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NPPA move to trigger debate on business model of Indian private healthcare

 Joe C Mathew   New Delhi     Last Updated: December 18, 2017  | 20:31 IST
NPPA move to trigger debate on business model of Indian private healthcare

Last week, apex medicine price regulator National Pharmaceutical Pricing Authority (NPPA) did a service to Indian healthcare sector. It brought to the public domain, the retail price and trade margin details of all the medicines and consumables that were billed by a leading pan-Indian hospital chain while treating a dengue patient in one of its hospitals in Gurugram. The trade margin was in the range of 5-914 per cent for 80 odd medicines and 12-1737 per cent for consumables.
NPPA sought this information from the hospital after it took note of media reports that suggested overcharging by the hospital. The issue was emotive as even after spending Rs 16 lakh on treatment, the patient couldn't survive the illness. NPPA's attempt was to clear the air by seeking all the billing details from the hospital to see if there is a case for investigation on the overcharging complaint.
Technically, the hospital may not have overcharged, if it has not billed over and above the printed MRP (maximum retail price). However, the significance of the data submitted by the hospital, and analyzed by NPPA is not in proving whether the hospital has "over charged" or not. It lays bare the systemic issues and the prevailing pricing patterns in Indian healthcare system.

As NPPA analysis shows, even in the case of scheduled formulations, or medicines that are sold according to government prescribed price limits, the trade margin can be as high as 343 per cent. In the case of medicines which are not under price control, it has gone up to 914 per cent.The unit procurement price of consumables like syringes, disposibles, infusion sets etc, and its MRP can vary as high as 1737 per cent.
Whether it's healthy to have such huge variations between procurement price and retail price is a matter of debate. The agency could have carried out the overcharging probe even if it had not made the information shared by the hospital public. It chose to do otherwise, terming it as a move to ensure absolute transparency and accountability in governance. This affirmative action, will now trigger a larger debate on the business model of private hospitals, and whether there is a need to keep an eye on the trade margins.
Patient welfare groups and civil society organizations have a legitimate right to highlight the trade margins. The healthcare industry also has valid reasons to suggest that they need to recover their cost, if not make profits, somehow or other. The government's role should be to ensure affordable treatment to the patients - both in public and private healthcare institutions - without turning healthcare industry unviable. The price list will open up the debate.

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