The Myth of Overcharging in Private Corporate Hospitals in India

Why is it so easy for us to believe that corporate hospitals ‘overcharge’?

If one was to poll educated, middle-class Indians, mostly professionals and smart and rational people, most would unhesitatingly aver that private corporate hospitals in India inflate their bills and take patients for a ride. If one was to ask them the same question with respect to a five star hotel, a dinner at a fancy restaurant or even an airline, where fares vary on a daily (and sometimes on an hourly basis), the answer would usually be that, yes they are expensive, but than they do offer certain comforts. I am yet to hear someone moan about a luxury hotel, overcharging.

One of the reasons for this perhaps is because expenditure on healthcare is almost always a forced expenditure. No one goes to a hospital to enjoy a few days of surgery, rest and recuperation. We spend in a hospital only because we do not have a choice. This expenditure is also usually unplanned, which means that it is an unwelcome drain on one’s savings. Thus, we hate to spend in a hospital, anyways.

To make matters far worse, the expenses in a hospital are also uncertain. They also do not guarantee the desired outcome. Thus, it is possible that in a hospital we may end up paying far more than what was initially indicated and we may also end up not fully regaining good health. Sometimes, we may end up paying an obscene amount and also lose a loved one. In these situations, it is almost certain that we will blame the hospital for ‘overcharging’ and not providing proper care.

Then there is the old inherited belief that healthcare is a noble profession and the providers of healthcare services should aim to serve the society rather than try and make some profits for their shareholders. This belief is so ingrained in our psyche, right from our childhood, that it is impossible to reconcile to the present day reality of private healthcare is as much a business as any other. An entrepreneur invests a very large sum of money upfront in creating infrastructure, buying state of the art equipment, hiring highly skilled and experienced clinicians and sustaining cash losses for many long years before he makes a profit. Yet we grudge him this and believe that since he has chosen to invest in healthcare, he must continue to serve humanity without expecting a reasonable return on his investment.

This sadly is the perceptual reality of private healthcare even amongst the well-educated, well to do people in our contemporary society.

Juxtapose this with the reality of high-end quality tertiary care in India being the cheapest in the world. Thousands of people travel from all across the world to avail of India’s high standards of healthcare at prices, which by global standards are almost unbelievable. Yet, in India, private healthcare institutions are reviled as expensive, profiteering and seen as overcharging. I remember meeting a CEO of a private insurance company in the US. The meeting happened at a global conference on medical value travel.

‘So, where are you folk, from’?

‘We are from New Delhi, India’.

‘Aha, India, so tell me something about your hospital’

The usual spiel about the hospital followed. I talked about some great work we were doing in Cardiac Surgery.

‘So do you guys do ‘bypass surgery’

‘Yes, we do. In fact a lot of it’

‘In a month, how many cases, would you be doing in your hospital?’

To keep things simple, I told him that in just one hospital we do about 10 surgeries a day. The gentleman clearly thought I had no idea of what I was talking about.

‘That seems a lot, how much does a bypass surgery cost?’

I thought, I should not tell him the real cost of USD 4500, lest he thinks that I was completely unaware of the cost of a bypass surgery.

‘Sir, we charge USD 10000 for the surgery’.

‘Well, that is impossible, it is humanly not possible to perform successful bypass surgeries for USD 10000 anywhere in the world’.

‘So what is your success rate?’

‘Well, it is close to 99%’.

‘That is simply impossible, we don’t have these kinds of numbers even in the US’.

I hesitatingly asked him, what in his opinion, would be a reasonable estimate for a bypass surgery in the US.

‘Well, I would say anything below USD 100000, would be difficult’.

‘But, you just can’t do this for USD 10000, there must be a catch somewhere’

By now, I was becoming a little hot under the collar. I told the gentleman, that we would be delighted to host him at our hospital in India and show him how the impossible is done. He would still not believe me.

Finally, I told him that just as he doesn’t understand, how the surgery can be done for USD 10000, I fail to understand, how does it cost upwards of USD 100000 in the US.

The gentleman never did accept my invitation to travel to Delhi to see how we worked. This is a true incident, and I narrate it only to underscore the point that while the world wonders at how private healthcare in India is able to deliver high-quality medical care at such low prices, patients in India, believe that the same healthcare services at even lower price points are obscenely expensive.

Private healthcare costs, though rising, still remain one of the lowest in the world. Large corporate hospitals have well-defined billing policies and most of the bills are generated through a sophisticated HIS system. After having worked for over 15 years in large private corporate hospitals in India, I am yet to come across a stated (or even unstated) policy, which says that let us overcharge for our services from our patients. The pricing is usually based on a cost-plus model and the ceiling is determined by the competitive situation in a particular market. Finally, the consumers always have a choice. If they find a particular hospital expensive, they can choose to go to the one that they believe is rightly priced.

Private corporate hospitals in India usually provide world-class care, medical outcomes comparable with the best in the world, highest possible service levels and at prices lower than anywhere else in the world.

By clamoring for more, let us not destroy that we should all be rightfully proud of.

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2 thoughts on “The Myth of Overcharging in Private Corporate Hospitals in India

  1. You make two fallscious assumptions:
    1. Cost of living is comparable in the India and the US.
    2. US has cost-effective health care system.

    In the US in education, there are two level of fees—in-state and out-of-state, you may look into this model.

    Healthcare, when it becomes a business, hospitals impose quantity targets on physicians leading to unnecessary tests to pad up the bill. This inflates the bills. Hospitals even in the private sector must accept a long pay back period-longer than any other sector.

    MBAs with a narrow “profit at all costs”
    mentality must never be recruited in hospitals.

  2. Very well compiled facts Anas. I wish this narative gains traction. Good luck with that. Keep up the good work.

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