A STUDY OF DIRECT TREATMENT COSTS IN RELATION TO

PRIVATE HEALTH INSURANCE STATUS OF HOSPITALISED

PATIENTS IN PRIVATE HOSPITALS IN DELHI

Thesis submitted to the Faculty of Medical Sciences, University of

Delhi in Partial Fulfillment of the Requirement for the Degree of

Doctor of Medicine (Community Health Administration)

By:

DR. AMIT KUMAR GUPTA

NATIONAL INSTITUTE OF HEALTH AND FAMILY WELFARE,

BABA GANGNATH MARG, MUNIRKA, NEW DELHI 110067.

MAY 2013

Summary of the thesis

A-37

SUMMARY OF THE THESIS

With advancements in medical science and diagnostic techniques, more people

are being diagnosed with one or the other medical illnesses. Rise in awareness has

also led to people seeking medical advice and treatment more frequently. Treatment

expenditure is getting costlier day by day and many people risk being pushed into

poverty, or further into poverty, because they are either unable to pay or forced to sell

assets or borrow money to pay their medical bills. Even where the healthcare charges

are covered by one or other measures, patients are generally required to share the

costs by paying some amount out of their own pockets. Such out of pocket (OOP)

expenditures have serious repercussions for health.

As a method of risk transfer, many people plan and opt for Health Insurance

(HI), in which by estimating the overall risk of healthcare expenses among a targeted

group, a routine finance structure is developed to ensure availability of funds to pay

for specified healthcare benefits. It is an important method of funding the healthcare

systems in larger part of the world. Of late, in India too, HI is emerging as a big

industry in both public and private sectors. Private HI (PHI) is a type of HI offered by

private sector general insurance companies. It can either reimburse the insured for

medical expenses incurred or pay the care provider directly. Of late, it is becoming

popular in India too, and has encompassed urban and subsequently rural areas also.

PHI, as a method of risk transfer, should have favourable effects on its

stakeholders, as any unfavourable effect would be against the inherent philosophy of

risk transfer and can potentially detriment their interests. However, recently, there has

been mounting considerable interest in relationship between the PHI status of a

patient and the direct treatments costs for various healthcare services/ facilities being

provided to him/her by the private hospitals.

Summary of the thesis

A-38

Therefore, the present study has been conducted to assess direct treatment

costs in relation to PHI status of hospitalised patients in private hospitals in Delhi. The

study aimed to see whether there was any difference in direct treatment costs between

the hospitalised patients with PHI facility (PHI patients) and those without any HI

facility (NHI patients); and if it was then to identify factors associated with such a

difference in the treatment costs and find out how such a difference was affected by

the patients’ PHI status so that tentative measures might be explored to reduce such a

difference.

For this purpose, a retrospective, cross-sectional, hospital-based survey was

done in four tertiary-level private hospitals of Delhi, focusing on PHI and NHI in-

patients of the FY 2011-2012. As per the protocol designed for this study, 30 PHI

patients and their 30 matched NHI patients (by pair-wise matching for age, sex and

clinical diagnosis) were selected from each of the four study hospitals, thereby the

sample comprising a total of 240 study subjects (120 PHI patients and their 120

matched NHI patients). Primary and secondary data were collected in respect of these

study subjects, covering their demographic profiles, hospitalisation details,

hospitalisation bill details, OOP payments, direct treatments costs, PHI-related bill

details, and their experiences, perceptions & opinions regarding PHI & treatment

costs. All primary and secondary data thus collected were compiled chronologically to

supplement each other, and analysed to derive gainful information.

Results of the study showed that the direct treatment cost of hospitalised

treatment was affected by an in-patient’s PHI status, with such cost being higher in

the PHI patients than in the NHI patients. Based upon the observations, the study

identified various factors associated with such a difference in the treatment costs. It

highlighted as to how such a difference was affected by the patients’ PHI status. For

reduction of this difference, the study further tried to explore tentative measures for

remedial actions.

Summary of the thesis

A-39

The present study highlights that procedural delays, complications in payment

processes, selective human behaviour, asymmetric information, moral hazards on the

part of various stakeholders (particularly the private hospitals & their doctors, the

patients and the TPAs), and unmet need for universal risk transfer & health protection

are major factors for abnormal and unprecedented rise in direct treatment costs of

hospitalised treatment under PHI. Further, within the specified limitations, the study

suggests that such a difference in treatment costs due to PHI status of the in-patients

can be reduced by a comprehensive and proactive approach by instituting a number of

remedial and corrective measures.

At the end, the study recommends the following to reduce the difference in

direct treatment costs in relation to in-patients’ PHI status:

1. Laying of appropriate guidelines & procedures to check the practice of

showing PHI patients’ information wrongly in the hospitals’ records.

2. Listing of coverable & non-coverable charges under PHI in a uniform

and rational manner, their periodic revision, and avoiding levy of the

non-coverable charges in PHI patients as far as possible.

3. Development of guidelines for uniformity in the rates of charges for

various services and for their rational usage.

4. Strengthening of the private hospitals’ PHI desks as facilitator for PHI

services to the insured patients.

5. Enrichment of the TPAs’ role as important link between the insurers

and the private hospitals.

6. Mandate for medical examination before issuance of the PHI policy,

and thenceforth, periodic updating of the information by the insurers/

TPAs without bothering the PHI in-patients.

Summary of the thesis

A-40

7. Formulation of some plausible and practically viable system to address

issues related to coverage of pre-existing diseases under PHI.

8. More transparent and clear terms & conditions under PHI policies, and

reiteration of the crucial ones in the initial authorisation letter.

9. Doing away the capping of charges for individual services covered

under PHI (to the extent of available credit limit under a given policy).

10. Provision for informing the PHI in-patients about their authorised bill

amounts (with detailed break-up) in their final authorisation letters.

11. Comprehensive strengthening of the private healthcare system, with

suitable measures to deal with PHI-related malpractices.

12. Active participation by the government and other regulatory bodies for

further improvisation of PHI services.

The study concludes that the information gained on this key issue of PHI-

related differences in treatment costs and the suggestions made to remedy the

associated factors would be useful in scientific and medico-social applications as well

as in further decision-making in health financing.