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Times of India
12 May 2011
By Gauri Kamath and Vikas Dhoot
New Delhi, India

The success of Centre’s health insurance scheme for the needy prompts cos to set up specialty units in rural areas
Healthcare Comes Home to the Poor with Paid Cover
The government wants to introduce public private partnerships (PPPs) in hospitals to improve access to healthcare in the hinterland. But its health insurance scheme for the poor has already begun to have that unintended side effect.

The Rashtriya Swasthya Bima Yojana (RSBY) – which has quadrupled India’s health insurance penetration in just three years – is now attracting a slew of entrepreneurs wanting to set up hospitals primarily targeted at the rural poor. The trend of private hospitals coming up in districts where there were none before bolsters the view that the government should move into healthcare financing rather than run hospitals.

Baliya in eastern Uttar Pradesh, for instance, has been off the radar for most healthcare barons. But spurred by the demand generated by RSBY, Asarfi Hospitals’ owner Harendra Singh is building a 100–bedded multi–specialty hospital in this town, approximately 200 kilometres from Varanasi.

"The state of healthcare in Baliya is very poor," said Singh. So poor that between eight in the night and six in the morning "people are not allowed to fall sick" he said, only half in zest. He hopes to change this.

Singh set up his first hospital in Dhanbad in 2007 a year before RSBY was launched. With the scheme’s impact becoming tangible, he noticed many beneficiaries coming in for procedures ranging from gall bladder surgeries to appendix removals.

On an average, 35 in–patients in his 130–bedded hospital are RSBY beneficiaries. Singh believes RSBY’s demand push can have a profound impact on the healthcare system. Investors like Singh are being drawn to low–cost healthcare thanks to RSBY’s design. RSBY smart cards guarantee an annual health cover of . 30,000 for a poor family, which can be used across 8,000 empanelled hospitals, both public and private, across the country. Health insurers manage the issuance of cards and payouts. The Centre and the state government pay the premium.

"For almost 60 years, the government focused on supply–driven healthcare management by investing in public hospitals," a senior government official told ET. "Putting the choice in beneficiaries’ hands is now drawing hospitals to go where the demand is," he said. Here’s how. RSBY premium is paid out on a district–wise basis to insurers. Where districts don’t have good private hospitals, RSBY users simply travel to the nearest district that has one.

This is where entrepreneurs like Singh are stepping in. If they can set up a decent hospital within the district, the RSBY spends can be captured straightaway.

With 2.4 crore smart cards issued and district–wise premia running into crores, there is a potential to create a sustainable business with RSBY beneficiaries acting like anchor tenants for a mall.

GV Meditech’s Indu Singh is working on a hub–and–spoke model around RSBY. An ambulance driver from GV Meditech travels periodically to remote villages, pools 20 to 30 RSBY cardholders with myriad problems ranging from those affecting the eye to the stomach with the help of teachers at local schools, for instance, and brings them to the nearest Meditech hospital.

"RSBY is helping in a big way," said Dr Singh. The firm is now in discussions with a leading Bangalore–based cardiac care hospital to set up a 100–bedded hospital for RSBY patients. "I will provide them local support and patients and they will provide cardiothoracic support," Dr Singh said. Similarly, Kolkata–based Glocal Healthcare, spearheaded by former Sebi chairman M Damdodaran, is looking to tailor its rates to RSBY packages.

The scheme prescribes standard rates for over 780 medical procedures, which all empanelled hospitals have to comply with. "Broadly, our costs are in line with the RSBY rates," says Glocal’s CEO Sabahat Azim.

The RSBY is an important cog in its business model, which is hoping to launch innovative insurance schemes with its partners to create affordable healthcare options for people above the poverty line. Experts say RSBY has opened up a healthcare segment – to cater to low–income families – almost overnight.

And while not all hospitals catering to these segments have come because of RSBY, this is clearly at the back of their mind.

The trend also reinforces the argument that the government should move from being a healthcare ‘provider’ to a healthcare ‘financier’. This argument initially drew its strength from the sorry state of most government–backed healthcare infrastructure (with some exceptions such as AIIMs in New Delhi).

It is not just RSBY, but also statesponsored schemes such Aarogyasri that are having a similar impact. For instance, Bangalore’s Narayana Hrudayalya has opened a 500–bedded super–specialty and heart hospital in Hyderabad to cater to beneficiaries of Andhra Pradesh’s community health insurance scheme for BPL families.

Rural Shift
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