Private hospitals fleecing patients on consumables, diagnostics

In an analysis of bills from four reputed private hospitals in Delhi and the National Capital Region by the National Pharmaceutical Pricing Authority (NPPA) has revealed that they are making profits of up to 1,737 per cent on drugs, consumables and diagnostics that are not price-controlled, and that these three account for about 46 per cent of a patient's bill.

Over 25 per cent of the bill charged by these hospitals to some of their patients was for drugs that were out of price control. The share of the prices of medicines with a government-fixed maximum retail price was just 4.1 per cent of the overall bill.

In a statement on Tuesday, NPPA said that the analysis was made on the billing details provided by these hospitals as there were complaints of overpricing and inflated bills against them.

The analysis noted that ''the major beneficiaries of profits in all these cases because of inflated MRPs have been hospitals rather than the drugs and devices' manufacturers''.

The NPPA noted that most drugs, devices and disposables were obtained by the hospitals from their in-house pharmacies and patients didn't have the choice of buying them from outside where prices could be lower.

Institutional bulk purchase by private hospitals, in most cases by their own pharmacy, makes it easier for them to indulge in ''profiteering on drugs and devices even without the need to violate the MRPs'', said the NPPA.

According to the NPPA's analysis, the pattern indicates an attempt to claim higher margins as doctors and hospitals prefer and prescribe non-scheduled branded medicines instead of medicines under price control.

Adding that the scheduled medicines or medicines under the National List of Essential Medicines cover all drugs that are essential, it said that the disclosure was done to remove information asymmetry between patients and hospitals and for greater transparency in healthcare system.

''This is a clear case of market distortion where manufacturers after accounting for their profits print inflated MRPs to meet the demands of a distorted trade channel without getting any benefits from this 'artificial inflation' and patients have to incur huge out-of-pocket expenditure in hospitalization cases,'' stated the NPPA.

The expenditure on drugs, devices and diagnostics, constituting almost half the billed amount, is not part of the 'estimate' or 'package' (in case of implants) given by hospitals unlike procedures (about 11 per cent of the bill) or room rent (12 per cent), which are ''the more visible components'', stated the NPPA.

The NPPA's analysis came after complaints of overcharging by families of some patients who died from dengue and other ailments. Patients in all cases had complained that the initial estimate of expenditure got inflated by three to four times, NPPA said (See: Dengue death: Fortis charged over 1,700% margin on consumables).

It said the hospitals involved had requested anonymity. Reports said said the request was accepted since these practices are widely prevalent.

The profit margins for the hospitals were highest on consumables, ranging from almost 350 per cent to over 1,700 per cent. On drugs that are not under price control, overpricing

margins ranged from about 160 per cent to 1,200 per cent. Even margins on drugs under price control were between 115 per cent and 360 per cent.

Pointing to the huge margins on non-scheduled devices like catheters, canulas and syringes, the NPPA release said these were a case of ''clearly a case of unethical profiteering in a failed market system''.

As the law does not provide for controls or monitoring of the price of consumables, their share in bills was double that of scheduled drugs, stated the analysis. Since most consumables have not even been listed as drugs, ''the NPPA can neither monitor the MRPs nor bring the disposables / consumables under price control even in the public interest under extraordinary conditions'', the authority said.

Similarly, diagnostics services and other hospital charges are beyond the purview of NPPA and the central government and can be regulated only by state-specific laws, it pointed out. It noted that diagnostics constituted more than 15 per cent of the total bill.

In random checks by NPPA, it was found that the charges were invariably higher than in many independently run diagnostic centres.