The Politicians and Private Healthcare in India

Of late politicians of various hues have been paying a lot of attention to the private healthcare sector in the country. Sadly, most of this attention is rather unhealthy, based on their own populist electoral agenda and completely partisan. Let us look at two recent examples. We have had the Prime Minister talking about capping of stent prices and the like, while speaking some time back in London and then more recently we had the health minister of the government of Delhi announcing a slew of measures that the government plans to implement to curb ”profiteering” by the private healthcare players in the National Capital Region.

Even a casual glance at the financial results of private healthcare players in the country will establish the simple fact that far from profiteering, most of them are struggling to make a decent profit on their investments. The EBITDA margins for most of the hospitals are in the range of 7%-15% and the return on capital employed (ROCE) is mostly in single digits even after a decade of hospital operations. The investors who set up these hospitals as ”for profit” businesses, would probably be far better off if they had just chosen to keep their money idle in a bank or may be invested in some other business.

The government and the pricing authority (NPPA) tend to look at hospital profitability through a completely distorted lens. Media stories inform readers that hospitals are making jaw-dropping profit margins on things like syringes, gloves and other sundry drugs and medicines. While these items are always sold on the MRP, the hospitals have also been baselessly accused of colluding with the manufacturers of these items in inflating the prices. Even if for a moment one assumes this is true, the simple fact is that a hospital’s profitability cannot be judged from the profit margins on sundry consumable items.

The profitability of a hospital has to be established by looking at the revenue that it earns and the entire cost structure that the hospital carries. The huge upfront cost of developing hospital infrastructure, the costs of all the clinicians and the medical staff employed by the hospital, the cost of all the non-medical services (such as housekeeping, the front office and F&B) and the cost of sophisticated equipment and instruments for diagnosis and treatment of the patient forms the bulk of the hospital cost. The hospitals incur these costs right at the start of their operations and continue to make losses for several years before they can hope to break-even.

Even on the revenue side, private hospitals are required to cater to patients such as those covered under the CGHS and the ECHS schemes of the government. These patients enjoy cashless services at the point of delivery, with the government paying a subsidized amount to the private hospitals later on. This is largely because the government’s own hospitals do not have sufficient infrastructure to take care of these patients. Payments from the government are low, sporadic and endlessly delayed. These patients, however, receive the same level of medical care as any non-subsidy enjoying patient and hospitals incur the same costs.

On one hand, we as consumers continue to demand more from our healthcare service providers including better equipment, greater patient safety, higher levels of infection controls, better-trained doctors and ultimately superior patient outcomes, it seems we are willing to pay less and less for all of this. Clearly, this can not work. The hospitals have to recover these costs for them to be financially viable.

Politicians whipping up unnecessary hysteria by claiming that hospitals make huge margins on say a cotton swab and then presenting themselves as knights in shining armor out to protect the general public from the depredations of unscrupulous private sector hospitals is just playing to the galleries. It is actually the politics of the worst kind. A far better approach would be to increase healthcare expenditure and invest in creating better public healthcare infrastructure. Partnering with the private healthcare players in a fair and equitable manner would go a long way in improving healthcare services to the citizens of our country.

Private Hospitals and clinicians provide the bulk of healthcare in the country. Investors who have put their money in these businesses must not be denied a reasonable profit just because politicians have elections to fight. If the government continues with this agenda, they will end up destroying private healthcare in India.

And that truly would be a very high price for all of us to pay.

The views expressed are personal.

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When Journalists Pronounce Patients Dead

Quite often these days one comes across screaming media headlines about hospitals keeping dead patients alive on ventilators and other life-support paraphernalia. The headlines almost always accuse hospitals and doctors trying to make more money by keeping the patients in the hospital, even when the chances of their survival are minimal. Strangely, they always mention that the patient is already dead and the hospital is treating them unnecessarily.

This has always left me wondering as to how the journalists filing these reports and the media-houses publishing such drivel know that the patient is alive or dead. Since when have we handed over the responsibility of declaring people dead to journalists? Many of these worthies wouldn’t even know how to record a pulse, leave alone pronounce people dead. Yet, the media-houses carry these stories with aplomb, merrily destroying reputations and widening the gulf between the patients and the hospitals.

The laws in India on this are clear enough. Hospitals cannot withdraw life-support from a patient, howsoever sick he might be just because the patient’s families believe that there is no further chance of the patient’s recovery. The patient’s families often find themselves in a difficult situation wherein the patient remains alive on life-support in an ICU, with very slim chances of survival and the hospital bills keeps mounting. I can understand their dilemma well, to them it may appear that spending large amounts of money, when the patient has a very poor prognosis is futile. The attendants start pressurizing the hospital to hasten the inevitable. This is of course completely illegal and hospitals usually do not comply with these requests. This leads to bad blood between patients and hospitals, media gets called and accusations of making money by keeping the dead alive fly thick and fast.

With the media pressure mounting, the hospitals are forced to waive-off their charges and suddenly, hospitals find themselves in a better place. Patient’s angry relatives are no longer as difficult, they suddenly have a better ”understanding” of the hospital’s compulsions and they now urge the hospital to do whatever they can to ensure that the patient’s suffering is minimized. This drama plays out in our hospital corridors quite often.

Media’s role in this is quite suspect. They deliberately publish inflammatory and baseless reports of the dead continuing to receive treatment. They rarely carry statements from the treating doctor, even if they do, these are tucked away or played out in a manner that does little justice to the treating clinicians. The only objective is to put pressure on the hospitals and get the concessions for the patient and paint the hospital as the devil incarnate.

Hospitals can avoid this by taking a view that when patients are so sick that they have no chance of survival, they would on their own waive off their charges till the inevitable happens. This, of course, hurts their revenues and it isn’t really fair to them to continue providing a service free, but there is hardly a choice here. The inevitable media hoopla, which is far more unfair and even damaging can perhaps be avoided in this manner. They also have an opportunity of earning goodwill from the relatives of the patients, who one assumes would be grateful for this help in difficult times.

The other alternative is really a change in the laws of the country, which in a manner of speaking is underway. Do Not Resuscitate (DNR) guidelines have been given legal form through a judicial pronouncement. These though still remain nebulous and much more needs to be done to publicise the new laws, at least a good beginning has been made. Laws regarding the end of life care need to be framed with complete clarity and any loopholes regarding potential misuse must be plugged.

Till such time, this happens, doctors and hospitals will continue to be at the receiving end of a biased media in search of lurid stories and patient attendants, who see little point in continuing to pay for a relative who is unlikely to make it.

The views expressed are personal