India is considered the leading country promoting medical tourism-and now it is moving into a new area of medical outsourcing,” where subcontractors provide services to the overburdened medical care systems in western countries.
India’s National Health Policy declares that treatment of foreign patients is legally an “export” and deemed “eligible for all fiscal incentives extended to export earnings.” Government and private sector studies in India estimate that medical tourism could bring between $1 billion and $2 billion US into the country by 2012. The reports estimate that medical tourism to India is growing by 30 per cent a year. India’s top-rated education system is not only churning out computer programmers and engineers, but an estimated 20,000 to 30,000 doctors and nurses each year.
The largest of the estimated half-dozen medical corporations in India serving medical tourists is Apollo Hospital Enterprises, which treated an estimated 60,000 patients between 2001 and spring 2004. It is Apollo that is aggressively moving into medical outsourcing. Apollo already provides overnight computer services for U.S. insurance companies and hospitals as well as working with big pharmaceutical corporations with drug trials. Dr. Prathap C. Reddy, the chairman of the company, began negotiations in the spring of 2004 with Britain’s National Health Service to work as a subcontractor, to do operations and medical tests for patients at a fraction of the cost in Britain for either government or private care.

Apollo’s business began to grow in the 1990s, with the deregulation of the Indian economy, which drastically cut the bureaucratic barriers to expansion and made it easier to import the most modern medical equipment. The first patients were Indian expatriates who returned home for treatment; major investment houses followed with money and then patients from Europe, the Middle East and Canada began to arrive. Apollo now has 37 hospitals, with about 7,000 beds. The company is in partnership in hospitals in Kuwait, Sri Lanka and Nigeria. Western patients usually get a package deal that includes flights, transfers, hotels, treatment and often a post-operative vacation. Apollo has also reacted to criticism by Indian politicians by expanding its services to India’s millions of poor. It has set aside free beds for those who can’t afford care, has set up a trust fund and is pioneering remote, satellite-linked telemedicine across India.

If administered properly, healthcare insurance sector has a huge potential in India and it can be leveraged to realize the dream to provide ‘health for all’. I wonder if the government can create a corpus to fund the insurance premium to be paid on behalf of the lower income groups and those below poverty line. The state governments have to do this and each state government can initiate a fund with a nominal contribution of some Rs. 50 crores and invite the industrial units and big traders in the State to add to it generously against assured tax deduction. I am sure many big industrial houses running their own social schemes as part of corporate social responsibility are doing so only because they perceive the state-sponsored schemes as the biggest sieves on the earth. A public-private partnership trust can administer the corpus and the lure of premium paying public will in its wake spawn private hospitals in every nook and corner. It is certainly not a rosy picture that I am trying to paint against ground reality. Mark my words, healthcare insurance is going to be the next big revolution in India after Sam Pitroda’s telecom revolution in the eighties and the nineties.

Health Insurance is a huge opportunity to raise resources for creating healthcare infrastructure. There is no denying that IRDA comes up with some directives sporadically, especially for the senior citizens. But there has to be urgent, concerted action in this direction. There is a time for everything. With the economy growing at close to 9% with hopes of it reaching the magical double digit in a few years, now is the time to act positively. Maybe, the Planning Commission can goad IRDA to move quickly.

A US study has found that insured cancer patients live longer than the uninsured ones. Uninsured cancer patients are nearly twice as likely to die within five years as those with private coverage. The study found that people without health insurance are less likely to get recommended cancer screening tests and when these patients finally do get diagnosed, their cancer is likely to have spread. For all this, uninsured are believed to account for just a fraction of US cancer deaths. It is around 4%. The absolute figures are something like 20,000 of 560,000 annual cancer deaths are uninsured when they die. Hence, American Cancer Society is calling for action to fix holes in the health care safety net. No wonder, a major issue in the re-election of George Bush three years ago was revamping of the US healthcare system to bring in more people under insurance cover.

Compare this with our own healthcare system. Do we have anything worth the name? One only has to visit the district hospitals to see for oneself. There are any number of villages from where people can’t even think of reaching the district hospitals. And the long wait-list at All India Institute of Medical Sciences can only put you off further. Even the middle class cannot often afford the charges for major ailments at private hospitals. How about the lower middle class and those below poverty line? But then, when they can’t even feed themselves properly, do they have the right to even think about healthcare?

One wonders if health insurance is one way out. Maybe, like SEBI is doing its bit on educating the investor, IRDA has to educate the people about the benefits of health insurance. The Medical professionals themselves, the healthcare institutions and the Third Party Administrators in the insurance industry have all to be educated against possible temptation to misuse the system, so that the fledgling healthcare insurance sector in India is not obliterated in its infancy. If not administered scrupulously, the rates of premium will skyrocket and rising premium is a sure-shot prescription to shut the middle and the lower income groups out. The insurance companies will also have to be regulated effectively to ensure that they don’t treat a disease that was detected during an insured period as pre-existing for the purpose of calculating the premium while renewing the policy without a break. The insuring public will also have to be informed adequately about their own rights and obligations under the policy so that they don’t try to tempt the healthcare institutions to deviate from the norms, as that will only drive the premium northwards for all.

The burgeoning health insurance sector is set to see some far-reaching changes.

Specialized health insurance subsidiaries and allowing agents of one insurance company to sell health products of other general insurance companies are two of the major proposals.

A committee set up to look into the issue of senior citizens and the health insurance sector mooted these proposals.

The Insurance Regulatory & Development Authority (IRDA) had, some time back, talked about the formulation of new regulations in health insurance in order to take it forward.

Industry sources told DNA Money that health insurance needs a special focus and it makes sense to spin the segment into a subsidiary.

This subsidiary, the committee felt, will require special skill sets like a separate CEO, dedicated marketing team, in-house third party administrators etc.

While the committee has recommended this for the general insurance sector, it could, in the long run, be applicable to the life insurance sector as well. Life insurers are in the process of unfolding health plans in close competition with the general insurance sector.

It may be recalled that Life Insurance Corporation has already floated a separate business unit for the purpose.

Given that the health insurance sector has the potential to grow from the present Rs 4,000 crore to Rs 20,000 crore in five years, it makes sense to nurture this high growth segment, the committee is said to have pointed out.

In another change, the committee has felt that there should be modifications in the current restrictive agency regulations. The current regulations do not allow any agent of a company to sell products of different companies.
A change has to be brought about if health insurance products have to be popularised, it said.