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Friday 25 April 2008

Healthcare outsourcing to India

Surrogate mothers being outsourced to India add one more chapter to the saga of cheaper "jobs" being transferred to low-cost economies such as India. For now, "hiring" a womb appears to be a win-win situation, both from the cost and quality of medical service.

California-based Thomas and Karen, in their 30s and originally from South Korea, were married two years ago, but due to medical complications were forced to look for a surrogate mother. Research on the Internet led them to Anand in Gujarat, which has
become known for such in-vitro fertilization (IVF) procedures.

Pictures of their son, Brady, looking very much like his genetic parents, were splashed across television screens this week.

The cost of renting a womb is under US$5,000, compared to more than $50,000 in the West. The entire procedure in India costs in the range of $10,000, and the quality of treatment and technology and the expertise of the country's doctors compares with the best in the world.

What is more, the surrogate mother in the case above desperately needed the money. She lives in an impoverished district of West Bengal and needs to pay for treatment for her own very ill child who is suffering from a heart ailment.

The income she has earned is huge given her probable subsistence at less than a dollar a day. There are over 200 million Indians in this income category, in a country with annual per capita income around $500.

It seems that while one life has been created, another has been saved, though there has been criticism regarding the "commoditization of motherhood", risk to health and exploitation of the poor by the rich. However, the "plight" of a smiling surrogate mother with a big bank balance still looks like a better option than being one of the thousands of destitute women who are pushed into prostitution and treated mercilessly.

"It is difficult, but it is all right. They did not have a child so I am happy that they can be parents now, and I have found a friend in her," said the surrogate mother whose name has been withheld. "She's like my family. We just don't share parentage of the child. It's more emotional. She is like my sister," said Karen.

Infertility expert Dr Nayna Patel, who conducted the procedure, said: "I have found surrogate mothers for more than 50 couples, nearly 35% of which are foreigners, so far. This case is a good example of how technology can help solve crucial social problems. For me, the smile on Karen's face when Brady was born was satisfying enough."

According to Indian medical practitioners, 100 to 150 of the 500 to 600 surrogate babies born across the world every year are born in India. Many more are trying without success.

However, doctors say that given the fact that many women work and contribute significantly to household welfare, some may not want to take the time out to bear children and will choose the IVF option.

Many couples who adopt kids could also exercise this option. The Indian Council for Medical Research has estimated that the reproductive sector could soon be worth $6 billion a year.

As things stand, surrogate motherhood is illegal in Italy and banned for commercial purposes in Australia, Spain and China, and permitted with restrictions in the US, France and Germany.

Though new laws are being drafted, Indian medical statutes permit doctors to implant five embryos into a surrogate mother. In Britain the maximum is two, while many European countries are looking at a single embryo. India's existing laws permit the surrogate mother to sign away her rights to the baby, immediately after birth.

Reuters quotes C P Puri, director of India's National Institute for Research in Reproductive Health, as saying: "Every pregnancy and birth is associated with some health risk. We must not promote surrogacy as a trade. In addition, many surrogate mothers in India face issues associated with "traditional attitudes to sex and procreation".

A report by India Brand Equity Foundation and Ernst and Young says that outsourced healthcare will employ nearly 200,000 people in India by 2008, up from about 20,000 people in the medical, healthcare and pharmaceutical business process outsourcing space now.

According to estimates, the industry is expected to generate about $3 billion per year by 2010. Medical outsourcing has four clients - provider (hospitals and physicians), payer (health insurance companies), pharmaceutical companies and healthcare information technology companies.

Today, the Indian medical tourism market (foreigners seeking medical treatment in India) is worth $700 million and the projection is that it will swell to $1 billion in the next couple of years. More than 150,000 patients, the majority from the US and the UK, have undergone treatment in India.

The price differential can be quite significant, especially for patients from the US. For example, a liver transplant in the US costs around $450,000, while in India it is $40,000; low-cost cardiac surgery in India costs $4,000 to $9,000, while in the US it can be in the $30,000 to $50,000 range; orthopedic surgery costs as little as $4,500 in India, while in the US it is about $18,000. A comprehensive health check-up for a US patient in India is around $80, substantially less than the $600 it would cost stateside.

It is estimated that 50 million US citizens do not have health insurance policies due to high premiums.

Traditional outsourced services have been medical insurance claims processing and digitizing patient health records (medical transcription). Now, several high-end services such as clinical data analytics, biometric services and medical engineering are being sourced from India.

Newer services being outsourced include research, analyses and reports on emerging technologies for major US healthcare foundations and organizations, and for industry publications.

The US-based First Consulting Group, an IT services firm, recently set up a healthcare outsourcing facility in Bangalore.

Karvy, a financial services company, has now moved into providing services to the healthcare industry. Outsourcing major Firstsource Solutions, formerly ICICI OneSource, recently acquired BPM, a Delaware-based healthcare claims outsourcing company in the US.

Last year, Indian pharmaceutical firms acquired international firms. Dr Reddy took over German company Betapharm for about $570 million, and Ranbaxy bought out Terapia for about $324 million. Various Indian pharmaceutical firms have also started to expand their businesses in countries such as the US and the UK.
Several foreign pharmaceutical firms are targeting India's growing market and also looking at outsourcing research at half the cost.


Siddharth

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