India must develop a healthcare model by learning from US healthcare failures

India’s healthcare system has long tried to emulate US models, with value-based care (VBC) being the latest trend. The idea behind VBC—linking payments to health outcomes—is noble in theory but has largely failed in the US. Even after decades of experimentation, the US healthcare model struggles to lower costs or significantly improve care quality.

Healthcare is fundamentally local, shaped by each country’s unique demographics, infrastructure, and resources. India’s healthcare challenges—from rural access and affordability to a high burden of infectious and chronic diseases—require solutions that fit its distinct context. Adopting a US-style VBC model would likely exacerbate existing issues rather than solve them.

Instead, India has a unique opportunity to learn from the failures of the US model and design a healthcare framework that aligns with its specific needs. By leveraging its strengths, such as digital expertise, cost-effective solutions, and a focus on primary care, India can build a system that addresses its healthcare challenges and sets a new standard globally. The goal should be to craft a model that is simpler, more affordable, and better suited to delivering equitable care to India’s diverse population.

India must build a healthcare system tailored to local needs

The US experience with VBC reveals a fundamental issue: measuring ‘value’ in healthcare is more complex than anticipated. Connecting payments to outcomes requires extensive data and standardized metrics—challenges even advanced healthcare systems in the UK and Germany have struggled to overcome.

The US model creates financial risks and administrative burdens for healthcare providers, with compliance costs consuming up to 20% of revenues. India’s healthcare system, which is known for its low-cost, high-impact solutions, would be overwhelmed by this level of complexity. Instead, India should focus on straightforward, practical measures that align incentives and minimize compliance burdens (see Exhibit 1).

Exhibit 1: India must avoid a US-style VBC and chart its own path

Source: HFS Research, 2025

India must look beyond the US to build a better healthcare model

Focusing solely on the US model would limit India’s potential to innovate and develop a more effective healthcare system. While it is true that the US has made significant advancements in medical technology, specialized care, and research, its healthcare system is the most expensive (more than $15,000 per capita), with outcomes (life expectancy, prevalence of chronic conditions) that are amongst the worst for Organization for Economic Co-operation and Development (OECD) countries.

Countries such as the UK, Canada, Germany, Sri Lanka, and Japan offer valuable lessons to India’s healthcare system. However, while these nations present strong models, they face significant challenges, such as extended waiting times, escalating costs, and administrative complexities that India must proactively avoid. The UK’s National Health Service (NHS) demonstrates the benefits of robust public funding but struggles with significant waiting times and workforce shortages due to constrained resources. Canada’s publicly funded healthcare system ensures equitable access but grapples with long wait times for elective care and lacks universal coverage for pharmaceuticals and dental services. Germany’s dual public-private insurance model achieves comprehensive coverage but faces rising costs driven by an aging population and complexities that risk creating inequities. Similarly, Japan’s universal insurance system offers affordable healthcare but suffers from financial strain, overutilization of hospital care, and insufficient focus on managing chronic diseases. Exhibit 2 demonstrates the pros and cons of several global healthcare models.

Exhibit 2: Every country has  positive and negative sides to its healthcare model

Source: HFS Research, 2025
Disclaimer: The data in this table is based on publicly available sources. While every effort has been made to ensure accuracy, healthcare statistics may vary due to different secondary sources.

The key for India is to learn from what other countries do well and to avoid their mistakes. Crafting a healthcare model that combines the best global practices while addressing local needs and constraints is essential to success. This requires carefully adapting best practices to India’s unique demographic, economic, and healthcare landscape. Exhibit 3 shows a few examples of how India can consider tweaking the industry’s best practices to its advantage.

Exhibit 3: India’s healthcare needs to learn from the best practices of other countries

Source: HFS Research, 2025

India must leverage its existing strengths to build a robust healthcare system

India’s healthcare ecosystem has several distinct advantages, different from those of its global peers, which have positively shaped its trajectory:

Pharmacy of the world

• India’s 1970 Patents Act paved the way for a thriving generic pharmaceutical industry, earning the country the title ‘pharmacy of the world.’

Community health networks and hybrid care models

• India has one of the world’s most extensive community health worker programs (ASHAs under NHM), ensuring last-mile healthcare delivery in rural areas.
• Accredited social health activists (ASHAs) and auxiliary nurse midwives (ANMs) play a vital role in connecting remote populations to maternal healthcare.
• India’s strong private hospital sector has positioned it as a medical tourism hub offering advanced yet affordable medical procedures.
• Government schemes such as Ayushman Bharat (PM-JAY) leverage private sector capabilities to provide cashless hospitalization coverage to 500 million economically vulnerable citizens.

Digital healthcare innovations

• Initiatives such as the CoWIN vaccination platform (over 1 billion vaccinations) and telemedicine services (e.g., eSanjeevani) highlight India’s digital health strengths.
• Telemedicine has expanded access to specialist care in remote areas, reducing geographic barriers and promoting healthcare equity.

State-level initiatives for affordable care

• Programs in states such as Tamil Nadu and Rajasthan ensure free access to essential medicines and diagnostics, reducing out-of-pocket costs for underprivileged households.
• Free maternal and neonatal care services address gender-based disparities in healthcare.

By leveraging these strengths, India can build a healthcare system that meets local needs and sets a new global standard for affordable and equitable care.

The Bottom Line: India must avoid emulating the failures of the Western healthcare system and build on what has worked well.

India has the opportunity to design an effective care model. By doing so, it can catch up with global health systems, leap ahead, and provide genuinely value-driven healthcare to all its citizens.

Indian policymakers must forge a distinctively Indian path that includes:

• Increase in public health funding
• Expanding primary care
• Defining and prioritizing clear, achievable health outcomes
• Utilizing digital technology to simplify processes
• Encouraging robust public-private collaboration
• Implementing scalable and affordable healthcare solutions tailored to local conditions