Ayushman Bharat- A Step Towards Your Medical Care

Good news, Ayushman Bharat completes one year of execution, and we must celebrate India’s leap closer to its intended targets of Universal Health Coverage and SDG3 goal. With more than 18,000 hospitals selected, over 10.9 crore E-cards issued and over 54 lakh pre-authorised hospitalizations, the scheme has already benefitted numerous underprivileged families across the country. It is indeed an admirable achievement in a short span and we, as Indians, are proud of this.

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Ayushman Bharat 2.0, it is important to combine and act upon learnings from the first phase. While the idea of Ayushman Bharat is well-intended and supported by all stakeholders, implementation calls for improvement. The government has fast-tracked some initiatives. These are aimed at achieving key tenets of UHC. These are strengthening healthcare infrastructure, capacity building, enhanced use of technologies, as well as access to free medicines and screening. However, achieving the desired results seem improbable in the current landscape. The mammoth scheme, intending to cover about 40% of our population, has many barriers to be resolved. Although many states have joined the scheme, the central and the state schemes are not completely aligned with each other, bringing in anomalies in implementation.

Successful implementation of Ayushman Bharat would first need a change in the government mindset to bring about enormous structural modifications. Its substantial financial investment along with concerted effort to work with the industry in an atmosphere of faith and trust. Although, the government recognizes the significance of private sector participation in the scheme. Some suitable incentives for private healthcare providers have not been planned well.

Private healthcare sector- that has served as the bedrock of capacity and capability in the last few decades, accounting for about 60% of all inpatient care, and being responsible for extreme enhancing the quality of care- is currently beset with multi-faceted challenges. These include low profitability, highly competitive markets, decreased investor interest, unviable price caps, unpredictable regulatory environment. The rising costs of human resources and many others. In addition, the rising trust deficit of people and the government on private providers. In this along with increasing cases of violence against doctors are making the sector unattractive for top talent in the country.

The FICCI-EY 2019 report on ‘Re-engineering of Healthcare 2.0’ has observed that while major hospital chains witnessed a surge in bed capacity addition between 2014 to 2016 (at 14%), capacity addition has been significantly decreased between 2016 to 2019 (at 8%). Despite being preferred over government hospitals. The private healthcare sector is currently witnessing declining performance both for profitability and Return on Capital Employed (ROCE). It is expected that with the allocation of only 25% of capacity to AB-PMJAY patients, multi-specialty NABH accredited hospitals are likely to witness up to 25% decline in ARPOBs (Average revenue per occupied bed day). In up to 50% decline in EBITDA and up to 60% decline in ROCE. The recent corporate tax reduction to 22% is expected to benefit some hospitals, although full recovery from the slowdown will take time.

As per the case of GST, while the government has granted an exemption to healthcare services, the cost of care to the patients has increased owing to an increased cost incurred by providers on inputs and services consumed to deliver care in absence of provision of the input tax credit. The government needs to straight away consider zero-rating of healthcare services, which will ensure that the credit chain is intact, and the input taxes are not loaded into the cost of services but are available as refunds to healthcare providers.

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