Hospitals becoming insurers may reduce friction: Narayana Health's Shetty

Narayana Health's Devi Prasad Shetty says hospitals launching insurance arms could reduce friction with insurers, improve affordability and expand healthcare access in the coming years

The tussle between hospitals and insurance companies over claims and treatment costs could potentially be resolved if more hospital chains launch their own insurance arms, said Devi Shetty, chairman and founder of Narayana Health.

 

This, according to him, would fundamentally change hospitals’ approach to pricing and make healthcare affordable.

 

He added that in 5-7 years, healthcare quality will decouple from a person's wealth.

 

Speaking at the 25th Global Conference of Actuaries in Mumbai, Shetty said the problem with insurance companies and hospitals is universal. India is not an exception where hospitals want to get more money and insurance companies want to pay less. 

 

“But this will improve as more and more health insurance companies develop innovative ways of insurance. When a hospital becomes an insurance company, the rules of the game change. Because, as an insurance company, I don’t wish to make more money as I want my patients to be in a position to afford my care. The whole approach to healthcare will change when hospitals become health insurance companies and more health insurance players and digital-driven insurance firms enter the space,” Shetty said.

 

He also said that hospitals becoming insurers might help address the trust deficit among stakeholders in the healthcare segment — hospitals, insurance companies and patients.

 

Shetty said the number of doctors being trained in the country has nearly tripled, and there are adequate beds.

 

The only missing link in boosting healthcare in the country is that 70 per cent of people may not have cash to pay for healthcare.

 

However, with various government schemes and private health insurance, Shetty expects there will be adequate coverage in the next 5-7 years for everyone to enter a corporate hospital or a government hospital for care.

 

He also noted that equated-monthly instalment (EMI)-based premium payments will aid in making health insurance affordable for the public.

 

“Within five to seven years, India will prove to the world that the wealth of the country has nothing to do with the quality of healthcare its citizens will enjoy,” he said.

 

Congratulating the Institute of Actuaries of India (IAI) for the 25th Global Conference of Actuaries, Prime Minister Narendra Modi — in his message — underscored the importance of actuaries in the calibration and success of several government schemes undertaken to expand financial inclusion and security.

 

“Schemes such as Atal Pension Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Ayushman Bharat have widened access to insurance, health protection and pension coverage. These measures are strengthening social security and enhancing confidence among citizens,” the PM said. 

 

“As India advances towards the vision of Viksit Bharat 2047, it is important that our efforts remain aligned to widen and reinforce the safety nets available to citizens. It is encouraging to see professional bodies such as the IAI working in critical domains and contributing constructively to this broader national endeavour,” he added.

 

Separately, the insurance segment leaders discussed the growing importance and demand for actuaries as the industry moves towards new accounting standards and tracking new areas of risks that are emerging.

 

“There is lot of demand and it is more important than ever because of the changing financial regime. We are moving over to the RBC capital and IFRS financial regimes and I think actuaries need to get more involved in all the aspects of insurance,” said Girija Subramanian, chairman-cum-managing director (CMD) of New India Assurance.

 

Similarly, as India aspires to become a global reinsurance hub with more reinsurers entering the GIFT City, Hitesh Joshi, Executive Director with additional charge of MD, General Insurance Corporation of India (GIC Re), emphasized the role of actuaries in risk assessment, modeling, and capital efficiency, and noted the shortage of actuarial talent in the reinsurance space.

 

“From GIC Re and reinsurer angle, we are of the opinion that there is a tremendous call for actuarial community in India to move from the core task of reserving to probably more challenging task of pricing the risk, more from a reinsurer angle. We have also felt that the actuarial talent is not channeled adequately in the reinsurer sphere. We hope that with the introduction of new reinsurers in the mainland and a number of reinsurers in the GIFT City, this scenario will change,” Joshi said.