Big is not always better. This is proving to be true in the case of big hospitals where profitability is like a malnourished child, stunted in growth. Also chipping away at their incomes are smaller hospitals, which are only going to get better, thanks to bait that the insurance regulator is dangling. Just about this time last year, in July 2016, it took a bold step. The Insurance Regulatory and Development Authority asked every healthcare provider—be it a 500-bed multi-speciality hospital or a five-bed nursing home—to achieve a certain standard of quality. Why would the hospital owner do such a thing? To reap the benefit of scale that comes with cashless health insurance users.
The insurance regulator gave hospitals two years. A grace period that ends in July 2018 to meet the entry level standards laid down by National Accreditation Board for Hospitals (NABH). With this one move, the IRDA has pushed small hospitals to become more accountable. This equips them to compete with the larger accredited hospitals and lets health insurance providers keep a check on fraud and overpricing. Consumers, meanwhile, will have more choice.
What’s not to like about it? A few things, we figure out as we take stock with one more year to go for the deadline.
For a small hospital, getting accredited may mean a lot of work right now. But it is an olive branch that is shifting the balance of power, believes Dr KK Aggarwal, president of the Indian Medical Association (IMA). Aggarwal foresaw the need for quality improvement for small healthcare outfits and tied up with NABH a year before the regulator’s order.
“Accreditation gives a small or medium hospital extra mileage to attract a tourist and an insurance holder,” says Aggarwal. Moreover, a small hospital needs less investment and thus, offers lower prices and more benefits to a patient than the larger multi-speciality hospitals one sees in cities, adds Aggarwal.
At the IMA headquarters in Delhi, KK Kalra is helping small hospitals get accreditation. Kalra, a former chief executive of NABH, is the architect of the newly developed basic accreditation standards for small hospitals. As evident in the bar graph below, 84 accredited smaller outfits currently trailing behind the larger hospitals may soon catch up with the latter. Hundreds of applications are under process, says Kalra.
“The lure of accreditation is increased scale as the state government insurance schemes empanel only accredited hospitals.