STOP! Before it GATS too Late

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

Dr Sanjiv


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 nations.

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.

GATS 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 travelling 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.

Apply conditions

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