Health Insurance is the Best Tool to Spread Out Large Lump-Sum Payments over a Long Period of Time: Viren Shetty, Narayana Health

Narayana Health, renowned for its 'Walmart model' approach to healthcare, is embarking on a transformative journey in response to escalating infrastructure and service costs compounded by the COVID-19 pandemic. Led by chairman Dr Devi Shetty and executive vice-chairman Viren Shetty, this institution has long championed affordable healthcare through mass production techniques.

Recognising India's low health insurance penetration and changing post-pandemic customer attitudes, Narayana Health has now decided to enter the health insurance sector.'¯

In this exclusive interview with Viren Shetty, Sharmila Das explores the reasons behind this strategic move, the challenges faced, the innovative solutions being developed, and the potential impact on India's healthcare accessibility and affordability.

Q. Narayana Hrudalaya/Healthcare has been leading the Indian healthcare space with its unmatched services and initiatives. Why the thought of venturing into the healthcare insurance space? What are the challenges you wish to resolve through your insurance vertical?

Viren Shetty: The biggest challenge in the health insurance space is that payors (insurance companies), providers (hospitals & doctors), and customers (patients) do not trust each other. The traditional insurance structure is designed in a way that incentivises insurance companies to deny claims, patients to hide their pre-existing diseases, and hospitals to do more procedures.

Everyone gets stuck in a loop of trying to figure out how to pay for healthcare, and no one is focused on making people healthy. This causes tremendous dissatisfaction to all parties and does nothing to improve overall health or financial outcomes.

There is now a global consensus that a new model of health insurance needs to take the place of the current model. This model goes by many names '“ Integrated Care, Value-based Care, Managed Care, HMO, and Cooperative Care, but it all essentially boils down to combining the payor and the provider into one entity that takes the responsibility of collecting premiums'¯and'¯delivering healthcare.

This incentivises the payor/provider to minimise overall spending by keeping their customers healthy and out of the hospital. Such a model is very common in many parts of the world, and we will build this to provide an alternative for Indians who want to try out a different health insurance model.

Q. What is this Walmart-like health insurance model? What are its elements and execution strategies?

Viren Shetty: We will build multiple points of presence in Bengaluru city for the first phase of our venture. These points of presence would include a combination of clinics, pharmacies, labs, diagnostics, home care, corporate wellness centres, and care pods. All these centres would offer a range of services to customers who opt for long-term care plans with bundled health insurance. We will also build a strong digital backend to check up on our customers and ensure that we are meeting their healthcare goals.

Q. How you're going to integrate your insurance segment with Narayana Healthcare?

Viren Shetty: We are building two verticals that will work closely with our hospitals. The first is called NH Integrated Care, which will own and operate clinics, pharmacies, labs, doctors, apps, and home delivery services for our customers. The second vertical is Narayana Health Insurance, which will own and operate the stand-alone insurance company. Both these companies are operated independently by industry experts, and all will work towards the common goal of keeping our customers healthy. Doctors from Narayana hospitals will be available for consultation for patients who require specialised care.

Q. When will you receive the required licence for your insurance vertical?

Viren Shetty: The whole regulatory process for applying for a health insurance licence takes 6-12 months. We have applied for a licence from the IRDAI and are expecting to hear back from them soon.

Q. Who is the target audience for this vertical? Is there any specific strategy for serving a segment like Tier-II cities and towns?

Viren Shetty: We will be starting this program in Bengaluru and building out our capabilities based on our customer response to our Integrated care plans. Once we've perfected the model, we will roll this out to other neighbouring cities in Karnataka and eventually the rest of the country.

Q. How much technology dependency/deployment will be required for this new vertical?

Viren Shetty: Integrated care is highly dependent on technology to follow up on customers, to ensure they are taking their medicines on time, or to organise online consultations with doctors. We have a large team of engineers who are building a highly scalable Hospital operating system, and these capabilities will be extended to offer services to our insurance subscribers.

Q. What technology innovation would you like to bring to your insurance business?

Viren Shetty: Most of the technology required for running the insurance business has already been developed and is very stable. Our chief innovation will involve closely integrating the best-in-class digital insurance management platforms with our hospital operating system. This will allow us to closely monitor the health outcomes of all our subscribers and ensure that we are able to keep them healthy.

Q. What opportunities & challenges can you see in this segment?

Viren Shetty: Only 12% of the country currently has access to health insurance, and this will only grow over the coming years. As Indians live longer and the number of health interventions increases, it will be impossible for even rich people to pay for healthcare out of pocket. Health insurance is the best tool to spread out large lump-sum payments over a long period of time and make it manageable for the average person.

There are many challenges with scaling a health insurance business in a developing country like India, but there is also a tremendous opportunity to completely transform the expectations that most Indians have from their health insurance provider. By coming in with a services-first mindset, we will set ourselves apart from the rest of the industry by taking complete care of the health of our customers and their families.