kpmg report health care
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ADVISORY
GlobalInfrastructurTrendMonitorIndian Healthcare Edition:
Outlook 20092013
The Global Infrastructure: Trend
Monitoris a series of publications
allowing infrastructure investments
to be compared across geographies.
In this third edition, we analyze
the medium-term expenditure on
healthcare infrastructure across
India. Our aim is to help improve the
quality of debate in identifying the
geographically attractive markets in
Indias healthcare infrastructure.
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ii Global Infrastructure: Trend MonitorIndian Healthcare Edition
2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS
India saw rapid economic growth from 2003 to the start of the
global economic slowdown in 2008.
Among the largest economies in the world, its growth rate was second
only to that of China. However, few would disagree that Indias past
expenditure on infrastructure has fallen short of demand and, as a
result, it may be constraining current and future economic growth.
With a population of over a billion, the coordination and strategic
choices concerning expenditures on healthcare infrastructures are of
vital importance. These are especially challenging given the complex
migration patterns typically seen within emerging economies. It
remains to be seen how the policies currently in place will shape the
Indian healthcare infrastructure market in the future.
Private healthcare capacity in India is already significant. Given the
anticipated incentives to be offered by the government, including
the use of user fee financed provision and the opportunities for
Public Private Partnerships (PPP), it is believed that the private
sector market will attract further foreign investment. Additionally,
the recent election victory of the United Progressive Alliance (UPA)
with a stable majority, may help provide a mandate to push through
major social infrastructure improvements for this emerging global
economic power.
This third edition of the Global Infrastructure: Trend Monitor
presents forecasts for current and future healthcare infrastructure
expenditure across India. By this, we aim to help improve the quality
of the debate on the size and geographic location of opportunities in
India. We hope you enjoy this publication and find our commentaryon this exciting market informative.
Foreword
Kai RintalaHead of Infrastructure Intelligence
KPMG in the UK
Pradip KanakiaHead of Markets
KPMG in India
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2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS
Notes
1) This publication distinguishes between
model output-oriented commentary, which
is based on the data collated from stated
sources, and insight-oriented commentary,
which is based on the views among KPMG
professionals. The limitation of the former
is that it does not attempt to capture market
developments, new initiatives or shifts in
policy.
2) The 2009-2013 data are modelled using the
latest figures available at the time of writing
3) All figures in this publication are in 2006 US
dollars based on exchange rates to facilitate
direct comparisons and they represent
all investment, by both public and private
sector, in healthcare infrastructure which
may include activities such as medical
research, drug production or primary care
services
4) Annual growth rates over the period2009-2013 are in real terms, i.e. they exclude
the impact of inflation
Objective
The aim of the Trend Monitor is to help
stimulate informed debate of global
infrastructure opportunities by providing
Important Notes
observations and on-the-ground market insight
underpinned by econometric modeling.
Existing publications tend to focus on the
short-term, identifying opportunities that are about
to come to market, or the long-term, estimating
the size of the required investment over decades
to come. The Trend Monitor is purposefully
positioned between the two in order to present
a medium-term (2009- 2013) view of market
potential.
Our analysis builds on what we believe to be
the most consistent data sources, and relies on
only a small number of explicit assumptions. The
publication also leverages the local specialization
of professionals in KPMGs Indian member firm to
present a better informed view of the future.
Definitions and classifications
Size and prospects of individual states:
Largeandgrowingfaststateswhere2006
expenditure is above $500m and investmentis expected to expand relatively rapidly, with
average projected annual growth rates of over
6.5 percent in the period 2009-2013
Largeandgrowingslowlystateswhere
2006 expenditure is above $500m though
investment is expected to expand relatively
slowly, with average projected annual
growth rates below 6.5 percent in the period
2009-2013
Smallandgrowingfaststateswhere
2006 expenditure is below $500m while
investment is expected to expand relatively
rapidly, with average projected annual
growth rates of more than 6.5 percent in the
period 2009-2013
Smallandgrowingslowlystateswhere
2006 expenditure is below $500m and
investment is expected to expand relatively
slowly, with average projected annual
growth rates below 6.5 percent in the period
2009-2013
The term state is used throughout this
publication as a reference to various areas of
the respective federal structures of India. The
Trend Monitor is concerned with all 28 states
and four of the seven union territories of India
as data for the least populous union territories
of Dadra and Nagar Haveli; Daman and Diu;
andLakshadweepwereunavailable.
Method
A detailed overview of the research and
analysis method applied can be found in the
Method Output section of this report.
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2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS
India: expenditure on healthcare infrastructure in 2006 (US$ million)
India: expenditure on healthcare infrastructure in 2006 per person (US$)
Analysis: KPMG International, refer to Method section of this report
Analysis: KPMG International, refer to Method section of this report
0
200
400
600
800
1,000
1,200
1,400
AndamanandNicobarIslands
AndhraPradesh
ArunachalPradesh
Assam
Bihar
Chandigarh
Chattisgarh
Delhi
Goa
Gujarat
Haryana
HimachalPradesh
JammuandKashmir
Jharkhand
Karnataka
Kerala
MadhyaPradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Puducherry
Punjab
Rajasthan
Sikkim
TamilNadu
Tripura
UttarPradesh
Uttranchal
WestBengal
US$m
0
5
10
15
20
25
30
35
40
AndamanandNicobarIslands
AndhraPradesh
Arunac
halPradesh
Assam
Bihar
Chandigarh
Chattisgarh
Delhi
Goa
Gujarat
Haryana
Himac
halPradesh
Jammua
ndKashmir
Jharkhand
Karnataka
Kerala
Madh
yaPradesh
M
aharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Puducherry
Punjab
Rajasthan
Sikkim
TamilNadu
Tripura
UttarPradesh
Uttranchal
W
estBengal
US$
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5 Global Infrastructure: Trend MonitorIndian Healthcare Edition
2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS
India: forecast cumulative expenditure on healthcare infrastructurein 20092013 (US$ billion)
India: forecast average annual growth rate in healthcare infrastructureexpenditure 2009- 2013 (percent)
Analysis: KPMG International, refer to Method section of this report
Analysis: KPMG International, refer to Method section of this report
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Andaman
andNicobarIslands
AndhraPradesh
ArunachalPradesh
Assam
Bihar
Chandigarh
Chattisgarh
Delhi
Goa
Gujarat
Haryana
HimachalPradesh
J
ammuandKashmir
Jharkhand
Karnataka
Kerala
MadhyaPradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Puducherry
Punjab
Rajasthan
Sikkim
TamilNadu
Tripura
UttarPradesh
Uttranchal
WestBengal
0
1
2
3
4
5
6
7
8
AndamanandNicobarIslands
AndhraPradesh
ArunachalPradesh
Assam
Bihar
Chandigarh
Chattisgarh
Delhi
Goa
Gujarat
Haryana
H
imachalPradesh
Jam
muandKashmir
Jharkhand
Karnataka
Kerala
MadhyaPradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Puducherry
Punjab
Rajasthan
Sikkim
TamilNadu
Tripura
UttarPradesh
Uttranchal
WestBengal
US$bn
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2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS
India: forecast cumulative expenditure on healthcare infrastructure in20092013 per person (US$)
India: ratio of forecast cumulative expenditure on healthcare2009 2013 to the forecast average for all states
Analysis: KPMG International, refer to Method section of this report
0
50
100
150
200
250
300
AndamanandNicobarIslands
AndhraPra
desh
ArunachalPra
desh
Assam
Bihar
Chand
igarh
Chattis
garh
Delhi
Goa
Gu
jarat
Haryana
HimachalPra
desh
JammuandKas
hmir
Jhark
hand
Karnataka
K
erala
MadhyaPra
desh
Mahara
shtra
Manipur
Meghalaya
Mizoram
Nagaland
O
rissa
Puducherry
Punjab
Rajas
than
Sikkim
TamilNadu
Tr
ipura
UttarPra
desh
Uttranchal
WestBengal
US$
3
.66
2.6
6
2.
62
2.3
9
2.3
2
2.3
1
2.2
0
1.9
1
1.6
9
1.5
9
1.3
3
1.1
0
0.8
5
0.7
8
0.5
7
0.5
4
0.4
8
0.
48
0.4
8
0.
41
0.
35
0.3
3
0.2
0
0.
14
0.1
3
0.1
0
0.
08
0.
07
0.
06
0.0
5
0.0
5
0.0
3
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Maharashtra
Rajasthan
WestBengal
UttarPradesh
TamilNadu
AndhraPradesh
Kerala
Gujarat
Karnataka
Haryana
Delhi
MadhyaPradesh
Punjab
HimachalPradesh
Bihar
JammuandKashmir
Orissa
Assam
Jharkhand
Uttranchal
Chattisgarh
Manipur
Tripura
Nagaland
Chandigarh
ArunachalPradesh
Meghalaya G
oa
AndamanandNicobarIslands
Mizoram
Sikkim
Puducherry
Ratio
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2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS
Model Output
Total healthcare infrastructure
expenditure for 2013 is predicted to
reach $14.2 billion, a near 50 percent
increase on the 2006 total.
Of the 32 states, the six states of
Maharashtra,Rajasthan,WestBengal,
Uttar Pradesh, Tamil Nadu and Andra
Pradesh represent just over 50 percent
of the total expenditure in 2006.
Maharashtra alone spent around 12
percent of the total expenditure at
approximately US$1.1 billion, yet the
state accommodates fewer than 10
percent of the overall population.
Twelve states spent less than
US$100million each in 2006, together
representing less than 4.5 percent
of total national expenditure and 3.6
percent of the population. Among
these the smallest expenditure
states were Goa, Andaman and
Nicobar Islands, Mizoram, Sikkim, and
Puducherry.
The state of Uttar Pradesh was only
the third largest in terms of absolute
expenditure in 2006 but hosts over 16
percent of the population.
The states of Himachal Pradesh,
Manipur and Andaman and Nicobar
Islands were the only states to spend
over US$30 per capita on healthcare
infrastructure in 2006, with about
two thirds of the remaining states
spending less than US$15, including
the 6 largest absolute expenditure
states.
The state with the highest per capita
healthcare expenditure for 2006 is the
Andaman and Nicobar Islands at $36,
while the state with lowest is Bihar at
just $1.9, revealing uneven distribution
of infrastructure expenditure.
The states of Manipur and Nagaland
are expected to grow the fastest
through the medium term, each
projected to have average annual
growth rates over 8 percent against
an overall national rate of 5.8 percent.
Of the larger states, expenditure on
healthcare infrastructure is expected
togrowthefastestinRajasthanand
West Bengal.
Maharashtra maintains its dominance
as the state with the highest
cumulative healthcare infrastructure
expenditure over the forecast
period, with a projected spend at
over US$7.3 billion. Only the 2 other
statesofRajasthanandWestBengal
are projected to witness cumulativehealthcare expenditures of over US$5
billion from 2009 to 2013.
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2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS
2 KPMG/Confederation of Indian Industry (2008) Health Insurance Inc.: The Road Ahead
Insight
Against a world average of around four
hospital beds per 1000 population,
India lags behind at just over 0.72. This
is a clear indication of the insufficiency
of healthcare infrastructure in India.
The Indian healthcare industry is
estimated to double in value by 2012
and more than quadruple by 2017. The
main factors propelling this growth
are rising income levels, changing
demographics and illness profiles
with a shift from chronic to lifestyle
diseases. This is likely to result in
considerable infrastructure challenges
and opportunities.
Indian healthcare infrastructure over
the last decade has not kept pace with
growth in population. The available
capacity has increased but not in linewith rising demand. This is likely to be
in part due to lack of capacity building
in semi urban and rural areas.
The Indian healthcare system is
controlled by respective state
authorities, presenting an opportunity
to improve responsiveness to
healthcare needs at a more local
level. Our analysis suggests that
there is uneven focus on healthcare
infrastructure in India. The variety
of organizational structures and
processes in healthcare delivery may
result in greater inequalities between
geographical areas.
There is a growing agenda to deal
with the issues of urban healthcare
infrastructure as rural to urban
migration has significantly increased
demand for these services.
The healthcare sector in India is
undergoing considerable reform
prompted by the continuing phase
of rapid economic growth. Emerging
markets, such as diagnostic chains
and medical device manufacturers,
are attracting increasing amounts ofinvestment.
There is growing appreciation for
the role private involvement may
have in meeting public demand and
government is piloting the use of PPP
models to help improve infrastructure
and healthcare provision.
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9 Global Infrastructure: Trend MonitorIndian Healthcare Edition
2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS
Method
This publication draws on data from
named sources and insights from profes-
sionals in KPMGs Indian member firm, in
order to present both model outputs and
commentary on the Indian healthcare
infrastructure market.
Information on market size has not
been readily available and as such it is
produced using an econometric model,
utilising data sourced externally and a
limited number of explicit assumptions.
The dataset3 is presented in Appendix 1.
Our forecasts of the future size of
the healthcare infrastructure markets
across India encompass expenditure at
different levels of government as well
as the private sector on building and
maintaining healthcare infrastructure
for uses such as medical research, drug
production or primary care services.
Our modeling relies on past trends to
project the future and does not attempt to
capture the undercurrents of political risk,
financial and other market fluctuations, or
sudden spikes in infrastructure activity.
The process of data gathering and
presentation was as follows:
Constructionoutputdata(2000-2006)
for 32 Indian states was obtained from
Indian National Income Accounts at
factor cost and converted to market
prices.
Theconstructionoutputdatawas
converted to US$ at June 2000
exchanged rate and rebased in 2006
prices using a price index from US
Bureau of Economic Analysis.
Constructionoutputforeachstate
was multiplied by 0.66 to arrive
at healthcare construction output
(including new build as well as repair
and maintenance). This ratio is based
on the average long-run ratio in UK
Construction Statistics Annual (UK
Department of Business Enterprise
andRegulatoryReform).
Healthcareconstructionoutput
was multiplied by 3.6 to include the
expenditure on design and professional
services, land, plant and materials.
This ratio was derived from the UK
Construction Statistics Annual and UK
Quarterly Capital Expenditure Inquiry
(UK Office of National Statistics).
Theforward-lookingexpenditures
up to 2013 were estimated by linear
extension of the line of best fit for the
historical data.
Thepercapitaexpenditureswhere
created using 2006 population sizes
(www.india.gov.in) except for Jammu
& Kashmir (2005), Nagaland (1997),
West Bengal (2004) and Puducherry
(undated) due to availability of data.
The population sizes were considered
to remain unchanged in the calculation.
It should be noted that the numbers
for India are not directly comparable
with those presented in other editions
of Global Infrastructure: Trend Monitor
as different sources and methods have
been used in producing them.
3 The datasets have been produced in collaboration with Dr Stephen Gruneberg
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Global Infrastructure: Trend MonitorIndian Healthcare Edition 10
2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS
Appendices
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Appendix 1. Historical and forecast future healthcare infrastructure expenditure in India (in US$ millions at 2006 prices)
State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Andaman and Nicobar
Islands7 7 9 10 13 13 15 17 18 20 21 23 24 26
Andhra Pradesh 402 408 447 493 547 603 672 759 774 825 877 928 980 1,031
Arunachal Pradesh 17 19 25 22 24 29 30 33 35 37 39 41 44 46
Assam 109 114 132 119 146 148 154 160 169 176 183 191 198 206
Bihar 143 144 140 160 145 173 171 217 201 210 218 227 236 245
Chandigarh 11 12 23 18 22 31 33 40 42 46 50 54 58 62
Chattisgarh 37 32 43 46 54 76 90 108 109 120 130 141 152 162
Delhi 248 287 280 314 334 365 408 443 455 482 509 535 562 589
Goa 10 10 11 12 15 16 19 21 22 23 25 27 28 30
Gujarat 386 380 383 432 474 532 588 633 651 689 728 767 806 844
Haryana 222 273 279 320 342 392 455 505 523 562 600 639 678 716
Himachal Pradesh 130 131 142 161 161 184 210 278 258 277 295 314 332 351
Jammu and Kashmir 69 76 90 102 105 131 150 169 176 190 204 218 233 247
Jharkhand 105 100 114 112 127 141 152 161 167 176 185 194 203 212
Karnataka 297 307 350 380 405 443 499 550 567 603 640 676 712 748
Kerala 370 339 324 397 483 558 637 695 720 774 828 882 936 991
Madhya Pradesh 207 230 239 248 268 307 336 365 375 397 419 441 464 486
Maharashtra 771 631 678 748 815 1,018 1,149 1,195 1,232 1,311 1,390 1,469 1,548 1,627
Manipur 24 32 39 44 56 71 79 100 103 113 123 134 144 155
Meghalaya20 21 22 22 24 25 26 27 28 29 30 31 32 33
Mizoram 7 7 9 11 12 13 14 16 17 19 20 21 23 24
Nagaland 10 13 17 19 24 30 36 42 44 48 53 57 62 66
Orissa 113 125 125 133 139 156 154 165 171 178 185 192 199 207
Puducherry 11 11 11 12 12 12 12 12 13 13 13 13 13 14
Punjab 164 175 188 196 205 230 260 288 289 306 323 340 357 374
Rajasthan 416 386 434 470 590 569 781 866 867 934 1,001 1,068 1,135 1,203
Sikkim 5 6 8 9 11 12 14 16 17 19 20 22 23 25
Tamil Nadu 481 506 529 572 611 666 714 783 801 844 887 929 972 1,015
Tripura 20 27 33 37 43 45 51 62 64 70 75 80 86 91
Uttar Pradesh 503 530 554 558 613 672 771 805 825 869 914 958 1,002 1,047
Uttranchal 58 61 82 88 93 99 114 131 136 146 156 166 176 186
West Bengal 370 389 424 455 554 608 760 819 850 917 985 1,052 1,119 1,187
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KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.
Designed and produced by KPMG LLP (U.S.)s National Design Proposal & Production Services
Publication name: Infrastructure trend monitor
Publication number: 20866NSS
Publication date: July 2009
The information contained herein is of a generalnature and is not intended to address the circum-stances of any particular individual or entity.Although we endeavor to provide accurate andtimely information, there can be no guarantee thatsuch information is accurate as of the date it isreceived or that it will continue to be accurate inthe future. No one should act on such informationwithout appropriate professional advice after athorough examination of the particular situation.
KPMG member firms ability to deliver somespecific services may be limited in individualcountries by local laws and governancerestrictions.
KPMG's Global Infrastructure professionals provide objective advisory support to our
member firms clients through the lifecycle of complex infrastructure projects.
Our teams have extensive local and global experience advising infrastructure contractors,
operators and investors, and government organizations in the following areas:
Planning,structuring,andmanagementofnewinfrastructureinvestments
Procurementandfinancingsupport
Improvementandmonitoringofconstructionandoperations
Restructuringofdistressedprojects
Investmentduediligenceassistance
Infrastructure-relatedaudit,tax,accounting,andcomplianceissues.
For additional information regarding our services and capabilities,please e-mail us at infrastructure@kpmg.com.
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