A study of direct treatment costs in relation to private health insurance status of hospitalised patients in private hospitals in Delhi (Summary of MD Thesis by Dr AK Gupta, NIHFW, University of Delhi, 2013)

1. A STUDY OF DIRECT TREATMENT COSTS IN RELATION TO
PRIVATE HEALTH INSURANCE STATUS OF HOSPITALISED
PATIENTS IN PRIVATE HOSPITALS IN DELHI
Thesis submitted to the Faculty of Medical Sciences, University of
Delhi in Partial Fulfillment of the Requirement for the Degree of
Doctor of Medicine (Community Health Administration)
By:
DR. AMIT KUMAR GUPTA
NATIONAL INSTITUTE OF HEALTH AND FAMILY WELFARE,
BABA GANGNATH MARG, MUNIRKA, NEW DELHI 110067.
MAY 2013

2. Summary of the thesis
A-37
SUMMARY OF THE THESIS
With advancements in medical science and diagnostic techniques, more people
are being diagnosed with one or the other medical illnesses. Rise in awareness has
also led to people seeking medical advice and treatment more frequently. Treatment
expenditure is getting costlier day by day and many people risk being pushed into
poverty, or further into poverty, because they are either unable to pay or forced to sell
assets or borrow money to pay their medical bills. Even where the healthcare charges
are covered by one or other measures, patients are generally required to share the
costs by paying some amount out of their own pockets. Such out of pocket (OOP)
expenditures have serious repercussions for health.
As a method of risk transfer, many people plan and opt for Health Insurance
(HI), in which by estimating the overall risk of healthcare expenses among a targeted
group, a routine finance structure is developed to ensure availability of funds to pay
for specified healthcare benefits. It is an important method of funding the healthcare
systems in larger part of the world. Of late, in India too, HI is emerging as a big
industry in both public and private sectors. Private HI (PHI) is a type of HI offered by
private sector general insurance companies. It can either reimburse the insured for
medical expenses incurred or pay the care provider directly. Of late, it is becoming
popular in India too, and has encompassed urban and subsequently rural areas also.
PHI, as a method of risk transfer, should have favourable effects on its
stakeholders, as any unfavourable effect would be against the inherent philosophy of
risk transfer and can potentially detriment their interests. However, recently, there has
been mounting considerable interest in relationship between the PHI status of a
patient and the direct treatments costs for various healthcare services/ facilities being
provided to him/her by the private hospitals.

3. Summary of the thesis
A-38
Therefore, the present study has been conducted to assess direct treatment
costs in relation to PHI status of hospitalised patients in private hospitals in Delhi. The
study aimed to see whether there was any difference in direct treatment costs between
the hospitalised patients with PHI facility (PHI patients) and those without any HI
facility (NHI patients); and if it was then to identify factors associated with such a
difference in the treatment costs and find out how such a difference was affected by
the patients’ PHI status so that tentative measures might be explored to reduce such a
difference.
For this purpose, a retrospective, cross-sectional, hospital-based survey was
done in four tertiary-level private hospitals of Delhi, focusing on PHI and NHI in-
patients of the FY 2011-2012. As per the protocol designed for this study, 30 PHI
patients and their 30 matched NHI patients (by pair-wise matching for age, sex and
clinical diagnosis) were selected from each of the four study hospitals, thereby the
sample comprising a total of 240 study subjects (120 PHI patients and their 120
matched NHI patients). Primary and secondary data were collected in respect of these
study subjects, covering their demographic profiles, hospitalisation details,
hospitalisation bill details, OOP payments, direct treatments costs, PHI-related bill
details, and their experiences, perceptions & opinions regarding PHI & treatment
costs. All primary and secondary data thus collected were compiled chronologically to
supplement each other, and analysed to derive gainful information.
Results of the study showed that the direct treatment cost of hospitalised
treatment was affected by an in-patient’s PHI status, with such cost being higher in
the PHI patients than in the NHI patients. Based upon the observations, the study
identified various factors associated with such a difference in the treatment costs. It
highlighted as to how such a difference was affected by the patients’ PHI status. For
reduction of this difference, the study further tried to explore tentative measures for
remedial actions.

4. Summary of the thesis
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The present study highlights that procedural delays, complications in payment
processes, selective human behaviour, asymmetric information, moral hazards on the
part of various stakeholders (particularly the private hospitals & their doctors, the
patients and the TPAs), and unmet need for universal risk transfer & health protection
are major factors for abnormal and unprecedented rise in direct treatment costs of
hospitalised treatment under PHI. Further, within the specified limitations, the study
suggests that such a difference in treatment costs due to PHI status of the in-patients
can be reduced by a comprehensive and proactive approach by instituting a number of
remedial and corrective measures.
At the end, the study recommends the following to reduce the difference in
direct treatment costs in relation to in-patients’ PHI status:
1. Laying of appropriate guidelines & procedures to check the practice of
showing PHI patients’ information wrongly in the hospitals’ records.
2. Listing of coverable & non-coverable charges under PHI in a uniform
and rational manner, their periodic revision, and avoiding levy of the
non-coverable charges in PHI patients as far as possible.
3. Development of guidelines for uniformity in the rates of charges for
various services and for their rational usage.
4. Strengthening of the private hospitals’ PHI desks as facilitator for PHI
services to the insured patients.
5. Enrichment of the TPAs’ role as important link between the insurers
and the private hospitals.
6. Mandate for medical examination before issuance of the PHI policy,
and thenceforth, periodic updating of the information by the insurers/
TPAs without bothering the PHI in-patients.

5. Summary of the thesis
A-40
7. Formulation of some plausible and practically viable system to address
issues related to coverage of pre-existing diseases under PHI.
8. More transparent and clear terms & conditions under PHI policies, and
reiteration of the crucial ones in the initial authorisation letter.
9. Doing away the capping of charges for individual services covered
under PHI (to the extent of available credit limit under a given policy).
10. Provision for informing the PHI in-patients about their authorised bill
amounts (with detailed break-up) in their final authorisation letters.
11. Comprehensive strengthening of the private healthcare system, with
suitable measures to deal with PHI-related malpractices.
12. Active participation by the government and other regulatory bodies for
further improvisation of PHI services.
The study concludes that the information gained on this key issue of PHI-
related differences in treatment costs and the suggestions made to remedy the
associated factors would be useful in scientific and medico-social applications as well
as in further decision-making in health financing.