Medical inflation goes up despite sharp fall in Covid-19-related hospital admissions

Despite Covid-19 related hospital admissions going down in recent past, medical inflation in India has continued to rise, as per a recent report by Indian financial services company Motilal Oswal Financial Services Limited. The report noted that room rents have increased 3-4 per cent over the past one year. Generally, hospitals refrain from increasing the room rents too often and by material quantum, still the cost scaled up sharply.

“Routine surgeries have seen their pricing go up by 8-10 per cent. Consumable pricing is up 17-18 per cent. Medical inflation is passed on to consumers. Doctor fees are linked to the total amount and differ significantly based on specialization. Overall, agreed pricing of major surgeries, however, has increased 12-15 per cent,” the report stated.

The report compared cash versus Mediclaim such as the patient who is paying out of pocket chooses lower category of rooms, such as general ward or twin sharing. However, under a Mediclaim option, customers prefer higher-end rooms, thereby, increasing the claim severity. Also, under insurance plans, quite a few things such as doctor fees are linked to the room rent, the report noted.

“There is no difference in pricing for retail and corporate plans coming through the same insurance company. High value surgeries (Transplant) have low margins for hospitals and their pricing does not change materially. COVID intensity with regards to mortality has reduced significantly because of herd immunity and a strong vaccination program,” said the report.

As per the report, when it comes to network versus Non-Network hospitals: Private/PSU insurers get a 10/20 per cent discount (as compared to the non-Mediclaim charges) in their network hospitals. PSUs get better discounts, owing to the volumes they provide.

“The pandemic has also brought many changes in the treatment protocol, impacting the cost of claims. You can compare the hospitalization costs from three to four years ago versus the current prices, and you will observe a substantial increase. Another critical factor you need to consider is the impact of Covid. It has put massive stress on the healthcare system,” said Roopam Asthana, CEO and Whole Time Director, Liberty General Insurance in the report.

“For example, suppose someone needs a medical treatment, in that case, they must first undergo an RT PCR test, irrespective of the treatment they seek, incurring an additional expense. Also, the doctors, nurses, and the other medical staff still need those protective layers such as masks, gloves, PPE kits, etc., which has put additional costs on the ground,” he said.

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