Healthcare Industry

Overview of the Healthcare Industry

The Healthcare industry has evolved from hospitals, medical devices, medical equipment, clinical trials and pharmacies to medical tourism, telemedicine, health insurance etc. The Indian sector has been growing at a brisk pace with people getting aware of the health risks and the need of health insurance and the amount of expenditure the governments both at Central and State levels are making in the Health sector. The pandemic has acted as a catalyst for increase in investment in the health sector.

The healthcare delivery system in India is broadly divided into two categories public and private. The government of India provides the public healthcare delivery system offers secondary and tertiary care institutions in important cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres in rural areas whereas the Private sector provides a majority of secondary, tertiary and quaternary care institutions with major concentration in metros and Tier 1 and Tier 2 cities.

India has a huge advantage both in terms of skilled medical workforce, professionals and also the huge cost advantage compared to other Asian countries and those in Western world. The cost of surgery in India is almost one-tenth the cost in the western world.

India is also one of the largest vaccine manufacturers and supplier to the whole work which is evident from the fact that more than 115 crore vaccines have been administered in India and a big number of vaccines have been donated and sold to other countries of the world.

Market Size of the Healthcare Industry

The government of India has set the percentage of healthcare expenditure at 1.2% of the India’ GDP as per the Budget of 2021. The healthcare market is expected to increase to the tune of $133.44 billion by the end of 2022.

As the middle class is growing and the burden of new disease increases, a large chunk of the population has become aware of the need of health insurance coverage. As the demand for affordable and quality expands, healthcare insurance is certainly going to expand in the coming years.

The Indian medical tourism market stood at almost $3 billion in 2020 and is expected to reach at $14 billion by 2026. According to a report, around 700,000 foreign tourists came for medical tourism in the year of 2019. Out of 46 International destinations, India stood at the rank of 10^th position in the Medical Tourism Index (MTI) for the year 2020-21 according to Medical Tourism Association.

Also, it is expected that by the end of the financial year 2022, Indian healthcare infrastructure is expected to reach around $350 billion and with e-health market size to breach the mark of $11 billion by the end of 2025.

A report released by the DPIIT, the Foreign Direct Investment inflows in the drugs and pharmaceutical sector has stood at a handsome $19 billion 

Laws applicable to the Healthcare Industry in India

Laws governing the commissioning of hospital

Following is the Indian Regulatory framework for the commissioning of hospitals in India and to ensure that establishment of hospitals take place after following due process of registration, the facilities created are safe for public use, minimum essential medical infrastructure is available and periodic inspections take place to ensure compliance.

• Atomic Energy Act, 1962 (Atomic Energy Regulatory Body Approval for Radiology/ Nuclear Medicine Service)
• Atomic Energy (Safe Disposal of Radioactive Waste) 1987
• Radiation Protection Certificate from BARC
• Bombay Lift Act, 1939, Delhi Lift Rules, 1942
• Companies Act, 2013
• The Partnership Act 1969
• Electricity Rules 1956
• Delhi Electricity Regulatory (Grant of consent for captive power plants) Regulations, 2002
• Delhi Fire Prevention and Fire Safety Act 1953, and Fire Safety Rule 1987
• Delhi Nursing Home Registration Act 1953
• Electricity Act 1998
• Indian Telegraph Act 1885
• National Building Code 2016
• Society Registration Act
• Urban Land Act 1976
• The Clinical Establishment (Registration and Regulation) Act, 2010
• Indian Boilers Act 1923
• Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996

Laws governing the business aspects in relation to healthcare sector

Following are the laws related to the business aspects of establishing a hospital:

• Companies Act, 2013
• Indian Contract Act, 1872
• Copyrights Act, 1982
• Foreign Exchange Management Act, 1999
• Sale of Goods Act, 1930
• Income Tax Act, 1961
• Insurance Act, 1938
• Customs Act, 1962
• Charitable and Religious Trusts Act, 1920
• Public Liability Insurance Act, 1991
• Cable Television Network Act, 1995

Laws governing sale, storage of Drugs and Safe Medication

Following is the regulatory framework governing the usage, storage and sale of chemicals, drugs, regulate the sale of drugs through licenses, blood, blood products, prevent misuse of dangerous drugs, prevent adulteration of drugs and provide for punitive actions against the offenders:

• Drugs and Cosmetics Act, 1940, Drugs and Cosmetics Rules 1945
• Drugs Control Act, 1950
• Narcotics and Psychotropic Substances Act, 1985
• Pharmacy Act, 1948
• Sale of Goods Act, 1930
• License for possession and use of denatured/ Rectified spirit
• Goods and Services Act, 2017
• Retail Drug License
• Indian Penal Code, 1860

Laws related to the environmental safety in relation to healthcare sector

Following are the laws aimed at protection of environment through prevention of air, water, noise pollution and punishment for the offenders:

• Water (Prevention and Control of Pollution) Act, 1974, Water (Prevention and Control of Pollution) Rules, 1975
• Air (Prevention and Control of Pollution) Act, 1981, Air (Prevention and Control of Pollution) Rules, 1982
• Environment (Protection) Act, 1986, Environment (Protection) Rules, 1986
• Biomedical Management Waste Management Rules, 2016
• Noise Pollution (Regulation and Control) Rules 2000
• State municipality laws
• Indian Penal Code, 1860

Laws related to the medicolegal aspect of the healthcare sector

These laws mainly govern the doctor-patient relationship, legal consequences arising from breach of contract along with the medicolegal aspects of negligence of duty. Following are the laws related to the medicolegal aspects of the healthcare sector:

• Consumer Protection Act, 2019
• Indian Penal Code, 1860
• Indian Evidence Act, 1872
• Law of torts

Laws related to the safety of the patients, staff and public within the hospital premises

The laws related to safety of patients, staff and public mainly regulate the safety facilities and services against potential accidental hazards that may endanger the lives and liability of management for any violation. Following are the applicable laws:

• Prevention of Food Adulteration Act, 1954
• Fatal Accidents Act, 1977
• Radiation Protection Rules, 1971
• Explosives Act, 1884
• Arms Act, 1950
• The Boilers Act, 1923
• Gas Cylinder Rules, 2004
• Radiation Surveillance Procedures for Medical Application of Radiation, 1989
• Cigarettes and other Tobacco products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) act, 2003
• Radiation Protection Rules, 1971
• AERB safety Code no. AERB/SC/Med-2 (REV-1)-2001
• Prohibition of Smoking in Public Places Rules, 2008
• Rules related to Provision of Safe Drinking Water
• Rules related to Provision of Uninterrupted Power Supply
• IPC, 1860

Laws governing the human resource within the healthcare sector

The laws relating to the human resource mainly deal within healthcare sector deal with the employment of manpower, their salaries and other benefits, service rules and system of redressal of grievances and disputes. Following are the laws:

• State-wise Shops and Establishments Act
• Payment of Wages Act, 1936
• Payment of Gratuity Act, 1972
• Negotiable Instrument Act, 1881
• Rights of Persons with Disabilities Act, 2016
• Maternity Benefits Act, 1961
• Payment of Bonus Act, 1965
• Equal Remuneration Act, 1976
• Employment Exchange (compulsory notification of vacancies) Act, 1959
• Employee State Insurance Act, 1948
• Employee Provident Fund & Miscellaneous Provisions Act, 1952
• Trade Unions Act, 1926
• Workmen’s Compensation Act, 1923
• Child Labour (Prohibition and Regulation) Act, 1986
• Contract Labour (Regulation and Abolition) Act, 1970
• The Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013

Licenses/ Certifications required for Establishment and Operation of Hospitals in India

Any Hospital Operator or administrator must be aware of the following licenses that are required not only for establishment and operation of hospital but also the process to renew such licenses as and when required.

Following is the list of the certifications/ licenses required for establishment and operation of Hospitals in India:

Compliances which are required for Establishment and Operation of Hospitals in India:

A hospital administrator entrusted with the task of managing the hospital must be aware of the reports and returns that are essentially required by different agencies with fixed periodicity. Following is only an indicative list and not an exhaustive list for the same:

Most of the common medico-legal issues arise out of non-compliance of the abovementioned laws, rules and regulations. It is suggested that the healthcare businesses take assistance for smooth and seamless functioning of the business without inviting unnecessary legal troubles.  

The rescue of Indian students in the Russian-Ukraine conflict the majority of whom were medical students highlighted the need of medical institutions and colleges in India. Addressing the same issue in one of his speeches, the Prime Minister has asked the private sector to make inroads in this sector and also state governments to frame a policy to give lands at cheap rates to build such institutions.  This gives a huge opportunity to the private sector in making inroads into this new opportunity.

Enterslice can give you overall advisory and assistance in entering and establishing yourself in healthcare sector and filing of the necessary compliances for your organisation as we are a team of highly skilled & dedicated professionals. We specialize in providing legal consultancy services too.