• Tassos Stassopoulos

Lower socioeconomic groups fuelling Growth of Private Healthcare in EMs


Private healthcare is set to grow exponentially in many EMs as the lower socioeconomic classes prefer to pay for access to doctors rather than use services provided by government. Looking through the EM lens, “free” public healthcare can be “unaffordable” for those that need it most, as they can’t risk losing wages while waiting to see a government doctor who might never show up.


Raj lives in India, in a village not far from the city of Aurangabad in rural Maharashtra and is a typical example. He is married with a young daughter and works as a farm labourer, earning upwards of of Rs. 210 (USD $3) a day. His young family depends on his daily wage as they have few savings.

“free” public healthcare can be “unaffordable” for those that need it most, as they can’t risk losing wages while waiting to see a government doctor who might never show up.

Despite his low wage he will visit a private doctor who charges him Rs.130-180 (USD 2). The doctor lives close to his village and will see him quickly, meaning he does not have to forgo a day’s wages. Put simply, they need to pay for the doctor because they can't afford to lose his wage.


Raj cannot afford to go to a “free” government doctor in the nearest town, which is six miles away, where he would spend his whole day waiting and may not see the doctor. A study[1] co-authored by this year’s Economics Nobel winner, Michael Kremer, found absenteeism of 40% for doctors during unannounced visits to primary healthcare centres in India. The poorer the region, the higher the absenteeism. So not only would Raj have a longer journey and more waiting, but he also runs the risk of the doctor not being there at all. This could mean wasting the following day again, with still no guarantee of seeing the “free” doctor.


The study has also shown that more senior doctors are absent more often than junior doctors. Men tend to be more absent than women, and lower quality hospital facilities drive higher absenteeism. Meanwhile the government struggles to fill vacancies[2] which for doctors are at 8% and for nurses at 18%.


While demand for healthcare is set to grow dramatically as societies grow richer, some countries like India, which has 0.7 beds per 1,000 population compared to 11.5 in South Korea[3], have a long way to go to catch up.

it will drive exponential growth in the private healthcare sector in EMs. This means that the providers should take on the social responsibility to fill the gap

Studies show that poorer people take fewer sick days, as they can't 'afford' not to work. We believe that as health and wellness becomes more important in people's lives, it will drive exponential growth in the private healthcare sector in EMs. This means that the providers should take on the social responsibility to fill the gap, offering efficient, affordably-priced solutions to the lower socioeconomic groups who need it the most.


[1]Chaudhury, Nazmul, Michael Kremer et al. Missing in action: teacher and health worker absence in developing countries (The Journal of Economic Perspectives 20.1 (2006): 91-116)


[2] Rao, K., et al. So many, yet so few: Human Resources for Health in India (2012, Human Resources for Health)


[3] Data on Hospital Beds per 1000 people, https://data.worldbank.org/indicator/SH.MED.BEDS.ZS, Accessed on 7th October 2019.


Sources for the infographic:

Data on Healthcare spends as a percentage of GDP, https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS, Accessed on 7th October 2019.

Insurance related Migration

Shoree, Shantanu et al. Evaluation of RSBY's key performance indicators: A biennial study 2014 http://www.impactinsurance.org/publications/rp42 ,Accessed on 7th October 2019.

Increases in Healthcare demand with Wealth

Ministry of Statistics and Program Implementation (MOSPI) India

http://mospi.nic.in/download-reports, Accessed on 7th October 2019

Photographs

Bajpai, N, J D Sachs and R H Dholakia (2009): Improving Access, Service Delivery and Efficiency of the Public Health System in Rural India: Midterm Evaluation of the

National Rural Health Mission, (Working Paper No 37, Center on Globalisation and Sustainable Development, Columbia University


The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of Trinetra Investment Management LLP and are subject to revision over time. Trinetra is authorised and regulated by the Financial Conduct Authority in the United Kingdom.

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