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The malaise of Private Healthcare versus govt's NPHS

By Dr Mukul Kapoor | PUBLISHED: 13, Feb 2018, 20:24 pm IST | UPDATED: 13, Feb 2018, 20:38 pm IST

The malaise of Private Healthcare versus govt's NPHS No investor will venture into a business if no profit is envisioned. Private Hospitals are business establishments and it would be naïve to expect them to be just philanthropic non-profit organizations. Medical care till the 1960’s and 1970’s was limited to government hospitals. Adequate health cover for all citizens of the country was a distant dream.

The governments of the day ignored the country’s need of quality healthcare, although they committed to the WHO that healthcare will be provided to all by the year 2000. Efforts were made to establish Primary Health Centres (PHC) at remote villages but no serious effort was made to enhance secondary and tertiary healthcare. Tertiary healthcare providers were restricted to some apex government hospitals and charitable trusts.

The palpable vacuum in tertiary healthcare was recognized by private players and the first tertiary care hospital, Apollo Madras, began operations in 1983. This hospital, established as a doctor’s private enterprise, gradually transformed into a corporate hospital and its shares traded on the stock market. The success of this novel enterprise was impetus for other corporates to explore this start-up industry. Tertiary Hospital business suddenly attracted industrialists from other sectors. The field soon became competitive and the private sector gradually entered even secondary and primary healthcare. The profile of healthcare business leaders transformed from medical administrators to professional non-medical managers.

The government reduced effective healthcare budgets further and stopped earnest efforts to upgrade its hospitals and establish new tertiary care centres. Phenomenal growth in world class healthcare infrastructure and huge investments in the private sector were, possibly, responsible for this apathetic attitude of the regimes. The governments saw fiscal benefit in even out-sourcing tertiary care of patients covered by the government health schemes. Formal referral schemes, such as the Central Government Health Scheme (CGHS), Ex-Servicemen Health Scheme (ECHS) and Employee State Insurance (ESI) were established, to treat these beneficiaries. The government effectively washed its hands off enhancing public healthcare infrastructure. Some apex government hospitals (AIIMS) were planned in the last decade but an indifferent approach has ensured that they have miles to go before they reach the projected functionality.

Private hospitals have high infrastructure and manpower payroll costs. International standards are maintained to attract an affluent clientele and the medical tourists. Accreditation compulsions hike maintenance costs and running costs are high. Accreditation standards are setup in equivalence to western standards, without consideration of the paying power of the common man. If standards are maintained, the cost of maintaining a hospital bed far exceeds the cost of maintaining a five-star hotel bed. The clientele at these high-end hospitals finds the cost of services exorbitant.

The hospitals find it difficult to charge heavily for the infrastructure and maintenance costs. To recover the revenue, they charge the clientele under different heads. Hospitals try to recover costs in form of profits from drugs and disposables. This wrong practice is today the bone of contention for the hospitals, as the National Pharmaceutical Pricing Authority (NPPA) is tightening prices of drugs and disposables. The application of NPPA has restricted the finances of the hospitals to unviable levels. To cover this deficit in revenue, they are catering to generic drugs (which may be unfortunately sub-standard as quality assurance is sadly wanting in the country), low quality disposables or they reuse disposables (single use items are recycled). The regulatory authorities have no effective methods to ensure quality and haven’t developed safe disposable reuse policies.

Expecting these hospitals to cater to the common population at low rates is unreasonable. The public hospital system is grossly inadequate and a failure. The common man is forced to approach these big private hospitals, in desperation to save his kin. Unfortunately, the big private hospitals also try to lure the desperate poor common man to boost their revenue. The common man can’t afford treatment at these high end hospitals and is depleted of his lifetime savings and lands up in debt. The resultant frustration triggers violent attacks on medical personnel and attracts media attention, damaging the image of the medical profession. After such recent attacks, as a damage control measure to pacify the electorate and gain brownie points, governments have indiscriminately applied sanctions on hospitals, which further mess up their balance sheets.

The private hospitals are falling apart. Unable to meet the standards set by excessive and unreasonable regulations, initially the small nursing homes and small hospitals found the business unviable and started shutting down. Private big hospital units thereafter started getting sick and were acquired by larger groups and hospital chains. Large hospitals tried to maintain themselves with richer clientele and medical tourism from neighboring countries. The standards and the infrastructure costs at these large hospitals and chains have resulted in prohibitive treatment costs (although cost of treatment even here is much lower than that in other parts of the world). The high healthcare costs are considered predatory by the public and the media. The balance sheets of the large corporate hospitals today are also strained and with many of them are getting sick and are under threat of acquisition by international chains.

The recent budgetary announcement of low cost health insurance is probably not the answer. Its success would depend on healthcare delivery by private hospitals. The private hospitals are already in financial mess and many are up for sale. The government needs to add hospital infrastructure in the public sector or encourage private investment in the medical sector by offering some concessions. The country desperately needs augmentation of its highly inadequate healthcare facilities. The answer definitely doesn’t lie in just promoting AYUSH and being over critical of modern medicine delivery systems.

  • Writer is Dr Mukul Kapoor, MD, DNB, MNAMS, FIACTA, Director, Department of Anesthesia, Max Smart Super Specialty Hospital, New Delhi.
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