The document lays out a 100-day agenda for Modi's second term healthcare reforms. It discusses focusing on encouraging private sector participation through investments in social infrastructure, clinical staff supply chains, and longitudinal research on price controls and innovation. Specific policies and actions are recommended around healthcare infrastructure financing, skills development, and establishing a national research agency for healthcare. The conclusion calls for government-industry dialogue to kickstart investment through strong reform agenda.

1. Laying out the 100-day agenda
for Modiʼs Healthcare Reform 2.0
After the much-heated and prolonged general electionsʼ campaign
in the country, itʼs time to get back to the business of governance.
While in the run-up to the general elections, there were several
popular announcements on price controls, Ayushman Bharat and
Jan Aushadhi, there needs to be a holistic framework of reforms to
be planned in Modi 2.0. Healthcare can serve as a black swan for
the incoming government in India, provided the reform agenda set
has a clear policy for private sector participation, which is required
to encourage investments and balance out social infrastructure
development in healthcare and meet inclusive development.
Action plan for the 100-day agenda for funding Modiʼs
Healthcare Reform 2.0
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2. Action plans and policies for encouraging private sector
participation in this sector in three key areas would need focus:
G. Investments in social infrastructure and upgrade of healthcare
with impact on outcomes
H. Investments in clinical and support people supply chain to
increase job creation in the sector
J. Longitudinal research studies on healthcare products and
services, which can provide guidance on price controls and
regulation to attract investments in healthcare innovation
Investment in healthcare infrastructure and upgrades
One of the key points that I have been highlighting in several of my
articles over the last few years is that India needs $300 billion of
investments in healthcare infrastructure to just meet the basic bed
to population ratio of 3 beds per 1,000 persons. There is a lag factor
of two to three years before this capacity is productively available to
society. Ayushman Bharat has helped in absorbing spare capacity in
the private sector. Capacity building was held back by financing
constraints due to non-banking financial company (NBFC) and
banking crisis last year, and the financing requirements of Rs 5,500
crore could not be met. In the short term, the private sector would
only be able to service limited population under Ayushman Bharat
unless rates are enhanced or capacity is enhanced in the short
term.
In the short term, monetisation of healthcare assets to finance
additional capacity or upgrade of capacity becomes the only viable
solution to shore up over $1 billion in the short term before the long-
term investment cycle of healthcare infrastructure creation kicks in.
However, one of the key things that the industry is demanding is
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3. reducing the Goods and Services Tax (GST) to five per cent on
rental of healthcare properties to fund capacity expansion. These
demands of the industry have been declined over the last year.
Next 100-day agenda: Policy on healthcare infrastructure
financing and GST taxation rationalisation, incentives
What went wrong: Funding crisis, long-term funding structures,
GST regulation and reimbursement rates
Whatʼs going right: Consumer spending on health and wellness,
preference for private-sector providers
Investments in clinical and support people supply chain
Job creation in India is going to be a critical agenda for Modi 2.0. In
my earlier articles, I have mentioned that Indiaʼs share of the global
disease burden is around 20% for its share of the global population;
however, the supply of trained clinical labour pool is less than half of
the disease and healthcare burden in the economy. In some of the
occupational groups such as lab technicians, India has only one per
cent of the globally trained supply of human resources!
India has been fortunate to export one-third of its nursing
population abroad every year, which adds to Indiaʼs forex reserves
through their salary repatriation. Hence, there is an acute people
supply chain issue. For the scale of investments expected to come
up in the next few years, the roadblocks facing policies for and
investments into the people supply chain need to be removed
immediately. We have noticed that most healthcare facilities have
slipped on their timelines to stabilise due to supply of inadequate
skilled medical, para-medical and support staff, which is well-
trained and credentialed.
While investment in every new bed added will create jobs for 30
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4. different skills, we have acute capacity issues that need to be
bridged through investments.
Next 100-day agenda: Policy on healthcare skill development
What went wrong: Funding crisis, long-term funding structures,
skill council regulations, making healthcare jobs glamourous
like IT jobs in early 2000s
Whatʼs going right: Skill definitions, technology investments for
skilling and upskilling
Longitudinal research studies on price controls and regulation
to attract investments in healthcare innovation
Investments in healthcare innovation are of a very long duration and
require deep pockets till commercialisation, given the risks of
failures. Across the board, price controls will dissuade investments
in innovation in healthcare products and services. We still do not
know what population lost lives before stent pricing control and how
many lives were saved due to price control. In many countries, there
is an apex research agency set up for regulating healthcare
innovations and granting exclusivity to innovations. Once these
innovations go out of exclusivity, then pricing controls and
competition and market forces create environment for reduction in
prices.
Next 100-day agenda: Policy on investments in healthcare
innovation, national research agency for healthcare and pharma
for longitudinal studies
What went wrong: No transparency, no information on impact
of price controls on affordability and access to healthcare
Whatʼs going right: Patent regime
Conclusion:
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5. We are looking forward to government-industry dialogue to kick-
start the investment process through a strong reform agenda for
healthcare in Modi 2.0
Kapil Khandelwal is managing partner of Toro Finserve LLP
(manager of India Healthcare Opportunities Fund, the countryʼs first
healthcare infrastructure fund). Views are his own.
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