Daily Editorial Analysis for 19th February 2020

Powering the health-care engine with innovation

GS Paper II

Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Mains:  Role of start-ups in mainstreaming innovation in the Indian health system.

What’s the News?

As the scale of the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (PM-JAY) scheme grows, a key area of focus is to expand the secondary and tertiary hospitals empanelled under PM-JAY and ensure their quality and capacity while keeping the costs down.

Ayushman Bharat PM-JAY:

• The Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) scheme remains one of India’s most ambitious health schemes ever.
• The scheme built on the more limited Rashtriya Swasthya Bima Yojana (RSBY), a UPA-era scheme that provided some groups, including people below the poverty line people, health insurance coverage up to ₹30,000, and also subsumed some state-level insurance schemes.
• The stated aims of the insurance portion of the programme include to cushion poor families against the financial shock that a health emergency can trigger, as well as to bring the private sector to small cities.
• The claims limit is a big step up from the RSBY, at ₹5 lakh per beneficiary annually. The government claims that 4.46 million beneficiaries have used the scheme thus far. However, relatively little is known about the nature of treatments sought by beneficiaries.

Expanding the supply side:

While a comprehensive long-term strategy will focus on expanding hospital and human resources infrastructure, an effective near-term approach is needed to improve efficiencies and bridge gaps within the existing supply and likely demand. This can be achieved by mainstreaming innovation in the Indian health system.

Few Solutions: Role of start-ups

• Today, start-ups are working to bring innovative technologies and business models that leapfrog infrastructure, human resources, cost-effectiveness and efficiency challenges in Tier-2 and -3 cities.
• Artificial Intelligence platforms that aid in rapid radiology diagnoses in low resource settings, tele-ICU platforms to bridge the gap in high-skilled critical care personnel, centralised drone delivery of blood, medicines and vaccines to reach remote locations cost-effectively and reliably are all no longer just theoretical ideas.

These are real solutions that are ready to be tested on the ground and potentially implemented. It is high time for transformative solutions to make their way into our hospitals, especially in Tier-2 and -3 cities, to turbocharge the way health care is delivered at scale.

Challenges:

This mainstreaming of health-care innovations is lined with challenges at every step. The friction in their path to market often stems from multiple reasons.

1. Non-uniform regulatory and validation standards:

• Regulatory requirements, specifically for biomedical start-ups, are still evolving in India. As a result, hospitals often rely on foreign regulatory certifications such as FDA and CE, especially for riskier devices and instruments.
• In addition, it is difficult for a start-up to understand the minimum necessary validation requirements in order to qualify for procurement by hospitals.
• Lack of standards in this area leads to a huge variation in validation requirements at States and hospitals, forcing the start-up into a spiral of piloting studies.

The government is now pushing ahead to overhaul Indian med-tech regulatory standards and product standards which will help bridge this trust-deficit.

2. Operational liquidity crunch due to a long gestation period:

• Health-care start-ups spend long periods of time in the early development of their product, especially where potential clinical risks are concerned.
• The process of testing the idea and working prototype, receiving certifications, performing clinical and commercial validations, and raising funds, in a low-trust and unstructured environment makes the gestational period unusually long thereby limiting the operational liquidity of the start-up.

3. Lack of incentives and adequate frameworks to grade and adopt innovations:

• Health-care providers and clinicians, given limited bandwidth, often lack the incentives, operational capacity, and frameworks necessary to consider and adopt innovations.
• This leads to limited traction for start-ups promoting innovative solutions.

4. Procurement challenges:

• Start-ups lack the financial capacity to deal with lengthy tenders and the roundabout process of price discovery.
• Private procurement is complicated by the presence of a fragmented customer base and limited systematic channels for distribution.

5. Identifying promising market-ready health-care innovations that are ready to be tested and deployed at scale.

There is a need to facilitate standardised operational validation studies that are required for market adoption, to help ease out the start-up procurement process such that these solutions can be adopted with confidence.

Conclusion:

• Through Ayushman Bharat, India has the unique opportunity to develop a robust ecosystem where hospitals actively engage with health-care start-ups by providing access to testbeds, communicating their needs effectively and adopting promising innovations.
• Start-ups can be effective collaborators for the most pressing health-care delivery challenges faced by hospitals, as opposed to being mere suppliers of technology or services.

The dream of an accessible, affordable and high-quality health-care system for all will be achieved when private sector health-care providers, health innovators, industry and start-ups work in alignment to complement each other and jointly undertake the mission of creating an Ayus