Final Project Report Dated – 29/07/2020

Authored By - Improving Global Health: Focusing

Dr Faisal Khan - New Delhi, India on Quality and Safety
School of Public Health - Harvard
Faisalk499@gmail.com

Topic – Indian Health Care Quality: Influence on Health Insurance.

Background
The relationship between Health Care and Health Insurance has gone
from strength to strength during last decade in Indian market. Health
Insurance has become a significant business partner to Health Care.
Both depend on each other; one provides services, while another adds
the revenue.
There are more than thirty thousand active hospitals in insurance
network, However, 75% of the total health insurance spend goes to
top 1000 hospitals only, as they are treating insurance patient on
regular basis.
How Health Care Quality Impacts Health Insurance?

According to various studies, by School of Public Health – Harvard, for

Low Income Countries, like India, the quality of treatment needs
improvement. When we say quality, the incidence of Hospital Borne
Infections, Surgical Complications, Medication Errors etc. are
included.
The occurrence of ‘Adverse Events’ is 10 % in hospitals, which prolong
the hospital stay that eventually increases the cost.
Health Insurance also get its share from this additional cost, because
approximately 20% of the hospitalization business of health care is
from health insurance. Therefore, this extra cost is borne by, already
burdened, Health Insurance Industry.

An attempt to quantify

FY 2018-19, the total claims paid amount was INR 34983 Cr, according
to studies, when error percentage is applied i.e. 10%, implies that cost
inflates by 25% for erroneous cases.
This additional burden is due to low Health Care Quality & Errors
which is approximately 2% of the total Health Insurance paid amount.
 Claim Figures as per IRDA Annual Report - 2018-19

Total Claims Settled – Count 15912560

Total Claims Settled - Amount (INR) 349830000000 2%
Average claim size 21985 Extra
Erroneous Cases - count (@ 10% of total settled) * 1591256 Burden
Erroneous Cases - Amount (INR) 34983000000 on
Insurance
Considering Cost inflation ~25% in Erroneous 27986400000
cases, actual amount of such claims would be
Difference in Amount (INR) 6996600000

Inflated Amount as % of Total Claims Settled 2.00%

Inflated Amount in INR (in all Erroneous cases) 6996600000

What is the solution?

If Health Insurance Industry partner with 1000 major providers, and

drive to improve the quality of treatment, it is evident that we will able
to save a substantial amount of claim out-go at Industry level.
1- Patient should be able to ‘Rate’ these hospitals based on the
‘Quality’ of treatment, provided.
2- Make the hospital quality ratings public through a common IT
platform so that other patients can select the hospital based on
quality of treatment rather than brand and tariff.
3- This will surely increase the competition for quality amongst
hospitals which will benefit the Health Care also at a larger scale.
4- There could be ways and means to make the “Rating
Mechanism” fool proof.
5- Common IT Platform to share the credentials of these 1000
hospitals amongst all Insurers and TPAs.
Conclusion -

In the absence of Health Care Regulator, Health Insurance Industry

must play a role to lead the ‘Quality Improvement Campaign’, which
will not only benefit Health Insurance in reducing extra cost but also
support Health Care as a whole.
‘Quality Rating of Hospitals’ and making it available for the people to
take an informed decision, while selecting a service provider based on
the Quality of services, must be one of the agenda of Health Insurance
Industry in collaboration with Government and Regulator.

Better services, improved quality care & reasonable cost will play a
major role in shaping future of Health Insurance Industry.

References –
1- Insurance Regulatory Authority of India- annual report 2018-19.
2- ROHINI (Registry of Hospitals in Network of Insurance).
3- T.H.CHAN. School of Public Health - Harvard.
4- Better Care, Better Health, Lower Cost – Donald Berwick, Founder-
Institute for Healthcare Improvement – USA.