patients. However, only 2% of indoor cases in 1999-2000 in Apollo Hospital were treated free and most of these were relatives of staff, bureaucrats and politicians. However, the government failed to charge the hospital for failed accountability. If the revenue of such hospitals does not revert and seep into the local population, the revenue boom may turn out to be a myth.
For medical tourism, only large specialised hospitals run by corporate bodies are promoted to enhance their opportunities beyond the limited domestic 'market'. Indian private health care costs are likely to rise as the number of medical tourists increases. Even before the medical tourism boom in India, health care was becoming increasingly expensive. In 1987, the cost of a single treatment in the public health sector in Kerala was 16.6 rupees, but this rose to 830.7 rupees in 2004.3 With growing attention given to medical tourism, quality health care will probably become unaffordable for the common person.
Emigration of Indian medical professionals to other countries is common. Due to medical tourism, Indian institutions may be capable of providing remunerative salaries which will attract back the 'drained brains' (reverse migration). But the new manifestation in the form of medical tourism is just 'brain drain plus'. This requires the skilled person to stay back within the country, get marginally higher wages, use infrastructure and other resources from his/her own country and contribute his/her whole energy to serving foreigners. In addition, the poor Indian taxpayers have to finance the training of these professionals since the latter acquire their expertise from government institutions. This provides a much higher surplus to the developed-country economy.
Another serious problem is that corporate hospitals just dump their medical waste in areas where 'ignorant' citizens live as no proper medical waste management system is in place. The local people, however, have no information at all about the threats they are exposed to living close to medical waste dumps. In India, a bed in a hospital generates on average 1 kg of waste per day, out of which 10-15% is infectious, 5% hazardous and the rest general waste. To put that in perspective, a big urban corporate hospital generates two million tons of waste each year.4 As in many developing countries, the waste is not separated: from reception-area trash to surgery-room waste, all is burnt in incinerators or dumped into rivers or the sea. These external costs are not included at all in the overall running costs, so the businesses are seen to be running very cost-efficiently!
Western countries are increasingly concerned about the quality, expertise, and health standards provided (to their residents) in developing countries. Their governments are thus likely to implement internationally accredited quality systems for hospitals. This, however, will lead to even higher treatment cost.
Medical tourism is demanding more subsidies and incentives from the government with the argument that it earns high revenues and foreign exchange. But subsidising the corporate sector will reduce even more the already-limited health service resources for the poor. How could a country like India dare to promote medical tourism when even the basic health care needs of the majority of its citizens have not been met? Why should the poor Indian taxpayer pay the price for treatment of medical tourists? The need of the hour for India is to focus on assuring basic health care as a right to its citizens.

Permalink Reply by Manav Surti on June 27, 2009 at 2:40pm

Hi Christin,

My opinion is that taxing the medical tourism industry is not an ideal solution to the healthcare problems of rural India. The benefits of medical tourism are only reaped at the cusp of significant cost reduction for those seeking affordable healthcare and yet a profit for those providing healthcare.

Obviously, taxing the medical tourism industry will disturb this balance by increasing the cost to provide affordable healthcare which will inevitably be passed on to the consumers.

I feel that the hospitals and Medical Tourism companies should take on this responsibility as a philanthropic gesture and support those who are unable to afford basic and life saving healthcare. Of course, what steps can these organizations take to do this is another topic of debate.