Managed Care and Scenario in India

Over-expensive healthcare plans providing no service at all? Reduced efficiency? Worry over the healthy future of your family? Look no further.


Managed care a method of health care delivery that focuses on collaboration among and coordination of all services to avoid overlap, duplication, and delays and to reduce costs. There is an emphasis on efficacy and timeliness of interventions to prevent unnecessary delays in discharge from the hospital or agency. Managed care plans typically cover a wide range of health services such as preventive care and immunizations for adults and children, general checkups, diagnosis and treatment of illness (including necessary tests, doctors’ visits, prescription medications, and hospital care), and complete prenatal (pregnancy) and newborn care. Additionally, most managed care plans offer some services for the diagnosis and treatment of mental health conditions and substance abuse problems.
Health insurers in India currently face many challenges, including poor consumer awareness, strict regulations, and inefficient business practices. They operate under a combination of stifling administrative costs and high medical expense ratios which have ensured that insurers operate under steep losses. External factors (eg, onerous regulations, lack of standards, high claims payouts) and internal factors (eg, high administrative costs, dependence on indemnity models that cover inpatient treatment costs only) have forced the health insurance industry into a regressive spiral. To overcome these challenges, health insurers need to innovate in their product offerings and tighten their existing processes and cost structures. But as a long-term strategy, it is imperative that health insurers deploy managed care concepts, which will go a long way toward addressing the systemic issues in the current operational models of health plans.

Faced with this state of affairs we want to explore if it is at all conceivable for developing countries like India to offer a comprehensive high quality healthcare solution to all her citizens. It is my view that, given the unique nature of healthcare, a pure laissez faire, demand driven approach will not produce first-best outcomes for India and nor do existing “solutions” have the potential to do so. Managed Care with its emphasis on offering a structured set of solutions with strong gate-keeping functions, in my view, represents the ideal model both from a cost control and healthcare point of view, irrespective of whether it is operated by the Government or the private sector. One could have a long debate on the pros and cons of Managed Care but even assuming for the moment that we all agree that this indeed is the direction that a developing country like India must go, all the practical challenges that have dogged Indian efforts at providing healthcare do not magically vanish merely because a new model of healthcare has been proposed.


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