Explainer: Why insurance aggregator Policybazaar’s hospital foray is drawing scrutiny

policybazaar

• Swati Maliwal warns of hospital-insurance nexus harming patients
• PB Health faces scrutiny for insurer-hospital integration model
• Critics urge strict regulations to prevent cost-driven healthcare.

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In her February 2026 budget session speech, Aam Aadmi Party (AAP) MP from Rajya Sabha Swati Maliwal mentioned about the the “nexus between hospital and private insurance".  In the speech, which went viral, she said that this nexus is "breaking the back of the common man.”

She alleged that insurance companies trap patients in a cycle of claim delays, rejections, and collusion with hospitals, turning them into “a tennis ball between the hospital and the insurance company” and pushing families into financial ruin.

She also argued that the entry of insurance-linked corporates into hospital ownership risks turning patients into commodities rather than beneficiaries of care.

“For foreign private equity, the patient is not a patient, but raw material… they have to earn 25 percent returns within 3-5 years,” she told Parliament, referring to a company controlling 93 percent of India’s online insurance market also investing in hospitals now. “The same company will sell insurance, will admit (policyholders) into the hospital and will process the claims. There is no regulatory wall here,” she said.

Maliwal suggests, among others, prohibiting the same group from controlling both insurance and care delivery.

PB Health model

Her comments have sharpened scrutiny around PB Health, the ambitious hospital venture incubated by PB Fintech, parent of insurance aggregator Policybazaar. PB Health is building a 1,200‑bed network across Delhi NCR—including a 270‑bed Noida facility and two Gurugram hospitals—while simultaneously expanding into digital preventive care through the acquisition of Fitterfly.

The company positions itself as India’s first integrated, “prevention‑first” managed‑care model, inspired by US Health Maintenance Organizations (HMOs), such as Kaiser Permanente, promising cashless treatment, fewer rejections, transparent pricing, and fixed‑fee preventive plans around Rs 10,000 a year.

HMO is a type of managed care health insurance plan that provides healthcare services through a designated network of doctors and hospitals for a fixed, prepaid fee.  In theory, HMOs shift healthcare from expensive, reactive treatments to affordable, preventive, and coordinated care, helping to control rising medical costs.

PB Health is backed by a $218 million seed round led by General Catalyst. PB Fintech argues that marrying insurers and hospitals will eliminate inefficiencies and reduce avoidable hospitalisations.

To be sure, it isn't PB Health alone which is trying to create this model in India. Bengaluru-based Narayana Health and Even Healthcare are experimenting with similar models, but they aren't close to the scale that Policybazaar is attempting. A similar payor-provider model has been well entrenched in the US.

If it is a good model, why the criticism?

But critics say that this very integration is a structural red flag. The managed-care model PB Health emulates has been heavily criticised in the US for restricting access, rationing care, and undermining clinical independence. As Dr Aniruddha Malpani writes in the Indian Journal of Medical Ethics, “The bottom line is no longer the quality of care, but rather its cost,” warning that HMOs often limit referrals, enforce rigid guidelines, and turn doctors into high‑volume operators driven by utilisation metrics rather than patients’ needs.

“The ability of the doctor to make decisions, individualised for the particular patient, is taken away,” he argues, noting that patients eventually lose trust because they feel care is being denied.  Both Maliwal and Malpani raise the same fundamental concern - a vertically integrated insurer‑hospital network has an inherent incentive to minimise payouts and maximise cost savings, which can translate into delayed treatment, restricted choices, or under‑provision of care for patients—especially when foreign private equity backers expect rapid, high returns.

Why is the debate important?

The debate comes at a moment for Indian healthcare when 80 percent of the population still lacks health insurance and rejected claims routinely plunge families into debt. Maliwal has called for strict regulatory firewalls—capping foreign PE stakes in hospitals, prohibiting the same group from controlling both insurance and care delivery, creating a national rate card for procedures, and criminalising inflated billing.  Malpani’s analysis closely aligns, advocating robust patient‑rights legislation and protections for doctor autonomy before managed care becomes entrenched in India.

A credible path forward, they argue, requires regulators to impose transparent pricing, independent medical decision‑making, and strong oversight on vertically integrated models to prevent the system from prioritising financial optimisation over patient welfare. Whether PB Health becomes a blueprint for affordable care or a cautionary tale of concentrated market power will hinge on how quickly these guardrails are put in place.