The Mess at CGHS

While the government has ambitions of running and efficiently managing the world’s largest public healthcare program called Ayushman Bharat, the much smaller and much older healthcare scheme meant for the employees of the Central Government is in a complete mess. The Central Government Health Scheme (CGHS) website loftily proclaims that it” is the model Health care facility provider for Central Government employees & Pensioners and is unique of its kind due to the large volume of beneficiary base, and open ended generous approach of providing health care”. It is anything but that.

CGHS is over six decades old and is run under the Ministry of Health and Family Welfare of the Government of India. It is meant to provide subsidized healthcare to government servants through a network of primary clinics, dispensaries and em-paneled hospitals, which are mostly in the private sector. The private hospitals are required to treat the CGHS beneficiaries in a cashless mode and claim reimbursements at subsidized and pre-agreed rates from the CGHS organisation. The participation of the hospitals in the scheme is voluntary.

Recently, on July 2nd, the Minister of State for Health and Family Welfare, GoI, Ashwini Choubey, stated in the Rajya Sabha (the upper house of the Indian Parliament), that the government has received some complaints regarding private hospitals em-paneled with CGHS refusing to admit the CGHS beneficiaries and that show cause notices have been issued to these hospitals and strict action is contemplated against them. As usual, the government is stating only one side of the story.

Here is the other side.

CGHS had entered into an agreement with private hospitals in 2014. The agreements were valid for 2 years. Since 2016, the CGHS organisation has been arbitrarily extending these agreements for a period of 3 months. Fresh agreements that should have been signed in 2016 have not been floated and the em-paneled hospitals just receive a communication from the CGHS organisation that the agreement is extended by 3 more months.

Interestingly, the agreements signed by the hospitals in 2014 were sent to CGHS for the signatures of CGHS officials. These have not even been returned to the hospitals. This essentially means that the hospitals do not hold with them any legally valid agreement duly signed by both the parties.

To make matters infinitely worse, the pricing that the hospitals had agreed to in 2014 for a period of 2 years remains unchanged even in 2019. Thus, the CGHS organisation has not increased the price that they pay to the hospitals in the last 5 years. The price of a consultation with a specialist is fixed at INR 150 (approx. USD 2) !!!! The hospitals’ costs of course keep going up year on year. There is no justification offered for this stasis.

If this was not bad enough, the CGHS never pays the hospitals on agreed credit period. The payments are delayed for months, while the hospitals are expected to continue treating CGHS patients without a pause. One clause in the CGHS agreement states that 60% of the bill will be reimbursed by the CGHS with-in one week of the submission of the bills. This, of course remains only on paper. The CGHS owes hundreds of crores of rupees to private hospitals in the National Capital Region of Delhi alone. Effectively, the private hospitals end up locking their working capital in treating CGHS beneficiaries.

A small industry thrives on recovering dues from the CGHS. Sundry companies offer their services to private hospitals to help get their bills cleared by the CGHS. Many hospitals employ a small army to chase their bills across the dusty desks of the CGHS mandarins. They literally move the files in the CGHS corridors, from one desk to the other and from one office to the other. All this means additional expenses for the private hospitals, just to recover their legitimate dues.

Finally, when the money arrives after a valiant effort stretching over months, the hospitals discover that their bills have not been paid in full and deductions have been made for reasons, never specified. The hospitals often make representations to the CGHS to understand the reasons for these deductions and seek the recoveries, which of course is another herculean task. Some simply do not bother and accept whatever CGHS deigns to pay them.

The genesis of the problem lies in the fact that CGHS is under-funded and monumentally inefficient. No one is actually bothered to take a broom and clean up the mess. No one has a real incentive to do that. While, perverse incentives to let things be, continue unabated.

Rather than threatening private hospitals, Minister Choubey will perhaps do well to have a look right down the corridor from his office and do something about the mess in CGHS.

The views expressed are personal and do not necessarily reflect those of my employers.

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The Need for a new Healthcare Model and some Concerns

The organized private healthcare in India needs to urgently evolve a new business model.

The present model faces challenges as the government goes about changing the healthcare landscape of the country in a ham-handed manner. The price controls that are being put in place essentially mean that private healthcare players will have to develop a new business model, which is ultra low cost and allows them to accept patients at the government mandated low prices.

The Ayushman Bharat Scheme and its different versions being developed by the state governments appear to be a precursor to some kind of Universal Healthcare system in India. The government in itself is not in a position to significantly increase its own healthcare spending on badly needed public healthcare infrastructure. Thus, it will willy-nilly rely on private healthcare, which in any case caters to a majority of the citizens of our country. This is likely to see the emergence of a low-cost health care system, which will serve the needs of the masses.

The Contours of the New Model

Going by the prices on offer from the government for various medical procedures, the new model will have to be quite bare bone. Essentially, this would mean less number of people employed in the hospital, very little by way of ”support services”, no private rooms, generic medicines (my fear is of inferior quality as well, as India has over 30000 pharmaceutical companies with poor regulation in place) and very little by way of patient comfort. The model can only work on large volumes of patients and high patient throughput.

The Concerns

While the model can be developed, the biggest concern will have to be the quality of care that will be delivered. The model’s cost-driven approach completely ignores the minimal clinical quality standards that must be delivered. Presently too, this is a nebulous area as the quality of health care services vary widely and there are no comparative acceptable benchmarks. Large private corporate hospitals have their own standards often comparable to global standards and they have systems in place to monitor the quality parameters and clinical outcomes. Small, private nursing homes have fuzzy standards not clearly defined and stated. No one publishes there outcomes.

To make matters worse, in India we do not have a clinical quality watchdog, which keeps an eye on medical processes and outcomes. Thus, hospitals can report their outcomes and clinical data as they wish. This is clearly a recipe for disaster.

While the implementation of National Health Protection Scheme (NHPS) may lead to better access to medical care to a large number of citizens, the large private healthcare players may get deluged with patients far beyond their capacity. When the payor will be the government through insurance companies, everyone would want to access the highest level of care possible. This in itself is fine and laudable if the care available in the country is of a uniformly high quality. However, in India, the quality of care varies tremendously and therefore the private healthcare players with high standards of care may find themselves unable to cope. Sadly, they may end up compromising on these very clinical standards to manage the patient volumes, thus blunting the competitive edge that they had to begin with.

The third big concern is the ability of the government agencies to be able to effectively implement this ambitious scheme. While the mandarins in Niti Aayog are burning the proverbial midnight oil to get the scheme off the ground, the challenge is indeed enormous. The best-planned schemes come to naught if the execution is tardy. That sadly has been the fate of almost all such similar schemes implemented earlier in different states. The government’s track record is hardly inspiring and the stakes this time around are truly high.

The private healthcare players, however, have their task clearly cut out for them. They have to find a new business model, which delivers world-class care to a very large number of people at a cost which is impossibly low. The sooner they get on with finding the right business models for themselves, the better off they will be.

The views expressed are personal

 

 

 

 

 

The Big Healthcare Challenges in FY 19

As the present financial year draws to a close, I am left reflecting on the challenges the private healthcare services organizations in the country face in the coming year. The present year has been a pretty tumultuous one. The regulatory environment threw up several challenges. The NPPA orders on price controls of devices such as stents and joints impacted the profitability of most private healthcare companies adversely. The DPCO’s orders on price controls on key drugs too are also likely to dent the bottom line of private hospitals. The media brouhaha triggered by two cases one at Fortis Hospital Gurgaon and one at Max Hospital, Shalimar Bagh, New Delhi created consumer distrust of an unprecedented nature. The private sector hospitals were called names and their doctors were addressed in the vilest of terms leading to all around despondency. Private hospitals are now limping back from this assault. The government of Delhi also announced a half-baked scheme for its citizens, which allows them access to private hospitals if the government-owned hospitals put them on a wait-list of more than a month. Finally, in the budget, the union government announced the path-breaking ”Ayushman Bharat”, which is supposed to provide a cover of INR 500000 to a million families across the country.

All these are expected to lead to some fresh challenges for the private healthcare providers in the next financial year.

Regaining Patient’s Trust 

If there is one thing, which ranks higher than any financial matrix of revenue, costs, and profits it has to be the effort to regain the patient trust. The reasons for the loss of trust are many, some genuine and some purely trumped-up, however, most private hospitals see the urgent need to regain the customer trust. Significant investments will have to be made to improve transparency, patient communication, and organizational culture, which will lead to patients trusting their hospitals. This too is a difficult task and will involve a lot of senior management time and effort.

Profitability

The government and the media have quite successively sold a narrative to ordinary citizens of the country that the private sector hospitals are profiteering and that they are out to cheat patients by over-prescribing, over-billing or worse. Thus, they have ascribed themselves the role of the guardians of the ordinary citizens against the rapacious, profit-hungry hospitals. The truth is far more prosaic and indeed worrying for the private sector hospitals. Most of them have seen a shrinkage in their profits, which to begin with were meager. The biggest challenge that private sector hospitals face in the coming year is clearly of ensuring reasonable returns for their shareholders. In an environment, driven by complete distrust between patients and the hospitals, with power-hungry politicians seemingly baying for their blood in what might be an election year, most private sector hospitals are staring at a bleak year ahead. The EBITDA margins are likely to contract. The hospitals will have to thus figure out a way of reining in costs, without compromising on patient care, safety, and outcomes. This is obviously easier said than done and will probably consume most of the bandwidth of the top management of the hospitals.

Managing the Changing Regulatory Environment

Healthcare is finally getting some attention from the government, which in itself is not a bad thing at all.  However, the controls being put on pricing and the schemes like the Ayushman Bharat and similar programs are not at all well thought through. The private sector, however, has no choice but to adapt to the changing situation. The National Health Protection Scheme (NHPS), will be rolled out this year. One is hopeful that it will be backed by suitable technology, which allows private hospitals to handle patients covered under NHPS. The hospitals will need to usher in change to be able to accommodate the large number of NHPS beneficiaries, which may flow into private hospitals. These changes may include modifying the bed configurations in the existing hospital, tweaking systems and processes and creating special areas to handle NHPS patients and create low-cost models, which allows the private hospitals to manage the NHPS patients in high volumes. Other regulatory changes in drug price controls, devices pricing controls and guidelines on re-usage will all lead to significant tweaks in hospital processes.

Managing Media and Consumer Activism

Consumer and media activism is here to stay. An unexpected outcome, a perfectly explainable error of judgment and sometimes a perceived lack of attention can trigger a media avalanche. Much as the hospitals may crib about being unfairly targeted, they will have to learn to live and cope with it. However, this does not mean that hospitals will not take a stand or push-back particularly when they are in the clear. They will have to learn to work with a partisan media and try their best to put out their side of the story. Speed will be of the essence and the communication teams of the hospitals will have to be beefed-up. Social Media too will throw up new challenges and the hospitals will have to learn to respond quickly and have a ready base of loyal supporters who will help defend them against motivated tirades.

These are all unique and new challenges. I am sure something good and lasting will emerge from these as well.

The views expressed are personal