Demonetization leads to 15% dip in healthcare spends

Mumbai, January 20: Already we knew that, Prime Minister Narendra Modi had announced the demonetization of old Rs.500 and Rs.1000 notes since November 8.

Demonetisation led to a drop of 10-15% in healthcare spend, with patients deferring elective surgical and medical procedure, while overall, the impact was more pronounced in small towns.

While retail sales of drugs witnessed a slight dip, the diagnostic services suffered a drop of around 15%. Private hospitals in major cities like Delhi and Mumbai were not impacted, as cashless payment channels including credit/debit cards/ e-banking and electronic payment platforms emerged, with no significant reduction being reported from their out-patient department.

Initially, retail sales of prescription drugs had experienced a boost as older notes were still legal tender at pharmacies till November 24, but weeks later, the adverse effect of demonetization led to a dip in the retail market.

In a sudden move, the government announced that existing currency notes of denominations Rs 500 and Rs 1,000 will cease to be legal tender from November 8, 2016.

Over 70% of the country's healthcare spend is out of pocket, so the liquidity crisis certainly had an impact, industry experts say, adding the impact was more pronounced in November, while the situation was creeping back to normalcy over the following weeks.