NDHM | Kapil Khandelwal KK

Budget 2022: When is Healthcare’s Amrit Kaal Coming?

Budget 2022

Preamble

On 1 February 2022, our Hon. Finance Minister presented her fourth budget in the Parliament and introduced the “Amrit Kaal” in Point 4 of her speech, “we are marking Azadi ka Amrit Mahotsav, and have entered into Amrit Kaal, the 25-year-long leadup to India@100. Hon’ble Prime Minister in his Independence Day address had set-out the vision for India@100.”

Point 5 of the Budget Speech outlined the vision for Amrit Kaal, “By achieving certain goals during the Amrit Kaal, the government aims to attain the vision. They are:

Complementing the macro-economic level growth focus with a micro-economic level all-inclusive welfare focus,
Promoting digital economy & fintech, technology enabled development, energy transition, and climate action, and
Relying on virtuous cycle starting from private investment with public capital investment helping to crowd-in private investment.

The Finance Minister has envisioned to develop ‘sunrise opportunities’ such as artificial intelligence, genomics, and pharmaceuticals to assist sustainable development and modernise the country. However, this is more on the supply side industrial development. But the core issue of healthcare infrastructure is not addressed. Envisioning the Indian population which we would like to be a healthy one by 2047 when we enter India@100. I believe that Budget 2022 missed out a huge opportunity in envisioning Healthcare 2047! Here are my reasons.

Current Undergoing Transformation in Healthcare

The country has undergone a tough time during the pandemic. The Government has played its enabling role in ensuring the supply chain disruptions with China does not lead into a health crisis of sorts. On the other hand, the funding of Covid-Vaccine and immunization has ensured that the country emerges quickly into an endemic phase of Covid pandemic. While this was going on, there was strengthening and upgrade of the digital health infrastructure. The pandemic has also taught lessons to the private healthcare delivery ecosystem to restructure their business models and ensure that there is a push toward lower costs healthcare delivery models. These transformations have demonstrated India’s resilience in its healthcare systems to face emergency situations like the current pandemic.

India’s Amrit Kaal’s Population Demographics

As the chart below demonstrates that India’s population by 2047 will be shifting towards middle age bulge. Over 300 million (~19% of the total population) will be senior citizens by 2047. Our dependency ratio will be around 40%. These 40% will be in the tax paying bracket which will provide the then Finance Minister in 2047 the revenues to spend for different welfare programs including healthcare.

India's Population Pyramid Shifts to 2047 — India’s Population Pyramid Shifts to 2047

Lessons from Elsewhere in the World

In early 2000, I was involved in restructuring the healthcare systems of Saudi Aramco. Being the largest oil producer in the world, the company had been underfunding the pension and healthcare benefits of their employees who were going to be retiring in the future. The financing of these healthcare benefits created a financial crisis of sorts which have to be funded.

USA has also being facing such challenges when its baby boomers have now become unproductive senior citizens and their total healthcare bill is currently 18% of their GDP.

Vision for India’s Amrit Kaal Healthcare Delivery to Avoid Maha Kaal

As per current estimates, our country requires USD 400 billion of investments in healthcare infrastructure on our current demography to meet the global norms. There are no allocation in the current National Infrastructure Pipeline (NIP) funding for healthcare. Therefore much of the investment will be private sector driven in the future for healthcare infrastructure.

Such experiences elsewhere in the world remind me that our Amrit Kaal in 2047 does not end up as Maha Kaal of our Amrit Kaal where we would have to look up to Indian Gods who were invoked to end the situation. There have been several demands in the last few budget to accord infrastructure status to the healthcare industry. The current budgetary allocations to healthcare all though increasing has not been sufficient to build capital formation for healthcare infrastructure in the country. From the current 2.5% of GDP, there needs to broaden the spend on healthcare. We need the real picture of the input and outputs in healthcare. With the current GST regime of zero tax on healthcare services, we are not able to gather the real value of healthcare in the country and healthcare should be under minimum GST slab so that there is pass through benefits of the inputs that are set off. This will lead to a lot of transparency and provide real hard estimates of healthcare spend of the country.

Assuming by 2047 our dependency ratio will be lower than today. Which means that the total taxpaying population in 2047 may be same as today or even lower. There needs to be a plan to ensure that current taxes from the current population who will become senior citizens by 2047 will be underfunded like in the examples that I have mentioned below, leading into a budgetary crisis.

In all earnest, given the current constraints the current budget 2022 could do so much for healthcare. But now that the Amrit Kaal is out of the bag, there needs adequate focus to healthcare to avoid healthcare Maha Kaal in 2047 when we enter India@100.

Why is India’s National Digital Health Mission is likely to succeed?

Background

Last year the Government of India announced the National Digital Health Mission (NDHM). We were asked to review and comment on the draft as one of the stakeholders in healthcare. This inclusive approach to involve the various stake holders was never seen before. We believe that COVID-19 and NDHM has increased the pace of digital healthcare and can unlock USD 200 to 250 billion in next 10 years in terms of primary and secondary impact to the nation’s economic value. Such is the magnitude of the NDHM initiative for India. So will this succeed?

To understand the critical success factors for India, let’s understand some notable failures and learn from them. Also we need to learn from the currently ongoing Covid Vaccination Drive in the country that’s the largest in the world and the fastest that will cover over a billion people.

Notable Failures

We have several tech giants and countries that have invested and failed in rolling out digital health initiatives. Some of these that come to my mind are:

Google Health

I had written in my column on Why did Google Health Fail? (see text below)

IBM Watson Health

Some of the insider views on the closure of IBM Watson Health (shut down on 31 Dec 2020) are as under:

Business call by IBM leadership – viability of the case in oncology
Muted doctor’s acceptance
50:50 prediction accuracy of the algos
Wrong expectations set when initially selling the idea to the doctors and Manipal
Difference in clinical pathways of oncologists on the Watson output
Implementation was very complex due to the different oncology tumour and stage
Oncologists time to teach the system versus doing it by their own experience
- Doctors believed that they were recruited to treat the patient and not teach the Watson
Limited use case of the system
- More for research than for actual treatment and second opinion

UK NHS Spine Program

As part of the leadership team of one of the vendors involved in the UK NHS Technology initiative and also interacting with the Managing Director of British Telecom Healthcare that was leading the rollout in the UK of the NHS Spine, I gathered that the digital health (in those days-2007, this was not called digital health) in UK had a partial success. The reasons were multi-fold:

Exgaggerated benefits of the program
Botched up decentralized implementation at the different trust level
Multiple stakeholders with their wrested interest
Manpower and resources shortages
Multi-year delays and costs overruns
Poor change management and acceptance at the ground level with the clinical workers
And many more issues

African ICT and Digital Initiatives

As part of the Health and ICT Minister’s Panel for Africa, the major issues voiced by the Ministers from the African continent happens to be the disease of Pilotonomics. There have been multiple pilots of initiatives but none have actually fructified to be a mainstream as some of them have been abandoned by the sponsors and the donors as the budgets ran out

Have seen the failures across the Tech Giants, developed world countries and low income countries, the issues of failures are a myriad of technology, sponsorship, change management and end user acceptance.

Why will India succeed?

During the Covid-19 pandemic, India Government initiated a host of digital initiative (see blog Sustainability of Digital Health | Kapil Khandelwal (KK)). The most important being the roll out of the CoWin App for the vaccination of the citizens. For the first time on the world, a billion people would be mobilized through this initiative for their vaccination. With the pace and success of the initiative and the citizen acceptance, we will see that the National Digital Health Mission will succeed. Some of the positives that I am seeing include:

PMO and senior Ministers’ and Bureaucrats’ driving this Mission
Inclusive attitude to gather all the stakeholder’s voices right from the beginning
ICT framework and the National Telemedicine Act also being enacted bringing the decades of differences between the Medical Council of India (MCI) and various players to an end
- Many doctors have actually started using Telemedicine during the lockdowns

Let’s not belittle the National Digital Health initiatives for shorter political gains!

Also read: Digital Health | Kapil Khandelwal (KK)

Republished Column: A Dose of IT: Why did Google Health fail?

Google Health is not going to be there anymore.

After its launch in May 2008, Google Health has gone through its chequered existence till the Google Execs announced, last week, to withdraw the product by end of 2011. As I epilogue, I will use the PESTC model to conduct the postmortem analysis on the death on Google Health

Politically, 2007-08 was a time when concerns around reforming healthcare reform were at its peak and a one of the key agenda items in the US Presidential war. Such rhetoric on healthcare and need to reform healthcare was politically echoed world over by many leaders. This political analyst wanted to get more bang for the buck on healthcare spend. This meant more business for healthcare ICT to create solutions to address the issues of healthcare access, costs, quality, outcomes and so on. Politically, it made sense for tech heavy weights to put their might in launching healthcare solutions and in this political back drop that Google Health was launched. However since then and Obama’s healthcare reforms bill, not much impact for many tech major’s who waged on healthcare and hence to reassess their decisions to throw their towels in.

Economically, this was the time for world’s worst economic downturn since the Great Depression. Healthcare was seen as anti-recessionary. Tech major’s boardrooms and leadership strategy break outs discussed derisking and growth by enter social sectors such as healthcare, education and so on. Google’s board and leadership could not have been thinking differently when giving thumbs up to invest in healthcare business. However as many tech major now realize that healthcare requires long-term strategic vision and investments to stay in the game. Like many other tech major, Google has other investment priorities in other portfolios of their business such as android OS and mobile phones and devices, etc. It made sense for them to exit out of a sector that requires time and investments to change the way people and clinicians manage health.

Socially, the rise of social media is changing the way people manage information, communicate, exchange content and interact including their doctors and care givers. Google Health failed to capture this trend in their solutions.

Technologically, Google failed to learn from the failures of many others who failed in the past and replicated solutions where there are far more superior solutions and players in the field. Some major gaps, I guess alignment with doctors and clinicians is the first step towards creating a technologically superior solution that can align with healthcare consumers. Secondly, there were hardly any vertical partnerships in healthcare that Google went out to create an ecosystem. Lastly, Google did not integrate their other products such as Google Maps that could provide location aware services to the consumers on their health.

Consumers and competition, contributed to putting the nails in the coffin of Google Health. Google Health focused on one end of the healthcare value chain and did not believe in working in aligning the overall healthcare ecosystem. Moreover, consumers are moving towards mobile-based solutions on their smart handphones that Google Health failed to capture as a trend. Lastly, competition has far better ideas and staying power as health tech solutions is a long-term game.

With Google Health putting down their shutters on their shop, what are the implications? Firstly, the spotlight now falls on Microsoft HealthVault. Analysts will now try to second guess Microsoft’s response to this development. Health is a very large opportunity that Google may not like to miss. It may come back with an acquisition sometime later.

Google Health, RiP!

From Telegraph Road to US$50 Billion Digital Health Silk Road

Digital Silk Road

Preamble

There have been very positive developments for Indian healthcare on the digital front. First, the Indian Telemedicine Guidelines and then the National Digital Health Mission (NDHM). From various think tanks and industry bodies there have been various numbers been project on the incremental value that these will create for the Indian economy. While it is wishful to conjecture the US$ 250 billion dollar impact, what hums in my mind is the Dire Straits famous 14-minutes “Telegraph Road” song. At that time, Mark Knopfler was reading the novel The Growth Of the Soil by the Nobel Prize winning Norwegian author Knut Hamsun and he was inspired to put the two together and write a song about the beginning of the development along Telegraph Road and the changes over the ensuing decades. Using the same analogy, the development of India’s Digital Health Silk Road is feasible on the back of the physical and human healthcare infrastructure. So let’s tune in to my song!

Song Intro – India’s State of Wild-Wild West Healthcare Underdevelopment

India is a country of paradoxes for healthcare infrastructure. India has 18% of world’s population. However, it has around 18% of world’s diseases burden which is increasing. To service this diseases burden, this increasing disease burden, India has only 2.4% of world’s land mass and needs approx 0.01% of world’s land usage for health and well-being purposes. On the clinical manpower supply, India has 1% of world’s lab techs, 9% of world’s health workers, 8% of world’s nurses and doctors. To level up India to the global average, the total investment is approx $460 billion now (165 countries in the world had a GDP of less than $460 billion in 2018). (see Tedx talks My Presentations – Kapil Khandelwal (KK) To address the country’s healthcare needs within the constraints of capital, land and clinical manpower, homegrown solutions are required. At per capita healthcare spend of INR 4116 (USD 55), India’s per capital spend is growing @ 22% pa. However, India is amongst the lowest 4 countries (ranked 129) in the world on healthcare spend as per Oxfam’s latest Commitment to Reducing Inequality Index 2020 at 4% of GDP (against the globally recommended 15% of GDP).

Song Pre-Chorus – Healthcare Gold Rush to the Wild West due to Covid

Let’s set the context under which there has been an accelerated push for healthcare digitization in India. The Great Covid Lockdown. Elective healthcare were down by 70% across the board due to lockdown and priority to Covid affected. The healthcare industry started rumbling and requesting Government to come out with a bail-out package of over INR 50000 crs. Doctors needed to restart their practice through work from home or anywhere. The decade-long deadlock on the telemedicine act between Medical Council of India (MCI) and the Ministry suddenly cleared. There was a mutual agreement to develop the telemedicine road and to regulate the gold rush road to telemedicine in India.

Song Verse – New Digital Health Regulations

The actual verse of the telemedicine regulations in India was announced by the Niti Aayog and the MCI. The Prime Minister in his verse of Independence Day speech also announced the National Digital Health Mission (NDHM). The draft verse of the digital health regulation was available for the general public to review and critique. This was the back drop to the crescendo of the industry chorus on the digital health in India and the opportunity it offered.

Song Chorus – Industry Estimates and Reports

With the regulatory verse out in the public, the industry voice chorus on the real impact to the Indian economy initiated. One industry report estimated the pace of digital healthcare can unlock USD 200 to 250 billion in next 10 years in terms of primary and secondary impact to the nation’s economic value. These value-creation in the march to the wild west will be on three key roads:

Road 1: From episodic care to wellness-oriented care
Road 2: From volume-based to value-based healthcare
Road 3: From siloed systems to streamlined processes

While such stratospheric estimates at a Concorde-neck supersonic speed of the digital health silk road to the Wild West is great for headlines for the chorus, let’s not fool ourselves with the history of what the retail (brick and mortar) and ecommerce underwent in the past decade which went super sonic with investments and valuations on digital retail commerce in India. I have been writing about various issues and roadblocks to digital health path in my various columns which are available at My Library – Kapil Khandelwal (KK)

Song Bridge/Solo – My Estimates on the Investments and On Ground Reality and Impact

For any song chorus there is also a bridge/solo that makes the real sense. Here is my view of the chorus. The last decade received around USD 500 million in different ventures of digital health which were cut-past healthcare business models of the West. The current technology spend on these is around USD 500 million per annum. For the USD 250 billion impact on the ground to be realized a straight forward deep healthtech investments of around 5% (around USD 12.5 billion) is to be right away with a gestational lag of around 3 years on a conservative 2x on valuations return and not on revenue growth. In other words, all the sum total of early stage VC money raised in 2019 globally will have to be directed to India and that too in healthtech. A tough ask and a pipe dream.

Let’s also focus on the available data sets which is the oil to run the digital health motorway in India that we currently have. Currently, India’s data sets on healthcare is of the Telegraph road era. These include information on radiology, EMR, labs, meds, monitoring, doctor exam, nurse observations, claims data, billing and transactions. This data set is available for the Bharat Stack 1 (the elite-12% of India’s population). The real driver for the growth is the Bharat Stack 2 (the next billion of India’s population) and 30-odd points of healthcare data (not under the current NDHM regulations) which will make the digital health silk road truly a reality. An incremental investments of USD 18 billion in deep tech ventures in next generation digital health ventures to create a true high-speed digital health motorway of the future.

Therefore to land the stratospheric Concorde of the chorus that were singing, we require a total of USD 30 billion of tech investments on the word go. Where is that sort of money? We still don’t know where this money raised will be invested and that is not the point we are belabouring. Taking that cue, we have been tracking around 150 healthtech ventures in our annual healthcare and life sciences investment heatmap on digital. We will need to create 10000s of ventures that can create the depth and width of healthcare apps for the next billion today!

Song Outro – The Rhythmic Orchestration of Capacity Creation in Physical and Digital Healthcare

While most songs orchestra fade and end abruptly, this India digital health silk road would need a different Outro to its song. On a conservative basis, we estimated that the overall India digital health silk road opportunity is valued conservatively at USD 50 billion as it currently stands with the different constraints in our physical and technology healthcare delivery system. This is on the back of three key multiplier effect on the Indian healthcare economy:

Increasing per capita spend on health and well being of the next 1 billion population as disposable incomes goes up moving from the informal sector to formal sector in next 10 years
Incremental 1/6^th disease burden our population carries as compared to world due to the genomic make up and ageing population in next 10 years through alternative healthcare delivery models
Emerging alternative digital healthcare delivery models that would play on the shortages in the physical delivery system as penetration and acceptance of mobile first delivery of healthcare services become mainstream and productivity of the clinical manpower is augmented by healthtech

Money for Nothing – Covid Vaccines for Free

Another Mark Knopfler hit which talks about the excesses of a rock star and the easy life it brings compared with real work. Between the Independence Day announcement and the Bihar elections manifesto announcement, there seems to be shift in the focus and the priorities it seems from our Rock Star Prime Minister. The Government would not have the funds to spend on the Digital Health Silk Road if it spends its budget on providing free Covid Vaccines to the masses.

Only time will tell how the orchestra and the song of the great India digital health gold rush will play out!

Excerpts of this blog published as an article in VC Circle: