India’s IT services industry is a $150-billion-per-year behemoth, a global enterprise which touches the far corners of the world. The wealthiest economies — the US, Europe and Australia — have benefited from skilled Indian engineers writing code and maintaining systems at a fraction of what engineers in those countries would have had to be paid.
Skill and labour arbitrage are the foundation of this success — and they go hand in hand. Were the Indian IT companies to increase their rates arbitrarily, they would immediately begin to face pushback. In many cases, foreign customers would shop among other Indian vendors, switch countries, or even bring work back to their own shores. The selling price of Nasscom’s services is a crucial factor.
What other industries does India have where skill levels are comparable to western nations, but our willingness to work for far less money gives us a competitive edge? The healthcare industry certainly is one.
Healthcare powerhouse
India is already a powerhouse in the production and distribution of the world’s generic drugs. These are medicines whose patent protections have expired, generally 17 years after the original branded drug was first launched. The western pharma companies, known for engineering many life-saving drugs, are forced to cede not only the formulas which make these medicines, but also the production processes behind them.
Indian companies have stepped in to mass-produce generics for such critical needs as controlling hypertension, diabetes and heart disease. Western doctors prescribe many of these generics as “maintenance medication” — which means as long as patients are alive, they will continue to require these drugs. Translation: there is constant demand for India’s drugs.
Is it being tapped?
But in the business of offering healthcare services to foreign nationals, India has been a laggard. Clearly, an Indian hospital cannot set up shop in a western nation. But India could attract foreign nationals to visit India and get treated. This is the business of medical tourism. While every medical procedure should be on the table, non-life threatening ailments are best treated because they are less risky and the service can be planned in advance.
No coordinated effort: India has fallen behind other countries in the medical tourism sector because the few hospital players who offer this service are all fragmented. There is no coordinated industry group of repute, like a Nasscom, that is lobbying the government to promote the sector. While the IT industry built technology parks with five star hotels inside them to cater to visiting foreign business people, the medical tourism sector has done nothing of the sort. There are no world class hospitals, staffed and dedicated to foreign patients.
What can be done
Once such a private infrastructure is in place, the Indian government, for its part, must enlist its trade offices to market our medical tourism industry, establish primary care clinics in foreign countries to refer foreign patients to India for free, and create visa-friendly policies to enable foreigners to travel to our country.
The industry should enlist a single national travel agent through which the entire journey is coordinated. Accommodations and medical care must be top class. Administrative components — such as billing, customer service and post-hospital care — must be outstanding.
Service providers should partner directly with foreign insurance companies to handle billing issues and provide cashless benefits to the patient, from soup to nuts, including travel and per diem allowances. Hospitals should assign potential patients with a full-time adviser, who meets the patient on arrival and stays with him/her till departure, like a conducted tour manager.
An example
Malaysia is doing this already, although not everything. Most hotel rooms in Malaysia carry a magazine or flier featuring the country’s medical tourism industry. The ads direct people to visit a single-stop portal through which patients can research treatment options and even complete flight and hotel reservations.
Large hoardings hang in Kuala Lumpur’s massive central train station advertising treatment for every ailment including cancer, heart disease and obesity. If Malaysia can do all of this with its limited English-language capabilities and IT talents, India can surely do a lot better.
The cost difference
And now, the cost arbitrage factor. A full-replacement knee surgery in the US costs about $17,000. Most Indians pay about $3,000 retail, much less when under contract with an insurance company. The world famous Mayo Clinic, in Rochester, Minnesota, is promoting its two-day executive health check-up, which includes blood and urine tests, ECG, a treadmill stress test, a chest X-Ray, a hearing and an eye exam. All this for a whopping $5,000! In Bengaluru, one can have a similar check-up for $75. The price difference is huge and will immediately draw the attention of the world’s insurance companies.
What about protectionist wave?
Should the industry be afraid of the protectionist wave consuming the UK, the US and potentially a few European countries this year? Not at all. The one constant in all these nations is that people are getting older; healthcare expenses are skyrocketing, budgets are straining, and the shortage of healthcare professionals is growing. Even Donald Trump would not be opposed to having large insurance companies negotiate medical tourism deals with Indian providers.
Many of us in the early 1990s would never have believed that India would be known as the world’s IT hub just 25 short years later. This is remarkable success, but the IT sector alone cannot shoulder the dreams of a young nation. The time has come to think of new industries in which India can, and should, dominate.