What comes next is anyone’s guess.
After three months of discussions, the World Health Organisation (WHO) has convinced the health ministry to make certain diagnostics affordable. When the price regulator studied hospital bills in February, it found that diagnostics constituted over 15% of the bill, and the prices varied significantly across labs. The policymakers have begun the process to expand the scope of price control but the path to regulating the price of a diagnostic test is far more challenging than it was for drugs and devices.
This is primarily because there is no regulation for pathology labs in India. Only voluntary accreditation by the National Accreditation Board for Testing and Calibration Laboratories (NABL). Something only about 1% of the 100,000 labs possess. Unlike medical devices, for whom the Medical Device Rules kicked in from January 2018, and, of course, drugs, whose quality is monitored by the Drug Controller General of India. Diagnostics sector is neither bound by law nor a regulator.
Further, the policymakers have missed the one factor they cannot control—the price of treatment. If the health ministry fixes the price for diagnostic tests this year, it still would not be able to ensure that the benefit reaches the patient. It appears the lessons of stent price control haven’t reached the policymakers’ table.
To refresh public memory, we are re-publishing our earlier story and making it free.
As far as the popularity of any health policy goes, price ceiling for stents has made it right to the top. Just before Uttar Pradesh elections, Prime Minister Narendra Modiused it at a rally to woo the voters. The PM claimed that he was committed to providing affordable healthcare to everyone by reprimanding and controlling the profit-motivated businesses. Only if its simplicity and popularity made healthcare affordable.
Eight months later, the cheer from the crowds is followed by some behind-the-door discussion in fine print. Hospitals’ message: you can control the margins of devices but the price of medical procedures is ours to decide.
The recovery phase
Hospitals have already recovered from the loss in revenue that followed price ceiling for stents from about 40% patients, who pay them directly. Now they have raised their game to begin negotiations with private health insurance companies, who pay for about 20% of the patients. The patient is already losing. Will the hospitals succeed again?
“The negotiations can go either way depending on the power of the insurance company. How much a small hospital needs to stay on their panel? And on the expertise of the hospital. No insurance company can afford to lose a big cardiac speciality hospital if they are adamant [on increasing the price],” said a senior executive of a private insurance company, who is currently involved in a few such negotiations.
Some hospitals are adamant. Recently, Ashutosh Raghuvanshi, CEO of Narayana Hrudayalaya, which runs a chain of multi-speciality hospitals across the country, made it clear that he’d have to increase the price of the procedure, and that the patient would not really benefit out of price reduction of stents. As many as 12,000 angioplasties were conducted across all Narayana’s hospitals in the financial year 2016-17.
Raghuvanshi’s argument is about the hospital he runs, but does it ring true for most patients? Is the patient, whom the government wanted to help, better off now? Did the government, who took a big pat on the back, accomplish what it set out to?
The policy is as the policy does. Well-intentioned intervention into the private healthcare space by the drug regulator was a short-sighted move. Its benefit has not reached the vast majority of patients. Neither those who never had any access to medical procedures like angioplasty nor the ones who pay for angioplasty.
The remaining patients, protected by health insurance and government health schemes, have a thin wall between them and increased medical procedure costs, which will negate the benefit of the price ceiling. Hospitals are bringing the wall down. One brick at a time.
In March this year, a month after the prices were capped, hospitals began to come up with ways to make profits again, said an executive who works on pricing with a Delhi-based health tech company. The company partners with over 600 hospitals across the country.