Health plans, offering customers discounted physician consultations and diagnostic services, are the next big thing on the radars of India’s corporate hospital chains.
Costing between Rs 3,000 and Rs6,600 a year, depending on the size of the family covered, such schemes may contribute a mere 1-2% to revenues, but healthcare companies are betting on the plans to have an assured patient base.
Private healthcare in India generates estimated revenues of $15.5 billion (about Rs68,200 crore) and is an industry growing at 15%.
The schemes will cover outpatient services at hospitals, an expense that cannot be claimed under health-insurance policies. Most current health insurance plans cover only those medical services that require a patient to be admitted to a hospital.
While Max Healthcare, Privat Hospitals and Wockhardt Hospitals are already offering these ‘prepaid’ offerings, rivals Apollo and Fortis are considering introducing similar schemes at their hospitals.
Low health insurance coverage in India, at under 2%, they hope, will help boost demand for health plans.
“Health plans fill in a clear gap as insurance covers largely in-patient expenses, leaving out out-patient and diagnostics to be funded by individuals. Lifestyle diseases, too, have fuelled expenses on testing and visits to doctors,” Vishali Bali, vice-president at Wockhardt Hospitals, said.
Wockhardt has sold half a million health plans across its 10 hospitals. Among the most popular schemes sold, Bali said, were ones that provided preventive healthcare in cardiovascular, neurology, orthopaedics and women’s health. Wockhardt, among the earliest hospitals to introduce health plans, has been hawking such schemes for about a decade now.
Shashwat Sharma, associate director with consultancy firm KMPG India, says that hospitals are looking to enrol patients for events with high probability, but low treatment, cost.
“Trips to doctors are more certain and hospitals are catching onto that,” he said, adding that hospitals will keep pushing health plans till they have excess capacity.
Fortis, which runs seven hospitals today, aims to expand to 40 by 2010, while Max is doubling its capacity to 1,400 beds. Apollo is adding 1,000 beds over two years to its current 8,000-bed capacity.
Newcomers such as Artemis Health Sciences, the healthcare venture promoted by Omkar Kanwar-contolled Apollo Tyres, are thinking of introducing health plans, too. Artemis’ 500-bed hospital in Gurgaon is scheduled to become functional before April.
“We will bring out these plans in July-August this year. Nuclear families, which look for convenience in accessing healthcare, are a natural target,” said Anas A . Wajid, Artemis’ head of sales and marketing. The chain aims to sell up to 8,000 plans in its first year of operations.
While Fortis may look at health plans, Chennai-based Apollo Group of Hospitals, the largest Indian healthcare player, will bundle together such schemes with insurance products that it will float with German partner DVK. Some players feel that these plans might create better health-insurance products as they reveal how disease profiles and health data across population segments emerge over time.
“Such plans will give hospitals experience in disease exposures in certain settings and will feed into ‘actuarial’ data that can create better risk-adjusted insurance products,” Pervez Ahmed, Max’s executive director, said.
Ahmed cautions the need to “concept sell” health plans. When launched, Max had set a target of 20,000 plans in a year, but it has sold just 1,000 in the last five months.
A multi-city location and scale are other key variables before health plans catch on, KPMG’s Sharma said.
Consumer fears that they may be short-changed once they sign up for a health plan with a multi-year tenure, could hamper growth in the uptake of such schemes. Cutting corners by any hospital could prove a disaster for the entire industry, insiders say.
“The prepaid consumer is an unforgiving one and when hospitals are trying to expand their chains, any negative word of mouth (on health plans) can spell doom for them,” says Artemis’ Wajid.