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Ayushman Bharat to transform healthcare investments: Panellists at VCCircle event
(Left to right) Harish Pillai, CEO, Aster Hospitals & Clinics, India; Sumit Nadgir, director, True North; Nitish Agrawal, managing director, Indium Capital; Vishal Beri, CEO, Hinduja Healthcare; Archna Shukla, editor-in-chief, News Corp VCCircle

Ayushman Bharat, the government’s ambitious health insurance scheme, is a game changer that will distinctly transform how investments are made in healthcare, panellists at VCCircle’s Healthcare Investment Summit 2018 said on Tuesday.

The tenth edition of the day-long annual event took place in Mumbai, with industry leaders, legacy and new-age entrepreneurs, and leading private equity and venture capital investors discussing strategies to seize opportunities in the Indian healthcare market.

The panel that discussed the government’s healthcare drive comprised Harish Pillai, chief executive officer (CEO) of Aster Hospitals & Clinics, India; Sumit Nadgir, director at True North; Nitish Agrawal, managing director at Indium Capital; and Vishal Beri, CEO of Hinduja Healthcare. The session was moderated by News Corp VCCircle’s editor-in-chief, Archna Shukla.

The panellists said it was significant that the rollout of the scheme, which promises access to quality healthcare as well as financing for over 500 million people, had become a national talking point.

“The pros and cons of the scheme aside, 2018 marks an inflection point for healthcare in India,” said Aster’s Pillai.

Indium’s Agrawal said that while it will take 5-10 years to see how the scheme pans out, money will now likely flow into newer geographies.

“For the last 10 to 15 years, the bulk of investment has gone into hospitals in Tier-I and Tier-II cities,” he said. “All that will change now.”

Agrawal further said that Ayushman Bharat will trigger inflows of “different capital” into healthcare, adding that non-traditional investors including foreign players are closely watching the scheme with interest.

He said, at present, there are several hospitals in smaller cities with just 10-20% occupancy. Ayushman Bharat could help them attract funding and even consolidation as they may be better placed than some of the big chains.

“Everyone will have to adapt,” said Hinduja’s Beri. “Stakeholders will have to develop new models that align with the scheme,” Beri added.

Beri further said that while there will undoubtedly be a huge increase in coverage, the current framework doesn’t lend itself to low-cost models.

On that, True North’s Nadgir said that not many hospitals are designed for the poorer segment and creating enough supply at lower price points will be a challenge.

“The bottom line is that there will be a supply side issue. A new model will have to be built,” he said.

All the panellists agreed that the scheme does not do enough to address the problem of primary healthcare.

“Primary healthcare is difficult to implement because of the expansive canvas.” said Nadgir. “Tertiary and secondary healthcare are more glamorous.”

He said it is not yet clear how the government will attract private sector investment in primary healthcare.

“We need to look at Ayushman Bharat as a startup, which needs really good execution,” he added. “The platform needs to evolve and refine going forward.”

Earlier in the morning, True North partner Satish Chander delivered a special address at which he presented an overview of healthcare investments in India.

He said that while the sentiment had improved after setbacks in 2016-17 such as the implementation of the Goods and Services Tax, the sector had not really recouped losses.

Chander said that the expanded role of the government in terms of regulation such as price caps had left stakeholders uncertain about the future.

But acknowledging the potential impact of Ayushman Bharat, he said that volumes will explode, and this, combined with lower prices, would foster innovation.

He said the scheme will require a strong infotech backbone and this presented an opportunity for massive investment.

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