Bessemer Venture Partners has acquired a minority stake in Bangalore-based Medi Assist India TPA Pvt Ltd (MAPL), which is involved in providing third party administrator (TPA) services for health insurance-related claims. Bessemer, along with the management led by Dr Vikram JS Chhatwal, have picked up the shares held by Reliance Health Ventures and also infused fresh capital into the company.
The overall investment in the company by Bessemer stands at around $20 million, according to BVP India managing director Vishal Gupta who has joined the board of the company. The company’s shareholding is now held by Bessemer and the management, he added. The management currently owns a significant majority stake in Medi Assist.
“Medi Assist is India’s largest healthcare TPA, which will benefit from the growing insurance coverage and state government schemes. The health insurance industry is growing at 30-40 per cent and large third party administrators (TPAs) are growing at much faster rates,” said Gupta.
As one of the fastest growing segments in non-life insurance, Indian health insurance market is expected to grow at a CAGR of 43 per cent between 2011 and 2015, with the market penetration rising threefold during this time period, according to Technopak Advisors. India’s low health insurance penetration, which stands at only 15 per cent of the total population, is believed to be one of the key drivers of this industry.
Key factors driving the growth in this space include increasing awareness regarding health insurance, rising healthcare costs, supporting demographic profiles (as more Indians are ageing), de-tariffing of the general insurance industry and rationalisation of premium rates.
“We are looking at areas such as payer provider networks, pharmaceutical benefit management, single specialty hospitals, health insurance and antecedents around that,” said Gupta.
The deal marks the first exposure of Bessemer to India’s healthcare space. Earlier, it had invested in NetAmbit, a financial services distribution company selling products like mutual funds and insurance.
Third Party Administrators
Health insurance TPAs are normally contracted by health insurers or self-insuring companies to administer services such as claims administration, premium collection, enrolment and other administrative activities. A hospital or provider organisation, desiring to set up its own health plan, will often outsource certain responsibilities to a TPA.
Key TPAs in India include companies like Paramount, Family Health Plan, E-Meditek Solutions and TTK Healthcare, among others. In 2004, India Value Fund had invested in TTK Healthcare and exited in 2007 by selling its stake to Swiss Re, a global leader in re-insurance.
Medi Assist was incorporated in September 1999 as one of the earliest IRDA-licensed TPAs in India with funding from Nadathur Holdings & Investments (which has now completely exited the firm), private investment arm of Infosys Technologies’ co-founder NS Raghavan. In 2006, Anil Dhirubhai Ambani Group’s Reliance Health Ventures Ltd acquired the company.
Medi Assist is currently led by Dr Vikram JS Chhatwal, who had set up and headed the healthcare business for Reliance ADAG. He was also part of the founding team as the CEO of healthcare BPO and IT company Apollo Health Street Ltd besides holding a concurrent position as the CIO at the Apollo Hospitals Group. Medi Assist also roped in SD Srinivasan (former global head of FNPA at Hinduja Global Solutions) as its chief financial officer in April this year.
Medi Assist signs up service agreements with public/private health insurance companies and also enters into agreements with hospitals to provide cashless treatment. The company also creates a network of hospitals for its corporate clients so that the employees and their dependents can be treated in those facilities.