Medical Insurance Subsidy

Exactly a year back my mother was in hospital. She was there for three weeks before she died. The bill for the three weeks came to close to four hundred thousand rupees. She was covered under my corporate medical insurance so I passed on the cost to the insurer, who paid most of it. I didn’t really complain, the insurer was obliged to pay, and the hospital was more than happy to receive the fee.

The hospital follows an interesting business model. On one hand it dons the garb of a corporate hospital while on the other it is a charitable hospital. A large section of the patients are treated at extremely low cost, or even for free. The rest of the patients have insurance coverage. Those that have coverage are fleeced, and this money effectively cross-subsidizes the treatment of the poor. All works out well for the hospital. Except..

Do you realize that when you (or, in most cases, your employer) pay your premium for medical insurance you’re not insuring just yourself? That because of hospitals like I just mentioned, your insurance is also effectively paying for the treatment of a larger population? That the cost of treating some random patient in the hospital you were admitted to is paid for by you, as part of your medical insurance premium?

Changing tracks, I think the best thing about India’s healthcare industry is the diversity. You have government hospitals. There are university hospitals. There are large corporate hospitals you wouldn’t think of stepping into unless you had insurance. There are charitable hospitals which treat you for next to no cost. There are the neighbourhood nursing homes which essentially cater to the uninsured middle class. Reasonable facilities but not too expensive. And so forth.

There is no formal system of medical insurance in the country. There is no single large government system. If the current state of healthcare in the country is one of not having evolved much, I really wouldn’t mind it remaining this way. I hope we never get into the kind of equilibria that the US and the UK have gotten themselves into, which appear efficient but which ultimately prove expensive for people.

It is the diversity in the system that keeps the healthcare industry here competitive, and keeps costs low. And of course, you pay for other people too when you pay your medical insurance premium.

Flower Sellers

If you have ever been to Church Street in Bangalore, you would have come across this girl. It is extremely hard to miss her, and it is likely that she has pestered you at least once in your life. She was little the first time I saw her, but I happened to come across her recently, and she seems to have grown up now.

She is a fair girl, with a pleasant face. Her hair is usually tied up in two plaits, and whenever I have seen her, she is wearing this woollen pullover over her salwar. Her job is to sell flowers, red roses to be precise. And the first time I happened to see her was four summers ago, when I was walking down Church Street with a girl to whom I hoped to give red roses. And as her profession warrants, she was trying to sell us a red rose.

The worst insult you can give to a street vendor is to turn them into a beggar. Hawking on the streets is respectable business, it is a signal that you are willing to work for your living and don’t want to be shown pity. It is another matter that most street vendors don’t really get this and literally beg you to buy their product. Nevertheless, they do get extremely offended if you were to treat them like you would treat a beggar. That fundamental difference is there.

My companion on that day hadn’t wanted the flowers, not even if I were to gift them to her as a token of love. The flower seller, however, wouldn’t go away. Maybe she had figured that marketing to couples was an extremely profitable strategy, and didn’t want to let go of this opportunity. My companion had proceeded to pull out twenty rupees and give them to the vendor, asking her to keep it and not give her any flowers. Incensed at being treated like a beggar, the poor flower seller had run away. I don’t know if something snapped in me at that moment, but we broke up under inexplicable circumstances a couple of hours later.

Cut the scene forward by three years, three months and three days, and change the venue of the scene to Gandhi Bazaar in South Bangalore. It was a different vendor this time, and she was selling jasmine on strings. It was dark, and her face was dark, so I don’t really think I’ll recognize her if I see her another time. It was late in the evening so her stock of jasmine was almost over, and she was trying to get rid of whatever was left.

I was meeting this girl (not the vendor) for the first time that day, and her reaction was swift. “I’ll buy some for my mum”, she declared and quickly cleared the vendor’s stock. My mind quickly went back to that day on Church Street three years, three months and three days earlier.

Louis, I thought, this is the beginning of a beautiful friendship.

Breakfast at Maiya’s

It is incredible that a South Indian restaurant in South Bangalore can charge forty rupees for a plate of idli-vada, and not just get away with it, but also run a full house. By the time I was getting out of Maiya’s (in Jayanagar 4th block; I’d written about their dinner earlier) it seemed like the first floor was already full and people were being directed to the seating area on the second floor. Apart from these, in a separate area on the ground floor, there is a breakfast buffet (priced at Rs. 125 on weeekdays and Rs. 150 on Sundays).

The food was good but nothing exceptional. Perhaps I don’t find it exceptional since a lot of my South Indian eating out happens at one of the Vasudev Adiga’s restaurants, which I believe are significantly superior to the other “Darshinis”. The food at Maiya’s was approximately of the same standard as that of a Vasudev Adiga’s, and the coffee (served in a silver tumbler) was incredibly superior. And the place was full. I didn’t bother to exactly estimate the capacity of the place but I think the hall seats around 100 people.

The service was good and quick (except for the coffee which took an hour to arrive), and the waiters weren’t overbearing (unlike those on the third floor where I’d had the silver thali last month). It perhaps gives an idea as to what Adiga’s might have been had it gone into the business of running sit-down restaurants. I haven’t tried making an estimate of the finances, so I don’t really know how well it works out financially to have a sit-down restaurant priced at about 100% premium over similar food at fast-food joints.

The success of Maiya’s in Jayanagar also gives us an indication as to what my neighbours the Kamats (of Yatri Nivas, Lokaruchi, etc.) have missed out – having held a virtual monopoly over sit-down south indian restaurants over the last ten years during which most other sit-down places were downing their shutters and most of the new upstarts have been stand-and-eat types. If only the Kamats had been able to get a hold on their quality, they probably wouldn’t have had to go into the business of Chinese restaurants (chung-wah-opus in Jayanagar 3rd block) or capuccino shops.

Also, Maiya’s is what I call as a “full-service restaurant” – one that serves food throughout the day – as opposed to Darshinis which are typically breakfast-and-evening-snacks focused, or the fine dining places which do only meals. What that allows the Maiyas to do is to maximize their usage of space – since they will be using the same seating infrastructure throughout the day. I remember saying a couple of years back that darshinis should have a time-share arrangement with fine-dining places.

Another nice feature at Maiya’s is the tables. They have a large number of tables which can seat two people across, and which have been designed so as to easily join them to other tables. The chairs are also simple and light and can be moved around. This allows the restaurant to easily reorient the tables and chairs depending upon the size of various dining parties, without resorting to making people share tables with strangers (common practice in south indian restaurants).

Today probably the restaurant was relatively lean, so my mother and I got a table for four (basically 2 tables joined together). However, if the restaurant had reached capacity, I’m sure they’d’ve yanked off one of the tables and given it to someone else.

The food is good but not spectacular, but you can sit down and eat. Go on a weekday when it is not crowded, and you’ll enjoy it. Don’t botehr waiting in line to get in to eat on a Sunday – you might as well take a parcel from the nearest Adigas and eat at home.

2 plates  2-idli-1-vada             2 * 40          Rs. 80
1 plate  rava idli                         1 * 25           Rs. 25
1 coffee (silver tumbler)        1 * 15            Rs. 15
1 tea (silver tumbler)              1 * 15            Rs. 15

———————————————————

Total                                                                   Rs. 135

Tips not accepted.

PS: On the ground floor, at the side, they have one stand-up coffee shop, which operates between 6am and 8pm on all days of the week (the restaurant is closed on Mondays). Absolutely brilliant coffee. Among the best I’ve had in Bangalore. I would recommend you to try it out the next time you pass by the area. Rupees ten only.

Alumni Dinner Pricing

So this is Anusmaran week. This is the week where all over the world, in over eleven cities, alumni of IIMB will meet in the annual alumni meet up. The venue for this is usually a convention hall or a lawn in a hotel, and people have to contribute an “entry fee” in order to pay for the dinner. Drinks are usually “extra” and you have to pay for each drink that you drink.

The problem with this is that for “pseud value” reasons the event is usually held in a reasonably expensive place. For example, in Delhi it happened at the India Habitat Center, with the “participation fee” being rupees eight hundred only. And on a Sunday evening, and you know how early or late parties in Delhi start. I didn’t go for it so I don’t really know about the response but I don’t expect it to have been spectacular.

The probelm with alumni meets is that the organizers (usually students doing their summer internship in the city where it is held) underestimate the elasticity of these meets. They don’t realize that people who want to be in touch with each other continue to be in touch with each other irrespective of efforts by the Alma Mater, and that there needs to be some sort of concrete incentive in order to come and attend the alumni meet up.

As I was discussing with Baada a short while ago, networking for networking sake does require a reasonably high level of enthu. It doesn’t come naturally for most people. You netwrok if you have a product to sell and need to meet potential buyers. You netwrok if you are looking for a job and hope to meet potential employers. You network if you are looking for some favour and there is a good chance you might meet someone who might do you that favour. You don’t naturally network for netwroking sake.

Given this, expecting people to shell out a not-so-inconsiderable amount to attend a networking event where food will probably be of dubious quality and you have to pay for each glass of booze is a bit too much. The more enthu people and people who want to network will turn up. The rest won’t. They will probably get together with their own little gang of people (maybe all alumni of the same college) and go elsewhere for good dinner and conversation.

The first time I attended Anusmaran was in 2005 when I helped organize it in London, where I was interning. All of us London interns were full of enthu for networking back then and turned up in good numbers. There were quite a few alumni also, and it was good fun. I attended Anusmaran in Mumbai in 2006, immediately after I’d joined my first job. I knew that a large number of people from our batch was in the city, and Anusmaran provided us a good opportunity to catch up. Extremely good fun.

In 2007, I had gone to the Bangalore meet and walked out looking at the extremely thin turnout. I went to the nearby Adigas for dinner along with Aadisht and GB. Was good value for money.

Yes I might be a cheap guy. But what the organizers need to keep in mind is that a large number of attendees are also cheap guys. So forget all the pseud value and hold it at a place where it doesn’t cost too much for the attendee in order to network.

Tranche of wallet

One of the buzzwords in marketing in the last few years has been “share of wallet”. “We don’t aim for market share in any particular segment”, they say. “What we are aiming for is a larger portion of the customer’s share of wallet”. Basically what marketers try to do is to design their products such that a larger portion of customers’ spending comes to them rather than go to competitors (again – they claim they have no direct competitors and everyone else who competes for the customer’s spending is a competitor).

So far so good. But the problem with looking at things from a “share of wallet” pespective is that it assumes that the wallet is homogeneous. That each part of the wallet is similar to the other, and spending for different items comes uniformly from all parts of the wallet. This isn’t usually very well recognized, but what matters more than “share of wallet” (of course that matters) is the “tranche of wallet” that this particular product sits in.

I don’t think I need to give a rigorous proof for this – but some spending is more equal than others. For example, if you are dirt poor and have only ten rupees left in your pocket, you would rather buy a loaf of bread than buy a tube of lipstick. Some goods are more important than the others. “Necessities” they call them. The rest become “luxuries”. Even the “luxuries” are not homogeneous – there are various tranches in that.

So the aim for the product manager should be to get into the deeper tranches of the customer’s wallet (assuming that the top tranche is the “equity tranche” – the one that takes the first hit when spending has to be cut). Targeting the top tranche may be a good business in good times, but when things go even slightly bad, spending on this product is likely to take a hit and thus the “share of wallet” falls dramatically. Getting into a deeper tranche means more insurance, so to say.

In the world of  CDOs (from where I borrow this tranche, equity, etc. terminology), people who take on the equity tranche and other more risky tranches do so only in exchange for a premium – basically that you need to be paid a premium amount (compared to lower tranches) during good times so that it compensates for lack of income in the bad times. So this means that if you are trying to target the most disposable part of the wallet (i.e. the part of wallet that takes the first hit when spending has to be cut), you better be a premium player and make enough money during good times.

So the basic insight is that. The more disposable spending on your product is for your customer, the more the premium that you have to charge. Some products such as high end fashion accessories seem to have got it right. Extremely disposable spending, which leads to volatility of income; balanced by extremely high margins which make good money in good times.

Certain other products, however, don’t seem to have got it right. One example that comes to mind is Indian IT. Some of the offerings of Indian IT companies come near the disposable end of their customers’ wallets. However, to compensate for this, they don’t seem to charge enough of a premium. So they make “normal” profits during good times, and sub-normal profits during bad times – leading to an average of sub-par performance.

So before you enter a business, see which part of your customer’s wallet you are targeting. See if the returns that you will get out of this business in good times will be enough to tide you over during bad times. And only then invest. Of course, before the 2007-present downturn happened, people had no idea what bad times were, and thus entered into risky businesses without enough of a risk premium.

Blegs and cribs

Given that my pipeline in the arranged scissors project is temporarily empty,  I think I should concentrate on other issues. Other real and pressing issues. Speaking of pressing issues, I need to call the dhobi and give my shirts for ironing. I have excellent ironing infrastructure in my house but I think that 2 rupees a shirt is cheaper than 10 minutes a shirt.

My big problem in life currently (and no, it isn’t pressing) is that I’m under a credit crunch. My credit card expired last month and ICICI didn’t send a replacement. Total jai. Six months back, HDFC Bank happened to offer me a “gold card”. I happily told said “i want i want”. They came over and got a few forms filled. Some guy landed up at home to do address verification, found it locked and called me. I was at work and abused him back for arriving at the middle of a weekday without prior intimation. I received a letter from HDFC a few weeks later saying that they found me not creditworthy.

I had gotten my first credit card (the ICICI thing) back when I was a student at IIMB. My father had abused me for it, saying it will trigger bad spending habits. I am happy to note that I did none of it, and have always lived well within my means. It is not the credit that I want. It is the convenience of online transactions. And now it seems I can’t do any of it. Total jai is happening.

The other concern I have is that my passport will be expiring this May. Given that it’s less than six months away, I can’t leave the country now. And I have no clue how to go about renewing it. Anyone who has fundaes about this please let me know. It might help to add here that I have one live visa (a B1/B2 to the US) on it.

The biggest problem that I think is facing me is that I’m facing an overdose of thought. I’m thinking too much. I’m thinking too much for every damn small thing. Driving back from Akshardham last evening, I pulled over several times to refer to the map and chart out my route, only to think a couple of minutes later that I’ve lost my way and repeat the process. And at each step, I’d solve using Dijkstra’s algorithm. Clearly suboptimal. Memoriless systems should not use algorithms that require things to be stored in memory.

Liverpool is playing ManCity as I write this. Normally I don’t not watch a Liverpool game if I can help it, but I found this one too emotionally taxing and switched channels. I was thinking of my funda about how different EPL teams are like different civilizations in Age of Empires, and have relative strengths and weaknesses. Apart from these, each team has a special weapon. For example, when you play Stoke, you need to rejig your defence completely so as to not put the ball out of play in your own half, thanks to their special weapon – the longthrowman Rory Delap. Liverpool’s special weapon could probably Alonso’s long shots though they don’t use it that much. Man U has C Ronaldo. And so forth. Ok I should stop straining my brain further by thinking about this.

I’ve taken tomorrow off. Shivarathri is a trading holiday and thus an optional off for us. I was supposed to do a moviethon with Aadisht but he decided he’s going to wrok so I suppose I’ll chill at home and try chill my nerves. How I’ll manage to do that I don’t know.

Money and religion

No matter how much you preach, how much you write, how many arguments you make in favour of your stand that there is no god, the believers will ignore you. And given that believers usually have strong sense of belief, it is very unlikely that your preaching and reasoning will have any effect on them.

Instead, the easiest way for you to spread your message is to make the religious ones pay. Literally. Religious arbitrage, I call it. Religion usually comes with a set of beliefs. And superstitions. And the religious people are more likely or less likely to do certain things because of their beliefs. And you need to exploit these beliefs. Exploit them as much as you can, and try make money at the believers’ expense.

My argument is this: if you think your religion or the lack of it is better than any other religion, there must surely be a way in which you can exploit this to make money at the expense of the other religion. So go ahead and do it. Nothing talks like money.

I did my bit in this direction last Diwali. I went to buy a mobile phone, and figured that it being dhan teras the shopkeeper was loathe to send me away without selling me anything. I managed to get the phone for almost a thousand rupees below what it cost the shopkeeper (I confirmed this figure with a friend who is a sales manager at Nokia). The poor guy even gave me a bill for an amount much larger than what I’d actually paid.

You might claim that I could have bargained harder. But as I said, even religion has its monetary limits, and the shopkeeper would’ve figured that incurring the wrath of the gods would’ve been cheaper than selling the phone to me for lower than he actually did.

So stop preaching. Stop preaching when you know you have no chance. Stop bringing up the FSM in every line of conversation. And let money do the talking.

PS: Religion might just be a special case for this argument. You should be able to take advantage of all sorts of beliefs (including the non-religious ones) using this strategy.