Hospital packages, specialised medical loans and financing schemes for medical devices can help

Given the rise in medical costs, sudden hospitalisation or an unplanned surgery could prove detrimental to a family's financial health. Access to health insurance is limited mostly to the organised sector. Even those of us with employer-sponsored health coverage might find it insufficient in a serious ailment. In such a case, what are the options to deal the additional financial burden?

Tens of millions in India fall into poverty due to medical emergencies, says Jose Peter, co-founder and chief executive officer (CEO) of Arogya Finance, a registered non-bank finance company (NBFC) that gives only medical loans.
The loan is against medical and hospital bills and paid directly to the hospital. You can get up to 75 per cent of the treatment cost, up to a maximum of Rs 2 lakh. The tenure is between six and 36 months.

Payment made simpler
  • Take a medical loan that is disbursed in a few hours, with minimum documentation
  • Buy medical devices for cardiac ailments on instalment
  • Sign up for hospital packages which reduce overall cost
  • Opt for health cards that offer discounts at hospitals and pharmacies
While the typical borrower is someone with a monthly family income of Rs 10,000-20,000, even those in a higher income bracket and with health insurance can take a loan from Arogya in a medical emergency.

"The difference between a bank or other NBFCs and Arogya is that we don't lend on the basis of documentation such as income proof, etc. We do a personal discussion with the person to understand how much they earn, their liabilities, how much of Equated Monthly Instalment (EMI) they can afford to pay, etc. Then, we do a psychometric test designed to understand their basic integrity, risk taking nature, willingness to pay and so on. This allows us to take a lending decision in a few hours," says Peter.

The only other condition is that someone in the family should own a house, so that the borrower can be traced to a fixed address.

In terms of cost, the interest rates charged by Arogya might work out to be the same or slightly higher than those for unsecured personal loans charged by banks. This is because banks charge on a reducing balance basis, while Arogya charges on a flat rate. The advantage is the faster processing, critical in a medical emergency.

Arogya has tie-ups with 48 hospitals in 250 locations over the country. Patients are free to take treatment at any hospital. In the case of partner hospitals, the interest charged is a 12 per cent flat rate and in the case of other hospitals, a 15 per cent flat rate.

Patient financing by Arogya is mostly used for any in-patient hospital bills, but can also be used to cover diagnostic tests like a CT scan or MRI scan that can be very expensive.

"Some of our borrowers have higher incomes. This segment can use patient financing as a top-up to meet expenses not covered under their insurance policy. It can also be used for pre-existing diseases that might not be paid by the policy," Peter says.

Hospital packages

Another option is to sign up for packages offered by hospitals. These could be for a preventive health check package or a diagnostic package. For instance, the Apollo group offers various packages across its hospitals and clinics. Apollo Clinics offer a basic health check, a heart check, executive check and whole body check. There are also quick checks for heart, kidney, liver, lungs, thyroid, etc, which can be extended to a more intensive check in case of a problem.

Apollo Spectra Hospitals offers 1,150 insurance-approved surgery packages - orthopaedics and spine, ENT, urology, gynaecology and so forth. The health checks only comprise diagnostic and specialist consultations. The surgery packages broadly include pre-defined number of days of hospital stay, surgery charges (OT, surgeon fees), consumables and pre-defined amount for drugs and medicines. Any implants, investigations (lab and radiology) and special instruments used are excluded. Typically, investigations - both lab and radiology - and usage of special instruments, are also excluded.

"Today, the biggest challenge for patients is that there is no firm sense of what the bill will be at the end of the treatment. Hence, there is a perception that hospitals overcharge. Packages help to reduce the absolute total cost and also offer complete certainty for the patient. You know upfront the amount you are going to pay," says Neeraj Garg, CEO of Apollo Health and Lifestyle.

In the case of patients with health insurance, a package will ensure approval faster from the insurance company prior to hospitalisation. Before getting admitted, the hospital sends the estimate to the insurance company. The patient is admitted only after the company validates the estimate. If the patient has a package, the approval by the company is faster, as the amount is pre-determined and the insurance company knows the treatment will not exceed that amount.

Apollo also has a pre-paid health card that can be bought at either its pharmacy or hospitals. It gives discounts while buying medicines or for medical procedures or tests at hospitals. "The card has done very well in pharmacies because medicine is regular purchase and it gives value for money for customers. But at hospitals, it is yet to catch on," Garg says.

Financing for medical devices
Another option is to buy medical devices like cardiac stents, pace makers, heart valves, implantable cardioverter defibrillators (ICDs), etc on instalments. Medtronic is a firm that offers financing options for devices in tie-ups with hospitals, under its programme Healthy Heart for All" (HHFA). Under the scheme, 85 per cent of the device cost gets financed and patients are offered easy monthly installments plans for repayment.

Patients are referred to Medtronic by the partnering hospitals. The finance counselor from Medtronic then screens the patient based on parameters like family background, residential and identity proof etc. A sanction letter is issued to the patient or hospital after the screening. The finance counsellor then visits the patient's house, cross-verifies the information, collects the basic identity proofs and the money is disbursed to the hospital before discharge, on behalf of the patient. "Loans are disbursed directly to the hospital to monitor and ensure that the funds get used only for the recommended procedure," says a spokesperson from Medtronic India.

The amounts vary from Rs 20,000 to Rs 8.5 lakh. Payments are made by the patient or their family until the loan is retired. EMI starts from as low as Rs 800 and does not exceed 20 per cent of the family income. The duration of loans varies from six months to three years. The loan disbursement happens within two to three days of it getting sanctioned. "Patients with a family income of as low as Rs 8,000 per month can avail of the financing. The cumulative collection ratio for HHFA program is 95.5 per cent," the spokesperson says.

Patients buy medical devices from hospitals and not from Medtronic directly. This ensures that devices are of good quality.
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