How is Healthcare Finance Becoming Efficient in India?

There is an increasing thrust on privatization of healthcare services in India since the increasing population imposes an unbearable burden on government run hospitals. Even government hospitals that provide healthcare services need finances and rely on government funding as well as part payments by patients. The financial side is complicated since a patient needs to consult several departments and receive treatments as well as undergo tests, paying for such treatments at different points. This complicates financial management of hospitals but technology helps healthcare to better manage finances by unifying patient data records and their treatments at different stages. From creating patient records to the treatment lifecycle, technology makes healthcare much more efficient in India. 

Aiding this improvement in efficiency is issuance of insurance or maha cards to patients that aids in centralized record keeping and managing the patient’s journey in public hospitals. According to a TOI report based on ET Health world surveys, the Indian healthcare service expenditure exceeds $115 billion out of which the patients’ share stood at $72 billion. This study factors in cases where patients have insurance cover and those who do not have insurance cover. 

Talking about insurance cover, technology helps hospitals in the public and private sector to know beforehand if a patient has insurance and if it covers treatments. Such patients do not need to pay upfront for the entire treatments and pay only for those areas excluded by the insurance cover. Hospitals directly recover costs from the insurance companies. Patients needing to pay out of pocket can easily avail of personal loans to bridge the cost gap with assistance from hospitals to obtain such loans. Technology, especially blockchain, ensures secure and safe transactions at all stages and can prevent cases of insurance frauds. 

Then there is another aspect to consider. The fact is that medical colleges turn out a large number of graduates who cannot be accommodated in private or public sector jobs. For them, the best option is to avail of a professional loan or doctor finance loan to set up their own private clinic. Banks and institutions provide healthcare finance to help such medical graduates set up their own practice.  Even before this stage is reached, a student must complete medical studies which have become an expensive proposition considering the high fees that such colleges charge. Medical students can look forward to completing their studies without worrying about the financial aspects since loans are also available to such students to undergo professional studies in India as well as in foreign countries. 

It would normally take months for regular financial institutions to approve professional loans to help doctors finance his private clinic. Thankfully, there are NBFCs that have stepped in and offer healthcare finance to medical professionals to enable them to start their clinic, purchase equipment and get working capital without any collateral. Doctors can avail of doctor finance up to and above Rs 50 lakhs through such NBFCs with repayment spread over 5 years. 

It is not just NBFCs that have stepped forward with a professional loan and financial assistance to doctors. Medical equipment is quite expensive and represents a sizable investment, especially for doctors wishing to set up hospitals. In such cases even medical equipment manufacturers like Siemens offer easy financing assistance. Technologies and changes in approach have made it easier for doctors to avail of healthcare finance and start their own ventures instead of looking forward to a bleak future working as assistants or hoping for a job in a hospital. 

Recently, there was a TOI report that the finance minister has announced a Rs 50000 crores credit guarantee scheme to enable setting up of medical of health infrastructure by private hospitals in smaller tier 2 and tier 3 cities. State Governments too have come up with schemes to enable setting up of large private hospitals in special economic zones, making land available at concessional prices. The government too has realized the significant role of private sector hospitals and has devised schemes for large hospital finances at a low interest rate of 607%. Under the anvil are public-private partnership schemes in healthcare to improve healthcare finance efficiency and extend its reach to smaller towns and villages in India. 

The past pandemic of 2020 and the social distancing factor led to the rise of telemedicine. Telemedicine has benefits for patients as well as for doctors. Patients need not travel to a doctor’s clinic or a hospital for consultations. Likewise, doctors can stay at one place and dispense guidance to hundreds of patients with less effort. In the process, the costs reduce for both parties. Doctors can use video conferencing facility to engage patients and also consult with specialists in other locations thereby reducing the financial impact while improving efficiency. It does not cost much for doctors to upgrade technologies for telemedicine and professional loans take care of investments needed to set up the IT infrastructure. 

Large private hospital projects involve considerable financial outlay on land, building and majorly on equipment. Things are looking up for such large private healthcare projects that can be financed through venture capital investments and through public equity participation. The plain fact that healthcare, whether it operates as a small private clinic, or a large hospital, is a financial operation too and requires professional financial management. This has been aided with the help of fintech that now also includes AI and ML which, however, becomes a separate topic.