Arul vel arasan
- 1. B – plan Tworupee per day Health insurance Presented By Arul Vel Arasan C Indian Institute of Foreign Trade, Delhi Email: arulvelarasan@gmail.com Phone No: 7838843825
- 2. BUSINESS OVERVIEW BUSINESS PURPOSE Toprovide health insurance to rural and semi-urban people and improve their standard of living by offering it at Rs.2 per day per person, but at the same time covering all the expenses they would incur without any hidden clauses BUSINESS PHILOSOPHY Living healthy is a human right and it should be enjoyed by all human beings irrespective of their financial status and behavioral characteristics ORGANISATION The organization is a health insurance provider for people living in the rural and semi urban regions of our country CONCEPT DEVELOPMENT Economic condition Easy curable treatments The Model • It is not the lack of health care supply • It is for instance common for aged • The law of large numbers being that leads to unfavourable health men to suffer from kidney failure for effectively used to provide a high status of the poor, but rather their want of a simple prostrate degree of health security to the poor inability to pay for quality care operation, or from premature population in India • Insurance promises to be a viable blindness that is easily rectifiable by • So providing health insurance solution a cataract extraction procedure depends less on resources and more • Similarly appendicitis, diseased on mobilizing capacity and uterus etc. could be cured organization
- 3. PRODUCT AND SERVICE FEATURES PRODUCT DETAILS WHAT IS NOT COVERED? Type Self-funded Preexisting War, invasion Artificial limbs Group or Individual Household Intentional injury Alcohol abuse HIV related Term 5 years Fertility related Transplants Weight reducing Mental illness Birth defects Vaccination Age 6 to 59 years Plastic surgery Hazardous sports Joint replacing Premium Collection mode Weekly/Monthly by a person Burn cases Vitamins, tonic Malignancies Pricing – premium Rs. 2/day/person Cosmetic surgery Skin grafting Angioplasty Insured sum Rs. 1 lakh Normal delivery Implants SERVICES OFFERED TREATMENTS COVERED Free transportation No hidden clauses 1600 surgeries Voluntary check ups Pregnancy – caesarean No reimbursement Standardized All Medicines covered procedure, Directly treatments and Eye – Cataract paid by the insurer claim process No tardy reimbursement Hearing aids – operation Hospital charges Dental – operation Diagnostic service USP Hassle free claim process OPD
- 4. COMPETITIVE ANALYSIS Competitor ICICI Lombard Bajaj Alliance Apollo Munich Products Family Floater Individual/ family/ star Easy health Individual and package Easy health Family Market share 9.52 % of Health Insurance 8.63% of the 5% of the market share holders market share Infrastructure 4000+ Network Hospitals 2300 Empanelled hospitals 4000 Hospitals & 1800 Pharmacies Benefits Tax Benefits & OPD In-House Claim 100% Lifelong renewal. Coverage administration. Over 80% of the existing Hassle free. Star Package. customers renew . Life + Health Insurance Drawbacks Higher rejection rate of the Restrictions on value of Amateur customer claims sum insured support Sales Method Unsolicited Calls, News Agents and Online – Paperless and Advertisement Salesmen Reputation Healthy backup of General Second largest company in Own reputed Apollo chain Insurance Health Insurance sector of Hospitals Source: IRDA
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- 6. INDUSTRY – HEALTHINSURANCE CURRENT INDIAN SCENARIO MARKET OPPORTUNITY India spends 4.9% of GDP on health with public Less than 10% of people have access to health expenditure of 0.9% and private expenditure of insurance, a majority belong to organized sector 4.0% Health insurance market grew at a rate of 40% in the In private expenditure, out-of-pocket expenditure is three years following 2006 and presents the fastest 3.6% and employees /community financing is 0.4% growing market in the general insurance The central budgetary allocation has been stagnant An exploration of 35% over the next years is seen as at 1.3% while in states it has declined from 7.0% to realistic 5.5% The per capita total expenditure on health is US$ In India, its large informal sector accounting for 90% 23, of which the Government expenditure is US$ 4 of population contributes 40% of the nation’s GDP The government health centres address primary A study of claims found that 22% of total claims healthcare needs, but lack the facilities, cohesion, were for communicable diseases solidarity to provide satisfactory surgical treatment Commercial insurance shows little interest in providing health insurance for rural informal sector since it has low profitability and high risk Source: WHR, Bhat, Gumber
- 7. INDUSTRY – HEALTHINSURANCE REGULATIONS PEOPLE ISSUES Regulatory body in India – IRDA (Insurance More than 40 per cent of hospitalised Indians have Regulatory and Development Authority) to borrow or sell assets to meet hospitalisation costs People pay very high interest rates on the money Minimal capital requirement of Rs. 100 crore they borrow, it is estimated that around 25 per cent of hospitalised Indians become poor in a single year Certificate requirement for agents - Rs. 250 for On average, individuals in the poorest quintile of renewal or issue of license, 12th grade standard India are 2.6 times more likely than individuals in passed, 120 hours practical training the richest quintile to forgo medical treatment Lack of regulations and control on provider Issue of accessibility – majority of poor are in behaviour remote rural areas where no facilities are available Currently there are no mechanism or infrastructure The claims ratio is growing at a fast rate allegedly for collecting mandatory premium among the large because of collusion between the informal sector patients, insurance agents and hospitals No standard procedure for treatments and claim Patients experience problems in reimbursements by process long delay and partial reimbursements Source: WHR, Bhat, National sample survey
- 8. TARGET MAJOR TARGET -> People in rural and semi-urban areas with low income but not very poor – family income above Rs. 3000 per month -> People majorly associated with Industries and Co-operative societies since 67% of the rural households belong to a co-operative society FOCUSSED TARGET – SALEM IN TAMILNADU MAP – SALEM KEY STATISTICS – SALEM Population 34.8 lakhs Total workers 14.5 lakhs Health centers 70 Factories 1242 Co-operatives 232 Health insured <5% Preventable >20% No. of Villages 144
- 9. MARKET RESEARCH On People RESEARCH OBSERVATIONS • Sample size: 40 • People with no idea about health insurance – 55% • Willingness to pay Rs. 2 / day – 35% • Methodology: Depth interview • They all prefer private facilities • The costs of even minor health problems is unaffordable • Place: Salem • Travelling long distance costs which is a very big problem • It is expected that better information will make all clients • Participants: People join voluntarily On Hospitals RESEARCH OBSERVATIONS • Sample size: 12 • Research conducted on the hospital revealed something different: a number of hospitals throughout Salem • Methodology: Depth interview experienced poor utilization rates, as low as 40% • So it is not improper health infrastructure, but insufficient • Place: Salem financial means that hindered the poor people • Network hospitals that meet the standards are often • Participants: Doctors and located in the district workers in hospital • Hospitals in the taluks does not have the quality expected
- 10. ORGANIZATION AND MANAGEMENT BUSINESSSETUP IN SALEM Same setup in all other 20 regions OFFICE S VEHICLES SETTING • 10 rental offices with 1 as • 10 vehicles of our own to • 2 Computer and 2 phones in head office take patients during each office • Electricity and maintenance emergency • Furniture, Printing, Stationery KEY MANAGEMENT Chairman & CEO Chief Marketing Chief Operation Chief Technology Director officer officer officer • Responsible for all • Responsible to get • Design overall • Design business • To solve all IT managing activities business tie ups marketing strategy operation model related issues WORKFORCE IN SALEM Same Workforce in all other 20 regions Employees Workers Doctors Manager Number 30 20 10 10 Qualification Any degree Not required Medicine degree M.B.A. Skill sets Communication skills Laborious work Medical knowledge Managerial skills Roles Front end to enroll To carry all activities Adopting standards Business activities
- 11. BUSINESS DELIVERY MODEL DistrictHead Office • It is responsible for all activities of the towns and covered villages • All the strategy and decisions to be followed in the sub offices are declared here • Recruitment for all the Departments is also done here Team of Doctors • Define the standards for treatments and claims under the advise of one senior most doctor • All the strategy and decisions to be followed in the sub offices are declared here • They also work in tandem with the doctors in networking hospitals • They decide the methodology of treatment, medicines and prepare a Standard Rate Sheet which is in average 30% less than charged by other hospital • They also ensure that no patient is kept in ward for more than the required number of days Activities • Training – 120 hours of training to the agents and sales people, and review every 3 months • A senior person from Marketing department will approach the SSI, MSI and cooperatives and initiate the tie up • Payment collection – Weekly / Monthly 1 person for every 10 cooperatives and the registry is done in PDAs. People don’t feel the burden of paying. Third Party Administrators • Process the Claims • Database Management, Biometric detail collection, Co-ordinates all network hospitals
- 12. OPERATIONS Enrollment of New Hospitals Hospital submits Application/ We approach BENEFIT FOR THE HOSPITAL them The occupancy rate in the Inspection by our set of Doctors hospitals will increase and also the Brand image Doctors report in a prescribed format Our Board of Directors makes final decision Hospital signs an agreement Policies, Terms Information to our set Records to be & Conditions of Doctors Maintained KEY POLICIES A standard procedure adopted by our team of Doctors for treatments has to be followed The rate quoted is 30% less than that of the average rate for all the standard operations
- 13. THE CLAIM PROCESS Illness of Insured Patient USP Call to 24 X 7 toll free number No money is collected from the patient once the treatment is ratified to be Client chooses network under coverage and no tardy Hospital with biometric card reimbursement procedure Patient taken to hospital by free transportation Admission for Surgery Yes Hospitalization and No Doctor examines the Surgery not covered patient and checks Free Operation whether the Claim Patient has to Spend comes under his own money coverage Beneficiary leaves Hospital Patient leaves TPA Hospital Hospital Sends claim Documents to TPA Bill paid by the company
- 14. RATE SHEET –KEY OPERATIONS The rates are standardized to 30% lesser for all the operations done in the Hospitals
- 15. MARKETING STRATEGY AWARENESS PROGRAMS Dramas Local TV Ads Local Newspaper Wrappers of local products PROMOTION CHANNELS Co-operatives and Banks and Microfinance Post Office Referrals Communities institutions SALES TEAM • One sales person will handle 10 cooperatives • At least 5% of the total workers in cooperatives or Industry is to be tapped • So a total of 116 cooperatives has to be tapped in the initial phase.
- 16. RISK MITIGATION STRATEGIES • Filing claims for medications not received • Using someone else’s coverage or card • Unique biometric card is given to everyone insured • Strict verification is done to identify authentication of claims • Opportunistic frauds by inflating claims • Inflating through insider contacts • The standards are set by our own Doctors and not by the networking hospitals • The claim amount is also directly paid by the insurer • The model works only if the insured claims for Operations and does not make too many claims • Cannot claim for the next 6 months after a claim for OPDs and frequent claims are avoided • Also there will be a reimbursement if no claims are made at the end of 5 years • Poor sample selection of unhealthy people • Preexisting diseases, more than 59 years not • Communicable diseases covered, and also whole family is insured • Awareness of cleanliness, sanitation and voluntary check up once in 6 months
- 17. REVENUE STREAMS Key Assumptions& Projections: 2013 2014 2015 2016 2017 Number of regions covered 1 - Salem 5 10 15 20 Number of customers 70000 350000 700000 1050000 1400000 • From past data 1% claim operations – Average cost is Rs. 22000/operation Claims • Assuming 2% claim for Outpatient care – Average cost is Rs. 1000/OPD • The IT development and maintenance is outsourced to Indus software Ltd. IT outsourced • Development and support for first year, from second year only support service Commission paid • 5% of the premium paid to the agents, Referral, Banks, Post Office etc. • It involves – Training cost, Salary, Voluntary check ups, conveyance, Rent & Operating expenses Maintenance, Stationery, Communication, Legal, Marketing & Ads, Interest • The back side of the biometric card given to them is used to generate Income from Ads advertisement Depreciation, Interest • The depreciation is 10% of the fixed assets expense • EMI of 16.27 crore is paid annually for the loan amount of 100 crore
- 18. FINANCIALS Profit & LossStatement In Rupees (lakhs) Particulars 2013 2014 2015 2016 2017 Premium earned 511 2555 5110 7665 10220 Interest earned 24.5 122.6 245.2 367.9 490.5 Total revenue 570.5 2852.6 5705.2 8557.9 11410.5 Claims settled 168.0 840.0 1680.0 2520.0 3360.0 Commission paid 25.5 127.7 255.5 383.2 511.0 Employee cost 81.6 448.8 987.3 1629.1 2389.4 IT cost 50.0 50.0 100.0 150.0 200.0 Third party administration 7.0 35.0 70.0 105.0 140.0 Other operating expenses 57.9 251.5 513.1 764.3 1091.4 Total expenditure 390.0 1753.0 3606.0 5551.7 7691.9 EBITDA 180.4 1099.5 2099.2 3006.1 3718.6 EBIT 171.0 1052.5 2005.2 2865.1 3530.6 Profit after tax (1455.9) (574.4) 264.7 866.7 1332.5
- 19. FINANCIALS Balance Sheet In Rupees (lakhs) Particulars 2013 2014 2015 2016 2017 Share capital 2000.0 2000.0 2000.0 2000.0 2000.0 Reserve and surplus 2200.0 2200.0 2464.7 3331.4 4664.0 Total Debt 10000.0 8373.0 6746.0 5119.0 3492.0 TOTAL LIABILITIES 14200.0 12573.0 11210.7 10450.4 10156.0 Investments 153.3 766.5 1533.0 2299.5 3066.0 Loans 102.2 511.0 1022.0 1533.0 2044.0 Fixed assets 94.0 470.0 940.0 1410.0 1880.0 Cash and balances 13850.5 10825.5 7715.7 5207.9 3166.0 TOTAL ASSETS 14200.0 12573.0 11210.7 10450.4 10156.0 Funding • Loan borrowed at 10% interest rate Investments • Invest 30% of the premium for 8% return in 1 year government bonds Loans • Lend 20% of the premium for 12% interest It is expected to break even in a period of 10 years by settling the entire loan amount
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