12 Jan 2024 , 10:16 AM
Please help us understand the journey of Medi Assist so far.
The Third Party Administrator (TPA) industry, emerged around in 2002 and Medi Assist has played a pivotal role at the intersection of our partnerships with health insurance companies, our partnerships in creating networks of providers or hospitals, and our partnerships with delivering services on behalf of insurers to policyholders.
The industry operates with two primary types of policyholders: enterprise policyholders (group) provided as part of employment benefits to employees and their families, and retail individual subscribers to health insurance plans. Over the years, Medi Assist has forged strong partnerships with insurers, working with around twenty-seven or twenty-eight insurers, including both general and standalone health insurers.
As of now, the health insurance sector covers approximately 16% of the population, and this figure is expected to double to 33% by FY 2028, in alignment with the government’s goal of achieving health insurance for all by 2047.
Please elaborate on how Medi Assist has adapted to the changing landscape of healthcare. Also how does the company’s emphasis on building quality networks and leveraging technology?
One notable trend is the evolving demands of the insured population, moving beyond traditional in-patient care to encompass a broader range of outpatient services. In FY23, for the first time we saw outpatient claims surpassing inpatient claims. The shift towards outpatient services is driven by factors such as harmonization with global practices and addressing the financial strain caused by healthcare expenditure.
The company places a supreme focus on building quality networks across the country, boasting networks covering nearly 967 towns and cities with about 14,301 hospitals offering cashless hospitalization. This approach is vital in addressing the issue of escalating healthcare costs or medical inflation prevalent in India. Our ability to work with our insurer partners and hospital networks to efficiently manage costs, reduce instances of fraud, waste, and abuse, and control medical inflation without compromising the policyholder’s healthcare experience.
An integral aspect of the company’s success lies in its profitability and ability to consistently generate cash. Leveraging technology, the company has developed proprietary tools across the healthcare ecosystem, from claim management to hospital access, automation, machine learning, and other essential components for delivering superior experiences to policyholders. This technological foundation has been instrumental in the company’s growth, performance, and enduring partnerships with insurers and policyholders alike.
Medi Assist does not have comparable listed peers in India. How should the investors then weigh in the IPO valuations?
Let me shed some light on two key themes. Firstly, in the Indian context, we are poised to be pioneers – potentially the first in our industry to publicly list our business. Globally, Third-Party Administrators (TPAs) serve as the anchors in the health insurance market, a trend mirrored across most geographies. In India, we have been steadily gaining market share.
When it comes to comparable peers, it is crucial for investors to understand the qualitative factors propelling our growth. In the Indian market, health insurance is experiencing a remarkable 23-24% CAGR increase in penetration, and our growth trajectory aligns with and even surpasses this trend. We attribute this success to our unwavering commitment to delivering exceptional service experiences throughout our network and claims process. Our track record of maintaining stable margins over several years.
Lastly, our participation in an evolving ecosystem is noteworthy. Our digital assets and technologies play a pivotal role, creating efficiencies that extend beyond traditional human interfaces. Our business is debt-free and cash accretive. We are actively leveraging technology to support and drive our growth, contributing to a dynamic and forward-looking landscape.
As per RHP, top 5 clients contribute approximately 78% of your revenues for FY23. This concentration is often seen as a potential risk. How are you mitigating this risk?
As of the end of September, the top five clients contributed 71%, but our alignment with the market dynamics justifies this concentration. The concentration risk mirrors the distribution of premiums in today’s market. We have well-balanced relationships with public, private, and SAHI insurers. With all our contracts being annual, we maintain an impressive retention rate of over 94% retention rate in annual renewals.
Historically, the group insurance segment has seen a diverse mix of insurer participation. We are a reasonable reflection of the current market distribution from an insurer perspective. Over the past three years, approximately 25% of our premiums and revenues are already from the private insurer market. As we continue to expand on the retail side and witness shifts in business dynamics, especially at the insurer level, our position evolves in tandem with industry changes.
Run us through the company’s growth strategies for the upcoming three to five years.
Firstly, the industry itself is experiencing growth in penetration, reflecting the increasing number of Indians purchasing health insurance plans. This external factor is integral to our growth strategy.
Secondly, our ability to retain a significant portion of our business under annual renewals, around 94-95%, is a central theme in our growth strategy. Thus, our existing business continues to expand organically and forms the backbone of our growth story. It is not just about acquiring new business, which is also growing.
Please shed light on how are you giving back to the society?
In terms of our societal contributions, we actively engage as a participant and partner in various government-sponsored public health schemes, particularly those falling under the Ayush Mahan Bharat umbrella. Serving and partnering with both state and central governments has been integral to our business, both pre and during the COVID era.
From a Corporate Social Responsibility (CSR) standpoint, our focus has consistently centered around healthcare-related initiatives, emphasizing awareness, empowerment, and care for women and children. Our annual investments and contributions are dedicated to these sectors, collaborating with proficient partners to ensure effective delivery. These efforts are concentrated in communities near our operational regions.
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