April 04, 2020
Home  »  Magazine  »  National  » Unhealthy Mess »  Misery As A Terrific Biz Opportunity

Misery As A Terrific Biz Opportunity

A non-existent system of ­regulation ­allows ­unscrupulous ­profiteers to mint ­money from private sector hospitals, which ­comprise nearly 80 per cent of India’s healthcare ­infrastructure

Misery As A Terrific Biz Opportunity
Illustration by R. Prasad
Misery As A Terrific Biz Opportunity

It’s like a patient with a long list of underlying pathologies and overt symptoms. To say there’s a crisis in Indian healthcare would be to state a truism: we need sharper points of diagnosis. The private sector covers about 80 per cent of India’s healthcare. Its energies, and the capital it infuses to keep things state-of-the-art, are a boon in a resource-scarce country. But must its profiteering instincts get so far ahead of its ethics that it starts showing up like a beeping red line on the monitor?

When the prices of cardiac stents and orthopaedic implants were capped earlier in 2017 after some sustained media focus, it drew att­ention to the systematic “loot” that had been going  on, particularly in corporate hospitals. Now, a spate of tragic deaths—accompanied by unconscionably high bills, often running into lakhs—is pointing to another area of darkness. Three days before Christmas, a police complaint was lodged against a top private hospital in Gurgaon—after 22 days of treatment for dengue and a Rs 16 lakh bill, seven-year-old Shaurya Parmar lay dead. Before that, the case of Adya Singh (also seven, also dengue, also Rs 16 lakh) had already brought a probe against another Gurgaon hospital. Then a newborn was delivered in a plastic packet, erroneously declared dead, by a Delhi hospital. It’s not just about quality not matching costs. Is a routinised way of profiteering—tests and lines of treatment on which patients are often hazy—actually bringing a kind of deadly sloth and uncaring?

For R. Balashankar, popular columnist and former editor of Organiser, grappling with his wife Dr Mangalam Swaminathan’s death, many unanswered questions remain—enough for him to seek legal help. She had gone to Max Hospital in Saket, New ­Delhi, early morning on October 3 with stomach pain and vomiting. The line of treatment included two exploratory laparotomy surgeries—and four days later she was dead.

Photograph by Getty Images

“The whole experience was sickening with doctors contradicting themselves at every turn and no clarity on how my wife’s case was handled,” alleges Bala­shankar, claiming the hospital has not shared with him the visual and textual records of the operations. Tests done during the first nine hours “showed all the organs were functioning normally” despite her “uneasiness and inability to rest”. Yet, in three days, after a CT scan, many other tests and two surgeries, the end result was multiple organ failure.

However, Max Hospital, which claims to carry out peer review of all fatalities, states the surgery was done with only 10-15 per cent changes of survival, as it was a ‘rare’ case of intestinal gangrene—a very grave situation. “She had extensive SMV thrombosis,” says Dr Manish Agarwal, associate director in the department of general surgery and rob­otics, who was part of the team that did peer review of the Swaminathan case after she died. “In this condition, the symptoms show up only when the int­estines start dying of gangrene.” Senior surgeons with whom the case reports were shared also vouched for the gravity of the case.  

Why do specialty and superspecialty hospitals leave most people, including the relatively well off, in such despair? Adya’s Rs 16 lakh bill at Gurgaon’s Fortis Memorial Research Institute (FMRI) turned out to be fattened with over 100 per cent mark-ups on medicines, and over 1,000 per cent on other consumables! In Balashankar’s case, the bill was over Rs 7 lakh, including charges for dialysis (he doesn’t know why it was needed).

“In some states, a hospital or a lab doesn’t need to hold a ­licence, ­unlike a beauty parlour,” says a health activist.

All this happens because the regulatory framework is still non-existent. A medical device or consumable needs to be defined as a ‘drug’ under the Drugs and Cosmetics Acts and Rules before price control kicks in. National Pharmaceutical Pricing Authority (NPPA) chairman Bhupendra Singh laments: “I wish I could use the para (in the Drug Control Act) on profiteering each and every time, but so far only 23 medical devices have been defined as drugs.”

Some consumables like surgical dressings, syringes, IV fluid etc are classified thus, but they may or may not be under price control depending on whether they are scheduled or non-scheduled. “We have asked Fortis to send us details of the drugs, syringes and other consumables used and the price charged. But that will be confined to drugs. Regulation of hospitals is not in my jurisdiction, so we won’t be asking why the OT or doctor’s charges were so much. That’s for the ministry of health and family welfare to handle,” says Singh. Despite repeated requests, there was no response from the health ministry on the growing complaints against private hospitals—or from health minister J.P. Nadda’s office to a questionnaire.

Addressing these questions at a CII summit a fortnight ago, leading private hospital top brass—Narayana’s Devi Shetty, Medanta’s Naresh Trehan and Apollo’s Preetha Reddy—argued for a “holistic approach” that blends “quality healthcare with profitability”. But what really skews this equation? “When you have a health system that’s basically private-run, it is in the nature of the beast that the institution’s fiduciary duty is to the shareholders instead of the patient,” says a leading critical care expert and board member of a trust hospital.

Unbalanced Sheet

A comparison of cost of drugs to hospital and to patient; test costs at labs compared with costs billed by hospitals

Fact is, private hospitals have to keep showing increasing profits every year to be considered a success. If that bec­omes the purpose of healthcare, it follows logically: costs will escalate. One major contributor is the charges for devices, which are billed to the patient at MRP though the hospital acquires it at much lower rates, sometimes close to the manufacturing cost. So there’s huge and routine profits here.

In an ICU setting, almost 50 per cent costs are for medicines and consumables, 25 per cent is for labs and other investigation costs, about 15 per cent is for the ICU itself and other hospital facilities, including room rent, and about 10-12 per cent is doctors’ fees. To be fair, even public hospitals entail many of these charges. Medicines, which account for a significant proportion of out-of-pocket (i.e. uninsured) spending, are provided free only in a few states like ­Tamil Nadu and Rajasthan. But how much is a justifiable profit? Obviously, not a question with unanimous answers.

Medical law experts say litigation at consumer courts has been increasing on these questions in recent years. “We used to see maybe two or three cases in a month before, say, one particular forum. Now we see at least 10-15 a month,” says Prof (Dr) S.V. Joga Rao, who runs LegalExcel in Bangalore. The percentage of favourable outcomes for patients too has been increasing, says Rao. Most of these cases, however, relate to negligence or deficiency of service—and not to overcharging per se.

When it comes to expenses, patients typically complain when the bill exceeds the insurance coverage. One common grouse: patients are often given a low estimate for a procedure or treatment, but the final bill invariably exceeds all expectations, greatly surpassing the insurance coverage in most cases. Everything suddenly becomes a factor: from gloves or syringes (the numbers used, their cost), medicines, room rents.

The catch lies in the room rent. A senior executive of a leading private health insurer reveals that it influences the whole line of treatment—and the final billing. For instance, a person whose INS­urance covers a Rs 5,000 per day room rent but instead opts for a Rs 6,000 room, it has a cascading effect. Higher costs on the whole range of things: diagnostics, consultation, surgeon, OT to nursing charges. All these become out of pocket expenses.

Amit Gupta (name changed), an adv­ocate, narrates how during his wife’s pregnancy a couple of years ago, when he had to rush her to a corporate hospital in South Delhi  at night for an emergency, the whole effort of those on duty was to push them to a room costing Rs 50,000 and above per day, even though cheaper regular rooms were available. The fact that he was a lawyer saved the situation, says Gupta, who blames the hospital administration and not the doctors for the attitude.

Many patients share Gupta’s view that private hospitals are not just pushing up costs but also forcing doctors to convert OPD patients to in-patients, even pressing them to undertake unnecessary surgeries like knee replacements. Many shared how their parents, holding out against the pressure, were doing fine without the “urgent” surgeries advised several years back.

“Health has become a business. Every other person has a horror story to share. It’s an open sec­ret that if you tell any hospi­tal you are insured, the rates go through the roof,” says Sunil Nandraj, a health activist who helped draft the Clinical Establishment Act (CEA), 2010. “When you go to a corporate hospital, they don’t ask what your illness is, but what room you want. The type of room determines treatment. It makes no sense,” he says.

Aimed at bringing about some kind of regulation of private healthcare sector, the Clinical Establishments Act, a central legislation, has been adopted by some states, though there’s still reluctance at the state level about its provisions. “It’s amazing that in some states, including Delhi and Haryana, it’s not even necessary for a hospital or a clinical lab to hold a licence, unlike a beauty parlour or beer bar,” says Nandraj.

It’s a paralysis of regulation, says Dr Abhay Shukla, national convenor of Jan Swasthya Abhiyan, a civil society network. Neither has self-regulation worked, nor have bodies like the Medical Council of India, themselves mired in corruption. “What we are seeing is a classic case of market failure. In cases of life and death, decisions lie not with the patient but with the provider. In this supply-driven situation, the consumer is a slave, not the king,” states Shukla.

A situation is fast dev­eloping where faith in doctors itself is eroding. Ever so often, private hospitals in West Bengal are attacked by mobs of angry families of patients—like it happened in March, after 16-year-old Saika Parvin died. This led the state to introduce its own path-breaking Clinical Est­ab­lishments Act 2017—to finally book erring private hospitals. It has in its ambit crimes such as inflated bills.

“In Calcutta, we take it for granted that we’ll be overcharged for everything,” says a 17-year-old boy’s father, who rec­ently paid nearly one lakh rupees for his son’s appendix ­ope­ration. “In extreme cases, we hear about incensed families going on the rampage and we don’t blame them at all. These private hospitals don’t care that they are dealing with helpless sick people. Their whole idea is to squeeze them dry of their money.”

Faith in doctors itself is eroding. In West Bengal, for ­example, mobs of angry families of ­patients have attacked ­private hospitals.

The scenario is not much different in Kerala, despite its better public healthcare. Six years ago, Rajini, 48, was admitted to a leading hospital in Thiruvananthapuram with kidney complications. She underwent dialysis for a week, but her condition worsened and she was put on the ventilator. Listen to the rest from her sister Remani: “We were told late one night that my sister had died. And that unless we made the final payment the body wouldn’t be released. We’d been settling bills on a daily basis but we had to make the final payment in the dead of night or we’d have been charged for another day. Our strong suspicion is my sister had died a few days earlier but had been kept on the ventilator to escalate the bills (Rs 25,000 daily). My sister’s family went into debt. My nephew took a while to repay the amount.”

Shjyu K, 45, a driver with a flour mill in Kochi, is still paying off debts incurred for his mother’s three-month hospital stay for cancer. Shyju feels cheated—no treatment seemed to be forthcoming, only scores of tests. “It was scan after scan and blood tests. We don’t think they started chemotherapy. We were not clearly informed what was going on, but in the end we had to cough up Rs 7 lakh.”

Public health expert Indira Chakra­varthi says the private sector’s dominance needs to be seen in the context of the failures of public health, marked by abysmally low investments for years. “It is not evidence of some inherent superiority of private providers. The withdrawal of the state from the social sector following neo-­liberal policies has led to this growth at all levels. Public sector expenditure, which was low to ­begin with, has stagnated since 2011,” she states. Witness the private sector’s presence in the national health insurance programme or its state-level versions, or the way the latest National Health Policy encoura­ges it with adequate returns.

“In India, only 12-13 per cent come under insurance,” says Dr S.K. Hooda of the Institute for Studies in Industrial Development. “But hospital-referred pat­ients would be in large numbers…ano­ther way of pumping public money into private hands.” That is, when a public hospital refers a patient covered under CGHS et al to a private hospital. It’s not just the mismatch between the slogans of affordable healthcare and the budgetary allocation of 1.2 per cent of GDP—it’s the lack of regulations, as in say telecom, in whatever exists. The government is “demolishing” systems of public health, says Hooda, citing the wholesale “leasing out” of utilities to the private sector in Rajasthan.

Gopa Kumar of Third World Network disagrees with the contention that health, as a state subject, offers barriers to overarching policy. “The Centre has the legal grounds to act under the concurrent list on two grounds. One is the Essential Goods and Services Act, the second is price control under the Goods and Services Act. It can also act under international treaty obligations for protection of health. If each state sets its own rules and regulations, including on pricing, we will have 28 sets.” That would mean the anomalous situation of people travelling across states for cheap options—a domestic medical tourism!

Malini Aisola of AIDAN, which has spearheaded the campaign to cap the prices of medical devices, sees stent price capping as a big leap forward. “That small but significant step has sparked the storm that demands government intervention to check unethical profiteering by private hospitals,” she says. A glimpse of a possible tomorrow where everyone, and not just CGHS-fuelled bureaucrats, gets access to affordable, quality healthcare.

By Lola Nayar with inputs from Dola Mitra, Ajay Sukumaran and Minu Ittyipe

Next Story >>
Google + Linkedin Whatsapp

The Latest Issue

Outlook Videos