While various regulators are proposing policy changes to reduce the cost of healthcare services, none of these efforts will have long term impact, for citizens/patients, if they are not sustainable and feasible for the providers of these services.
Take for example, the recent decision by the insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), to abolish the age limit for health insurance. A long over due initiative but how soon will this translate into real benefits for senior citizens? India, traditionally considered a younger nation, is now watching a drop in fertility rates. As births drop below the number of deaths, it is only a matter of time before the country’s demographic profile gets more silver.
Health insurance is an important part of helping all citizens cope with the increasing cost of healthcare but increasing awareness about insurance coverage has been an uphill task. Certain sections of the population remain underserved, with low or poor coverage. Even after IRDAI removed the entry age barrier of 65 years for purchasing health insurance, there is no guarantee that insurers will find the senior citizen health insurance market attractive enough to design policies which meet the requirements of this category.
For instance, will insurers reduce the waiting period for pre-existing diseases, which most senior citizens would have? Will these policies remain on paper, with stringent terms, exhaustive exclusion criteria and higher premia? Will insurers offer a graded claim pay out in the first three years and full claim post four years of continuous renewal? Current insurance policies for this age category offer relatively smaller sums insured, which are not sufficient to pay the hospital bills which senior citizens have to deal with.
While long overdue, insurers need to find ways to make senior citizen health insurance coverage feasible and sustainable from an operational point of view. As the senior citizen population grows, swelling an already substantially large market, one hopes that insurers will re-look their offerings for this category and design more innovative health insurance covers.
A similar well-intentioned but difficult to implement initiative is the diktat from the Supreme Court of India (SC) to rationalise fee structures for private hospitals across India, by mandating that private hospitals implement the Clinical Establishment (Central Government) Rules, 2012. The rationale is that a set fee structure will reduce hospital bills of patients, putting public and private hospitals at par in terms of treatment costs.
The central government’s consultations with state governments had mixed results. State governments from Gujarat, Madhya Pradesh,Uttar Pradesh and Uttarakhand were reportedly against the idea, citing concerns that fixing fees might compromise quality of services. However, states like Uttar Pradesh, Bihar, Himachal Pradesh and Telengana, which had adopted the Clinical Establishments Act, 2010 were willing to take the discussion forward with private hospital authorities and asked the ministry for further guidance.
Analysts tracking the sector point out that if the hospital fees are regulated, they would impact smaller hospitals more than the larger chains. Tausif Shaikh, India Analyst – Pharma and Healthcare, BNP Paribas India opines that price regulation would hit standalone hospitals, whose net profit margins are mostly in low single digits. The analyst note reiterates a positive view on the hospital sector, despite the looming apex court verdict, reasoning that standardising pricing is difficult due to the extremely heterogeneous nature of the healthcare industry with substantial differences in hospital infrastructure, instruments used during surgeries, expertise of medical staff and the complexity of diseases that hospitals deal with.
While implementation of standardised pricing appears highly unlikely, BNP Paribas India states there is a possibility of capping room rents, which could impact hospital chains earning higher average revenue per occupied bed (ARPOB).
With the next date of the next SC hearing fixed on September 10, one hopes that we get more clarity on how this rule can be implemented in a more balanced manner. Capping room rents would go easy on patients’ pockets but would hospitals then cut back on clinical services or reduce quality of equipment? These are difficult choices and decisions. While the centre has put the onus on states, this merely prolongs the decisions.
Good intentions are not enough, we need a well thought out balanced long term blueprint and a solution which is sustainable for all stakeholders. Hopefully the next government and Prime Minister is up to the task.
VIVEKA ROYCHOWDHURY, Editor
viveka.r@expressindia.com
viveka.roy3@gmail.com