The state of health in India can be gauged by a simple scale. India is the second-most populous nation with 1.10 billion people. Yet the health care industry's turnover is mere $18.7 billion. In comparison, healthcare industry in United States, with only as much as a quarter of India's population, is a whopping $2.1 trillion.
The chilling factor for the Indian economists and the Ministry of Health and Family Welfare is that the country spends only 3 per cent of its $814.07 billion GDP on healthcare, while US spends 16 per cent of its $13.049 trillion GDP on healthcare.
Though India enjoys the reputation of having world's best doctors and almost 4 times the population of US, the healthcare industry in the country is not that strong. The main reasons are:
■ Private healthcare is expensive and unaffordable for many, while public healthcare leaves much to be desired.
■ There is an abysmal lack of incentives to control medical costs.
■ Rapidly expanding technology coupled with inflation increases the cost of doing business both for the insurers and for medical services providers.
With Indian health tourism industry about to topple Singapore's, there is a big need of setting the standards for Indian healthcare industry, which calls for managed care.
Managed care
Imagine a situation where a patient goes to a doctor for a simple malaise. Usually, the doctor recommends a lot of tests, including lab tests, X-rays, ultrasounds and ECGs. If the hospital does not provide these facilities, the patient may have to go to a far away laboratory to conduct these tests. At the end of it, the patient often lands up with a big bill on his desk. Also, there are many who undergo medical services when it is not required. This lot of people is not worried about the cost factor, as they are reimbursed from their insurance companies. This leads to an increased financial burden for the companies offering health insurance. It was to combat this volatility in provision of health care services and to provide quality medical services to people at minimal cost, a system called managed care was introduced in US. Managed care is an amalgamation of health care delivery and healthcare financing, seeking to manage the accessibility, cost, and quality of it.
India desperately needs to implement this unique concept of managed care, which will benefit to millions of Indians. The Indian healthcare scenario is typically a 'fee-for-service', where patient goes for treatment, pays the bill to doctor, submits the bill to insurance company and gets the reimbursement. This environment involves a conflict of interests and obligations, which makes managed care, a dire necessity for India. Like other service industries, managed care is a system, which revolves around the customer who is a patient in this case.
Managed care manages quality of care given to patients, controls the cost of care and also accessibility to quality healthcare services. All these services are done through the managed care organizations. Not only managing the premiums and reimbursements, managed care organizations also plan the healthcare roadmap for each patient. All the services are co-ordinated by the service providers and the service managers. The service managers are none other than the insurance companies, while service providers are doctors and hospitals.
Managed care insurance is similar to life insurance except that the latter plans one's future after death, while the former when the person is alive. Doctors become responsible for taking into account the effect of their clinical decisions, the treatment recommended to their patients and also the ethical principles. Insurers become responsible to bear the expenditure of their client's medical expenses. Policy holders and service providers are also responsible to share this cost of expenditure with the insurer. In short, managed care makes everybody responsible and shares the medical expenses.
Why managed care?
Now, see the difference between fee-for-service and managed care to appreciate the latter better. In fee-for-service, service providers are not penalised in case of over or under utilization of medical services. However, in managed care, the service providers are penalised for over or under utilization of medical services. In fee-for-service, the main focus is on treating sick people. On the contrary, in managed care, the main focus is on preventing people from falling sick. In fee-for-service, it's the patient who contacts between the insurance company and doctor, where as in managed care, it's the insurance company that leads both doctor and patient. In fee-for-service, the insurance company is responsible for financing its client's medical expenses, whereas in managed care, insurance companies are responsible not only for financing healthcare, but also for ensuring get quality healthcare for their clients. In fee-for-service, insurance companies do not have any control over the providers, while in managed care, insurance companies enforce control over providers through medical management.
What is lesser known is that managed care could turnaround the health of the nation, as it can in every aspect of the economy.
Implementing managed care
Managed care, as the name suggests, means managing the healthcare. It can be started with managing all the entities involved in healthcare scenario and the relations between them. Underwriters need to play a bigger role in accordance with the analysis done by the actuaries. This would lead to better policies in terms of premium and other minute details written on the policies for the betterment of both people and health insurance industries. Network management should be done to form good provider networks that comprise of excellent physicians, hospitals, labs etc.
Medical management in hospitals is required to supervise the best treatment possible to the patient. Utilization management holds the responsibility to draw the lines on which both patients and doctors need to move. Any deviation from the path would lead to the leaking of pockets of patients and/or doctors. Admission, continued stay, retrospective, discharge planning, bill screening and everything that happens to the patient during the treatment should be reviewed. Case management is another process that assesses, plans, implements, coordinates, monitors and evaluates the options and services required to meet the needs of patient. Disease management is yet another concept intended to reduce health care costs and improve quality of life for individuals with chronic disease conditions by preventing or minimizing the effects of a disease through integrative care. It is a prospective, disease-specific approach to improve health care outcomes by providing education to beneficiaries.
All managed care organizations need to follow 'prevention is better than cure' concept. They need to target their population, conveying the ways for better health. Moreover, discounts in the premiums would be one way of asking employers to conduct wellness programmes for employees and their dependants.
Each policy holder can be made to select a doctor from a network of doctors formed by the managed care organisation. Thus selected doctor would be the physician, who will be responsible for the overall healthcare of that particular patient. In order to refer the patient to any specialist for any major medical treatment, this physician should get pre-authorization from the medical management team. And if approved, health insurance company will pay for his/her medical expenses. The system needs to be flexible enough to allow the member to see the specialist or to undergo the treatment directly without any referral or pre-authorisation from the primary care physician in case of emergencies.
Managed care organisations should ensure that each provider has sufficient member base and that the provider spends quality time with each and every patient. Patient should be informed of all possible treatment options available by the service provider. Apart, it should be made certain that their members need not have to travel a long distance to see a provider.
Government role
In implementing managed care in the country, the role of government is very critical. First of all, the government needs to frame certain laws, which directly or indirectly, benefit the patients. Insurance companies should be asked to abide by these laws. More and more managed care organizations should be encouraged by the government and special facilities should be given to start the new business. State and Central government need to take the responsibility to finance healthcare for people below poverty line, handicapped people, children and aged population. In addition, government should ensure that these people get quality treatment from the service providers and that these people are treated with respect and dignity. At the same time, government should ensure that people who fall under these categories don't misuse the benefits provided by the government. The government should make it mandatory to enroll people who come under these categories into government sponsored health insurance programs.
Apart, employers should be forced to have health savings account, similar to pension plans where the employer and the employee would contribute equally. The amount used for medical treatments from this account should be made tax free.
Also, the government should make sure that the concepts of managed care are implemented in the health insurance programs sponsored by them. In order to benefit the entire population, the government should come up with initiatives such as developing healthcare standards, unique identification number for providers and patients, clinical guidelines for physicians, formation of committees accountable for setting up standards for each of the areas of healthcare, initiatives to prevent diseases, educating the mass on being health conscious etc.
In total, managed care makes cost, availability, accessibility and the quality of medical care a function of free-market determination or negotiation. Thus, all the three participants - the insured, service provider and insurer - will benefit to a greater extent by the managed care system.
(The authors are business analysts with FCG India,Bangalore)