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 Health is Wealth
Health care in bad health
Business Standard, India Friday, September 24, 2010

There are practically no entry barriers in newspapers, magazines and television channels. It takes little to set up a television channel and even lesser to start a newspaper. But such is not the case of a hospital.The investment needed is huge, and land is a huge issue. Hiring good doctors too is a major problem. The law of supply and demand haven't taken off as of restrictions, writes Bhupesh Bhandari in Business Standard.

The prolonged monsoon and the diseases that come with it have really tested Delhi’s health-care infrastructure. There is a huge shortage of beds in government as well as private hospitals. You can find patients wreathing in fever in the corridors, emergency wards, everywhere. Why aren’t there enough hospitals around? Contrast this with the media: Nowhere in the world will you find so many newspapers, magazines and television channels than India. The reason is that there are no entry barriers. It takes little to set up a television channel and even lesser to start a newspaper.

Hospitals seem to be a different story. There are 1.37 million beds in the country: 833,000 in private hospitals and 540,000 in government hospitals. This means, there is about one bed for every 1,000 Indians — pretty bad even by emerging market standards. But that’s not the full story. According to Technopak Advisors, only 60 per cent or so of these beds are functional and relevant. That makes the average worse. And, 40 per cent of these beds are in the top-20 cities where about 10 per cent of the country’s population resides.


Now look at it from the other end of the pipe. There is a huge upside to the hospital business in the country. Lifestyle disorders are on the rise; 16 per cent of the country’s population has some form of medical cover, which means well over 190 million can afford proper treatment. Every 1 per cent of population that enters the “prosperous” category means 12 million possible customers. So, why aren’t hospitals coming up with the same rapidity as news channels?


Hospital chains say there are still sizeable entry barriers. One, the investments required can be substantial.


Land, of course, is a huge issue.


The other big challenge is doctors. As a breed, they are paranoid about their reputation. So, most of them want to be associated with only those hospitals which have state-of-the-art technology — there is, therefore, really no scope for cutting corners in the business. And any new hospital needs these doctors to build its brand equity. Topnotch doctors now cost as much as the CEO of a company: Up to a million dollars. If that is the scarcity, why hasn’t the law of demand and supply taken over? Why does India not produce armies of doctors?

This article was published in the Business Standard on Friday, September 24, 2010. Please read the original article here.
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