May 30

Udaya Kumar

Cashless Hospitalization, Premiums of $3.90 a Year … and the Program Pays for Itself

According to World Bank figures, more than three-fourths of all health care spending in India is out-of-pocket spending. The latest available figures for 2014 suggest that nearly 89.2 percent in India pay for health care on their own. Though it is a marginal improvement over the 1995 figure of 91.4 percent, India is still far from achieving total health care by 2030 as envisioned under the UN Sustainable Development Goals.

Beset with high levels of preventable illness and avoidable hospital admissions, India needs a carefully designed risk coverage instrument that shields poor and low-income households, who suffer dire economic deprivation following the hospitalization of even a single family member. With the appropriate and affordable health care tools, the poor can be much more risk-resilient and their ability to bounce back will be much higher.

At Grameen Koota, a microfinance organization operating mostly in rural areas of India, we have found a comprehensive approach to address this issue. We have combined preventive health care education with provision of affordable cashless hospitalization for our clients in rural India, and the program has yielded very encouraging results over the past five years. Many families at the bottom of the pyramid have benefited.


up to 10 family members are covered

Grameen Koota collaborates with M D Sachidananda Murthy Hospitals, a network of hospitals in Mysore, in the southern Indian state of Karnataka, to offer an affordable health care program that provides cashless hospitalization to our customers and their family members.

Designed to provide immediate relief to the affected family, it offers a variety of medical services at an annual premium payment of INR 250 (US $3.90), capturing the pricing benefit of risk-pooling between different households. The program includes unlimited medical consultation at a low cost – just INR 25 (39 cents). Grameen Koota customers and their families are eligible for cashless inpatient treatment in network hospitals. Operational in Karnataka since 2010, up to 10 family members can access the benefits of the program.

A customer-friendly help desk executive called “Sakhi” (friend) in all network hospitals guides Grameen Koota cardholders, arranges for their consultations and helps them access medical benefits. The results are encouraging; 469,119 Grameen Koota customers and their families have enrolled in the program so far. About 90,000 of them have availed outpatient treatment, while 11,000 have received hospitalization benefits amounting to $1 million. Essentially, these beneficiary families have saved $1 million – the cost of monetary deprivation during unforeseen medical contingencies.


not just a solution, but access to the solution

In 2011, Grameen Koota launched “Jagruti,” our flagship customer education program covering key health issues. The program promotes pre-emptive measures to avoid or overcome the burden of chronic diseases. It encourages our clients – all of whom are financially disadvantaged rural women – to consult a doctor when symptoms appear.

Grameen Koota’s water and sanitation (WATSAN) initiative, launched in 2009, combines preventive health care awareness with access to clean drinking water and affordable loans to build toilets. Mass social awareness campaigns motivate the women and enable them to sensitize their families, localities and villages about the hazardous health impacts of poor sanitation systems. Encouraging communities to embrace better practices and delivering programmes on preventive health care is one thing. It’s quite another to enable access to resources for the community to make the change. Grameen Koota’s approach of not just offering a solution but access to the solution has resulted in changing mindsets. Through our CSR partner, the organization has adopted 26 villages under the “Sugrama” program, to make them open defecation-free.



One of the primary challenges of the affordable health care program is finding good quality network hospitals in rural Karnataka. Hospitals are reluctant to set up facilities in rural areas due to prohibitive operating costs, low return on investment and lack of qualified medical personnel.

Persuading communities to sign up for the program is a big challenge. There is resistance to the idea of paying a fee – however nominal – for an eventuality that may not occur, even though it enhances customer resilience in times of medical exigency. People prefer to rely on low-cost traditional health care practices and personal rapport with the local physician, to overcome health challenges.

The affordable health care program is not subsidized by the state. Neither does it accept grants. It pays for itself.

Despite the challenges, we are encouraged by the success of this comprehensive approach to health care and will make the affordable health care program accessible to more customers. We will expand the program in a phased manner to the four other states where we operate – Tamil Nadu in southern India, Maharashtra in the west and Chhattisgarh and Madhya Pradesh in the north. The expansion will, however, depend on the availability of good quality medical infrastructure. It will also depend on how quickly we can iron out the challenges in our current system and make it an easily replicable model across geographies.


Udaya Kumar is the managing director and CEO of Grameen Koota.

Photo courtesy of Grameen Koota

Health Care
Base of the Pyramid, business development, financial inclusion, microfinance, public health