Health Insurance in India - improving the healthcare industry

Health Insurance Summit India 2008: "Health Insurance is expected to play a critical role in ensuring healthcare access to people in India . The level of penetration of Health Insurance in India has been on a steady rise; however, it is clear that there is still a long way to go from single digit access figures to meeting global penetration levels.

While the Health Insurance industry has benefited from the recent changes in regulations, entry of new players, and improvements in systems and processes , it is important to sustain this growth trajectory. Thus it is critical that the key stakeholders in the health insurance value chain including Regulators, Insurance companies, Third Party Administrators, NGOs and technology companies work in synergy, paving the way for a brighter future ahead."

I attended an excellent seminar on 9 Dec organised by the CII on Health Insurance: The Road Ahead.

Mr Hari Narayan, Chairman, IRDA ( Insurance Regulatory and Development Authority, set up by the Government of India to regulate the Indian insurance industry) said “Requiring the third-party administrators (TPAs) to build their IT systems and infrastructure for speedier claim processes; and encouraging insurers to make their systems robust and embarking on wide consumer awareness programmes are the various measures undertaken by IRDA towards the growth of the health insurance in India.”

So far, the Indian healthcare sector has been run by doctors, and this has been a cottage industry. It's small, fragmented and disorganised. It is very interesting to see how the entry of the corporate world into this sector has changed the rules of the game.

I was impressed by the fact that health insurance companies have realised the importance of going digital - and appreciate the fact that the challenges they are dealing with are enormous. Because of India's huge population, the numbers of transactions are in the millions - but the value of each transaction is much less. Also, since the cost of medical care is low, the potential profit margins are much slimmer which means the operations have to be much more efficient.

The first need is to standardise medical records, and since there are no legacy issues, this is a huge opportunity to improve the quality of medical care. IT can be used to improve healthcare - and companies are insisting that doctors and hospitals use ICD-10 coding. While their primary motivation is to improve their claims processing , this will also help to improve the quality of medical care delivered, because it will be much easier to audit this . Electronic transactions are much more frictionless and reduce transaction costs, and it's possible to use the newest web-based technology to make them efficient.

One of the comments made was that doctors are very reluctant to participate in providing better data. I wonder why this is so ?

Doctors are service providers and are happy to do what needs to be done to provide better care for their patients . Most doctors understand that keeping better medical records and analysing their clinical data will help them to improve the medical care they provide. If it's so obvious, then why don't they cooperate ? The reality is that they have had their fingers burnt when dealing with insurance companies. Many doctors have had bad experiences - delayed pre-authorisation; delayed payments; and refusal to honour claims for the flimsiest clerical reasons ( a list of litanies all US doctors can empathise with , I am sure !) Doctors want to take care of patients - not to deal with paperwork and bureaucratic hassles. Unfortunately, all insurance companies seem to understand is paperwork - and hence the friction.

The problem is that patients, who are meant to be the beneficiaries, often end up suffering - and they take out their anger on doctors, who are the "customer face" of the industry, rather than the clueless clerk who is safely ensconced in the TPA's office. Patients expect instant cashless hospitalisation - and since they have an insurance policy, they cannot understand why the doctor refuses to accept this. Unfortunately, the burden of filling out the forms falls on the doctor - and many of whom don't have the staff to do so efficiently. In response to this pressure, doctors are now employing secretaries to fill in the forms - and the additional costs of this paperwork will be passed onto the patient.

An enlightened approach would be to provide doctors with practise management software, so that they can run their practises more efficiently; provide better medical care; and also provide the data the insurance company needs, thus creating a win-win situation. This is a huge opportunity for a clever company to provide open source web-based software as a ASP !

The elephant in the room which no one is willing to discuss is the fact that insurance companies have started using their financial clout to start squeezing doctors. They are cutting down on the amounts they are willing to pay for procedures - and doctors are being forced to toe the line, as they cannot afford to lose their patients to other doctors. This has already started to happen for cataract surgery in Bombay - where it's the insurance companies who are now deciding how much a doctor can charge. In a few years, the progressive corporatisation of medicine is going to force Indian doctors to deal with the same problems US doctors are facing today.

I must agree that it's doctors who are partly to blame for this. Some doctors are unethical and unscrupulous, and have taken insurance companies for a ride. They overcharge insured patients; fudge paperwork, and it's in order to protect themselves that insurance companies have introduced these safeguards. The trouble is that paperwork has a life of its own, and expands and grows, until it becomes unmanageable ! Also, in order to safeguard themselves from the 5% of doctors who are crooked, the companies end up penalising the other 95% of honest doctors. It's because doctors refuse to police themselves that corporates have been forced to do so.

In India, it's really not health insurance at all - it's actually all about illness insurance - about how to manage the financial risk when you need medical care. However, it's hard to sell when you are coercing people to buy policies based on appealing to their fear, because most of us think nothing bad will ever happen to us. We need to focus on wellness , not just illness insurance. The good news is that clever Indian companies are learning from the rest of the world, and are offering new initiatives, which promote wellness and help people to remain healthy.

Doctors were conspicuous by their absence in this seminar - and not a single practising doctor ( the ones who have to deal with patients daily ) was invited to be a speaker at the summit. It's a sad fact that most doctors are clueless about these policy decisions which are going to have such a huge impact on their future. Doctors have been sidelined and have become marginalised. Though they are very smart individually , as a group they have no unity, with the result that its very easy to manipulate the profession. The rules as to how healthcare will be delivered are changing - but doctors are not being given the opportunity to offer their insights.

What will the impact on patients be ? Most likely, it will be mixed. The good news is that insurance companies will invest in educating patients , who will then hopefully have a bigger say in their own care, because the process will become more transparent. However, the fear is that greedy insurance companies may force the industry to go down the US route , where patients and doctors get squeezed for the sake of profits.

Hopefully, companies will take an enlightened approach, and introduce good managerial business practises to ensure transparency and accountability ( both on their own part, and that of doctors). It's unfair for them to expect doctors to be transparent , when they refuse to share their business information, using the pretext that it is confidential . This will benefit doctors , patients as well as health insurance companies , because the entire industry will then grow in a healthy manner.