Service SectorKey drivers of Indias Economic GrowthHealth Sector

Service Sector-Key drivers of India’s Economic Growth-Health Sector Dr. M. Arulpitchai Narayanan, CHAIRMAN ARMA MEDICAL FOUNDATION Chennai, INDIA. www. armafoundation. com www. armaindia. com

Economy Agriculture , Industry , Research Etc R o a d B r i d g e H a r A I b i T o r r HUMAN POPULATION Health 28 -02 -2021 w a t e r Edu Dr. Arul 2

What is 'Economic Growth' • Economic growth is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. It can be measured in nominal or real terms, the latter of which is adjusted for inflation. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used. - investopedia 28 -02 -2021 Dr. Arul 3

BREAKING DOWN 'Economic Growth' • In simplest terms, economic growth refers to an increase in aggregate productivity. • Often, but not necessarily, aggregate gains in productivity correlate with increased average marginal productivity. • This means the average labourer in a given economy becomes, on average, more productive. • It is also possible to achieve aggregate economic growth without an increased average marginal productivity through extra immigration or higher birth rates. Population POPULATION - investopedia 28 -02 -2021 Dr. Arul 4

How big a part of the economy is health care? Healthcare accounts for about one-sixth of the entire economy -- more than any other industry and sector 28 -02 -2021 Dr. Arul 5

How big a part of the economy is health care? • The Cost, price and spending in India in Healthcare, is Country Specific with the mix of Indigenous and imported factors. • Betterment of Indigenous to the International Standards and substituting the Imports with Indian products shall bring down the cost, price and spending to a larger extent. • In present Indian economy Healthcare expenses has become catastrophic resulting in poverty , man power and production loss and mounting debts. 28 -02 -2021 Dr. Arul 6

Health status of India in the world • In all the health indexes out of 180 countries in the world , India ranges in single digit in the last few ranks between 170 to 180. • Malnutrition , Maternity mortality , Anti- natal and Pre-natal deaths … etc 28 -02 -2021 Dr. Arul 7728 -02 -20217

Healthcare manpower • It is a team work • Dynamic • Healthcare team – manpower development , capacity building and skill development • Physician makes the judgment • Manpower needs the physical infrastructure and function infrastructure • High end technologies preferred for production – irrespective of volume ie. One patient or multiple patient 28 -02 -2021 Dr. Arul 8

Relationship between manpower and economic growth • Manpower is an essential ingredient needed in the growth of the economy. • When Manpower development is given priority, as most of business sectors will experience tremendous growth rate. Manpower development is that factor that ensures we do not lack brain drain, that helps us build leaders and industry chiefs of the future. 28 -02 -2021 Dr. Arul 9

Health Economy • Population • Workforce • Economy 28 -02 -2021 Dr. Arul 10

How do health care costs drag on the economy? • In USA , growth in overall health care costs, including spending on the huge Medicare and Medicaid programs, is out of control, limiting how much money the federal government and businesses have to invest in solving the energy problem, developing products that can be sold to other countries, creating technology that can bring medical breakthroughs, building infrastructure and more. 28 -02 -2021 Dr. Arul 11

How do rising health costs affect workers and businesses? • Health care cost has skyrocketed, making it evertougher for workers and employers to afford them. In USA, workers income have barely kept pace with inflation, more of the pay check is going to health costs, and there's less left over for things like vacations, dining out or home improvements -- especially for low-wage workers and retirees. That represents a huge drag on the economic growth, considering that consumer spending powers about 70 percent of the economy. 28 -02 -2021 Dr. Arul 12

How do rising health costs affect workers and businesses? • For employers, particularly small businesses, rising medical costs mean there's far less money for new equipment, better facilities, research or expansion. That means fewer new jobs, plus smaller raises and higher health premiums for workers, further limiting consumer spending. • Health care has been "one of the few engines of job growth during the recession and during better economics. " 28 -02 -2021 Dr. Arul 13

Intersections in/off Health 1. India is the Human Capital of the world with quality 2. Health is wealth : Individual health to Health of the Society 3. Health Mental and Physical Health 4. Prevention and Cure of sickness and Rehabilitation 5. Prevention : Lifestyle Practices + Education 28 -02 -2021 Dr. Arul 14

Intersections in/off Health 6. Cure : acute care and Chronic Care 7. Acute Care: infection, Cancer, Injury, Non Infection & non Cancer such as heart attack, Asthma, Paralysis, Poison, joint replacement 8. Chronic Care: Diabetes, Hypertension, Asthma, Rheumatic Pain, 9. Rehabilitation: post event to recover fully to the normal or near normal 28 -02 -2021 Dr. Arul 15

Overview of the Distribution of Indian Population: 120 crores

Overview of the Distribution of Indian Population: 120 crores • 60% Rural & 40% Urban with 15% Urban Slums • 40% young & 30% Geriatric • 30% Below Poverty line • 30% Poverty with impact of catastrophic out of pocket expenses • 30% Middle income & 10% Affordable • 50% Educated 28 -02 -2021 Dr. Arul 17

Overview of the Distribution of Indian Population: 120 crores • Human Capital : Physical Manpower 50% Intellectual & white collar 30% • 80% of the 50% Total Population is Productive • This amounts to 48 corers of the Indian Population • This 48 corer Indian population , to be Productive, must be Healthy. • Their dependents must also be healthy, and not disturbing them as burden 28 -02 -2021 Dr. Arul 18

Let's take a look at what the phrase "health care costs" really means. ? ? It turns out that everybody uses the term to mean something different. • Cost of the healthcare for the government = Financial provision by the government – spending • Cost of the healthcare for the providers = Production cost by the healthcare delivery agencies or organizations – cost • Cost of the healthcare for the consumers = Purchase of the healthcare by the consumers – price 28 -02 -2021 Dr. Arul 19

Cost for the provider – production cost Capital cost + Operating cost + Manpower cost + Recurring cost + Maintenance cost + Upgradation cost + IT cost Consultation + Investigation + Diagnostics + Hospitalization + Procedures + Medicines + Devices + Physiotherapy + Daily medicines 28 -02 -2021 Dr. Arul 20

Valuation of Physician’s efficiency • Physician judgment is an intellectual property rights and an intangible asset. • No one patient is similar to another patient. 28 -02 -2021 Dr. Arul 21

…. . On the side line Judicial Decision on compensation cap. • The treatment is given to the human being and organ not to the status , position of the human being and specific to the status of the organ. Eg – the treatment given to the liver of the individual irrespective of the individual who he is. i. e , the cost to treat the individual or that organ is the same irrespective of the social-political-economical status. • So when the question of cost of the compensation arises, it cannot be the productive of the individual which decides the compensation Cost Accountants please come up with your thoughts! 28 -02 -2021 Dr. Arul 22

Judicial intervention in Costing • Recent Judgment of Supreme court has fixed the salary of nurses in the private sector as 75% salary of the equivalent in Government service. • Naturally , the same will become rule of thumb for the other members of the healthcare team in the private sector. This will become another crisis in Healthcare Cost 28 -02 -2021 Dr. Arul 23

Cost for the consumer ( price ) • Taken care by the employer or the insurance + out of pocket expenses + incidental expenses + cost through loss of pay / revenue + cost through lost productivity • Preventive health cost + Lifestyle management cost 28 -02 -2021 Dr. Arul 24

Poverty due to Health Care Expenses: • As per World Bank, ill health in turn is a major cause of poverty. • This is partly due to the costs of seeking health care, which include not only out-of-pocket spending on care (such as consultations, tests and medicine), but also transportation costs and any informal payments to providers. • It is also due to the considerable loss of income associated with illness in developing countries, both of the breadwinner, but also of family members who may be obliged to stop working or attending school to take care of an ill relative.

Poverty due to Health Care Expenses: • In addition, poor families coping with illness might be forced to sell assets to cover medical expenses, borrow at high interest rates or become indebted to the community. • Strong health systems improve the health status of the whole population, but especially of the poor among whom ill health and poor access to health care tends to be concentrated, as well as protect households from the potentially catastrophic effects of out-of-pocket health care costs. • In general, poor health is disproportionately concentrated among the poor.

Poverty due to Health Care Expenses: • It is an established fact that health care expenses today have become one of the essential parts of daily important house hold expenses of any individual and family irrespective of the age, gender, caste, creed, religion, social and economic status and geographical location.

Poverty due to Health Care Expenses: • It focuses mainly on governance and funding of public healthcare in the country. • It is expected that the educated youth population of India, constituting 30 to 50 percent in forthcoming 25 years, will be facing financial difficulties, either because of their personal health or family member’s health. • The so called powerful country America currently is the notable example where health care finance has become a major issue

Poverty due to Health Care Expenses: • If the health care policy does not bring down the present state of affairs of health care cost pushing more individuals and families into poverty by mere health care cost, as warned by socialists and economists, it will result in social violence in India in 20 to 25 years. • The health care policy must aim poverty alleviation, and avoidance of fresh poverty group, because of bringing down health care expenses.

Poverty due to Health Care Expenses: • If the present health care delivery system continues, health care induced poverty will result in social unrest in another 20 to 25 years time. • India needs political will, supported by Bureaucratic system and Judicial system with the principles o 28 -02 -2021 f liberalized economy to have its plan of action for affordable and quality health care for each and every Indian.

Cost for the Government ( Spending) • Sanitation + Drinking water + Environmental management + Primary education + Social and Physical infrastructure development 28 -02 -2021 Dr. Arul 31

What's included in that spending? • It covers money paid to health care providers -- hospitals, outpatient centres, and other clinics, doctor and dentist practices, physical therapists, nursing homes, home health services and onsite care at places such as schools and work sites. Also included are retail sales of prescription and non prescription drugs, premiums paid to health insurers, and revenues of makers of medical devices, surgical equipment and durable medical equipment such as eyeglasses, hearing aids and wheelchairs. • It also counts out-of-pocket payments by consumers for health insurance premiums, deductibles and co-payments, along with costs not covered by insurance and "medical sundries" like heating pads. 28 -02 -2021 Dr. Arul 32

What's included in that spending? • US President Obama is a strong candidate for healthcare system must be fixed first to repair the economy. • "Health care is the economy, " and fixing it would free up money for other priorities, such as education and industrial innovation. 28 -02 -2021 Dr. Arul 33

What's included in that spending? • The health care system is dysfunctional and full of waste -- as much as 30 percent of all spending if not managed properly. Unlike most other markets, consumers rarely know which doctors, drugs or treatments are best for them, don't price shop since they are stressed for cure and, if they're insured, don't know the full cost of care. That all can lead to unnecessary spending and wasteful expenditure. • Health care costs have become pocketbook issues for businesses. Periodic polls in US reveals what consumers worry about find the cost of health care and insurance are equal with job security, gas prices and being able to pay the mortgage 28 -02 -2021 Dr. Arul 34

A Recent Report from US • Cures Act Offers Tax-Favored Vehicle For Small Employers To Pay Premiums, And More By Timothy Jost • Title XVIII of the 21 st Century Cures Act creates a new vehicle for financing health coverage, the small employer health reimbursement arrangement. • Also, a new report analyzes 18 options for reducing federal health care spending and a survey shows the percentage of persons with problems paying medical bills dropped from 2011 to 2016. 28 -02 -2021 Dr. Arul 35

Healthcare Cost Spending Price 28 -02 -2021 Cost Dr. Arul 36

Healthcare Cost Quality Affordability 28 -02 -2021 Accessibility Dr. Arul 37

Healthcare Cost Price Spending Quality 28 -02 -2021 Dr. Arul 38

Healthcare Cost Price Spending Affordability 28 -02 -2021 Dr. Arul 39

Healthcare Cost Price Spending Accessibility 28 -02 -2021 Dr. Arul 40

Public Health Audit on cost and economy 28 -02 -2021 Dr. Arul 41

Nov 23 2016 : The Times of India (Chennai) `Lower drug prices helped buyers save 5 K crore in 3 years' New Delhi TIMES NEWS NETWORK • The government's told the Lok Sabha on Tuesday that stringent measures to keep prices of essential medicines at lower levels have led to an estimated savings of around `5060 crore for consumers over the last three years. • • In 2015, the government revised the price control order to bring under its purview more drugs. Currently , the government has fixed prices of around 850 essential medicines and is expected to cap prices of more drugs soon as part of its steps to make medicines affordable 28 -02 -2021 Dr. Arul

Socio Economics Loss of Pollution This Data Is from ICIC Lomboard. Claim this year 9000*45000=40 corer. 30 insurance companies 40*30 = 1200 corer. Only 8% of the population is insured in India. For 100% of the population the claim will be 1200 C*12. 5= 150 00 C per year This 15000 Corer can be spent for the waste management and pollution management. This has to become a part of health economics. Other than this 15000 C , there is intangible production loss and manpower loss. 28 -02 -2021 Dr. Arul

On the side line…. . Public Health Audit • What is cost of constructing 1 km two lane road in India? 2 lane will be around Rs. 2 Crore 4 lane & 6 lane, it will come to Rs. 6 Crore and Rs. 8 Crore respectively. 28 -02 -2021 Dr. Arul 44

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As consumers are asked to pay more for health care services, understanding and anticipating those costs may be increasingly important to them. At the same time, consumers must be able to consume value through shopping, by choosing lower-priced high-quality providers. Insurers, employers, and governments also have an interest in greater price transparency as they hope it will lead to lower spending on health care. In general, two main arguments have been advanced for how price transparency may lower spending on health care. First, consumers will be able to know the full cost of services before receiving them, and will be able to choose lower-cost services or providers, while holding quality constant. Second, when pricing information is publicly available, health care providers will be incentivized to lower their prices to be more competitive. This issue brief focuses on the first of these: the potential for consumer activity to lower overall health care spending 28 -02 -2021 Dr. Arul 47

Economy Agriculture , Industry , Research Etc R o a d B r i d g e H a r A I b i T o r r HUMAN POPULATION Health 28 -02 -2021 w a t e r Edu Dr. Arul 48

Hello… Dating please… • Healthcare in India is the virgin and it is high time The Cost Accountants should land up dating and marrying the Healthcare system for the welfare and cost benefit of the population and the better economy of the country India enabling the Healthcare providers cost efficient service. 28 -02 -2021 Dr. Arul 49

Where do Cost Accountants stand in Healthcare? • Healthcare is an important factor for the better economy of the country. • Healthcare is by the healthcare team and the physician leads the team along with paramedical, allied ancillary and supportive staff. They are the direct contact with the patient. • For the cost of the production , better price of the purchase and cost efficient spending by the country has to be supported by the economist and the cost accountants. • Even the economists advice depends on the cost accounts group. 28 -02 -2021 Dr. Arul 50

My Suggestion • Countries economic growth needs healthcare. • Cost effective healthcare in India needs the service by cost accountants. • This has to be understood by all the stakeholders and it is upto the stakeholders to impress the policy makers by gaining Political Will and making the Bureaucracy and Judiciary to understand. 28 -02 -2021 Dr. Arul 51

Summary The Role of Cost Accountancy in the Health : Direct: 1] In the Healthcare Provider Production Cost Capital Cost : Land Building Medical Equipments and Devices and Pharmaceuticals Manpower cost & Others 2] For the Consumers bringing down his paying price for buying the Healthcare Service making more portion of the same revenue available for buying the Healthcare by Tax Incentives + bringing down the Production cost and passing the benefits to the consumers + making the purchase of the insurance coverage with the better-reduced cost for more coverage 3] For the Government on Spending through the GDP Quality of Manpower , Equipments and Devices 28 -02 -2021 Dr. Arul 52

Summary The Role of Cost Accountancy in the Health : • Indirect: Nutrition+ Sanitation and Water +Prevention + Lifesyle Practices at reduced cost or nil cost + Pollution control by environment issues + Primary education + proper data, analysis of the same and R & D , Human - Agri - Veterinary - Marine safety linkages and many others 28 -02 -2021 Dr. Arul 53

Thank you 28 -02 -2021 Dr. Arul 54

…. . On the side line Judicial Decision on compensation cap. • The treatment is given to the human being and organ not to the status , position of the human being and specific to the status of the organ. Eg – the treatment given to the liver of the individual irrespective of the individual who he is. i. e , the cost to treat the individual or that organ is the same irrespective of the social-political-economical status. • So when the question of cost of the compensation arises, it cannot be the productive of the individual which decides the compensation Cost Accountants please come up with your thoughts! 28 -02 -2021 Dr. Arul 55

Judicial intervention in Cost • Recent Judgment of Supreme court has fixed the salary of nurses in the private sector as 75% salary of the equivalent in Government service. • Naturally , the same will become rule of thumb for the other members of the healthcare team in the private sector. This will become another crisis in Healthcare Cost 28 -02 -2021 Dr. Arul 56