Freemium Medical Care? Indian Hospital Shows That A Charitable Hospital Can Still Make A Profit
from the premiums dept
Aaron DeOliveira points us to an interesting documentary (and related series of articles) about a hospital in Bangalore, India called Narayana Hrudayalaya, which is providing top notch medical services to all comers and still making a profit in doing so. The trick appears to be a variation on the basic concepts of the "freemium" model (where you pay for higher levels of value) along with a price differentiation mechanism within the hospital. That is, the hospital puts people into different payment buckets based on their ability to pay -- such that it refuses no one, even if they can't pay at all. But, it also makes some of its profits by offering extra amenities at a premium. The medical care is the same for all, but other things cost extra:At the Narayana, approximately 40 per cent of patients pay a reasonable price for their treatment, a small percentage - those who "want the frills of executive rooms" - pay a premium, a majority pays less than the market rate and 10 to 20 per cent pay virtually nothing. For the latter category, the hospital's charitable wing raises money to help compensate for the material costs of their treatment.So, again, it appears that it's a "small" number who are paying those extras, but those really do help make the hospital profitable and allow it to continue on its overall mission.
In any other hospital, those who could not afford to pay their medical bills would simply be sent away until they came up with the cash, but at the Narayana the hospital's charity wing helps them to find the money.
Of course, the cynical might suggest that the hospital could be even more profitable if it only catered to those super wealthy who want the extras. But that's not necessarily the case. From the description in the article, the scale of the hospital operation here actually helps to keep costs low. So they actually get benefits of the economies of scale by running a large hospital which treats all-comers. That allows them to keep their actual marginal expenses lower than others, and then by offering premiums for those who can afford it, they're able to produce a profit. Interesting stuff...
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Filed Under: hospital, india, medical care, narayana
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[/sarcasm]
Really though... focus first on actually helping people as a baseline, and then offer amenities for added prices. This SHOULD be the way things are done. But that, of course, depends on the person/company's POV and outlook on their business.
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This is the way US insurance used to work
How soon we forget ...
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Re: This is the way US insurance used to work
The first is essentially doing to health care exactly what the patent trolls are doing to innovation. Crippling it with lawsuits that enrich lawyers and force providers to treat in more expensive ways to avoid lawsuits rather than to cure patients. Every health care provider in the nation, from corporate to individual doctors, should expect to be sued multiple times per year. They're all required to carry unholy amounts of malpractice insurance.
As for the second, insurance companies are simply unwilling to give up their monopoly on the entire health care industry. They've now managed to enshrine into law that every person and company involved in either giving or receiving health care must carry insurance to pay for it.
We've let trial lawyers write the fact that doctors are human and make mistakes into case law as willful negligence. We've let insurance companies become the only ones who are legally allowed to pay to either give or receive medical care. And we've allowed them both to acquire the second and first most powerful lobbies in Washington, respectively.
Can we all see now why we're well and truly boned, no matter what we hear out of politicians around election time?
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Re: Re: This is the way US insurance used to work
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problem ?
It is explained in my ongoing, educational trolling series.
How to troll an American : Lesson 2
Tell them how much their politicians sold them for.
( aka the TRUE VALUE OF AN AMERICAN )
About $1.68 per person in the US.
I didn't include revolving door or the billions in ""campaign contributions""
Will inflate it, to make American people feel good about their true value.
#note to self: Add Random number..( $1.82 ) to the $1.68 value of American person.
So Americans..
How much you pay for it is irrelevant.(they sold that as well)
The TRUE VALUE OF YOUR HEALTH is about "TREE FIDDY " per year
problem ?
Don't blame me , I didn't sell you.
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Re: problem ?
It's part of the fundamental nature of government to betray its people for money. The US has fucked up health care and IP laws, Britain has freedom of speech only as long as it doesn't inconvenience their government, Greece has bankrupted itself giving handouts in trade for votes, France is working on the same and has IP laws worse than the US.
Everyone has their own issues to deal with before they go talking shit about someone else's.
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Truth hurts
Obama will give you a medal for your patriotism.
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Re: Re: This is the way US insurance used to work
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Reusable business models
In health care terms, India is a fascinating place. They combine a lack of health care professionals with minimal financial resources for the majority. This means that the western model will never succeed and is forcing them to be more creative with how they provision health care. Assembly line style surgeries and lower cost health care professionals such as PAs, Nurse Practitioners, midwives etc. are being put to very effective use. The fact that highly skilled/trained doctors are only used for the most complicated procedures is dramatically driving down costs (I'm an avid Economist reader, so I probably sound like a parrot to many). However, they have two major advantages over most of the western world, three actually: no omnipowerful doctors lobby; limited legacy systems that resist technological innovation; and a minimal history of liability claims. This last one is particularly interesting as it causes hospitals and doctors to do a sober cost benefit analysis of different procedures and equipment, without worrying about being sued for not using the device with all of the useless bells and whistles.
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Trolling the poor
When the fire service put out a fire in a poor persons house, they should only give them the non-premium service, that only puts out the fire after the house is burnt down.
The fast lane on the freeway (premium service) should not be used by poor people with cheap ass cars traveling to minimum wage jobs.
When a poor person is murdered, give them the "non-premium" police service that doesn't collect evidence.
Your Ideas work well at creating class warfare ( trolling the poor ). I like it !
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Re: Trolling the poor
Thanks for proving my point.
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Re: Re: Trolling the poor
The point, seeing that your view of the "99%ers" blinded you to it...
aka....(the others, not like you, them others, the enemy)
"Essential" is a different term.
In ALL the other developed countries , "essential" healthcare is free (via tax).
Essential as in needed , not "premium", want "premium" service with hot nurses and gold taps in the bathroom ? go private.
But still......
I prefer your idea of "premium" for rich and "non-premium" for the poor, that way we can classify expensive cancer drugs as "premium". If they were "essential" those pesky "99%ers" would get them, where is the lulz in that...amiright ?
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Likely not. I am sure many of those wealthy patrons justify/rationalize the extra expenditure because they know it's going to support the charity.
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Also gives experience
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Re: Also gives experience
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I had a psychologist who charged between $50-$150 an hour based on the patient's wealth. He claimed $150 was the regular price and anything under was just a discount he generously gave to his poorest patients at the expense of his profits, but in effect he was just making the rich pay for the poor.
Long story short, I really like that this hospital provides something extra to those who pay the most instead of giving everyone the same service and pretending the rich are just paying the regular price and aren't being milked for extra bucks so the poor can benefit.
I refused paying $150/hour to my psychologist (we negotiated for less in the end) but I'd be happy to pay more money in a hospital like that (not that I'd want to go to a hospital in an under-developed country, but I'd be happy to pay a little extra so poor people can benefit if I get a little extra myself in return)
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