STOP! Before it GATS too Late
GATS will definitely enhance the quality of healthcare services
in corporate India. However, there are certain risks involved. Dr Sanjiv
Malik assesses the impact of GATS
Trade, implying exchange of goods, services and information
between individuals or groups, is as ancient as human history. Historically,
trade agreements dealt with reducing tariffs and lifting trade barriers like
quotas. In recent times, manufacturing and sale of products have ceased to be
profitable because of intense global competition. The profit margins are constantly
shrinking and this has led to a paradigm shift from goods to service sector.
The World Trade Organisation (WTO) was established in 1995 with an aim to ensure
that trade flows as smoothly, predictably and freely as possible among different
The services sector is covered by the General Agreement on Trade in Services
(GATS), which is the first multilateral, legally-binding set of rules covering
international trade in services.
distinguishes four different modes of services, all of which are relevant to
the health sector.
1. Cross Border Supply: When the service is provided
remotely from one country to another, such as telemedicine via Internet or satellite,
or international health insurance policies.
2. Consumption Abroad: When individuals use a service
in another country, such as patients traveling to take advantage of foreign
healthcare facilities or medical students training abroad.
3. Commercial Presence: When a foreign company sets
up operations within another country in order to extend their service, such
as hospital or health clinics, insurance offices or water distribution operations.
4. Presence of natural persons: When individuals such
as nurses, doctors or midwives travel to another country to supply a service
there on a temporary basis.
In today's world, efficient delivery of quality health services is critical
for any nation's health. This in turn depends on the availability of critical
resources like qualified health personnel, well-equipped facilities, essential
drugs and medical supplies and fair financing through insurance coverage or
affordable public sector provision. Health professionals today migrate from
one country to another seeking higher compensations and better work environment.
Patients also move from one country to another to seek treatment at lower costs.
Thus, while health tourism is booming, hospital groups and health insurance
companies are seeking new markets. Trade in healthcare provides opportunities
to enhance quality and efficiency of healthcare services. It also enhances the
scope of services, which were not available before.
International hospital chains can provide an attractive employment alternative
and arrest the migration of healthcare professionals from India. Besides, trade
liberalisation on healthcare sector will provide training opportunities for
healthcare professionals in India. Lastly, this will lead to increased foreign
exchange earnings and benefits accrued from this liberalisation can be directed
towards meeting public health objectives.
Doctors turn private
However, there are also risks involved with GATS. It may lead to healthcare
professionals leaving the public health sector hospitals and taking up lucrative
jobs in the private sector. This will exert extra pressure on public health
sector, which is already under great strain and would be a loss to the Government
with respect to investment made on training personnel.
The foreign-invested hospitals will target more lucrative markets without keeping
in mind the needs of rural and remote areas and of those patients who are not
in a position to pay for their treatment.
All of above will lead to intense competition and a further rural-urban imbalance.
If unregulated, GATS can have an adverse effect on the public healthcare delivery
system and suppression of growth of domestic providers. Thus, to reap the benefits
of GATS and globalisation in healthcare, a balance has to be maintained after
considering both the aspects. GATS in healthcare should be consistent with our
national health policy objectives. Our Government should seek liberalisation
in developed countries regarding entry of our service supplies in those countries,
recognitions of our professional's qualifications and experience.
Any commitment from our side regarding GATS in this services sector should be
accompanied with some effective conditions:
(i) limitation of the number of establishments allowed in
a year (as it happens with branches of foreign banks),
(ii) limitation of the size of the establishments, like the
number of beds,
(iii) requirement that such establishments will provide certain minimum compulsory
service free-of-charge like free beds in a hospital, free consultation for some
hours per week,
(iv) requirement that a major portion of these establishments, say at least
half, will be located at places far from the metropolitan cities,
v) condition that each of these establishments will have a branch for higher-level
professional training where the entry should be on the basis of open competition
and fee should be reasonable.
GATS, through its Article XVI, enforces such conditions on the entry of foreign
service and through its Article XVII foists these conditions only on the foreign
service and foreign service providers, without simultaneously imposing them
on domestic service and domestic service providers.
We are in a stage of development where certain experimentation in policies,
for instance in the area of liberalisation of entry of foreign medical and health
services, is essential and desirable. But it should be done in such a way that
the policies can be annulled if it appears to be harmful. Here lies the problem
in undertaking commitments in GATS. Commitments made cannot be discontinued;
they will remain operational for all times.
We shall have to pay compensation if we withdraw those concessions.
For this reason, it is better for a country like ours to go in with the present
liberalisation in domestic policy and measure without undertaking commitment
about it in the GATS. This will give us enough opportunity to assess the impact.
If we find it harmless over a span of time, we may then make a binding commitment
in the GATS Forum.
The writer is Chief Executive
NCR-II, Max Healtcare