Chris George, CEO & Co-Founder, QubeHealth highlights that while we see more and more private hospitals opening up in our towns and cities – some of them good and others just another way to fill the gap of ‘Hospital Beds to People’ ratio, the cost of healthcare has risen by leaps and bounds
The first private hospital, in free India that was set up, was the Sir Ganga Ram Hospital in Delhi in 1954. Since then, the emerging market (EM) private hospital market is expected to triple to US$ 240 Billion, driven mainly by India. The hospital sector contributes nearly 70 per cent of the US$ 81 Billion healthcare industry in India and during 2019–2020, the private hospitals market is estimated to have seen a nearly 27 per cent CAGR. Staggering, to say the least!
Yet, a Merrill Lynch report states that bed penetration in India is as low as 1.3 Beds per 1000 People. This is significantly lower than the global median of 2.5 beds per 1000 people. When it says “global median” keep in mind, it includes some of the poorest countries in the world.
With only a significant minority of the Indian population being insured, the rest just pay for healthcare by selling things like their buffalo. Yes, you read that right. I’m not trying to be facetious-Search online for “selling a buffalo for a brain scan”.
While we see more and more private hospitals opening up in our towns and cities – some of them good and others just another way to fill the gap of ‘Hospital Beds to People’ ratio, the cost of healthcare has risen by leaps and bounds. Indians spent $45 billion, in 2015–2016 on medical expenses, paid from savings or borrowings. That number jumped to $72 Billion by 2020 (NITI Aayog Report March 2021).
In India, “saving for old age” has really meant, ‘saving to pay for healthcare expenses in your old age’. The more aware Indians have opted for health insurance coverage to pay for such expenses, but it is shocking how inadequate this turns out to be. Example: You get an insurance cover for Rs 10 lakhs when you are 30 years of age, but your health expenses actually cost Rs 50 lakhs by the time you are 50.
Think back to conversations with the family CA, who prescribed getting health insurance when filing tax returns to manage tax liability. Tragically, managing health risk is often, diametrically opposite to our desire to manage financial risk. For most Indians, health insurance has been a tax-saving measure at best and cost reimbursements at its worst.
A revealing aspect of healthcare expenditure in India is that we always think of such expenses as “emergency expenditure” – paying for a sudden hospitalisation. However, a large portion of the health & medical expenses that we pay from our pockets is actually non-emergency procedures. Medicines, health checks, dental, eye, wellness, cosmetics and other such expenses account for a big chunk of this.
In the Indian healthcare ecosystem, the individual fights the battle alone with healthcare providers. The insurance companies that are supposed to fight for them are focused on reducing their claims, leading to a high-friction customer experience. The government finds itself overwhelmed in other ways and unless public healthcare catches up, dependence on private healthcare facilities will continue to rise as will healthcare costs.
So what does one do?
The first step is to get the maximum possible health insurance cover for yourself and your family members, as early as possible (even if it means you get it in your twenties). Make sure this cover is as comprehensive as possible and separate for each family member.
The second step is to look for products that provide you medical finance ‘on-tap’. You will need this, not just to pay for emergencies (e.g. Deposit amount at the hospital), but to also pay for those non-emergency, elective procedures that cost a lot of money and are not covered by your health insurance.
The third step is to create a small savings account for future healthcare expenses – think of it like a “provident fund or gratuity” deduction from your salary every month. A small amount, that you forget about, until it accumulates and builds up to pay for that healthcare expense that you had not expected.
Three simple steps that require discipline, but have a far reaching impact on your future health and medical expenses.
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