All You Need to Know About Healthcare Business In India

In this article, we shall take a look at the overall dynamics of the healthcare sector in India and the relevant laws governing it.

Healthcare Business in India

The healthcare business landscape in India encompasses a diverse range of sectors, including hospitals, medical device manufacturing, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment. This sector has emerged as a vital contributor to India’s economy, generating substantial revenue and employment opportunities.

Healthcare in India is undergoing rapid development, marked by increased coverage, enhanced services, and growing investments from both public and private entities. The Indian healthcare delivery system is divided into two major components: the public sector and the private sector.

In the public healthcare system, the government plays a significant role, with limited secondary and tertiary care institutions located in key cities. The primary focus of the public sector is to provide basic healthcare services, primarily through primary healthcare centers (PHCs) in rural areas.

On the other hand, the private sector dominates the provision of secondary, tertiary, and quaternary care services, with a strong presence in metropolitan areas and tier-I and tier-II cities. This dual structure aims to cater to the diverse healthcare needs of the Indian population, ensuring accessibility to basic healthcare facilities in rural regions while offering advanced medical services in urban centers. The continual growth and evolution of the healthcare sector in India position it as a key player in the country’s overall economic landscape.

Market Size

A joint report by Boston Consulting Group (BCG) and B Capital reveals that India’s healthcare industry is poised for a remarkable digital transformation, potentially soaring from $2.7 billion in 2022 to a staggering $37 billion by 2030. This surge is attributed to rapid digitization, the proliferation of innovative health-tech platforms, strategic collaborations between startups and established firms, and conducive funding environments, all supported by government initiatives.

The report highlights the upward trajectory of healthcare spending as a percentage of GDP, signifying economic development. Although India trails behind major economies in this aspect, the trend is gaining momentum. The COVID-19 pandemic has acted as a catalyst for the widespread adoption of digital healthcare, with patients and healthcare providers becoming more comfortable with technology in healthcare interactions.

Initiatives like the Ayushman Bharat Digital Mission underscore the government’s commitment to reshaping the healthcare system through technology. The report identifies emerging trends, including the expansion of insurance coverage and outpatient services, making healthcare more accessible. Healthtech companies are extending their influence horizontally and vertically across the healthcare value chain.

Collaboration between established healthcare providers and digital-native startups is on the rise, aiming to deliver more efficient healthcare solutions. Asset-light healthcare providers are also emerging, focusing on cost-effective solutions to meet evolving patient needs. Established players are enhancing digital capabilities to counter competition from digital-native challengers.

Investment in Healthcare

The healthcare sector in India has witnessed substantial foreign direct investment (FDI) inflows, amounting to US$ 6.72 billion between April 2000 and March 2020, with a particular focus on hospitals and diagnostic centers. 

Recent noteworthy investments and developments in the Indian healthcare industry include:

1. Remdesivir Manufacturing Agreement: In May 2020, Jubilant Generics Ltd inked a non-exclusive license agreement with Gilead Sciences Inc (USA) to manufacture and sell Remdesivir, a potential COVID-19 drug, in 127 countries, including India.

2. Carlyle Group’s Stake Acquisition: Carlyle Group acquired a 74% stake in SeQuent Scientific Ltd, an animal health-focused pharmaceutical company, for approximately Rs 1,580 crore (US$ 224.15 million) in May 2020.

3. Mobile BSL-3 VRDL Lab: Launched in April 2020, the first COVID-19 sample collection mobile lab, named ‘Mobile BSL-3 VRDL Lab,’ has the capacity to process over 1,000 samples per day, contributing to the country’s COVID-19 testing capabilities.

4. Record M&A Deals in Hospitals: The value of merger and acquisition (M&A) deals in hospitals surged by 155% to Rs 7,615 crore (US$ 1.09 billion) in FY19.

5. Microsoft-Apollo Collaboration: In August 2019, Microsoft India and Apollo Hospitals Group collaborated to establish a National Clinical Coordination Committee focused on AI-powered Cardiovascular Disease Risk Score API.

6. Tri-County’s Acquisition Approval: In January 2019, the National Company Law Tribunal (NCLT) approved Tri-County Premier Hearing Services Inc’s plan to acquire Bhilai Scan and Research Pvt Ltd (BSR) Diagnostics Ltd for Rs 67 crore (US$ 9.29 million).

7. India-Cuba MOU: India and Cuba signed a memorandum of understanding (MoU) to enhance cooperation in health and medicine, demonstrating the commitment to international collaboration in the healthcare sector.

8. Fortis Healthcare Demerger: Fortis Healthcare approved the demerger of its hospital business with Manipal Hospital Enterprises, with potential investment from TPG and Dr. Ranjan Pal amounting to Rs 3,900 crore (US$ 602.41 million).

Things To Keep In Mind While Starting A Health Care Business In India

Considerations for Initiating a Healthcare Business in India

Starting a healthcare business in India involves various crucial aspects. Here are key considerations to keep in mind:

1. Know Your Investment:

   – Understand the capital requirements for infrastructure, equipment, and operational expenses.

   – Evaluate the potential return on investment in the healthcare sector.

2. Capture the Niche Market:

   – Identify a specific niche within the healthcare industry to target.

   – Tailor your services to meet the unique needs of your chosen market segment.

3. Understanding Growth Prospects:

   – Analyze the growth potential of the healthcare sector in your chosen location.

   – Stay informed about emerging trends and evolving healthcare demands.

4. Medical-Legal Complications:

   – Be aware of medical-legal complexities and compliance requirements.

   – Consult legal experts to navigate regulations related to healthcare services.

5. Taxation Regimes:

   – Understand the taxation structure applicable to healthcare businesses.

   – Comply with tax regulations and seek professional financial advice.

6. Abide by Rules and Regulations:

   – Familiarize yourself with healthcare regulations and licensing requirements.

   – Ensure compliance with ethical standards and patient privacy laws.

7. Connect with Hospitals:

   – Establish partnerships with hospitals or healthcare networks.

   – Collaborate with existing healthcare providers to enhance services.

8. Loans and Finance Requirements:

   – Assess your financing needs and explore loan options.

   – Develop a comprehensive financial plan to secure funding for your venture.

9. Legal Department for Registration Guidelines:

   – Consult with the legal professionals from Vakilsearch to understand registration procedures.

   – Obtain necessary licenses and approvals to operate a healthcare business.

10. Quality Standards:

    – Adhere to quality standards and certifications applicable to healthcare services.

    – Implement measures to ensure patient safety and satisfaction.

Consolidated List Of Acts Related To Health And Medical Industry

Laws For Governing The Commissioning Of Hospital:

• The Companies Act, 2013
• The Partnership Act, 
• Society Registration Act –1960
• Clinic Establishment Act
• St. John Ambulance Association (India) Transfer of Funds Act – 1956
• Red Cross Society (Allocation of Property) Act- 1936
• Fire Safety Rules – 1987
• Government Buildings Act – 1899
• Electricity Rules – 1956
• The Registration Act. – 1908
• Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act – 1908
• Delhi Nursing Home Registration Act – 1953
• Clinical Establishments Bill – 2010
• Moreover, the Bombay Nursing Homes Registration (Amendment) Act- 2005
• Additionally, the Indian Telegraph Act – 1885
• Additionally, the Bombay Nursing Homes Registration (Extension and Amendment) Act -1959
• Atomic Energy ( Safe Disposal of Radioactive Waste) Rules -1987
• Similarly, Bombay Nursing Homes Registration Act – 1949
• Radiation Protection Certificate for Radiology Department from BARC
• Further, Atomic Energy Regulatory Body Approval for Radiology / Nuclear Medicine Services under the Atomic Energy Act – 1962

Laws/Regulations Governing Hospital Business Aspects

• The Public Liability Insurance Act – 1991/1992
• Further, the Public Liability Insurance Rules – 1991/1993
• Charitable and Religious Trust Act-1920
• Contract Act – 1982
• Moreover, Income Tax ACT – 1961
• Copyright Act – 1982
• Likewise, the Customs Act – 1962
• Gift Tax Act – 1958
• Foreign Exchange Management Act-1999
• Cable Television Network ACT – 1995
• Likewise, Wireless Operation Certificate from Post and Telegraphs
• Insurance Act – 1938
• Similarly, Rules for the display of Red Cross Insignia
• Vehicle Registration Certificate
• Sales of Good Act – 1930

Laws Governing Sales/Storage Of Drugs And Safe Medication:

• Sales of Good Act – 1930
• Drugs and Cosmetic Act – 1940
• Central Excise Act (for a permit to use and store spirit) – 1944
• The Drug and Cosmetics Rules (Amendment 2005) – 1945
• Pharmacy Act – 1948
• The Drugs Control Act – 1950
• Central Sales Tax Act -1956
• Homoeopathy Central Council Act – 1973
• Drug and Cosmetic Act Amendment – 1982
• Narcotics and Psychotropic Substances Act -1985
• Blood Bank Regulations under Drugs and Cosmetic ( 2nd amendment ) rules – 1999
• Homoeopathy Central Council (Amendment) Act -2002
• Licence for Possession and use of Rectified/denatured spirit
• Retail Drug Licence
• Adulteration of Drugs (IPC Sec 274)
• Sales of Adulterated Drugs ( IPC Sec 275 )
• Sales of Drug as Different Drug or Preparation ( IPC Sec 276 )
• Negligent Conduct about Poisonous Substances (IPC Sec 284)

Laws Governing Qualifications, Practice And Conduct Of Professionals

• Indian Nursing Council Act -1947
• The Dentists Act – 1948
• Indian Medical Council Act – 1956
• The Apprenticeship Act – 1961
• The Dentists (Code of Ethics Regulation) – 1976
• All India Council for Technical Education ACT – 1987
• Rehabilitation Council of India Act – 1992
• Indian Medical Council (Professional conduct, etiquette, and ethics) regulations- 2002
• Dental Council of India Regulations – 2006
• Indian Medical Degrees Act
• Registration of Medical Practitioners with State Medical Councils
• The ICN Code of Ethics for Nurses
• AICTE Rules of Physiotherapy Rules

Laws Governing Management Of Patients

• Birth, Death, and Marriage Registration Act – 1886
• Guardians and Wards Act – 1890
• The Epidemic Disease Act – 1897
• Indian Lunacy Act – 1912
• Drugs and Magic Remedies (objectionable) Advertisements Act 1954 – 1954
• MTP Rules – 1971
• Lepers Act – 1975
• Ear Drums and Ear Bones (Authority for Use for Therapeutic Purposes) Act – 1982
• Eyes (Authority for Use for Therapeutic Purposes) Act -1982
• The Mental Health Act – 1987
• Transplantation of Human Organ Act – 1994
• PNDT Act – 1994
• Transplantation of Human Organ Rule – 1995
• Pre Conception and Prenatal Diagnostic Techniques (prohibition of sex selection) Rules – 1996
• MTP Act – 1997
• Rules for Insurance Cover for the Sterilization Cases
• Laws of Contract Section 13 (Consent)
• National Guidelines for Clinical Management of HIV / AIDS, NACO, Govt. of India.
• Manual for Control of Hospital Associated Infections: SOPs, NACO, Govt. of India

Laws Governing Environmental Protection/Safety

• State Municipality Sanitation and Public Health Bye-Laws – 1959
• The Water (Prevention and Control of Pollution) Act – 1974/1988
• The Water (Prevention and Control of Pollution) Rules – 1975
• The Water (Prevention and Control of Pollution) Cess Rules – 1978
• Air ( Prevention and Control of Pollution ) Act – 1981/1987
• The Air (Prevention and Control of Pollution) Rules – 1982
• The Air (Prevention and Control of Pollution) (Union Territories) Rules – 1983
• Environment Protection Rule – 1986
• Environment Protection Act – 1996
• Biomedical waste management handling rules – 1998/2000
• The Noise Pollution (Regulation and Control) (Amendment) Rules – 2000
• Noise pollution control Rules – 2000
• The Noise Pollution (Regulation and Control) (Amendment) Rules – 2002
• The Water (Prevention and Control of Pollution) Cess (Amendment) Act- 2003
• The Noise Pollution (Regulation and Control) (Amendment) Rules – 2006
• The Noise Pollution (Regulation and Control) (Amendment) Rules – 2010
• Rules regarding the safe discharge of effluents in the public sewers /drains
• IPC sec 278 (making atmosphere noxious to health)
• IPC sec 269 (negligent act likely to spread infection or disease dangerous to life, unlawfully or negligently) 

Laws Governing Employment Of Manpower

• Negotiable Instrument Act – 1881
• Workmen’s Compensation Act – 1923
• Official Secrets Act – 1923
• Indian Trade Union Act – 1926
• Payment of Wages Act – 1936
• Industrial Disputes Act – 1947
• Weekly Holidays Act – 1942
• ESI Act – 1948
• Minimum Wage Act – 1948
• ESI ( Central ) Rules – 1950
• Employees Provident Fund and Misc. provision Act – 1952
• Citizenship Act – 1955
• Employment Exchange (Compulsory Notification of vacancies ) Act – 1959
• PPF Act – 1968
• Payment of Bonus Act – 1965
• Payment of Gratuity Act – 1972
• Equal Remuneration Act -1976
• SC and ST Act – 1989
• Persons with Disabilities Act – 1995
• Persons With Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act 1995
• Information Technology Act – 2000
• Maternity Benefit (Amendment) Act – 2008
• Information Technology (Amendment) Act – 2008
• Workmen’s Compensation (Amendment) Act – 2009
• Shops and Factories Act (for National Holidays)
• Child Labour Act

Law Governing The Safety Of Patients, Public And Staff Within The Hospital Premises

• Vaccination Act – 1880
• Explosive Act 1884 (for diesel storage) – 1884
• Further, Indian Boilers Act – 1923
• Arms Act – 1950
• Prevention of Food Adulteration Act -1954
• Likewise, the Indian Fatal Accidents Act – 1955
• Insecticide Act – 1968
• Radiation Protection Rules – 1971
• Similarly, the Radiation Surveillance Procedures for the Medical Application of Radiation – 1989
• Protection of Human Rights Act – 1993
• Similarly, Vaccination (Repeal) Act – 2001
• AERB safety code no. AERB/SC/Med -2 (REV -1) – 2001
• Petroleum Act + Storage Rules – 2002
• Further, the Cigarettes and other Tobacco products ( prohibition of advertisement and regulation of trade, commerce, production, supply, and distribution ) Bill – 2003
• Gas Cylinder Rules -2004
• Disaster Management Act – 2005
• Similarly, the Prohibition of Smoking in Public Places Rules – 2008
• The Tamil Nadu Medicare Service Persons and Medicare Service Institutions (prevention of violence and damage or loss to property ) Act – 2008
• IPC Sec 336 ( act endangering life and personal safety of others)
• Further, IPC Sec 337 (causing hurt by act endangering life and personal safety of others)
• IPC Sec 338 (causing grievous hurt by act endangering the life and personal safety of others.
• Additionally, Rules for Provision of Safe Drinking Water
• Rules for Provision of Uninterrupted Power supply

Laws Governing Medico Legal Aspects

• Consumer Protection Act – 1986
• Law of privileged communication
• Further, Protection of human rights Act
• IPC Section 52
• IPC Section 80
• Additionally, IPC Section 89
• IPC Section 92
• Moreover, IPC Section 93
• Likewise, IPC Section 269
• Law of torts
• Therefore, the Indian Evidence Act (disclosure of privileged/confidential patient-related information before a court of law – under protest)

Law Governing Professional Training And Research

• ICMR Rules Governing Medical Research
• MCI Rules for Internship Training
• Further, the Nursing Council of India Rules for starting the School/College of Nursing
• National Board of Examinations Rules for DNB training

Law Governing Biomedical Research

• Reconstitution of Committee for Control and Supervision of Experiments on Animals (CPCSEA).
• Further, Breeding of and Experiments on Animals (Control and Supervision ) Amendment Rules – 2005.

Conclusion

In conclusion, the healthcare business in India is a multifaceted and regulated industry with various legal considerations. Navigating through the complexities of regulations, compliance, and ethical standards is crucial for the success and sustainability of a healthcare venture. 

Engaging legal professionals or experts becomes imperative to ensure adherence to laws, mitigate regulatory risks, and capitalize on available schemes or provisions. If you have further queries or require legal assistance, feel free to reach out to us. We are committed to providing the best guidance for your specific needs.