‘Ayushman Bharat’ is easily the single-most important catalyst for the potential transformation of Indian healthcare. The scheme is expected to fire up demand growth while changing the rules of success for healthcare service providers.

But it would require the government to think and act out of the box to prevent the scheme costs from ballooning out of control and would necessitate the development of a mechanism to monitor healthcare quality.

The ambitious health insurance scheme can help develop the environment for emergence of new business models around health technology, revenue cycle management and primary care. And if procedural ease and on-the-ground implementation are managed well, Ayushman Bharat could well drive significant demand growth.

Viable pricing is key

The question is, to what extent? If Ayushman Bharat, like its predecessor the RSBY (Rashtriya Swasthya Bima Yojana), achieves about 60 per cent of its declared target of roll-out to 100 million families in the next six odd years, it would end up covering an incremental 24 million families or 110 million lives, besides moving the 36 million families currently covered under RSBY to the new scheme.

However, if the NITI Aayog does not evolve a more viable pricing option for providers (the proposed pricing currently is 15-20 per cent lower than existing State schemes), there could be a scenario of a large pool of Ayushman card-holders not managing to get services from private providers.

The scheme would also establish cost-effectiveness and effective revenue cycle management (RCM) as the new mantra for success amongst healthcare providers. Sustaining margins for the growing payer-backed patient segment will require cost-effectiveness through standardised usage of consumables and drugs and deployment of lower-cost clinicians to address scheme patients.

Managing receivables for scheme patients may become a big worry for providers and this will drive the industry towards effective revenue cycle management or RCM.

How would the government fund the scheme? The government is betting on a model of dual sponsorship between the Centre and States to finance the premium pay-out for the scheme. However, if adoption picks up, then claims are likely to far exceed the premium, thereby significantly increasing the cost of serving the scheme.

To address this cost-escalation issue, the government needs to strengthen the primary and preventive care system in the country by working out a viable public-private partnership model.

This will prevent many cases from reaching the hospitals, thereby lowering the claims burden for Ayushman Bharat.

DRG-based system

Like mature payers in developed economies, the government will be forced to think about health outcomes and quality seriously if Ayushman Bharat is implemented expansively. Because, without a way to hold providers accountable for outcomes and quality, unfavourable outcomes and readmissions could shoot up, leading to escalation of claims and pay-outs.

The first step here would be to pilot the rollout of a DRG (diagnosis-related group) based system in a controlled health eco-system. DRGs would provide a basis for services standardisation, outcome measurement and pricing.

Ayushman Bharat could spawn the growth of the domestic RCM industry in India. And the same holds true for the coming of age of private primary care or of cost-effective medical devices or of technology solutions focused on quality measurement and clinical risk management. Once the roll-out truly gathers pace, we could see the emergence of some of these new business models in India.

If effectively rolled out, Ayushman Bharat could well change the course of evolution of Indian healthcare. Cost-effectiveness and effective revenue cycle management will be the new success-drivers for private healthcare providers.

As for patients, they should expect better access and more quality care, provided the government works out a viable pricing mechanism. And for this, the Government must redesign the primary care framework and set norms for quality control without which the scheme costs may spiral out of control.

The writer is Managing Director and Healthcare Practice Leader with consulting firm Alvarez & Marsal. Views expressed are personal

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