Government to cap profits made by hospitals to stop overcharging

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NEW DELHI: The Delhi government has decided to cap the profits made by hospitals while selling medicines or consumables to patients. The big change is that the maximum retail price (MRP) is not going to be the criterion that will decide the profit margin. Delhi health minister Satyendar Jain declared on Wednesday that profit margins would be decided on the basis of the cost of purchase of the item to the hospital. 

TOI had reported last week how certain corporate hospitals were making profits ranging from 275% to 525% on the sale of disposable syringes by purchasing them at a discounted rate and billing them to the patient at MRP. 

"The government has formed a nine-member committee to look into the issue of overcharging by private hospitals. The panel will submit its findings and recommendation by December 31," said Jain. 

He added that the committee has been asked to suggest a ceiling for profit margins above the purchase cost."I have been getting complaints about how hospitals charge Rs 1,100 for an injection that is priced Rs 200. It is the same in the case of consumables. The hospitals buy gloves for Rs 6.50 and bill patients Rs 50 per glove," the health minister elaborated. 

In 1997, the central government had formed the National Pharmaceutical Pricing Authority (NPPA) to regulate drug prices. It has been very active in the past few years and has brought more than 466 drug formulations under the list of essential medicines and capped their price. NPPA, however, doesn't regulate prices of consumables or the profits made on them. 

The Delhi government has also mandated the nine-member committee to suggest ways to ensure hospitals do not overcharge a patient who has already been assured of a certain medical procedure 'package cost'. 

Explaining this, Jain said, "I get complaints that hospitals admit a patient after telling him the treatment will cost around Rs 2 lakh. Then due to complications, the cost goes up to Rs 5 lakh or Rs 10 lakh. Complications are possible and costs can escalate, but such eventualities should be sold as part of the package so as not to leave the patient in a lurch." 

The government's decision was welcomed by many industry experts, who said it is high time the dealings of private hospitals were strictly monitored and regulated. The Clinical Establishment Act passed by Parliament also aims at a same objective, but Delhi is yet to adopt the central law. When asked about this, the Delhi health minister said the state government was working on it and the law was likely to be in place as the Delhi Health Act in two months' time. 

"Single-doctor-run clinics will not be covered under our law, that's the big difference from the central law," Jain disclosed. 

A senior doctor at AIIMS, however, said that though regulating private hospitals was fine, there was an urgent need to invest in public hospitals. "The proposal to cap drug and consumable price on the basis of cost of purchase will lead to corruption," he explained. "The hospitals might buy at cheaper rates and bribe the seller to invoice at a higher price. The best option is to ensure patients are allowed to buy medicines or consumables from a place of their choice."