Private hospitals fleece patients, overcharge up to 1737%

After several complaints and Right To Information (RTI) applications, the National Pharmaceutical Pricing Authority (NPPA) has discovered that four "reputed"

Private hospitals overcharged items up to a whopping 1737 % to patients.

Even as the NPPA did not reveal names, sources told DNA that private-run hospitals like Fortis Memorial Research Institute (FMRI) and Medanta Hospital in Gurugram, Max Hospital and BL Kapoor Hospital in New Delhi were under the scanner for inflated bills.

Four hospitals, in cases of four patients who died later, had billed their relatives a total of Rs 69, 34, 764.43, an average of over Rs 17 lakhs, NPPA said. "46% of the total bill is charged for drugs, devices and diagnostics, and patients have complained that the initial estimate of expenditure had gotten inflated by three to four times at the time of final billing," said Anand Prakash, deputy director, NPPA.

While 25.67% of the total bills (Rs 17, 79, 898.66) is for non-scheduled drugs, only 4.10% (Rs 2, 84, 295.71) is for those drugs under the price control. "It is clear that for claiming higher margins, doctors-hospitals prefer prescribing and dispensing non-scheduled branded medicines, instead of scheduled medicines, while scheduled medicines under National List of Essential Medicines (NLEM) are supposed to cover all the essential medicines," said Prakash.

The industry, in order to get bulk supply orders, is "forced" to print higher MRPs as per "market requirement". This is a clear case of market distortion where manufacturers after accounting for their profits print inflated MRPs to meet out the demands of a distorted trade channel. On the other hand, patients incur huge Out-Of-Pocket expenditure and they are not allowed to buy drugs from outside.

For example, a 3-way stop cock bi-valve is purchased by hospital at Rs 5.77 but billed to the patient at an MRP of Rs 106, and in the process, the hospital makes a profit of a whopping 1737%.

Profit margins on syringes, cannula and catheters are exhorbitant and clearly a case of unethical profiteering in a failed market system, said NPPA.

While consumables like a 3-way stop cock bi-valve or medical devices like a syringe (purchased at Rs 15.29 per piece but billed to patient at MRP Rs 200 with a massive 1208% profit for the hospital) are not under Drug Price Control Order, 2013 (DPCO), even those medicines under the price control have been over-priced. For example, Propofol Injection purchased by hospital at Rs 40.95 was billed to the patient at Rs 187.28 at a 357% profit.

Diagnostic services constitute for more than 15% (Rs 10, 78, 792) of the total costs. The NPPA conducted random checks and found the charges invariably higher in private hospitals as compared to facilities provided by other independently-run private centres.

While the NPPA is within its jurisdiction under the DPCO, 2013 to ask for details of billing from these hospitals, it is not in a position to take any further action except in case of 4.10% of the bills for drugs which are under price control, yet have been over-charged.

"The violation of ceiling price and corresponding MRPs detected shall be pursued further by NPPA for recovering overcharging amounts from defaulters," said Prakash.

"Hospitals submitted data to NPPA requesting 'confidentiality' which the regulatory authority has 'honored' and not named them in public," said Bhupendra Sinha, Chairman, NPPA.

NPPA’S ROLE

While the NPPA  is within its jurisdiction under the DPCO, 2013 to ask for details of billing from these hospitals, it is not in a position to take any further action except in case of 4.10% of the bills for drugs which are under price control

Scheduled drugs (Under Price Control)

Item                                           Hosp's Purchase Price               MRP to patient Hosp's Margin

Propofol Inj 10 mg/ml-

20 ml vial                                                               Rs 40.95               Rs 187.28       357%

Fenstud 500 MCG                                                  Rs 56                     Rs 220        293%

Non-scheduled drugs (Not under Price Control)

Adrenor 2 ml Inj

(Nor-Adrenaline)                                                  Rs 14.70               Rs 189.95        1192%

Todaycef 1gm Inj                                                  Rs 40.32                      Rs 430        966%

---------

Consumables

3-way stop cock                                                  Rs 5.77                      Rs 106        1737%

Bivalve

3-way stop cock                                                  Rs 5.82                      Rs 106        1721%

With leur

Medical Devices

IV infusion set                                                         Rs 8.39                      Rs 115        1271%

Syringe disposable

Without needle                                                         Rs 15.29                      Rs 200        1208%

What do you get billed for in a private hospital?

Total bill for four patients in four private hospitals in Delhi NCR

Particulars                             Amount (Rs)                             %

1. Scheduled formulations        2,84, 295.71                             4.10%

2. Non-Scheduled formulations 17,79,898.66                            25.67%

3. Medical Devices                      1,05,525                                   1.52%

4. Consummables                             6,63,175.06                             9.56%

5. Diagnostics                                    10, 78, 792                             15.56%

6. Procedures                                    7, 91, 912                             11.42%

7. Consultation/Medical Supervision 8, 82, 432                      12.72%

8. Equipment                                          5,16,771                             7.45%

9. Room rent                                           8, 04, 850                            11.61%

10. Surgery                                           69, 34, 764                             100%