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In India, turning to private hospitals in case of any serious illness or accident is becoming a cause of not only physical pain but also huge financial ruin for the common citizens and middle class families. Medical inflation, which is increasing at the rate of 14 percent in the country, and uncontrolled charges charged by private hospitals have taken the out-of-pocket healthcare expenditure to unbearable levels. Even today, millions of families in the country slip below the poverty line or get trapped in debt for the rest of their lives just because of the hospitalization of one of their relatives and paying the bill for his treatment.
Both the Supreme Court of India and the Parliamentary Standing Committee on Health have taken a very strict stance regarding this serious crisis. While the Supreme Court has asked the Central and State Governments to take concrete steps towards fixing a standard ‘price range’ (standard rates) for treatments and procedures under Rule 9(2) of the ‘Clinical Establishments (Registration and Regulation) Act 2010’, the Parliamentary Standing Committee has recently recommended in its 176th report that the basic room rent in private hospitals in metropolitan cities should be equal to the average of the nearest 3-star hotel. Should not exceed the fare.
Recommendation of 3-star hotel capping on room rent: Parliamentary committee’s big attack
The 176th report of the Parliamentary Standing Committee on Health—”Affordability and Accessibility of Healthcare Facilities in the Public and Private Sector”—has directly exposed the shortcomings of the billing structure of private hospitals. The Committee underlined that in many corporate and super-speciality hospitals, the daily rent for a simple single room is ranging from ₹10,000 to ₹25,000 per day, which is even higher than a luxury 5-star hotel.
The Committee has clearly recommended that basic room fares in hospitals in large metropolitan areas should be fixed on the basis of the average tariff of nearby 3-star hotels. Room rent is of utmost importance as most hospitals increase the cost of doctor visit fees, nursing charges, monitoring fees and even surgery packages by 2 to 3 times according to the ‘room category’ chosen by the patient. However, private hospital organizations (such as AHPI) argue that hospital rooms have 24-hour nursing, oxygen lines, infection control, and emergency medical backup, so they cannot simply be compared to hotel rooms. But experts believe that linking the cost of treatment to the room type is completely unethical and misleading.
Huge profiteering in consumables, medicines and tests: How do medical bills swell?
The biggest leakages in private hospital bills occur on items over which there is generally no government control:
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500% to 1000% margin on consumables and disposables: Hospitals charge printed MRP on basic items like gloves, syringes, cotton, gauze, PPE kits, catheters, cannulas and sanitizers, whereas they buy them from the wholesale market at huge discounts of 80 to 90 percent. The Competition Commission of India (CCI) investigation had also found that half of the profits of many big hospitals come from these non-pharmaceutical consumables alone.
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Obligation to purchase medicines from the hospital’s internal pharmacy only: Family members of patients are not allowed to purchase medicines and surgical items from cheap or generic medicine shops outside the hospital. Only branded and expensive medicines are dispensed in the hospital’s own pharmacy.
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Unnecessary Test and Procedure Bundling: As soon as one is admitted to the hospital, many expensive blood tests, MRI, CT scan and daily routine tests are prescribed which are not directly required in the main disease of the patient.
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Hidden Charges (Hidden Line Items): By adding innumerable small items like biomedical waste disposal fees, RMO (Resident Medical Officer) charges, dietitian charges, administrative processing fees and AC charges, the final bill increases by 40 to 50 percent.
Centre’s affidavit in Supreme Court: Fixing ‘rate range’ is constitutionally valid
The Central government has strongly defended its right to regulate the rates of private hospitals during the hearing of a public interest litigation (PIL) filed by ‘Veterans Forum for Transparency in Public Life’ in the Supreme Court. In response to the challenge to Rule 9(ii) by the All India Ophthalmological Society, the Center told the top court that setting a fixed rate range for private hospitals under the Clinical Establishment Rules is completely valid under Article 21 (Right to Health) and Article 47 of the Constitution.
The Center clarified that instead of imposing any rigid rate (Uniform Single Price), the government wants to create a flexible ‘rate range’ that takes into account the hospital infrastructure, city category (Tier-1, 2, 3), and quality of service. If hospitals continue to charge arbitrary charges, the premiums of insurance companies will increase exponentially and the common citizen will be completely deprived of the right to treatment.
Health Insurance and ‘Cashless Everywhere’: Despite claims, waiting for hours for discharge
Despite the increase in the number of health insurance holders in the country, insured people feel helpless at the billing counters of hospitals. Insurance Regulatory and Development Authority of India (IRDAI) has implemented ‘Cashless Everywhere’ system, under which the patient can demand cashless treatment even in any non-network registered hospital.
Along with this, IRDAI has made strict rules that the TPA and the insurance company will have to give the final claim approval within 3 hours of receiving the discharge summary of the patient. But in ground reality, due to tariff disputes between hospitals and insurance companies, patients have to wait in the hospital lobby for 8 to 10 hours to be discharged. Many hospitals deliberately refuse to go cashless and push the patient onto ‘reimbursement track’ so that they can collect the entire bill directly from the patient without any insurance deduction. Additionally, due to the long deductible list of co-payments, room rent sub-limits and non-medical items present in insurance policies, out of a bill of Rs 5 lakh, the patient has to pay ₹1.5 to ₹2 lakh from his own pocket.
In favor of private hospitals: High investment, cost of specialist doctors and practical challenges
Private health sector leaders and healthcare providers say that profiteering is not the only reason behind the rising cost of healthcare services. Hospitals argue that:
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Heavy Capital Expenditure (Capex): State-of-the-art MRI, PET-CT, robotic surgery systems and high-end ventilators are imported at a foreign exchange expense of crores of rupees, with costly maintenance and software upgradation.
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Salary of Skilled Human Resources: The salaries of super-specialist surgeons, anaesthetists, trained ICU nurses and paramedical staff have increased significantly over the years.
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Dues of Government Schemes: Despite providing treatment at government package rates under Ayushman Bharat (PM-JAY) and CGHS, non-payment by states on time deeply impacts the cash flow of hospitals, which they try to compensate from private paying patients.
Solution outline: How will a transparent and affordable health system be created?
To establish health security as a fundamental right of citizens in India, experts and policy makers have emphasized on taking the following concrete steps:
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Transparent and Standardized Billing: It should be made mandatory for all hospitals to publicly display at the reception and website a clear list of minimum and maximum rates for major 50 to 100 surgical procedures, room rents and tests.
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Trade Margin Rationalization (TMR) on Consumables and Implants: Just as the Central Government had imposed price capping on the prices of cardiac stents and knee implants, on the same lines, the trade margin of syringes, gloves and cancer medicines should be limited to a maximum of 30%.
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Formation of Independent Healthcare Regulator: An independent ‘National Healthcare Regulatory Authority’ should be created on the lines of TRAI or IRDAI, which can settle patients’ complaints of billing disputes, overcharging and medical negligence within 30 days.
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Expansion of Public Health Infrastructure: The quality and capacity of AIIMS, district hospitals and medical colleges should be strengthened so much that the general public is not forced to resort to private hospitals.
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Universalization of Ayushman Bharat: All senior citizens above 70 years of age have recently been brought under the ambit of Ayushman Bharat; Similarly, an option of ‘Contributory Public Health Insurance’ should be created for the middle class at affordable premium.
Health care cannot be merely a commodity in any civilized society. Unless governments, the judiciary and private hospitals come together to create a transparent, accountable and ethical pricing mechanism, the constitutional dream of ‘Right to Health’ will remain unfulfilled for millions of Indian citizens.