Sangita Reddy

1
Apollo Payment Models
Sangita Reddy Apollo Hospitals Group India
3rd May, 2005
2
Agenda
Over view of Indian Healthcare system
A Billion lives to cover
Apollo Hospitals group
Apollo Models
Healthcare Health Insurance -Future
3
Health Care Scenario of India

• Over 1 billion people, spread into many different
  economic classes.
• More than 140 million upper middle class,
  growing _at_ over 4 per annum, with combined annual
  income of over Rs. 820,000 crores (over 182
  billion).
• Improving standards of living
• Increasing health awareness and consciousness
• Rising demand for better healthcare facilities
  and services

Indian healthcare industry, currently estimated
at about Rs. 96,000 crores, is growing _at_ 9-10
per annum - to over Rs. 147,000 crores ( 33
billion) by 2005.
4
Health Care Scenario of India

• Poorest 60 receive 30 of the spends while
  richest 40
• receive 70 of the spends.
• Richest 20 use 6 times the number of bed days
  in public
• hospitals than the poorest 20
• 71 of rural population seek private facilities
• 92 of urban population seek private facilities
• 40 of those hospitalized borrow money or sell
  assets
• to cover expenses
• Hospitalized Indians spent more than half (58)
  of their total
• annual expenditures on health care

Second main cause for the Rural Indians
indebtedness
Source pib. nic.in
5
Health Care Scenario of India

• Private sector attends to
• - 65 of healthcare need of India
• - 75 of total healthcare expenditure
• Growth rate of Private healthcare is 12.84
• Complexities of Healthcare
• -Different systems of medicine
• -Dominance of smaller players
• -Quacks

Co-existence of Govt. Private Delivery System
6
Health Care Scenario of India

• Unorganized with only doctor driven clinics and
  not for
• profit hospitals apart from government
  hospitals and PHCs
• High excise and customs duties
• Government spending abysmally low Less than 1
  of the
• GDP
• High incidence of communicable diseases
• Infrastructure constraints Tertiary care
  infrastructure
• constitutes only 5 of the total beds as
  compared with
• 25-30 in developed nations

INDIAN HEALTHCARE WAS CONFRONTED WITH MANY
CHALLENGES
7
Health Care Scenario of India

• Inefficient payment mechanism
• Only 10 of the population has some form of
  insurance
• and most of it is inadequate
• Most of the spends are out of pocket
• Rising complexity of patient mix
• Geographical access
• Lack of equity
• Islands of excellence in Super specialties
  (Metro phenomenon)
• Many Rural areas lack access to adequate
  healthcare facilities

8
Health Care Scenario of India
DRIVERS OF HEALTHCARE GROWTH
9
Healthcare spending increases as a countrys
economy grows

• Indias health expenditure is 5.6 of GDP
• Most established market economies spend 7-10 of
  GDP on health. USA spends over 14.
• As GDP rises, the proportion of expenditure on
  healthcare tends to increase at a faster rate
• In the past 25 years, health expenditure in
  Europe has doubled as a proportion of GDP
• As life expectancy increases and population of
  elderly grows, health expenditure rises rapidly
• Healthcare costs of people above 65 are 4-5 times
  and for people above 75 they are 7-8 times the
  average per-capita healthcare costs

PRIVATE HEALTH INSURANCE WILL FURTHER SUPPLEMENT
THE GROWTH
Source S.O.L NCAER, World Bank,WHO
10
India has one of the highest rates of
out-of-pocket spending for health care in the
world (60)
100
90
80
70
60
50
40
30
20
10
0
India
Nepal
Sudan
Nigeria
Yemen
Georgia
Pakistan
Indonesia
Lao
People's
Myanmar
Viet Nam
Singapore
Source WHO study-2004
11
Less than 15 of the Indian population is
formally covered through prepayment
14
5
Additionally, government provides coverage
through free access to its facilities
5
3.4
0.4
Type of coverage
Private health Insurance
Social Insurance (ESIS)
Total
Employers spend
Community Insurance

• Premium paid through employers health plan or
  directly by individual

• Mandated wage-based contribution from employees
  and employers

• Reimbursement or free access to employer
  facilities

• Schemes managed by a local provider, NGO or a
  welfare body

Description
12
Each type of prepayment faces issues of either
reach or quality
Type of coverage
Key issues
Private health insurance

• Growth of private health insurance constrained by
  regulatory and systemic barriers

Social insurance

• Insufficient utilization of healthcare funds
• Poor quality of care at ESIS facilities

Employers spend

• Healthcare is not part of employers core
  business, but employers cover is necessary in
  absence of effective insurance schemes

Community insurance

• No large-scale development of community schemes
  across the country

• The scale of government spending is low compared
  to other developing countries
• The expenditure is inequitable as the spend
  mostly benefits the richer segments of the
  population

Governments spend
13
The low levels of activity in health insurance
attributed to regulatory and systemic barriers
Barriers
Key issues
Implication
40 equity cap on MNC participation
Regulatory

• Difficult to find a local partner in a less
  understood, risky business
• Solution Increase FDI limit to 49

• High premia needed to compensate for Investment
  
• Solution Decrease capital requirement to
  Rs.50crore

High capex requirement of Rs. 100 crore
No habit of prepayment

• Higher marketing costs to educate customers about
  insurance

• Systematic barriers
• Customer attitude
• Competitive scenario
• Provider unpreparedness
• Payer unpreparedness

High levels of fraud

• Claims ratio will be higher for existing products
  Solution Co-Payments to be made mandatory

• Mediclaim products priced at a low level

Low premia

• No standardisation of treatment protocols and
  quality, either through registration or
  accreditation
• Huge base of smal practices limits rapid
  networking
• Easier for providers to perpetrate fraud
• Solution Make accreditation mandatory for
  providers wishes to be part of network

Providers not standardised
No habit of prepayment

• Unable to design schemes that are profitable
• Solution Make healthcare insurance mandatory in
  organised sector

Source McKinsey analysis
14
Agenda
Over view of Indian Healthcare system
A Billion lives to cover
Apollo Hospitals group
Apollo Models
Healthcare Health Insurance -Future
15
Indias Challenge Indias Strength
Covering One Billion lives
16
Indian Population Rural Vs Urban
17
Rural India - Segmentation
Organized 360 mn
60 ( 430 mn) Farmers
Above Poverty line 530 mn
Unorganized 170 mn
RURAL 730 mn
Organized 130 mn
Below Poverty Line 200 mn
Unorganized 70 mn
Source Census India
18
Urban India- Segmentation
Mediclaim CGHS ESIS PSUs State Govt. Defense
Above Poverty Line COVERED
100 mn lives
URBAN 270 mn
Above Poverty Line UNCOVERED
Self Employed Employed but not covered
100 mn lives
Auto/Taxi Drivers House mid Casual Labour Mainly
construction Labour
BPL UNCOVERED
70 mn lives
Source Census India
19
Covering 1 Billion lives
PHI- Private Health Insurance ES- Employer
Spend SI Social Insurance CI- Communal
Insurance
20
Agenda
Over view of Indian Healthcare system
A Billion lives to cover
Apollo Hospitals group
Apollo Models
Healthcare Health Insurance -Future
21
Mission Statement
Our mission is to bring Healthcare of
International Standards within the reach of every
individual. We are committed to the achievement
and maintenance of excellence in education,
research and healthcare for the benefit of
humanity.
22
Apollo Hospitals Group

• Recognized as the Architect of Healthcare in
  India.
• Single largest private Hospital Group in Asia.
• Pioneered the concept of Corporate Hospital in
  the country.
• First Hospital established in Chennai in 1983.

23
The Apollo Hospitals Group
Franchise Primary Care Clinics
Third Party Administration
Health Education e-Learning
Clinical Research Site Management
Technology Services Solutions
Project Consulting Architectural Design
Owned Managed Hospitals
Retail Pharmacies
24
Value Creation Model
THE APOLLO HOSPITALS GROUP SYSTEMS DRIVEN -
DERISKED - HIGH GROWTH
Human Resources
Infrastructure Physical Technology IT
Operational Excellence Clinical systems
innovation
Access Geographic and Financial insurance
25
Inline With The Needs, a Suitable Infrastructure
Model was Created
Minimization of fixed costs i.e. real estate
Few high specialty Centers of Excellence
Tertiary care
THE BENEFITS
Secondary care
Distributed easy access Clinics and Centers
Maximization of customer value i.e. greater
service levels
Primary careNeighborhood clinics
26
Today, Human Capital is a Significant Strength

• Single-largest healthcare employer in the
  private sector
• Network of 5,000 doctors across more than 50
  specialties, Proven strength to attract clinical
  talent across continents
• 70 of consultants qualified / trained / worked
  in UK / USA
• Our nurses qualify for international placements
  (UK / USA) with a fair degree of ease

27
Apollo is an Institute for Quaternary Medicine
Care

• Treated over 10 million patients
• Over 400,000 Preventive Health Checks done
• Performed over 300,000 major and 500,000 minor
  surgeries
• Over 50,000 cardiac surgeries1
• Over 8000 renal transplants2
• 150 bone marrow transplants
• Pioneers in burns management
• First successful cord blood transplant for
  treatment of leukaemia
• Leading Oncology and Onco-surgical teams

28
One Among The Many Firsts

The Apollo Gleneagles P.E.T./C.T. Project
Time Magazine honored PET/CT as the "Medical
Science Invention of the Year" in 2000, noting
that the PET/CT scanner has "provided medicine
with a powerful new diagnostic tool."
29
Quality Initiatives
JCI
ISO
Six Sigma
CAP
30
Apollos World Standing
For profit hospitals
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Technology (IT)

• Hospital Information System (HIS)
• Picture Archiving and Communications System
• Messaging Solutions
• Web Solutions
• Telemedicine
• e-Learning Training Solution
• Nurse Call Systems
• Financial Accounting System

32
Apollos approach towards integrated
healthcare...

• Set up or network with low cost medical facility
  which will cater to 70 of illnesses
• Create models for different cross sections of the
  population
• Use Technology effectively- Telemedicine
  connectivity
• Ensure effective administration- Cost only 5.5
  of premium

Own Third Party Administrator for Health
Insurance
33
About Family Health Plan Limited

• Licensed Third Party Administrator (TPA) by IRDA
  ( L.No 013)

• Extensive operational presence through 24
  offices across the country

• Completely IT integrated operations and
  processing

• Only ISO Certified TPA in the country

• Largest TPA offering nation wide services to
  over 5.5 million lives

• TPA with the widest national network hospital of
  over 2850 hospitals

34
Agenda
Over view of Indian Healthcare system
A Billion lives to cover
Apollo Hospitals group
Apollo Models
Healthcare Health Insurance -Future
35
Apollos initiatives in Innovations in Health
Insurance
Rural Programs
Police department
Govt. Employees
Innovative Healthcare Models
Urban citizens
Women
36
Yeshasvini Karnataka State Co-operative Catego
ry Organized Rural

• Landmark initiative for the farming community of
  India covering 2.1 million farmers of Karnataka
  State
• Member Contribution Rs.90/annum ( 2USD)
  
• Surgical Coverage only, Free Out-patient
  consultation
• Annual Coverage Rs.2 Lakh ( 4600 USD)
• Cashless treatment at 140 Hospitals across
  Karnataka state
• Implemented Administered by Family Health Plan
  Limited.
• Over 25000 patients have benefited under this
  scheme

37
Andhra Pradesh State Police Scheme (Jan 1999 -
till date) Category Organized Urban

• Scheme for the A.P Police Force covering 85,000
  Employees and their dependents
• Employee contribution of Rs 50 (1.13USD) per
  month.
• Govt. participation as per Medical reimbursement
  rules
• Unlimited cover
• Coverage for Select ailments requiring tertiary
  care and are expensive
• Administration and Implementation by Family
  Health Plan Limited

Similar Models have been replicated in 3 more
States
38
J K State Govt. employee Insurance (15th Aug
2003 till date) Category Organized Urban

• Insurance backed scheme for all State Govt.
  Employees
• (3.5 Lakhs families)
• Annual Premium Rs.1400/- ( 32 USD)
• Coverage Rs 3,00,000 Lakh ( 7000 USD) per
  Family
• Coverage for All ailments requiring
  hospitalization
• Cashless treatment at network hospitals
• Administered and Implemented by Family Health
  Plan Limited

39
Accident Cum Medical Insurance( Aug 2000 till
date)Category Urban Unorganized

• Health insurance backed product
• Coverage for All accident-Domestic/RTA/Industrial
• Premium Rs.180/- (4 USD)
• Annual cover of Rs.2 lac (4600 USD)
• Cover open for general public/ defined groups etc
• Cashless treatment at National Emergency Network
  Hospitals

40
National network of emergency services
A national initiative to bridge a critical gap in
the Indian Healthcare System

• This system reduces mortality in emergency
  trauma victims by 45 .. Saving over a million
  lives per annum in the country

Hyderabad, Chennai, Delhi, Madurai Bilaspur
functional Bangalore, Mysore, Pune Kakinada
will become functional in 3 weeks Will cover all
major towns and cities in India by the end of
2003
41
Preventive and Curative
(April 2001 till date) Category Urban Unorganized

• Health insurance backed product
• Coverage for All ailments requiring
  hospitalization
• Annual Master Health Check
• Quarter Medical examination
• Home visits by Physicians
• Dietary counseling
• Free Emergency room treatment and Ambulance
  services
• Cover open for general public/ defined groups etc

42
Health Apollos Insurance Product Category
Urban organized

• Provider driven model of insurance
• Comprehensive solution providing Out-patient,
  In-patient an Preventive care
• Early detection through prescreening helps in
  timely management and lowering overall heath care
  cost
• Long term care packages for Chronic ailments
• Annual premium Rs.7500/- ( 175 USD)
• Annual cover Rs.3,00,000/- ( 7000 USD)
• Out-patient cover retained by provider,
  Inpatient risk insured

43
Health Insurance sector cannot work in
isolation, an integrated approach is critical
44
Aragonda, a village in the Chitoor District of
Andhra Pradesh An Example of Public-Private
Partnership
In the year 1999
In the year 2000

• Population of 7000 people 1500 families
• Nearest PHC is 20 miles away
• Access to only 6 General Practitioners
• For Practical purposes, there is No Medical
  support..

• Access to High Quality Healthcare and Specialists
  through TeleMedicine

TeleMedicine a Public- Private Model that has
changed lives !!!
45
Case Study - Aragonda Apollo Hospital
Infrastructure
Apollo setup a 50-bed hospital with
state-of-the-art Telemedicine infrastructure with
an Investment of 2 crores (4,65,000 USD) Over
150 jobs generated for the local population
46
Case Study - Aragonda Apollo Hospital
Financial assistance
Self sustaining model Each family pays Rs. 1
per day covers medical treatment upto Rs.
20,000 ( 465 USD)
Apollo has become a house hold name for entire
village of Aragonda Affordable health care for
all
47
Case Study - Aragonda Apollo Hospital
Wellness
Preventive health screening programs at the
Aragonda Hospital have checked the spread of
illness and reduce the burden of
disease Special Focus on -Cervical cancer
screening -Cataract -Immunization
48
Aragonda Apollo Hospital
Technology
Indias first Rural Telemedicine Center with
cutting edge technology connects Aragonda to the
best health care facilities
49
Aragonda Apollo Hospital
Holistic approach
Enhancing quality of living by - Yoga - Life
style - Social development
Let every Indian village become an Aragonda
50
Agenda
Over view of Indian Healthcare system
A Billion lives to cover
Apollo Hospitals group
Apollo Models
Healthcare Health Insurance -Future
51
Access the Complete Healthcare Services From
Your Desktop
www.healthhiway.com
Healthcare information highway by using the power
of internet for addressing the healthcare
industry's critical need for secure and reliable
transmission of information.
52
Health Highway Transactions - participants
S E R V I C E S
U S E R S
53
Apollos approach towards integrated
healthcare...
People
Geographic
Only 1 population insured
Income
Age Band
Insured
Ins. Co.
Integration Of PPT
Healthighway
ITIH
Process
Technology
TPA
Hospital
Telemedicine
Seamless Info and Delivery
The 4 wheels need to be aligned
54
Future Approach for covering 1 Billion lives

• Facilitate investment into healthcare sector by
• According Infrastructure status
• Increase FDI cap to 49 now and gradually
  increase to 74 over a period of 5 years
• Decrease customs duty levels to Nil in line with
  countries such as Malaysia, Srilanka (under BOI)

55
Future Approach for covering 1 Billion lives

• Improve access by
• Decrease capital requirements to Rs.30-Rs.50
  crore for Healthcare Insurance companies
• Make co-payment mandatory to avoid fraudulent
  practices
• Encourage community insurance schemes and make
  nominal subscriptions
• Make health insurance mandatory for organized
  sector
• Separate role of payer and provider in Social
  insurance
• Privatize ESI hospitals
• Promote Public Private Partnerships

56
Future Approach for covering 1 Billion lives

• Define and ensure minimum quality standards
• Make accreditation mandatory for becoming part of
  network of hospitals
• Improve standards Numbers of medical education
  / for medical and paramedical
• Encourage and facilitate the integration of
  medical services and information technology
  Health Satellite / Health Network
• Mass awareness programs
• Product designing Age specific, Region Specific,
  Social Insurance,
• Community based, Co-payment, Co-insurance,
  Deductible

57
We believe.. Integration, Product System
innovations must aim at Making Healthcare
Accessible affordable to the common man
58
Healthcare will be shaped not By the
differences of our past But The commonalities of
our future