There are several driving factors of medical inflation in India. To understand this better, we have discussed utilisation and changes in unit cost. These are as follows -
Change in Cost Per Person
Change in cost per person points to the change in the unit cost of a particular ongoing medical treatment or procedure. This change primarily occurs due to the change in the following areas,
- Hospital consumable costs
- Hospital staff and consultant’s fees
- Other expenses, such as utilities, technology, rent or property costs
Change in Utilisation of Services Per Person
This points to the change in the entire utilisation of services. However, the utilisation may vary over time, i.e., it can move towards newer and costly treatments and drugs. This change can happen for the following reasons,
- Medical advancements such as the launching of new drugs and technologies that can treat the disease, which was earlier untreatable, can increase the ultimate cost. Additionally, new-age diagnostic technology that can detect diseases with more perfection can also cause medical inflation.
- Consumer behaviour is another driving factor for change in the utilisation of services per person. This refers to the shift in perspective among individuals, such as more healthcare benefits or increased health awareness to consumers.
- Change in access and availability of healthcare (such as supply and demand) can be attributed as one of the primary reasons for rising medical inflation.
Now that the analytical portion of the discussion of medical inflation is clear let’s focus on more generic factors of medical inflation.
- Growing and ageing population
- Increase in chronic diseases
- Higher health insurance premiums
- Reduced number of qualified experts in the medical field