Health is the domain of the state, not the centre, and the tool that state governments currently use is the Clinical Establishments (Registration and Regulation) Act, 2010. Can the legislation regulate prices? No. Does it favour the standardisation of charges by state governments? Yes. A crown jewel of the Indian public health movement, the Act’s intention was to usher transparency, better quality care and monitoring of private hospitals, under one law for the first time in the country.
The law is one thing and politics, another. Although notified in 11 states, it’s not completely functional in any state—it has not ensured regulation of every clinical entity, even in states where the law does exist. This is recognised by both stakeholders—doctors and policymakers. Why? Because of the resistance by the state chapters of medical associations, points out Sunil Nandraj, who was one of the drafters of the legislation.
The doctors won the first round. But did the state governments accept defeat? Clearly not.
Why should I pay more?
Nandraj did develop a template that the states could follow to determine the rates for hospital procedures, but he says that the politicians wanted more out of the bill. They wanted to cap prices.
The politicians’ intention has taken a tangible form. On 17 March, West Bengal enacted the law. On 1 June, the state government proposed the rates, fixed under the state health insurance scheme Swasthya Sathi, announced in February 2016, for all treatment and diagnostic packages across hospitals. Karnataka soon followed with its proposed legislation.
Both moves were inspired by the 2010 Act, but they do not stop there. They give more teeth to the legislation with pre-decided prices.
Cornered, the Indian Medical Association’s (IMA) spokesperson KK Agarwal is now asking why not insurance instead of capped prices? Prime Minister Narendra Modi had promised enhanced coverage under the National Health Protection Scheme (NHPS) in his Independence Day speech last year. Healthcare providers were anticipating and preparing for insurance-driven regulation of prices, not for capped prices.
Doctors, hospitals and policymakers are in consensus that just a laissez-faire approach to increasing access to affordable healthcare has not worked. The question is who will bell the cat? The reach of insurance in the country is limited and thus, insurance providers strive to rationalise treatment charges in hospitals. The insurance market is expected to mature in its own sweet time. In the meantime, the states have reacted. An ill-planned knee jerk reaction that’s full of resolve, nonetheless.
The National Family Health Survey 2015-16 indicated that about three-quarters of Andhra Pradesh’s population is covered by some health scheme or insurance. High insurance coverage has meant that hospital package rates for the uninsured have come down as well.
No formal study has yet proven the effect of state-sponsored community insurance schemes on the market prices of hospital treatments. But the general consensus is that the price paid by patients not covered by any scheme has come down by 30-40%, says a Delhi-based health insurance consultant, on the condition of anonymity. He advises the central and state governments on insurance schemes.
“State-sponsored schemes have fixed the prices much below the market rates and hospitals have agreed because they get a large number of patients. Pressure from uninsured patients has forced the hospitals to bring down costs for them too,” he adds. Some of these common treatments include appendicectomy at Rs 15000, hernia surgery at Rs 20,400 and tonsillectomy at Rs 11,000.
Prepared for similar large scale, NHPS-driven indirect regulation of prices, the IMA was taken aback when it instead received West Bengal’s legislation—the Clinical Establishment Act, 2017 in March.
The rich pay up, the poor get subsidised
Dr JP Sarma, office bearer of the West Bengal chapter of the Association of Healthcare Providers (India) and Director of DESUN Hospital & Heart Institute—a two 300-bed super speciality hospital chain—has no time for rumours. But this time he figures they may be true. “I had heard that a couple of hospitals are up for sale in Kolkata, but today a man came, who had shut down his nursing home to seek a job in my hospital,” he sighs.
The negotiation over the ideal hospital rate for each treatment in West Bengal will soon reveal the fine line where hospitals become unviable, investors flee and quality deteriorates. Or it will indicate just how much state intervention can private healthcare accept to continue its services.