How Private Hospitals Makes 1,700 Per Cent Profit?

Dissection of bills by drug pricing regulator highlights excessive profiteering by corporate hospitals.

Country’s drug pricing regulator, on Tuesday, released detailed analysis to show excessive profit margins made by hospitals from sales of medicines, consumables and other services and highlight nexus between doctors and industry that leads to prescription of drugs that are largely outside price control.

The analysis, based on study of bills of four patients who were admitted in different corporate hospitals in Delhi-NCR and had later died, shows that profit margins made by some consumables went over staggering 1700 per cent in some cases.

A three-way stopcock (bivalve, by Romsoms), used in intravenous infusion, for example, which was procured by hospitals at Rs 5.77 was being sold to patients at Rs 106, registering a profit of 1737 per cent for hospitals.

Similarly, a syringe without needle (Lifelong Meditech Ltd) procured by the hospital at Rs 15.29, for example, was sold to patients for Rs 200 marking a profit margin of . The analysis concludes that it’s mainly hospitals, rather than drug and device manufacturers and distributors, which are indulged in maximum profiteering.

Relatives of all these patients had approached the NPPA with complaints of massive overbilling against the hospitals following which the regulator had asked the details of procurement and billing prices of all the items. The NPPA, however, kept the names of these hospitals confidential on their request.

But sources in the regulator told the New Indian Indian Express that the data is based on study of over-billing cases reported from Fortis and Medanta hospitals in Gurugram and Max and BLK hospitals in Delhi.

This includes the Rs 17 lakh bill that the father of a seven-year-old girl was made to pay to Fortis, Gurugram who had died of dengue last year.

The dissection of the bills found that there are over 800 medicines listed in the National Essential List of Medicines—whose prices are capped and cover almost all health conditions—hospitals and doctors prescribe mostly combinations which are outside price-control.

“The total cost on scheduled medicines used in the treatment is only 4.10 per cent as compared to 25.67 per cent on non-scheduled formulations,” the study noted. “It is amply clear that for claiming higher margins, doctors-hospitals preferred prescribing and dispensing non-scheduled branded medicines instead of scheduled medicines.” The study says that ‘new drugs’ and ‘fixed-dose combinations’ launched by manufacturers in order to come out of price control have become the preferred choice for manufacturing and medical fraternity thereby diluting the purpose of putting drugs under essential category.

The NPPA, has, therefore, called for a major policy intervention on the part of the government to safeguard the interests of patients and public.

The regulator has also suggested that medical devices and other consumables be put in the essential list so that they can be brought under the ambit of price control. It also found that diagnostics services constitute more than 15 per cent of the total costs.

“In random checks by NPPA, the charges were invariably found to be higher than diagnostics facilities provided by other independently run private centers,” the study noted.

Health activists said that the findings of the study were “not surprising” and should lead to the government taking some urgent steps.

“Hospitals are violating ethical standards in following protocols that disallow patients from buying medicines and consumables from market and are indulged in non-transparent billing against patients right,” said Malini Aisola of All India Drug Action Network.

Graphic Input

Drugs/ consumables————-Company—————-Profit margin made by hospitals (in per cent)

Three-way stopcock (bi valve)——-Romson—————-1737

Syringe disposable——————Lifelong—————–1208

Adrenor injection (used in heart arrest and allergy)—————–Samarth Pharma——–1192

Todaycef injection (used in bacterial infection)———————Acumentis healthcare —————966

Dotamin (used in cardiac decompensation) —————-Neon————914
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