Understanding The Role of Healthcare Financing in India


Indian Health System underperforms compared to most global benchmarks and even regional competitors. Both intermediate and outcome variables, such as health outcomes, responsiveness, financial protection, and equality, are underperforming. Health funding is one of the many measures required to improve the Indian health system.

Numerous investments are channeled into the healthcare financing industry, a profitable, fast-growing, recession-proof, and rapidly expanding sector. India has become the most popular destination for patients worldwide due to its competitive advantage of offering the best healthcare finance at the lowest cost.

Demand and Supply Gap: 

An Enormous Opportunity for Physicians

According to a report by Business Standard, 80% of the nation’s physicians reside in metropolitan regions and serve 28% of the population. Rural India, which comprises 70 percent of the country’s population, has vast untapped market potential.

With a low ratio of hospital beds to patients, overcrowded hospitals, insufficient or substandard medical facilities, and an increasingly health-conscious consumer base, physicians have the chance to establish their practice or clinic.

Today, healthcare is a dynamic industry.

Medical technology, patient empowerment, legislation, and quality compliances are all undergoing fast evolution in the healthcare financing industry. Investing proportionately is necessary to meet market demands and maintain competitiveness by constructing new facilities and acquiring and growing enterprises.

Hospitals, clinics, medical devices and equipment, telemedicine, medical tourism, health insurance, and other investment opportunities exist. There are several options to finance your medical business or clinic to meet the country’s unmet medical needs.

Types of Funding from Private Sources

1. Debt Financing:

Debt financing allows you to maintain control over your firm since lenders do not become a part of it. Borrowing money as opposed to transferring equity also results in tax savings. Small hospitals or professionals/entities that do not want to dilute their control/ownership choose debt funding.

Medical practitioners may use professional loan finance for:

Increasing services

Capitalizing on innovation

Improving infrastructure and investing in medical training and education

Focusing on implants and high-value medical consumables for indigenization

Increasing accessibility by working with insurers

Lenders provides physicians with individualized professional loan solutions for up to Rs. 25 lakhs (for unsecured loans) and up to Rs. 2 crores (for secured loans) with reasonable interest rates individualized and flexible repayment choices, and terms ranging from 12 to 240 months.

2. Foreign Direct Investment (FDI): 


Due to the market’s profitability, numerous foreign firms are willing to participate through capital investment and technological partnerships.

3. External Commercial Borrowings 

External commercial borrowings are loans made in foreign currency to Indian borrowers by non-resident lenders. Due to the complicated RBI clearance procedure, its usage is restricted. Companies in the service industry (hospitals, hotels, and software) have access to ECB 200 million.

4. Individual Investors: 


Individual doctors or healthcare professionals might establish their healthcare institutions as entrepreneurs.

5. Foreign Institutional Investors (FIIs):


These investors are registered outside India. To join the Indian market, they must register with the SEBI. AIG, BUPA, and Allianz are international firms that have partnered with Indian firms to participate in private health financing.


Health disparity, limited availability and reach, uneven access, and poor-quality and expensive healthcare finance services are all exacerbated by India’s health finance system. Low per capita health expenditures and inadequate state funding result in one of the highest shares of private out-of-pocket costs worldwide. Citizens get poor value for their money in the public and private sectors. With barely 10% of the population covered by medical insurance, financial security against medical costs is far from universal.

The Indian government has pledged to expand public health expenditure from less than 1 percent to 3 percent of gross domestic product over the next several years. The effectiveness of state-run public systems may be vastly improved by the combination of increased public spending and flexible financial transfers from the center to the states. Increased public investment may provide universal medical insurance, significantly lowering the burden of private out-of-pocket health costs. More public expenditure may also contribute to quality assurance in the public and private sectors through efficient regulation and monitoring. In addition to increasing public health expenditures, the Government of India will need to implement particular measures to restrict costs, enhance spending efficiency, strengthen accountability, and assess the impact of health expenditures.


Swedish-Massage-Seattle-WA-_ Previous post How Often Can You Get a Swedish Massage in Seattle?
international tax consulting Next post Model Risk Management Technology Solutions: Quantitative and qualitative aspects

Leave a Reply

Your email address will not be published. Required fields are marked *