JSA

PRESS RELEASE

Government must urgently regulate prices and profiteering in private hospitals

JSA and Working Group on Access to Medicines and Treatment demand ceiling on hospital charges, regulation of margins on medicines and medical products

New Delhi, 5 October: Jan Swasthya Abhiyan (JSA) and the Working Group on Access to Medicines and Treatment (Working Group)  have called for urgent government intervention to regulate  health care by private hospitals, warning that patients continue to face excessive and arbitrary charges for treatment, medicines and medical consumables with little effective protection or recourse.

The demand comes amid renewed scrutiny of private hospital pricing. The Supreme Court has recently questioned steep mark-ups on medicines sold through hospital pharmacies, including a case in which a cancer medicine supplied at around ₹2,700 carried an MRP of around ₹27,000. The Court has also questioned practices that require patients to purchase medicines from hospital-linked pharmacies and has asked the government to examine regulation of trade margins.

The problem goes far beyond the price of individual medicines. India lacks an effective nationwide system to regulate what private hospitals can charge patients for procedures, services, medicines and consumables. The leading corporate hospital chains charge on average Rs. 60,000 to Rs. 78,000 per day of treatment. This is unacceptably high level of profiteering that is paid for by ordinary patients through exorbitant hospital bills.

While the Clinical Establishments Act, 2010 (CEA) provides a legal framework for regulating clinical establishments and envisages government-determined ranges of charges, it has not been implemented. Clinical Establishment Acts of many states have no provision to regulate the hospital charges.  

Dr Abhay Shukla, Co-convener, JSA said, “Private healthcare has expanded enormously in India, but regulation has simply not kept pace, there is no regulation of rates of care, the patient has virtually no bargaining power over what they are charged. Leading corporate hospital chains have been earning huge surpluses estimated in the range of Rs. 22 lakhs to Rs. 55 lakhs per year from each bed, in the last few years. The CEA was passed more than a decade ago, but its non-implementation has produced zero results on the ground. It is high time that the government starts to regulate the procedures in private hospitals. A patient should know how much will they be charged before agreeing to a treatment.”

Healthcare cannot function like an ordinary market where the patient is expected to shop around. India needs a strong regulatory framework that protects patients, ensures transparency and puts clear limits on what private hospitals can charge. The government already has legal and regulatory tools at its disposal. What has been missing is the political will to use them effectively. Medicines and medical consumables are a particularly serious concern. A study by the Competition Commission of India has previously highlighted the problem of high margins in pharmaceutical sales and the perverse incentives that can arise when hospitals or hospital pharmacies control what patients are required to purchase. Hospitals can procure products at substantial discounts while patients are charged prices close to the printed MRP.

K.M. Gopakumar, Co-convener, Working Group said, “When patients are required to buy these products only from the hospital pharmacy, there is no price competition at all. The MRP cannot become a licence to charge patients many times the procurement price. The government must urgently fix the trade margins on all medical products and ensure that patients are free to purchase medicines and consumables from outside wherever clinically possible.”

The groups also warned that increasing financialisation of healthcare is affecting not just patients but clinical practice itself. Revenue targets and financial incentives within corporate hospitals can create pressure for unnecessary investigations, procedures or more expensive treatment options.

Dr. Gayatri Sharma, Community Health Physician and Researcher said, “Doctors should be able to make treatment decisions solely on the basis of what is medically necessary for the patient. But in increasingly commercialised hospital settings, doctors face pressure to meet revenue, investigation or procedure targets. Such pressures interfere with rational clinical decision-making and can result in unnecessary tests, procedures or treatment. National Medical Commission should ban the incentive linked pay for doctors”

For patients and families, challenging an excessive hospital bill can be an exhausting and often unsuccessful process. Even where overcharging or unreasonable billing is alleged, patients frequently lack access to a simple, independent and time-bound grievance redress mechanism.

Shishir Chand, Delhi Co-convener of NGO People for Better Treatment (PBT), said, “Patients come to us after receiving hospital bills running into lakhs of rupees, often without understanding how those amounts were arrived at. By then, families may have borrowed money, sold assets or exhausted their savings. When they challenge the bill, they are forced to run from one authority to another. A patient who has just gone through a serious illness should not have to fight another battle simply to find out whether they were fairly charged.”

JSA and the Working Group demand both the Central Government and State Governments :

• Immediate fixation and regulation of maximum trade margins on all medicines, medical devices and other medical consumables;

• Ensuring ceilings on charges levied by private hospitals for procedures, services and treatment;

• A time-bound investigation by the Competition Commission of India into potentially anti-competitive practices and violations of competition law by private hospitals; 

• Effective and accessible grievance redress mechanism for patients facing excessive or unjustified hospital bills;

• Major increase in public health spending and strengthening of public hospitals, to provide free and accessible care to wide sections of the population.

For more details, contact:

Abhay Shukla, Co-convener, Jan Swasthya Abhiyan: +91 94223 17515

K M Gopakumar, Co-convener, Working Group on Access to Medicines and Treatments: +91 93729 27647

Jyotsna Singh, Co-Convenor, Working Group on Access to Medicines and Treatments: +91 99993 32811