Our Managed Care Thinking at ICTPH

By Ankit Jain – AVP Operations, A.R. Selva Swetha – Research Analyst

At a recent Spark Session held at IFMR Trust, we presented our Managed Care thinking to the larger ecosystem, outlining our basic premise as to why a Managed Care setup would be a feasible solution to healthcare delivery in India, and how we propose to evolve SughaVazhvu to the role of a Managed Care provider.

In tackling the issues of healthcare accessibility and affordability, a lot of the focus has been on government-run public health insurance schemes providing secondary or tertiary care (hospitalization) coverage. One of the large scale schemes is the Rashtriya Swasthya Bima Yojna (RSBY) launched by the Ministry of Labor and Employment of the Government of India in 2008 with the primary objective of shielding low-income households from the burden of major health expenses. It provides a hospitalisation cover of up to INR 30,000 (USD 667) per family for a majority of procedures at any of the national network of 8,686 private and public empanelled hospitals. The scheme is targeted at Below Poverty Line (BPL) population, with the premium co-financed by the State and Central governments.

The scheme has enabled a large BPL rural population to use hospitalization services. As of 22nd March 2012, in the 448 districts where the scheme has been operational, there have been more than 3 million hospitalization cases since the inception of the scheme. The usage of a strong technology framework for enrolment, managing cashless hospitalization and fraud control has contributed to the operational efficiency of the scheme. Standardized rates for all procedures have been implemented across the empanelled hospitals for the first time through a centrally regulated system.

Operational success of these schemes however does not undermine the key structural issues they fail to incorporate. The schemes do not address the core issue of disease burden on the ground. With very poor primary care and equally poor existing health-seeking behavior, they have resulted in an upward drift towards higher levels of care. The insurance schemes are designed to intervene in hospitalization cases which could have been taken care of at the primary level through low cost diagnosis, early stage medications and life style modification.

Insurance schemes make it easier to access secondary care as well as improve the supply of secondary care services. Over time this shall lead to higher insurance premiums leading to inflation of health care costs. The only solution is to try and address the disease burden early, improve supply of primary care facilities, introduce gate-keeping functions at the primary care level and strongly limit the supply of secondary and tertiary care facilities.

Given the large unregulated private health sector, there is another critical issue of information asymmetry between the healthcare providers and patients that needs addressing. Healthcare providers may have an incentive to do unnecessary procedures because they are reimbursed on a ‘fee for service’ basis, which might lead to unnecessary cost explosion. In an ideal health system, the incentives of the various players should be aligned towards the health outcomes and the patient’s ‘Wellness’.

The High Level Expert Group (HLEG) on Universal Health Coverage (UHC) constituted by the Planning Commission has recommended the setting up of an ‘Integrated Care Network’, (See Zeena’s blog post) a Managed Care – like set up wherein the government would contract private and public health care providers at all levels.

Such an integrated network would have the following components at the core:

Strong focus on primary and preventive care delivery through systemic interventions for various diseases and conditions, and with a focus on early risk detection and intervention.

Capitation fee based contracting of health care providers, where against a fixed cost the enrolled population would be entitled to a carefully defined health package. So it would be in the best interest of the health providers to keep the population healthy and the cost low which would address the issue of unnecessary prescription of drugs.

Gate-keeping function at the primary care level, with the primary centres acting as gateways for cost control and referral to secondary and tertiary levels of care.

Technology aided Regulatory Framework to track the quality of delivery and health outcomes for a population and defined incentive structure for all entitled health care providers.

In the above context, we at ICTPH are in the process of demonstrating a first of its kind Managed Care setup for rural populations. SughaVazhvu as the ‘Managed Care’ provider would take on the accountability for the quality, cost and overall care delivery of a pre-defined health package against a fixed premium.

This shall entail an integrated health care delivery across primary care, specialist outpatient care and secondary & tertiary care. While the primary care would be provisioned by us, higher levels of care would be provided at providers contracted by us. At our small scale, where we wouldn’t be in a position to house the financial risk of secondary and tertiary care on our books, we would work with an insurer to finance this piece with an insurance product.

Over the next month or so, as we develop a Managed Care product, some the key issues we would be working on include:

Defining the overall health package that we want to offer
Pricing the health package
Exploring Financing Mechanisms
Developing an wellness tracking framework and an incentive structure
Devising a community driven marketing strategy

Working with our key partners IFMR Rural Finance on the product design and appropriate financing mechanism, KGFS for distributing the product, and insurance firms to co-develop a micro health insurance product, we are keen to evolve a model that will serve as an example of how integrated healthcare and financial protection can be provided to a rural population.


  1. Rashtriya Swasthya Bima Yojna, http://www.rsby.gov.in/
  2. Centre for Insurance and Risk Management – IFMR, Sept. 2011, ‘RSBY Performance Trends and Policy Recommendations’, (Retrieved from http://www.cirm.in/library/publications)

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