Wednesday, May 07, 2014

Why are Indian health insurance companies so reluctant to engage with their customers ?

I recently spoke to a health insurance company executive . I suggested to him that the best way that health insurance companies can stop hemorrhaging money with their ever increasing claims loss ratios because of the epidemic of overtreatment is by investing in Information Therapy .

I told him that he should publish the Healthwise Knowledgebase on their website , so that their customers could use this digital knowledge base to make better healthcare decisions for themselves. Empowering their customers with Information Therapy would ensure that they got the right treatment – not too much and not too little.

This is a time-tested model which has been successfully used across the US; and that all the top ten US health insurers provided this service. The US health-insurance market is far more sophisticated than the Indian market , and there is a lot we can learn from them . His response was that as an insurance company , we think of ourselves as being in the financial services space . Our job is only to help our customers to manage their financial risks , if and when they fall ill. When they need medical treatment, we reimburse their medical expenses, and help them to cushion the costs of medical care. We do not want to play doctor and we do not want to provide medical advice !

I found this attitude very old-fashioned. After all, if you are trying to help your customers manage their financial risks when they fall sick, then the most effective way of reducing that financial risk is by helping them to remain healthy !

Also, if they do fall ill, the insurance company can make sure they get the right medical care. Sadly, doctors are incentivized to overtreat, and while providing the most expensive care may be in the doctor’s best interests, this is often not in the patient's best interest . New is not always better in medicine !

However, by refusing to take a proactive role in educating their patients about their health and medical care, this shortsighted attitude is going to create a lot of confrontation and conflict . Now that health insurance companies find that they are being saddled with huge medical bills , they are being forced to pass on these costs to their customers by charging more for premiums. Customers are pushing back, because many find these premiums unaffordable.

The reason medical costs are going through the roof is that doctors and hospitals take pride in offering the latest medical technology. These new gadgets and gizmos are aggressively advertised and marketed by the medical device manufacturers.

Many of these so-called advances are unproven and of doubtful benefit to the patient. In order to curb this spending spree, insurance companies are setting up utilization review committees , where medical doctors vet the submitted claims, to see if they are medically appropriate; and comply with the health insurance company’s medical guidelines.

The irony is that this review is done after the patient has had the surgery ! This means that the insurance company is willing to play doctor – but at the wrong time ! The right time to review care and offer options is before the patient has had the treatment – what’s the point of doing this afterwards ?

By proactively providing patients with decision making tools, the company can help to make sure the patients gets the right treatment . While what the best treatment in a given case is can be controversial, it’s best that the patient has a discussion about his options with the doctor before going under the knife, rather than afterwards. This way, the decision is one which the patient is an active participant, and does not suffer between the tug of war between health insurance company and doctor.

When the utilization review committee decides that the procedure which was selected by the treating doctor wasn't the right procedure , and then refuses to pay for the claim, this is extremely unfair on the patient. Doctors also hate this kind of second-guessing , because doing arm chair reviews on medical appropriateness after the event provides a very distorted perspective. Insurance companies are seen as being heartless bureaucracies which care only about paperwork, and not the patient’s wellbeing.

They are painted as being greedy financial behemoths who care only about their bottomline. This attracts a lot of negative publicity, and can be a major public relations fiasco for the insurance companies , who seem to be behaving hike the US health payers, who are seen as being in the business of saying No ! to patients and their doctors by refusing to reimburse treatment advised by the patient’s personal physician.

Sadly, Indian health insurance companies have learned precious little from the experience of their US counterparts. Even worse, they seem to be making the same mistakes the pharmaceutical industry has .

Pharma has always treated doctors as their primary customers . This is why they wine and dine doctors , to persuade them to prescribe their products. This was very shortsighted and has led to the epidemic of corruption which has riddled the healthcare industry globally. They should have learned to put patients first.

Health insurance companies have been equally myopic , in thinking of themselves as being in the business of mitigating financial risk. This is a historical hangover, because they are part of the insurance industry. They need to reinvent themselves, and understand that there are in the business of keeping their customers healthy. Their customers should be their primary audience, and they should use tools in order to improve their customer’s health.

Prevention is better than cure , and health insurers need to proactively make sure that they don't get into a negative virtuous cycle of refusing to honour claims which the patient feels are legitimate, because he simply followed his doctor’s advise.

Information Therapy is open and transparent, and helps to keep everyone honest. It ensures there are no surprises, and will encourage the practice of evidence based medicine. Not only will it help to reduce avoidable care , it will help health insurance companies to position  themselves as responsible corporate citizens who have the customer’s best interests at heart !


  1. Couldnt agree more .. prevention is always better then cure.. i think regualr testing should be part of regular medical insurance every month or three months..

    1. Actually, this is a bad idea. Unnecessary tests done on healthy asymptomatic individuals are of no use. They just waste money and keep doctors busy !

  2. I always believed there should be a systematic approach to promote the insurance like we have in other developed nations.
    People health is the most important ingredient of any nations success.


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