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Budget 2020: Will Sitharaman Make Healthtech More Accessible, Affordable For Indians?

Budget 2020: Will Sitharaman Make Healthtech More Accessible, Affordable For Indians?

Startup innovation is crucial to healthcare and the government needs to support startups besides improving public access

Healthtech startups believe that digital infrastructure improvements can prioritise mHealth development

Critical healthcare equipment should be exempted from GST, healthtech startups told Inc42

At a time when India accounts for a substantial part of global deaths from chronic diseases and child malnutrition, spending just 1% of the GDP on healthcare clearly doesn’t justify the basic requirements of the country. In recent years, to the credit of the Narendra Modi government, policy-related initiatives have looked to change the game in lieu of funding allocation. Of course, when it comes to the future of healthcare, the government has to start focusing on enabling healthtech innovation to boost and supplement policy decisions.

The Modi government, in 2017, announced a new National Health Policy which identified the key issues such as the need to focus on the growing burden of non-communicable diseases, growing people’s expenditure in healthcare and more. Then In 2018, it launched a National Health insurance for certain entitled people chosen as per the government’s socio-economic and caste census data.

As PM JAY (previously Ayushman Bharat) completed a year in September 2019, the health minister Harsh Vardhan in the annual report gave an account of its success and performance. “During the year gone by, NHA has covered substantial ground. 10.3 Cr e-cards have been issued to beneficiaries and treatment amounting to INR 7,490 Cr was pre-authorised in different parts of the country. Every second, three e-cards are being distributed and every day, 51 hospitals are joining the network which brings healthcare to PM-JAY beneficiaries.”

However, the national insurance policy has been heavily criticised on multiple grounds, mainly:

  1. A significant part of rural India simply doesn’t have access to health services
  2. Hospitals are grossly misusing the cards, siphoning off public funds

The government has also released a report pertaining to National Health Digital Blueprint which aims to create digital health data and the infrastructure required for its seamless exchange. In 2019, the government provided INR 90 Cr to set up 1,032 AYUSH health & wellness centres, 91 integrated AYUSH hospitals.

Despite these initiatives and eight new AIIMS being established across India, building healthcare infrastructure for 1.3 Bn population is no less than a Himalayan task.

There is a severe dearth of at least 6 Lakh doctors and 2 Mn nurses. Lack of basic healthcare services, lack of doctors, nurses and inadequate online health data have brought in healthtech entrepreneurs to enable tech solutions that could help solve healthcare issues.

India’s healthcare market is set to hit $372 Bn by 2022 and it is expected to create 40 Mn jobs by 2030. Currently, there are around 3K startups many of which have successfully brought healthcare services to patient’s homes.

However, healthtech is here to complement healthcare and not to replace it. And, the government needs to look at how both could co-create services that could help solve India’s looming healthcare issues.

In the last Budget 2020, the finance minister Nirmala Sitharaman came up with some cosmetic reforms. Among these were:

  • The deduction limit for savings under section 80C was increased from INR 1 lakh to INR 1.5 lakh
  • The deduction limit for medical insurance was increased to INR 25K
  • For senior citizens, the deduction limit was increased to INR 50K
  • The medical deduction limit for senior citizens for critical illnesses was increased to INR 1 Lakh

Needless to say, the Union Budget 2019 was a major disappointment for the healthtech startups.

Abhishek Shah, CEO & cofounder, Wellthy Therapeutics told Inc42, “While the Budget 2019 saw no mention of healthcare, in 2020, the government’s four priorities are expected to be — shiksha (education), swasthya (health), suraksha (security) and swavlamban (self-sufficiency). The release of the National Digital Health Blueprint and healthcare incentives in 2019 were important developments for a more digitally ready healthcare economy.”

With the economic slowdown, technology, now more than ever, needs to play a large part in setting up a highly accessible, all-encompassing and low-cost healthcare ecosystem in India, Shah added.

Clearly, the major reform initiatives are part of the Union Budget 2020 expectations. What should be the top priorities for healthtech in Sitharaman’s second budget? We spoke to a slew of healthtech startups to understand the issues.

Make Home Healthcare Affordable

In India, good hospitals are struggling with high patient inflows. Quality home healthcare services could help bring down the imbalance. However, despite a slew of startups providing home healthcare for the past few years, the government is yet to help build this subsector to address the healthcare issues.

Speaking to Inc42, Meena Ganesh, MD & CEO, Portea Medical said that a major focus has to be on the home healthcare industry which is one of the ways to realise the government’s vision of affordable healthcare for all. However, current tax policies and regulations do not cover home healthcare and diagnostic tests and other at-home aspects still form a large part of people’s out of pocket expenses.

Home healthcare is not recognised as a mainstream sector and should be brought under the ambit of governmental schemes like PM-JAY and Ayushman Bharat. “We also expect to see an increase in the limits on reimbursement of expenses on diagnostics, preventive health check-ups, etc. and for home healthcare to be made a part of this exemption. Critical healthcare equipment such as ventilators, wheelchairs, crutches, and medical equipment spare parts should be exempted from GST. This will help make quality healthcare more accessible,” Ganesh added.

Support Innovation And Building Healthcare Infrastructure 

“Innovative, tech-based, large-scale and affordable healthcare solutions are the need of the hour in India and our expectations from the budget also revolve around the same.” – Amit Choudhary, founder and CEO, Dawaa Dost

Choudhary added that considering the fact that India, particularly rural India needs affordable healthcare, this can’t be provided without extending support to local innovations.

Neha Rastogi, founder and COO-Agatsa, which innovated the world’s smallest and leadless ECG machine, asserted that India’s current healthcare infrastructure and allocated budget need to be addressed on priority as they are not adequate to ensure universal healthcare services to all.

“This is where innovations in medical devices and services come into the picture and we hope the budget will focus on this aspect. The need of the hour, therefore, is to provide adequate funding and support to fuel further innovations under the Make in India and Digital India campaigns,” she told Inc42.

While the market for healthcare startups and digital healthcare devices is robust, it needs more support from the government to promote indigenous innovations and provide an impetus to domestic device manufacturers, Rastogi said.

“We would like to see the government procure more Indian products from the market so that our dependency on foreign imports can be brought down to a minimum. This will not only boost the Indian startup niche but also make healthcare services more affordable for the common people.”

Thus, to support local innovation and healthtech startups, the government needs to support them in some form and buying products and services from these startups can be one way. Gaurav Gupta, cofounder, Navia Life Care said he expects the government to partner with healthtech startups to implement their projects and help them establish quality care for the people. Union Budget 2020 should aim to create healthcare facilities in small towns and rural areas.

Healthcare Needs Digital Infrastructure

“There is a lack of doctors in public centres and they are currently not able to serve the demand. Technologies for doctors like video conferencing and diagnostic tools help the doctors to diagnose the patient and assist with services across the country,” said Gupta.

In the last few years, numerous startups such as Practo and others have used the internet to optimise healthcare service delivery in India, increasing the reach of healthcare providers.

Speaking to Inc42, Bhavjot Kaur, cofounder of Clinikk, wanted to see fresh investments in initiatives promoting digitisation of healthcare like the national digital health mission — this could have multifold benefits such as improving transparency, reducing fraud, she said.

Abhishek Shah wants the government to leverage mHealth technology or mobile interventions in healthtech in order to increase accessibility. With about 80% of the medical workforce in 10 cities serving only 28% of the total population, access to quality healthcare is still an aspiration for many. India will double the number of smartphones by 2023. The mHealth market is growing rapidly at a CAGR >42%.

“Policies and budgets towards the adoption of clinically-validated mHealth tech will help address last-mile access challenges, improve the quality of care and reduce costs for patients.”

Will Sitharaman Simplify Regulations Around Healthtech? 

At a time when the Drugs Controller General of India (DCGI) has directed states and union territories to prohibit the sale of medicines through unlicensed online platforms, friendly norms and simplification of existing regulations are the need-of-the-hour for a number of healthtech and related startups.

Dawaa Dost’s Choudhary is hoping that the Budget 2020 will also have some concrete action plans to realise this vision.

“We hope the government simplifies regulations for pharmacies buying medicines from GST paid channels. There should be 100% input credit for such entities and the working capital must be freed even under circumstances where the manufacturer or authorised distributor have erred on paying the deposit. The retailer has no recourse to anyone else nor the margins to absorb the entire GST as is the case today.”

Similarly, Vikas Bagaria, founder of Pee Safe, a sanitation and personal care brand, said, “our expectation from the budget 2020 centres around government policy and regulation to enable ease of doing business through centralised policies. This will also attract more foreign investment opportunities in the segment. There is also a need to simplify the taxation process and make early-stage funding easier.”

Focus On Preventive Healthcare

The government has already established a separate ministry namely Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH) to promote and enable preventive healthcare services in India.

Data from the World Economic Forum indicates that over 77% of Indians will be under the age of 45 by the next decade. However, despite being one of the youngest countries, we are also the most unfit with estimates suggesting that 1 in every 3 Indians are medically unfit and suffer from preventable lifestyle disorders.

Appreciating the government’s effort, Sarvesh Shashi, founder of SARVA, a yoga and wellness startup said, “Preventive health and wellness is the need of the hour for each given the high instances of disease and lifestyle-induced illnesses in our country. In order for holistic health to be made more attractive to consumers, it is important that the tax component on commercially-run yoga practices and institutes be revisited since yoga can help address chronic medical ailments and fill the gaps in traditional healthcare.”

Shashi added that under Section 80D of the Income Tax Act of 1961, taxpayers can claim tax deductions on health checkups and health premiums, but preventive wellness is still placed under a high tax bracket. “This year however we hope that the budget goes beyond providing tax deductions to those getting back to good health after falling sick but also supports and incentivizes those who take care of their own fitness,” Shashi told Inc42.

Utilisation Of Fund Remains An Issue

Like the Fund of Funds for Startups (FFS), most of the government’s funds go unutilised despite its announcement and allocation in Budget. Ayush Mishra, CEO and cofounder of Tattvan E Clinic pointed out that as an emerging economy, India has a considerable expenditure when it comes to telemedicine. More than INR 1700 Cr is dedicated to the growth of telemedicine in the country by the government of India. The problem, however, lies in the optimisation of this budgeted amount. Like Tattvan CEO Ayush Mishra says there’s a lot of gap between idea and execution in the Indian context.  

“What is lacking is the proper utilisation of the funds allocated by the state within the desired time frame. There is a long drawn process which leads to the delay ultimately causing the allocated resources and capital to lapse. The way forward is to have proper guidelines in the field of telemedicine to ensure proper channelisation and utilisation of the funds allocated in the next budget.”

Will Sitharaman pay heed? We shall find out come February 1.