Social media post last month by Maharashtra FDA Commissioner Tukaram Mundhe drew fresh attention to long-standing problem in Indian healthcare: steep markups on medicines, consumables and even hospital services. Issue of drugs being sold at prices several times their procurement cost has also come under Supreme Court's scrutiny. Centre has since decided to cap trade margins at 30% on select life-saving but expensive cancer medication. However, drug pricing is only part of larger debate on how healthcare costs are determined and who ultimately bears them.
Activists point to influx of foreign and private capital, vertical consolidation - where same company owns hospitals, pharmacy chains, diagnostic centres or insurance businesses - and hospitals using their dominant position to steer patients towards their own pharmacies and diagnostic services. They have urged government to investigate and intervene.
Activists point to intlux of toreign and private capital, vertical consolidation - where same company owns hospitals, pharmacy chains, diagnostic centres or insurance businesses - and hospitals using their dominant position to steer patients towards their own pharmacies and diagnostic services. They have urged government to investigate and intervene.
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The push to regulate healthcare profits could have significant implications: private sector accounts for nearly 60% of inpatient care and 70% of outpatient care in India. Challenge is to curb excessive charges without compromising availability of medicines and services.
The price of a hospital bed: Patients pay more not only for medicines and consumables carrying inflated maximum retail prices, but also for hospital stays. An analysis of publicly available price information on hospital websites by Jan Swasthya Abhiyan found that hospitals could be making surplus of Rs 36,247 to Rs 1,477 per bed per day. After operationalisation, hospitals could make surplus of up to Rs 20.8 lakh to Rs 31.4 lakh per bed. "These hospitals have thousands of beds across country, so you can imagine how much money they are making," says Shukla, co-convenor of Jan Swasthya Abhiyan. By comparison, a similar not-for-profit hospital made surplus of just Rs 50,308.
Healthcare has now become commodity in this country. We should ask whether we actually need 100% foreign direct investment when this is consequence, Shukla says. Such investments, he argues, are not necessarily creating capacities but buying up existing ones and extracting higher profits
A recent parliamentary committee report on healthcare affordability flagged costly treatment driving medical tourism rather than adequately serving domestic population. It noted robust financial performance of corporate hospital chains - while average revenue per occupied bed driven by expensive treatments and growing medical tourism market. While welcoming India's emergence as medical tourism destination, committee said advanced infrastructure, supported by government incentives such as 100% FDI, must also serve domestic patients more affordably, urging government to make private healthcare costs stark.
The committee put average cost of hospitalization in India at Rs 23,168, but average at government.
Why hospital bills need price caps: Capping trade margins on medicines and consumables alone, however, may not be enough. When cardiac stents were brought under price control, hospitals began charging more for other components, such as guidewires and balloons, or for their own services, Gopakumar says.
The Clinical Establishments Act and Rules actually empower Centre and states to regulate rates for all medical procedures. Section 9 requires clinical establishments to charge rates within range rates determined and issued by governments from time to time and to prevent overcharging. Rules also require facilities to display procedure charges transparently to prevent unethical profit and to prevent problem that the by this could not be implemented nationally. It applies in only 19 States and Union Territories. Besides, Centre has not notified rates under the Act.
Several bodies representing doctors and healthcare operators have already challenged provision. Parliamentary committee proposes comprehensive, legally binding upfront cost estimate before complex or prolonged treatment begins.
Steep markups on medicines and devices: The MRP of medicines and medical devices sold in hospitals and pharmacies can be several times price at which they are manufactured, imported or purchased from distributors. Investigations in Maharashtra and Karnataka have highlighted scale of these markups. For a simple medicine such as paracetamol, difference between hospital's procurement price and what a patient pays can exceed 1,000%. Common consumables such as intravenous (IV) kits can also see markups of 1,000%. Once you account for the absolute difference may be small for inexpensive items, it becomes far more consequential for costly cancer medicines.
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To determine visible markup at different levels of supply chain, government compared pharmacy outside AlIMS, Delhi compared with one in a village. "This would be extremely difficult to implement and we have been able to prevent it because these drugs are life of medicines," says Department of Pharmaceuticals official.
However, proposes simpler intervention: mandating disclosure of procurement prices alongside market charges on bills. "If government mandates that hospitals have to mention their procurement price and MRP and profit, if they do not impact supply to ensure that it does not impact supply, the charges to patient, cost may automatically come down because of competition," he adds.
Tags: #HospitalBill #HealthcareCosts #DrugMarkup #PrivateHospitals #ClinicalEstablishmentAct #MedicalTourism #POCSO #JanSwasthyaAbhiyan #TradeMargin