Healthcare in India

Healthtech in India is experiencing significant growth and innovation, transforming the healthcare landscape. According to a report by EY and FICCI, India's healthtech market is projected to reach $21 billion by 2025.

The COVID-19 pandemic has turbocharged the adoption of digital solutions, thrusting telemedicine and digital health services into the spotlight like never before. Several notable healthtech startups have emerged. LoanTap recently acquired healthtech startup UnoFin to introduce a range of products, including equipment financing, working capital loans and term loans, to healthcare professionals and institutions. UnoFin, a Delhi-based startup, is creating an Oyo-like healthtech network of more than 300 hospitals across 16 cities.

Indeed, these are praiseworthy initiatives, but for a population of 1.4 billion, it is like a drop in the sea.

Financing Problems Faced in Healthcare

The common man in Healthcare faces challenges such as high costs, lack of insurance coverage, long waiting times and limited access to healthcare facilities. Expensive medical treatments and medications burden those with limited financial resources and inadequate insurance coverage worsens the burden.

Out-of-pocket (OOP) expenses pose a significant barrier to healthcare access for the poor in India.

According to a report by Economic Times (ET), Indian healthcare services expenditures stood at $115 billion this year, out of which $72 billion was spent directly from the pockets rather than insurance.

According to an Inc42 report, over 60% of the Indian population relies on Out-of-Pocket (OOP) expenses for healthcare services. In comparison, major economies like the US, the UK, Japan, South Korea, Germany and Australia have OOP percentages of around 20%, while countries like Italy, Brazil and China have OOP percentages between 25-35%.

Dealing with insurance companies can be daunting for patients. Submitting claims, understanding coverage limitations and navigating the paperwork can take time and effort, often leading to delays in reimbursement and financial burden on patients. This problem is aggravated, especially in the case of out-of-network hospitals.

It Is Not Only Individuals Facing Problems; Hospitals Too Face Credit Crunch

Healthcare providers especially hospitals often face challenges managing their working capital. They need sufficient funds to cover operational expenses, purchase medical equipment and invest in infrastructure development.

Hospital suppliers, such as pharmaceutical companies, medical equipment manufacturers and distributors, face financial challenges. They may struggle with delayed hospital payments or difficulty accessing financing to meet their operational and production needs.

The Government’s UHI Has Also Not Helped the Cause

Unified Health Interface (UHI) was supposed to be the counterpart of UPI in the health sector, increasing healthcare penetration in India. According to the Government’s site of Ayushman Bharat, UHI is envisioned as an open protocol for various digital health services. UHI Network will be an open network of End User Applications (EUAs) and participating Health Service Provider (HSP) applications.

UHI implementation has been slow and hospitals have shown reluctance to participate. The original goal was to create a healthcare marketplace where hospitals, doctors, pharmacies, financing institutions and other stakeholders could come together, m2aking it easier for Indians to access healthcare services. However, the progress of UHI has not met the Government's and the people's expectations and the desired outcomes are yet to be achieved.

Understanding the Flow of Funds and Financial Uncertainty

In the Indian healthcare system, healthcare providers face significant challenges in tracking and managing their finances. The absence of a healthcare-specific financial system creates a lack of clarity around payments and cash flow. Today, the flow of fund happen like this:

• When a patient visits a provider, they typically share their insurance information and make co-payments or pay out-of-pocket expenses
• The provider then delivers care and sends a summary of the services to a medical biller, who converts the information into billing codes for insurance claims
• The process becomes complex as the claim goes through intermediaries like clearinghouses and insurance companies, leading to delays, adjustments and discrepancies in payments

As a result, providers often receive payments much later than expected, making it difficult to gauge their financial situation accurately.

Where Can Fintech Find Its Place in Healthcare

In Healthcare, prices are high, mostly paid out of pocket, entail high transaction costs and are unpredictable and unrelated to health outcomes. These costs prohibit people from accessing the proper care at the right time and place.

Fintech solutions can play a crucial role in addressing the financing problems faced in Healthcare. By leveraging technology and innovative approaches, fintech companies can offer solutions to make Healthcare more affordable, improve insurance coverage, streamline reimbursement processes and provide better access to financing for hospitals and suppliers.

Catering to Individuals’ Need

• Digital lending platforms: Fintech companies can offer small loans on digital platforms, allowing individuals to finance their (OOP)out-of-pocket healthcare expenses. These lending platforms can embed in the patient’s record keeping system and use the data to underwrite the patient based on his conditions along with the patient’s credit history
• Advance settlement by fintech players based on insurance coverage can significantly assist individuals in covering their medical expenses. By offering advance payments or cashless settlement options, fintech companies can alleviate the immediate financial burden on individuals seeking medical treatment

Catering to Healthcare Provider’s Need

• Invoice financing: Fintech companies provide invoice financing solutions that allow healthcare providers to receive early payment for their outstanding invoices
• Supply chain financing: Fintech companies offer supply chain financing options to healthcare providers and suppliers. This enables healthcare providers to extend their payment terms to suppliers while ensuring timely payments to maintain a smooth supply chain

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Four Main Anchors Driving Fintech in Healthcare

Four main anchors of innovative health financing solutions can be offered to unbanked or underbanked consumers using technology: digital health savings, digital lending, crowdfunding and insurtech. These financing models are not mutually exclusive; the most practical and impactful models combine two more anchors.

Leverage Financial Frameworks

Financial inclusion plays a crucial role in Healthcare. Many low-income populations lacking access to formal banking services also struggle to afford high-quality Healthcare.

Credit on UPI for Healthcare

Fintech companies and financial institutions can leverage the UPI infrastructure to offer convenient and accessible credit options to individuals seeking healthcare financing.

By integrating credit services into UPI, individuals can avail themselves of quick and seamless access to funds for medical treatments, medications, hospital bills and other healthcare expenses. This enables users to manage their healthcare costs more effectively and address financial constraints that may arise due to healthcare needs.

Digital Payments

Fintech companies can leverage digital payment systems like UPI, mobile wallets and online banking platforms to facilitate easy and secure transactions for healthcare services.

Micro Insurance

Microinsurance refers to insurance products specifically designed for low-income individuals and underserved communities. Through technology, microinsurance providers can offer affordable and accessible insurance coverage for healthcare expenses.

Embedded Finance in Healthcare

Via Healthcare Provider

By integrating with Healthcare stakeholders, fintech players can create a marketplaces bringing together healthcare providers, pharmacies, diagnostic centers, digital lenders and insurers, on a digital platform. These marketplaces can facilitate seamless transactions and enable individuals to compare healthcare services, prices and insurance coverage options.

Via Employers

Employers can enable healthcare funding support for their employees as part of their acquisition and retention strategy. They can do so through HR Tech platforms. Employers can use employee data they possess to underwrite and increase approval rates. The lender can get repaid on time through deductions from employees’ salaries.

Via Direct Sales

Retail platforms or B2C apps connecting patient parties with medical care providers can get in-context credit under the buy now pay later policy. These direct sales apps or platforms leverage embedded finance to ensure a better user experience and improve customer retention, leading to increased transactions.

By combining these innovative health financing solutions with the broad reach of UPI, the Indian Government can enhance financial inclusion, simplify payment processes and improve access to quality healthcare for unbanked or underbanked individuals. These digital solutions address the affordability challenge and empower individuals to proactively manage their healthcare expenses and make informed choices regarding their well-being.

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