IDEAS home Printed from https://ideas.repec.org/a/sae/vikjou/v46y2021i2p112-128.html
   My bibliography  Save this article

Health Insurance as a Healthcare Financing Mechanism in India: Key Strategic Insights and a Business Model Perspective

Author

Listed:
  • Rohit Kumar
  • Aditya Duggirala

Abstract

This study provides strategic insights and a business model perspective on health insurance as a vehicle for financing healthcare. It uses both primary (expert interview) and secondary data to investigate the overall disease burden and healthcare industry trends and track healthcare financing through the health insurance mechanism in India. To identify the critical success factors and to gain a business model perspective within the health insurance industry, telephonic and face-to-face interviews were held with 27 experts in the healthcare, insurance, and strategic management field. The study’s findings suggest that the growth of health insurance as a healthcare financing mechanism in India has been challenged continuously and impacted by multiple changes in the health insurance and healthcare industry over the last decade. One of the critical challenges faced by insurance companies is the high incurred claim ratio. We find the Indian health insurance industry to be very competitive and that the focus on critical success factors can help insurance companies gain a competitive advantage. The health insurance business model is unique, with varying configurations, and broadly comprises strategic choices and consequences. In this article, drawing from the strategic management literature on the resource-based view (RBV) and insights gained from the interviews of healthcare and health insurance experts, we highlight the six critical success factors relevant for competing in the health insurance business. We also list five strategic choices that can help health insurance companies improve their profitability and gain a sustained competitive advantage. We recommend that the insurance companies design and develop an innovative business model centred around lowering the claim ratio and simultaneously increasing the customer willingness to pay. To increase the customer willingness to pay and reduce the claim ratio, the insurance companies should focus on the six critical success factors and invest in the five strategic choices.

Suggested Citation

  • Rohit Kumar & Aditya Duggirala, 2021. "Health Insurance as a Healthcare Financing Mechanism in India: Key Strategic Insights and a Business Model Perspective," Vikalpa: The Journal for Decision Makers, , vol. 46(2), pages 112-128, June.
    • Handle: RePEc:sae:vikjou:v:46:y:2021:i:2:p:112-128
    DOI: 10.1177/02560909211027089
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/02560909211027089
    Download Restriction: no
    File URL: https://libkey.io/10.1177/02560909211027089?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Thomas J. Douglas & Joel A. Ryman, 2003. "Understanding competitive advantage in the general hospital industry: evaluating strategic competencies," Strategic Management Journal, Wiley Blackwell, vol. 24(4), pages 333-347, April.
    2. M. Govinda Rao & Choudhury, Mita, 2012. "Health Care Financing Reforms in India," Working Papers 12/100, National Institute of Public Finance and Policy.
    3. Jeetendra Yadav & Geetha R. Menon & Denny John, 2021. "Disease-Specific Out-of-Pocket Payments, Catastrophic Health Expenditure and Impoverishment Effects in India: An Analysis of National Health Survey Data," Applied Health Economics and Health Policy, Springer, vol. 19(5), pages 769-782, September.
    4. Richard P. Rumelt, 1991. "How much does industry matter?," Strategic Management Journal, Wiley Blackwell, vol. 12(3), pages 167-185, March.
    5. Randall P. Ellis & Thomas G. McGuire, 1993. "Supply-Side and Demand-Side Cost Sharing in Health Care," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 135-151, Fall.
    6. Janice A. Black & Kimberly B. Boal, 1994. "Strategic resources: Traits, configurations and paths to sustainable competitive advantage," Strategic Management Journal, Wiley Blackwell, vol. 15(S2), pages 131-148, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rajesh Chandwani, 2021. "Stakeholders in the Indian Healthcare Sector," Vikalpa: The Journal for Decision Makers, , vol. 46(2), pages 65-70, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Camisón, César & Forés, Beatriz, 2011. "Knowledge creation and absorptive capacity: The effect of intra-district shared competences," Scandinavian Journal of Management, Elsevier, vol. 27(1), pages 66-86, March.
    2. Hunt, Shelby D., 1997. "Resource-advantage theory and the wealth of nations: Developing the socio-economic research tradition," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 26(4), pages 335-357.
    3. Jonathan H. Reed, 2022. "Operational and strategic change during temporary turbulence: evidence from the COVID-19 pandemic," Operations Management Research, Springer, vol. 15(1), pages 589-608, June.
    4. Tarifa Fernández, Jorge & de Burgos Jiménez, Jerónimo & Céspedes Lorente, José Joaquín, 2018. "Absorptive capacity as a confounder of the process of supply chain integration," MPRA Paper 120125, University Library of Munich, Germany, revised 2018.
    5. Adu-Gyamfi, Richard & Kuada, John & Asongu, Simplice, 2018. "An Integrative Framework for Entrepreneurship Research in Africa," MPRA Paper 89133, University Library of Munich, Germany.
    6. Trottmann, Maria & Zweifel, Peter & Beck, Konstantin, 2012. "Supply-side and demand-side cost sharing in deregulated social health insurance: Which is more effective?," Journal of Health Economics, Elsevier, vol. 31(1), pages 231-242.
    7. D'Este, Pablo, 2005. "How do firms' knowledge bases affect intra-industry heterogeneity?: An analysis of the Spanish pharmaceutical industry," Research Policy, Elsevier, vol. 34(1), pages 33-45, February.
    8. Sverre Grepperud, 2005. "Medical Errors: Mandatory Reporting, Voluntary Reporting, or Both?," European Journal of Law and Economics, Springer, vol. 20(1), pages 99-112, July.
    9. Rafał Haffer, 2018. "Supply Chain Performance Measurement System Of Logistics Service Providers. A Conceptual Framework And Research Agenda," Business Logistics in Modern Management, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 18, pages 85-108.
    10. Seungchul Lee & Robert Rosenman, 2013. "Reimbursement and Investment: Prospective Payment and For-Profit Hospitals’ Market Share," Journal of Industry, Competition and Trade, Springer, vol. 13(4), pages 503-518, December.
    11. Hazhir Rahmandad & Nelson Repenning, 2016. "Capability erosion dynamics," Strategic Management Journal, Wiley Blackwell, vol. 37(4), pages 649-672, April.
    12. Short, Jeremy C. & Palmer, Timothy B., 2003. "Organizational performance referents: An empirical examination of their content and influences," Organizational Behavior and Human Decision Processes, Elsevier, vol. 90(2), pages 209-224, March.
    13. Villalonga, Belen, 2004. "Intangible resources, Tobin's q, and sustainability of performance differences," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 205-230, June.
    14. Yi-Min Chen, 2008. "How Much Does Country Matter?," International Regional Science Review, , vol. 31(4), pages 404-435, October.
    15. Shelby D. Hunt, 2012. "Understanding the Drivers of Economic Growth: Grounding Endogenous Economic Growth Models in Resource-Advantage Theory," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 6(4), December.
    16. Sipos, Norbert & Lukovszki, Lívia & Rideg, András & Varga, Anna Róza, 2023. "A magyar családi mikro-, kis- és középvállalatok erőforrás- és képességkonfigurációi [Resource and capability configurations of Hungarian family-owned micro, small and medium-sized enterprises]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1389-1413.
    17. Maria Giuseppina Bruna & Luc Frédéric Ducray & Nathalie Montargot, 2017. "Décrypter les ambiguïtés de la société post-moderne pour penser la morphologie de l'entreprise de demain. Une illustration réticulaire," Post-Print hal-01867619, HAL.
    18. Izabela Jelovac & Philippe Polomé, 2017. "Incentives to patients versus incentives to health care providers: The users' perspective," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 319-331, December.
    19. Rönnberg Sjödin, David & Parida, Vinit & Kohtamäki, Marko, 2016. "Capability configurations for advanced service offerings in manufacturing firms: Using fuzzy set qualitative comparative analysis," Journal of Business Research, Elsevier, vol. 69(11), pages 5330-5335.
    20. Ching‐To Albert Ma & Michael H. Riordan, 2002. "Health Insurance, Moral Hazard, and Managed Care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(1), pages 81-107, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:vikjou:v:46:y:2021:i:2:p:112-128. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.