Govt yet to formulate proposal for opening up medical services to foreign players

Soumya Viswanathan - Mumbai

India, which has to submit its initial proposal to the World Trade Organisation (WTO) on the areas it intends to liberalise in the domestic healthcare service sector for foreign players, has not taken any initiative in this respect either at the official or industry level. Signatories to the General Agreement on Trade in Services (GATS) are expected to make their initial offers by 31 March, 2003.

GATS talks about four modes of bilateral trade in healthcare services between signatory nations. Mode 1 deals with cross-border supply of services such as telediagnosis. Mode 2 relates to consumption abroad, such as medical tourism when a person from country A obtains hospital treatment in country B. Mode 3 talks about establishment of commercial presence and Mode 4 is related to movement of natural persons between member countries like when a doctor from country B practises in country A.

India has already made requests to more than 25 GATS signatory nations for liberalisation of their health services sector so as to allow Indian players to tap potential avenues there. India’s request is primarily focused on Mode 4. (see table below)

For this to happen, say experts, India has to draw up its own list on what it intends to offer in return. But, surprisingly, no initiative has been taken so far to discuss this critical issue in the first place - neither at the industry level nor in government circles.

Senior policy advisor for Confederation of Indian Industries (CII) T K Bhaumik says that though the CII has submitted the guidelines for trade liberalisation in service sectors such as education, tourism and IT to the Ministry of Commerce, there has been no discussion on healthcare services. Dr Naresh Trehan, chairman, CII’s National Healthcare Committee admits that they haven’t paid attention to GATS and how it will affect medical services. One of the reasons attributed towards this neglect is lack of time and resources. ‘‘The industry does not have the time or resources to evaluate these complex issues and come up with suitable recommendations,’’ says Dr Saji Salam - member of CII’s National Healthcare Committee. Another reason being that there has been no outcome as yet on India’s request put up in June last year to GATS member nations.

When Ministry of Commerce was contacted, R Gopalan, Joint Secretary, said that administrative ministries were in the process of preparing the proposals.

Though the industry, has not officially come up with its recommendations, there is consensus on liberalisation. Most stakeholders are unanimous in their eagerness to put the Indian healthcare sector on the global map. The CII’s view in general is to make the presence of the Indian healthcare sector felt in other countries. The opening up of medical services to global competition is expected to result in some high quality and expensive facilities, catering to the affluent class of the Indian society. This will force Indian healthcare majors to compete on quality of care, feels Dr Salam.

Experts feel that India should look mainly at Mode 3 and Mode 4 while opening up its healthcare service sector. This would encourage FDI and facilitate cross-border movement of people.

Says a CII member, “Mode 3 will be important for us to bring more investment into the country. We should be more relaxed on mode 3 and mode 2 for bringing in investment into the country in this sector.” Adds Bhaumik, “As of today, 100 per cent FDI is allowed in hospitals. We must take advantage of article IV of GATS, which facilitates developing countries to enter into bilateral trade. We must negotiate so as to put restriction on FDIs, to keep a check on domestic economy and put forth certain conditions so that they do not get their nurses and doctors here.”

However, the industry is divided on which areas should be opened up and which deserve to be restricted. Says a chief executive of a Mumbai-based Hospital, “We only talk of products going abroad and follow restrictive trade practices in India. Instead, we should make India an ideal destination to attract foreigners. For that, we have to create good facilities first.”

Issues and concerns

There are a number of issues that need to be addressed before opening up the healthcare service sector. For instance, facilitating Mode 4 would mean that medical degrees awarded in India should be accepted in other countries. So, negotiation on educational qualification requirements is imminent. Then, there is this worry whether trade in medical services will lead to brain drain. Dr Yogi Mehrotra, member of the Expert Group on Services Negotiation formed by the Ministry of Commerce, says in the long run trade will decrease brain drain as sophisticated and state-of-the-art hospitals will be created in India, which will in turn stem brain drain. Putting forth the positive aspect of mode 4, another expert says, ‘‘Doctors will not be required to leave the country to practise abroad. Under Mode 2 of Gats, doctors in India can practice abroad without having to leave the country.’’

On the regulation front, one of the crucial issues to be negotiated is extension of insurance cover to a US citizen seeking treatment in India. ‘‘We may want to negotiate the financial service and insurance issues, especially under financial service and insurance,’’ says an economist with the CII.

One of the major concerns of liberalisation is its impact on public health. Will liberalisation increase the overall cost of healthcare and unleash a crisis for the already burdened and uninsured people of India? Not likely, says Dr Salam. ‘‘As far as the masses are concerned, there might not be a major impact, since what will be added is another layer at the higher end of the affordability spectrum. So long as the public sector is able to live up to expectations, there need not be any concern,’’ he says.

Overall, the healthcare industry sees liberalisation of medical services in a positive light. There is much to gain. The much-talked about medical tourism may finally get a boost. And with MNCs pricing products and services based on the local economies where they operate in, experts feel more patients would want to travel to these institutions from other countries for affordable care.