All kinds of news are currently floating in the media and the industry regarding the Cashless Mediclaim. After PSU Insurance Companies taking a stand to stop Cashless at some high ended hospitals in top cities, as a reverse salvo Hospitals in Mumbai have united against Insurance companies and decided to refuse cashless hospitalization.
There is always a danger of adverse reactions against unilateral decisions. A PPN can be successful only if it is a buyer’s market. Else there has to be a genuine consensus between the carriers and the providers. Here are some facts to get a perspective:
- Currently India has beds to population ratio of 0.9 : 1000. The recommended WHO beds to population ratio is 3 : 1000 and in India, the recommended ratio is 2 : 1000. This deficit is over 50%. Critical care beds are generally 20% of the total beds. In India apart from the new breed hospitals most centers have up to 10-13% so one can imagine the paucity of critical and life saving beds in India.
- Insurance penetration is mostly in the urban and semi urban sector and among the middle class and above population.
- Internationally, in the USA the current government is looking at 85 cents per dollar claim out go. Brazil, an economy similar to ours also has a similar outgo. In comparison, Indian health insurance claims are about 130%.
- All the beds are not equitable. A general ward in a government hospital is crammed beyond capacity and sometimes over 1 one patient per bed. The nurse to patient ratio is probably 1 nurse for 15 patients. As opposed to this the private hospitals have a better nurse to patient ratio and super-specialty hospitals have close to 3 nurses per patient.
- In the absence of a concerted governance mechanism, all the players (Carriers, TPAs and Providers) are pulling in their own direction stretching this social measure to break point.
- India is clearly not a buyer’s market and the healthcare providers will continue to dictate the price at least for some time.
- Insurance companies are here to making profits albeit marginal on this portfolio, but certainly losses are not acceptable.
- With over 80% of the paid claims being for private hospitals, the preference of the customer is very obvious. This is a reality and hence a consensus most desired. One of the methods to do this is the RBRVS. This is the Resource Based Relative Value System. Giving a layman perspective, in this system, the pricing is done based on the resources used for a particular procedure. The insurer could identify a hospital well know for quality and ethics as the bench mark. In tandem with this hospital, the insurer could identify various procedures, the complexities involved, the resources utilized and the costing. This should cover the entire spectrum of hospitalization. Once this is done a tariff card can be brought out. This tariff is a relative value and will change with the type of hospital and the region.
- A strong governance mechanism should be put in place (this is the responsibility of the health ministry) to ensure that at the end of the day the average citizen is not taken for a ride.