Microfinance Focus, January 19, 2012: Swayam Shikshan Prayog (SSP), which offers health insurance product to low income households in rural India, has found the use of discounted outpatient services by clients to be associated with increased client retention.

As an added benefit of its cashless inpatient health insurance product, SSP offers clients a discount of approximately 50 per cent on consultation fees from a network of local physicians and a 40 to 70 per cent discount on the retail price of drugs.

SSP observed that clients who had accessed discounted outpatient services were three times more likely to renew their membership. Clients who did not use either outpatient or inpatient services had a 15 per cent renewal rate compared to a 45 per cent renewal rate for those who used outpatient services, and a 69 per cent renewal for those who used both outpatient and inpatient services.

The attraction of discounted outpatient services make sense when considering that at least 40 per cent of SSP’s claims were for common waterborne illness (diarrhea and typhoid), which can often be prevented or treated without hospitalisation. In areas where such illnesses are prevalent, providing and incentivising access to outpatient clinics (along with prevention mechanisms) can make economic sense and provide better value to clients.

Clients can be treated faster and avoid or reduce the adverse consequences of being ill, both economic (e.g. lost wages, out of pocket costs) and health related (e.g. temporary or permanent disability, death).

SSP has partnered with Swasth India Services to pilot a Community Health Fund in which a comprehensive health product will be offered.  The project envisages implementation of a health insurance product (inpatient care insured and cashless delivery) with an out-patient component delivered through a network of physicians, diagnostic centers and drug dispensing units, coordinated by Community Health Workers.

These findings were reported in Emerging Insights released by the International Labour Organization Microinsurance Innovation Facility.