Narayana Health’s insurance innovation offers hope for India’s healthcare coverage challenges, led by Devi Shetty’s healthcare enterprise.
Revolutionizing Healthcare: Narayana Health Insurance’s Managed Healthcare Scheme
Narayana Health Insurance has introduced a novel healthcare concept in India through its managed healthcare or integrated healthcare scheme. This initiative is designed to address the prevalent misalignments within the traditional health insurance model and places significant emphasis on proactive diagnosis and treatment.
Challenges of Traditional Model
The conventional health insurance model often leads to conflicting interests between healthcare providers and insurers, ultimately impacting the consumers. Healthcare providers are incentivized to maximize billing, while insurers strive to minimize payments, creating a discord that detrimentally affects the patients.
Escalating Healthcare Costs
Empirical evidence has highlighted the surge in healthcare costs when patients are covered by insurance. This leads to an increase in investigations, consultations, procedures, and treatment protocols. The existing co-pay model attempts to instigate patient-led cost control; however, patients lack the expertise to make informed decisions regarding recommended care, resulting in insurers bearing substantial costs.
Standardized Treatment Protocols
Insurers tend to standardize treatment protocols to minimize costs, regardless of the care facility, compromising the quality of care received by the patients, while the entire cost burden falls on the insurers.
Furthermore, the conventional health insurance scheme neglects preventive measures, as hospitals prioritize profits from curative treatments. Although insurers may encourage preventive check-ups, such efforts are generally ineffective within the Indian context.
Exploring the Managed Care Model in Healthcare
The managed care model in healthcare presents a significant shift in the traditional approach. Instead of separate entities for healthcare provision and insurance, in this model, the healthcare provider also offers insurance. This integration eliminates the conflicting incentives to inflate costs and deny coverage. Moreover, it incentivizes proactive screening and early intervention, which is particularly crucial for conditions like cancer.
Early detection of diseases results in more effective and less expensive treatments, benefiting both the patients and the healthcare system. Under this system, a care provider assumes responsibility for the overall health of a specific population, receiving upfront payment to ensure their well-being and cover necessary treatments when required.
Challenges and Implementation in India
Despite the potential advantages of the managed care model, its implementation faces obstacles. In India, initiatives in states like Rajasthan, where low-cost healthcare provider Glocal managed the health of a designated population, were disrupted due to changes in governmental policies. This discontinuation prevented a comprehensive evaluation of the model’s benefits and limited its expansion.
Risks in Managed Healthcare Model and Regulatory Considerations
In the managed healthcare model, one of the risks is that healthcare providers may have an incentive to withhold appropriate treatment to control costs. This issue is addressed through regulation, competition from other managed care providers, and the risk of reputational damage.
The second risk involves the selective sale of insurance only to the young and healthy. While Narayana offers to sell insurance to those with pre-existing conditions, regulation should ensure that new entrants cover willing populations from all demographics to prevent discriminatory practices.
The third risk pertains to the possibility of the care/insurance provider setting the premium too low, rendering the operation unviable. Employing the best actuarial expertise to set the price for insurance is crucial in mitigating this risk.
The insurance regulator has granted Narayana approval under its regulatory sandbox scheme, aimed at testing innovative approaches. Removing the constraint on tying insurance to a specific care provider is essential for the managed care model’s success.
