September 17, 2007

US insurance firms sell Indian treatment

That healthcare is unaffordable in the USA is well documented. That is also the reason why people from that part of the world are seeking out Indian doctors and hospitals to take care of their medical needs.

And contrary to popular perception in India, even if people in these countries have an insurance cover, life isn’t easy for a simple reason. The premiums are out of whack with what people can afford to pay. And that has now started a new trend that has Indian healthcare companies drooling.

American health insurance firms, particularly from the US are offering their customers a carrot: If you’re unwell, you've got two options. Either you pay the regular premium and get admitted to a hospital in your country of residence.

Alternatively, you choose to go to India for treatment; in return for which you get a hefty 30-40% discount on the annual premium you pay. The way things are in US, 71 million Americans in a population of roughly 350 million, are either uninsured or underinsured because they cannot afford it.

If industry watchers are to be believed, demand for the services is high and global players like Blue Cross, Blue Shield, Cigna Insurance and Aetna Insurance have latched on to the possibility and are hot-footing it to India not just to set liaison offices in the country, but to tie up with Indian hospitals where their clients can be sent to for life saving procedures like coronary bypass surgeries and heart valve replacements.

Germany-based DKV Group for instance, which has teamed up with Apollo group of hospitals, is also eager to set up a stand alone health insurance company in India to cater to this huge and growing overseas demand. The firm has applied for a licence to the regulatory authorities.

Star Health, another Us healthcare firm with investments from insurance companies has set up base in Chennai. It is believed to be in talks with leading hospitals across the country for tie ups.

Then there is American health insurer Cigna, which was present in the country until a few years ago. It is now looking to make a comeback. In its earlier stint, the company had arrangements with major Indian hospitals like Wockhardt that allowed its clients to seek treatment here.

"People are getting desperate for good, cheap and realiable medical care," says Vishal Bali, CEO of Wockhardt Hospitals. "Insurance companies are looking at their own viability and the need to save money. The trend of insurance companies latching on also illustrates the growing unaffordability of the US health care system," he added.

Hospitals in India usually charge around $6,000-8,000 for coronary bypass surgery, $6,500 for a joint replacement and $6,500 for a hip resurfacing, which represent a small fraction of the typical costs at US hospitals. "India is not just known for its outsourced back-office skills any more, like reading of X-rays, medical transcription or billing. It's the actual clinical care that is now being outsourced," says Bali.

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