I would like to start this essay by thanking regulators, ministers, bureaucrats etc. involved in shaping India’s Health stack - ABDM. I remember when the very first time (Aug 2022) I read ABDM’s consultation paper, the first thought struck my mind - if we build applications for 2P of the Healthcare - Patients and Providers - we have once in a lifetime opportunity to make quality healthcare universal in India under $100 (INR 10,000). Of course, there was some scepticism on the card because, in terms of release for 3P (Patients, Providers, and Payers), there was just ABHA to build Personal Health Record (PHR) application, and the rest of the building blocks were still in either ideation or development. However, today when I draw all the available building blocks - I find myself in amazement. And hence just for the velocity of execution - I have respect for all the above-mentioned stakeholders!
If I have to summarize ABDM’s masterwork in just one paragraph: Until yesterday, there was no incentive for the 3P of Healthcare to get digitized and adopt the technology. Today, thanks to ABDM, there are clear incentives for all 3P. And most of these incentives are visible, short-term: the incentive that drives human motivation. However, there are just a few more things regulators must do to make sure - Quality Healthcare is not limited to just the top 10% of India’s population.
One of the advantages of being surrounded by your customers and keeping people in the centre is that - you really ask all the hard questions about everything. And believe me, even after being so careful, we have found ourselves in shock - because we discover something unusual, often. I think I was aware of this problem because we track all the problems, being solved by new-age entrepreneurs in the USA. However, this is the first time an Indian patient expressed such problems. Building a new solution to fix a problem means price inflation. Unfortunately, the USA can’t scrap this multi-trillion dollar industry, fortunately, India is still building all the tech layers and infrastructure - we shall not repeat such mistakes.
Sometimes it is super difficult to explain the valuable insights you get just by living among your users and customers. I am in Patna for many months, and every single day, I talk to many potential customers (99% of my physical conversations in Patna are with our potential customers). And this is one of those conversations that were different because it highlighted a common USA Healthcare problem for the first time in India.
This problem is not visible in our societies because we have super low Health Insurance penetration. If I am not wrong, this problem will be visible to everyone in the next few years. And this is an important problem to solve otherwise, 90% of Indians might not purchase or renew Health Insurance after the first time purchase.
Before I go into my conversation with the potential customers, let me ask a question. Can you know the tentative cost of health treatment before completing your treatment? Let’s make it simpler. Can you know the Healthcare treatment cost after arrival (at the time of visit) to a Health Facilities? In almost all cases, the answer will be NO. I think Healthcare is the only service whose price is still unpredictable. And in almost all cases, there is a massive deflection in the expected and actual costs. We all can find the rate card of every product and service in the world, but the rate card of most Healthcare activities is still invisible to the world. And this is not just India’s problem, a global problem. In fact, recently, in the USA, the regulators had to jump to control some aspects of the treatment cost deflection.
In that regard, regulators (The US Department of Health and Human Services) have passed a new bill - No Surprise Act - in Jan 2023. This new rule would prevent health providers from charging patients more than what their insurance company pays. It would be better for all of us if I list the key points of this rule.
Prevent Providers from gag clauses: clauses in contracts that prevent providers from disclosing information about their prices to patients. This will allow patients to shop around for the best price for their care.
No extra payment to Providers: patients will not be responsible for paying any amount above the amount that their insurance company has agreed to pay.
I am surprised by the fact that USA’s regulators have woken up now when the Healthcare per capita is almost touching $13,000 (INR 10,00,000). Once I will explain the story, you will realize how important it is for our regulators to consider this problem.
Let me share my conversations with the potential customers:
People have been receptive and opened themselves without a filter thanks to my slightly different accent compared to locals. And after multiple iterations, we simplified our customer pitch and the steps of my answers, frankly, I exactly know what could be the next question once I have answered the previous question.
And in one such conversation, one of the PMJAY users asked me what do I do?
The steps on my conversations with potential customers:
Q. What do you do?
A: We are building Jile Health - a startup in Healthcare
Q. Can you tell me the details?
A. At this step, I pitch to the customer: We take care of the entire year’s Healthcare expenses per family for just INR 2000 - however, we are still building.
Q. Is it like insurance?
A. No, insurance only covers expenses inside the Hospital (IPD). However, most of the Health treatments of people like you and me (95% of the population) demand outside tests, medication, Treatment consultations etc
Q. Let’s say I purchased a Jile Health pack, what are all it covers?
A. It includes - medication worth INR 1400 after crossing the limit, 15% unlimited discount, X number of Offline consultations, Y number of Online consultations, Z number of lab tests, Accidental bike insurance of INR 2 lakhs per member etc.
I remember one such conversation where the other person took my phone no and these were his lines: Me aasa karta hu aap ka ye jaldi se ban jaye, me aap ko phone karke puchta rahunga, or aap ka sabse pahla customer banunga (He asked my number and told me, I will pray that you build this soon, I will call you to get to know the status, and I will be your first customer).
Let’s come back to PMJAY’s user conversation. And in that discussion, he shared his experience with his Health Insurance Card (PMJAY is a 100% Cashless Health treatment, and beneficiaries can take the treatment just by displaying the PMJAY Card). He told me, Private Hospitals are playing a very dirty game. As soon as they see the PMJAY Health Insurance Card and its limit, they do unnecessary tests and treatment and once that limit is over, they say, you have nothing - you can go home. According to that potential customer, in one such experience for a Simple Stomach Pain, the Hospital conducted a test of INR 3.5 lakhs and finally said - you can go home, and you have no problem.
I could feel his frustration and massive distrust in the Health Insurance and Providers. And if we are not fixing this problem, PMJAY will create a net negative. The purpose of the PMJAY is to eliminate unawareness about Health Insurance. And highlight the benefits of Health Insurance. But I can tell you by having such experience, there is no way that patient is ever going to purchase any Insurance in the future.
India is expected to increase Health Insurance density and penetration in the next 3 to 5 years. And as the regulators are doing everything to improve the overall experience. It is a good time to think about this lack of transparency problem from the first principle. We are still in the process of building this new layer of Healthcare and Insurance. And it would be amazing if we think about this problem from now itself. Otherwise, we will be in a similar situation where the USA - a massive Healthcare per capita cost, poor Healthcare experience, and zero transparency among the stakeholders.
I think this is probably the right time to solve this problem. And if we take the right steps, we can avoid making that mistake and being in that situation. I am the biggest fan of Indian regulators, and I know they have a lot on their plates. But this is something we might not be able to fix once the Insurance layer is spread across the Indian population.
What could be the potential solutions?
In any multi-stakeholders ecosystem (In the case of Healthcare, we have almost four) the multi-layer transaction always creates a problem of lack of transparency. Of course, we have 3rd-party authority in the middle to negotiate between Payers (Insurance companies) and Health Service Providers (HSP). But what Provider does and their cost structure in relation to cause and effect - is totally missing from the entire system.
Even for an educated and well-informed customer like you and me, it would be almost impossible to establish a cause-and-effect relationship and forget about general patients: it is almost impossible to validate the Healthcare activities conducted inside the Health Facilities. And once that goes to the Third Party Authority (TPS), TPA can’t establish that cause-and-effect connection and validate whether the Healthcare activities conducted by the Provider are necessary or just a medium to consume Health Insurance limit or inflate the treatment cost.
ABDM, operated by NHA has recently released NHCX (National Health Claim Experience) to improve the Cashless health insurance for patients, which is great. And since we are still in the process of building and improving the system. It is a good time to build a system that can bring transparency among the stakeholders. And one of the best ways to do that is if Health Professionals/Providers make their internal Healthcare activities and cost structure visible for Patients to validate and shop for other providers. They don’t have to share sensitive data. However, the details of all the tests conducted and their pricing before conducting Health treatment will bring much-needed transparency to the system. It will also generate healthy competition among providers.
This transparency and cost visibility might create an opportunity for startups to build AGI models that can validate and create the best optimal cause and effect-based treatment.
Conclusion: This is probably the right time for regulators to initiate a similar rule like - No Surprise Act. That can prevent providers to charge anything above the insurance claim amount and make it mandatory for providers to share the healthcare treatment pricing before the treatment. Maybe a standardized Healthcare rate card for all providers based on type will be great for a country such as ours to make Quality Healthcare universal at an affordable cost!
I have shared a few insights in this essay, however, the purpose of this essay is to make regulators take notice of this ground problem. And if you find this essay informative, please share it with your network.
I shall see you all the next weekend :)