Daybreak - Robotic surgeries won't be affordable in India anytime soon. Here's why

Episode Date: January 19, 2024

It was 20 years ago when doctors first used the help of a robot in India to carry out a complicated heart surgery at Fortis Escorts, New Delhi. Ever since, more than 100,000 robot assisted surgeries have been performed in the country. Patients are embracing these type of surgeries now than never before and why wouldnt they?Who wouldn't want a less painful procedure, a shorter hospital stay, and most importantly lesser cuts?But they cost more than 3 or 4 times than normal surgeries. And it was only in 2019, that the Insurance Regulatory and Development Authority of India (IRDAI) asked health insurance providers to cover modern treatments, including robotic surgeries. And even after that, insurers are not keen on to covering them because they are expensive and the pricing is unregulated.Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.   

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. It was almost two decades ago when doctors first used the help of a robot in India to carry out a complicated heart surgery.

It was at Fortis Escorts Hospital in Delhi. And ever since, more than 100,000 robot-assisted surgeries have been performed in the country. Patients are embracing these type of surgeries now more than ever before because why wouldn't they? Who wouldn't want a less painful procedure, a shorter hospital stay and most importantly, lesser cuts? But they cost more than three or four times than normal surgeries. anything between 3 lakh rupees to almost 40 lakh rupees. And it was only in 2019 that the Insurance Regulatory and Development Authority of India asked health insurance providers to cover modern treatments including robotic surgeries.

And even after that, insurers are not keen on covering them because they are expensive and the pricing is unregulated. Plus, the outcomes are kind of still undregulated. proven. So, while doctors prefer these surgeries because of the kind of precision that they offer, insurers are still reluctant to cover them, which means more and more patients in India are stuck between the two. They are either being forced to opt for a normal surgery or they have to bear the entire cost of the robotic surgery from their own pockets. And the sad part is that it is unlikely that these surgeries are going to become more affordable in the near future.

Let us try to understand why. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Dha Sharma, and I don't chase the news cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Friday, the 19th of January. Despite what I told you, robotic surgeries are, are on the rise in India, but that is mainly at private hospitals.

For example, Delhi-based Max Healthcare Institute doubled the amount of robotic surgeries to around 4,000 in the September quarter compared to the same period a year ago. Even India's largest hospital chain, Apollo hospitals saw a 400% increase in robotic procedures over the last two years. They performed more than 2,000 robotic surgeries with over 20 surgical robots in the year that ended in March 2023. Other hospitals like Manipal and Narayana Health are also posting record numbers within months of launching their new robotic specializations. So now a growing number of Indians are being forced to make the difficult choice between helpful robotic surgeries and cheaper, normal procedures. And yet, more and more are choosing these expensive robotic surgeries

even though there is no clarity around insurance coverage. And it is because of this impasse-like situation between health care providers and insurers in India. In fact, in some cases, it is actually blocking the path towards an effective treatment for many patients. Stay tuned for more. Let's take Pratik Dube for example. Let's take Pratik Dube for example. My colleague, the Ken reporter Narayanan, spoke to him. The 30-year-old chartered accountant was in for a surprise after he thought a robotic hysterectomy had fixed his mother's problems. The cost of the procedure at a Delhi hospital was around 4.5 lakh rupees.

So Dube thought it would be covered by his 8 lakh rupees worth health insurance policy, which also covers his dependent parents. But his insurance company paid out only one last. lack. Why? Because they had a fixed cap specifically for robotic surgeries. And things were even worse for NKKKKKKK, who is a teacher from Calcutter. His insurance company rejected a doctor-recommended robotic surgery for gallbladder removal. And this was even though his policy covers such procedures. And instead, the insurance company advised him to go for a normal surgery saying that gallbladder removal is a less complex procedure that does not require robotic intervention.

So imagine, an insurance company is deciding what is the best medical procedure for you instead of your doctor. A veteran surgical oncologist and a robotic surgeon from a Delhi-based private hospital chain told again that while he is happy with the rise in robotic surgeries, the growth could have quadrupled had there been active support from the insurance. industry. He said, and I'm quoting, insurers are the worst partners of healthcare who do not want to support any new technology. But it is not also simple, you see. The insurance business is a business after all. Stay tuned to find out their side of the dilemma. When it comes to health care prices, the Indian market kind of lacks regulations. A senior executive at a private general insurance company

explained it to us. He said, since less than one third of the country's total population is covered by health insurance, insurance companies are in no rush to bring about a change. And it is because of these conditions that insurance companies end up denying claims or applying sublimits on new technologies. They said, and I'm quoting, one claim for robotic surgeries is $3,000, and another is for 30 lakh rupees. Such unregulated and expensive claims will tarnish the book. Eventually, it'll lead to a loss-making portfolio for an insurer. End quote. They also pointed fingers at hospitals saying that they are passing on the costs to the insurance industry while making no efforts to cut the pricing at their end. For example, they said, a robotic-assisted cancer surgery at a Polo-Proton Cancer Center,

in Chennai costs up to 40 lakh rupees. So they asked, how can an insurance company pay nearly 40 lakh rupees for a 3 to 5,000-rupee premium? A valid question, right? Now, Ryan and spoke to a Chennai-based robotic surgeon and they agreed that the cost of robotic treatments is prohibitively high. So why can't hospitals bring down these costs? Because of the capital expenditure on the robotic equipment, annual maintenance charges or AMC, and the recurring cost of the surgical instruments that are attached to the robotic arms. Now, while there are many global surgical robot manufacturers such as Medtronic and Stryker, in the Indian market, many hospitals mainly use intuitive surgical's Da Vinci Systems,

and it can cost them anywhere between 8 crores to 20 crore rupees. In addition to that, the hospitals have to pay the annual maintenance charge of nearly a crore to the equipment maker. And the surgical instruments that are replaced after a certain number of surgeries can cost up to another 2.5 lakh rupees. And the hospitals pass on all these costs through the patients. And if insurers have to bear it for them, then obviously they will have to increase their premiums to keep their business going. and if they do, people will drop out of insurance. Like the surgeon told us, it is a vicious cycle, which is why it is unlikely that the price of robotic surgeries

will come down in India anytime soon. Daybreak is produced from the Newsroom of the Ken India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-forms. feature stories, newsletters, subscriber-only apps and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.