The Indian healthcare industry has witnessed an accelerated transformation in the past two years. The cost of healthcare has surged to record levels during the pandemic which has resulted in much predictable healthcare inflation. As per the stats – India has recorded a medical inflation rate of 14 per cent, the highest among Asian countries in 2021. Adverse underwriting experiences and rising demand from patients deprived of medical security contribute to factors driving healthcare inflation in India.
On the other hand, the rise in deductible plans has also triggered patient healthcare expenditure plaguing the multi-billion-dollar healthcare market with challenges. According to recent stats – the Indian healthcare market currently stands at $130-$140 billion in size. However, it is highly fragmented and underpenetrated. This has created inadequacies and inefficiencies in the healthcare infrastructure that leads to the inaccessibility of quality medical facilities. This adds an inherent unaffordability gap in the value chain.
Gaps in access, cost and quality
In the present healthcare scenario, medical care is underutilised due to an imbalance between access, cost and quality. One of the major concerns that affect the entire value chain is affordability. More than 60 per cent of the Indian population has to spend out-of-pocket expenses on healthcare services while other nations including the US, the UK, Japan, Germany, Australia and South Korea spend <20 per cent and Italy, Brazil and China’s OOP on healthcare stands between 25 per cent-35 per cent.
In recent years, the government and many private organisations have introduced several healthcare protection schemes. Even after having that, a majority of the population goes through medical insecurity. In addition to this, several schemes do not cover OOP, consultation, medicines and diagnostic expenses. This calls for the implementation of financing options for patients to access quality care, without emptying their pockets.
Need to fill unaffordability gap
A large number of people in India are still surviving below the poverty line. The rising cost of healthcare delivery and the receding ability of people to spend are widening the unaffordability gap. Introducing healthcare financing options can offer a huge opportunity in enabling the country’s progress toward universal health coverage.
In a country like India, middle-income groups who have low disposable income and are underinsured face huge problems in meeting their OOP expenses. It results in the sale of assets or lending from friends and family members to pay the medical expenses. This can be addressed by implementing patient financing solutions at the doctor’s facility.
In the majority of cases, Boomers II, Gen Xers and Millennials belonging to middle-income families avoid medical care due to the associated costs. This causes a delay in treatment, affects healthcare practices and results in missed revenue for the provider. Having a customised design of payment program prove to be an attractive option for such challenges.
Payment options for universal health coverage
Technology is continuing to make ripples in the healthcare sector. For instance, during the outbreak of COVID-19, we witnessed telemedicine gaining huge popularity across regions, giving people the desired treatment and care virtually. Similarly, when it comes to payments, people expect ease and convenience that can be achieved through digital financing solutions.
Furthermore, the rising trend of buy now and pay later should be implemented in the healthcare industry to meet patients’ expectations. Patients embrace customised and flexible payment plans as it offers them the ability to move forward with their treatment while paying the medical cost in affordable monthly installments. On the other hand, it reduces the hospital’s burden to write off bad debts.
Financing solutions to boost revenue
Before the integration of technology, extending the credit facility to patients directly resulted in hospitals writing off a certain percentage of their revenue as bad debt. With digital financing options, the practitioners and providers can help patients make payments accordingly with low to zero interest rates.
Setting up a system for financing options can improve the facility’s cash flow, reduce the team’s time spent on collections and increase patient satisfaction. One option is to partner with a fintech or a financial institution to manage the finance program. This will help hospitals receive their medical costs without worrying about collections from patients.
In addition, it white labels the hospital or practitioner by making it synonyms with a flexible and comfortable experience for patients. Moreover, it helps relieve patients’ anxiety without making the hospitals manage the finances.
Takeaway
A multitude of fintech and healthtech startups are working together to overcome the barriers to healthcare financing in India. They are touching the pain points of patients by focusing on fixing the broken financing value chain. Fortunately, through relevant financing solutions, the industry players are improving the payment process for patients as well as doctors while filling the major unaffordability gap in healthcare.
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