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Journal of the Academy of Hospital Administration

Cost of Medicare Scheme in Manipal

Author(s): V.P. Bhaskaran *, P. Satyashanker **, Rahul Menon***

Vol. 12, No. 2 (2001-07 - 2001-12)


Insurance is the name given to a legal method whereby the total possible and probably major losses of a number of individuals may be anticipated and by means of funds previously collected, which are the premiums paid, money will be available to pay the losses of any member of the group. In this way each members is protected against a loss by the payment of a premium from every member of the pooling group1.

Liberalization of the insurance sector in India will see the increasing involvement of large and powerful insurance companies of the world in the Indian insurance industry. It is essential that we turn this involvement into a positive factor for the growth of the Indian insurance sector in particular and the Indian economy in general. Now worth about Rs.73,000 crores, it is expected to surge by Rs.10,000 crore annually. Just by virtue of it's large population, one billion approximately, it is having around 350 million insurable people and is by the large the health care destination for all the major global insurance, such as Aetna, sun Alliance, BUPA. According to some estimates, within a span of 5 years the people who would be capable of getting insured would be around 700 million. The health insurance currently has a market of $ 66 million in India and expected to be $1.14 billion by 20006. Considering this vast market no one wants to be left behind in this lucrative market opportunity2.

Kasturba Hospital, Manipal has steadily grown since its inception in 1941 starting with modest bed strength of 6. Now it is a multi specialty tertiary care hospital with 1,475 beds. There are 24 specialties and sub-specialties. The hospital provides care to vast population, which includes patients from Karnataka, Kerala and Goa. It's specialist also reach the community through out reach clinics.

On an average 1,000 patients visit the OPD of the hospital daily and about 120 patients get admitted daily in the ward. There are about 40 major and 60 major operations done in the hospital.

Medicare Scheme

Medicare is a comprehensive medical and dental care scheme introduced by Kasturba Hospital in 1972. It's services are rendered its constituents hospitals in and around with a combined bed strength of 3,000.

Medicare is instituted primarily for the benefit of students, employees and their dependents and permanent residents of Manipal and it's neighbouring villages or towns who are/have been associated with Manipal groups of institutions. The prepaid health plan assist in extending medical care to the members covered the scheme.

The hospital provides, comprehensive (primary to tertiary) health care to its medicare beneficiaries. There is no problem regarding accessibility and affordability. Thus it is felt that the study of the system will give us an insight regarding the health economy.

Aim of the Study:

  1. To estimate the average cost of out patient visit/person/ year and
  2. To estimate the average cost of inpatient stay/person/ year in order to estimate the average Medicare cost per person per year.


Among total medicare beneficiaries numbering approximately 37,000, all the staff and their families of Kasturba hospital numbering 3,790 are taken as a sample. This sample has been taken as representative of the population and was studied for the months of September and October 1999. Relevant data pertaining to the study was collected by interviews with medicare staff and from records available. The Kasturba Hospital staff and families are considered as a representative of the population because it is likely that all their medical need is taken up by this hospital.

During the study period the following information has been collected from all the patients who availed the services among the study population

  1. No. of out patients visits
  2. No. of in patients admissions
  3. Average length of stay
  4. Cost of each out patient visit
  5. Cost of each impatient stay
  6. Average medicare cost per person per year

Observations :

The study population includes the total staff of Kasturba Hospital and their dependents. The staff are 1,420 in number and along with their dependents the total study population was 3,790 subjects. $1,863 (49.16%) were males.

  • Average outpatients visits among the study population was estimated to be 5496, per year implying thereby 1.45 outpatients visits/year/person
  • Average number of admission among the study population was estimated to be 588/year, implying 0.15 admission/year/personv
  • Average lengthy stay among the study population was estimated to be 6.4 days
  • Average expenditure per outpatient treatment was estimated to be Rs. 173.00
  • Average cost of per inpatient stay was estimated to be Rs. 4031.00
  • Average cost per inpatient was estimated to be Rs. 630.00
  • Medicare cost for outpatient visit per year per person was Rs. 250.85 (173 x 1.45) and medicare cost for inpatient stay per year per person was Rs. 604.65 (4031 x 0.15).
  • Thus the total medicare cost for outpatient visits per person per year was = Rs. 855.50 (Rs. 250.85 + Rs. 604.65)


A review of the extent of outpatient services provided by hospitals in India makes fascinated reading. The extents of the services are gigantic and the problems of organising them are enormous. There are still larger chunks of population who have no accessibility to medical care even ambulatory care according to currently available statistics3.

1.a) About 25 inpatients are given services per bed in a year
b) With 6,19,433 beds in the country, 1.54 crore inpatient are therefore served per year.

2.a) On the other hand, for each hospital bed, about 500 outpatients per year are given service.
b) This means that over 30 crore outpatients in a year are treated in the outpatient department of the hospitals3

From the above Figures it is quite evident that in a country with a population of 1 billion only 30 crore outpatients are treated in a year i.e. 0.3 visits per year per population. In the study population where every member is insured the visits per year per population was 1.45 i.e. 4.8 times more visits that what is seen in the rest of the country.

The impatient stay per year per population is about 1.54 crore patients i.e. 0.015 per year per population as compared to the 0.15 per year per population among the study group which is 10 times higher than the rest of the country.

From the above figures the Medicare cost for the entire population of the country i.e. one billion will be Rs. 85,550 crores.

It is clearly evident that the real need for health care is very high and the accessibility and affordable is very low. With the opening of private insurance agencies there will be a variety of schemes to choose from. These schemes of made affordable are likely to improve health care accessibility and availability to the in country.


  1. Blankenbeckker John C, The hospital insurance program, Concepts of Hospital Administration, Owen. P. 122
  2. Health Insurance - Indian perspective (unpublished)
  3. Sakharkar B.M., Principles of Hospital Administration and Planning, P-53

* Medical Supermtendent, Addl. Dean (Hospital affairs) and Prof. and Head. Deptt. of Hospital Admn., Kasturba Hospital Manipal
** Asstt. Medical Superintendent and Asstt. Prof., Deptt. of Hospital Administration, Kasturba Hospital Manipal
*** Postgraduate student, Deptt. of hospital Administration, Kasturba Hospital, Manipal

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