Navigating Healthcare Pricing Challenges in India

Source-This post on Navigating Healthcare Pricing Challenges in India has been created based on the article “Court’s nudge on hospital charges, a reform opportunity” published in “The Hindu” on 29 April 2024.

UPSC Syllabus-GS Paper-2– Issues Relating to Development and Management of Social Sector/Services relating to Health.

Context– The Supreme Court of India directed the central government to address the issue of high and varied rates for hospital procedures in the private sector. The action was taken because of big differences in the costs of procedures. For example, cataract surgeries are much cheaper in government facilities (around ₹10,000) compared to private hospitals (₹30,000 to ₹1,40,000).

The Supreme Court referred to Rule 9 of the Clinical Establishments (Registration and Regulation) Act, 2010, which mandates that clinical establishments charge rates for procedures and services within the range determined by the Central Government in consultation with State Governments.

How are healthcare services provided in India?

Healthcare delivery in India is primarily provided by private players, with prices set by the market. However, this approach leads to inefficiencies and inequalities in healthcare and necessitates regulation.

What are the key considerations for addressing healthcare financing challenges?

1) Yardstick competition– It involves regulatory authorities setting benchmark prices based on market observations.

2) Standard Treatment Guidelines (STGs)– STGs help in determining what care is needed, how much care is needed, and how much it costs. They make sure different procedures get the right amount of care, while ensuring clinical autonomy. This helps to know how many resources are used for each procedure.

What are the issues with these considerations?

1) Yardstick competition– Implementing this in India is challenging due to diverse patient profiles, unreliable price data, and weak regulatory frameworks.

2) Standard Treatment Guidelines (STGs)– STGs requires providers to get most of their money from fewer payers. However, due to limited regulation, health care providers could also get money directly from patients.

What are the challenges associated with implementing rate standardization policies in India?

1)There are challenges such as weak enforcement mechanisms, limited data on costs, and misaligned incentives among stakeholders.

2) Only 11 states and seven Union Territories have implemented the Clinical Establishment Act. There is not much evidence to evaluate its (Clinical Establishment Act) impact on cost, care quality or behavior of service providers.

3) There is a lack of accurate costing data due to limited participation from private hospitals.

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What should be the way forward?

1) There should be a comprehensive health financing reform strategy that is informed by robust and ongoing research on appropriate processes for formulating and adopting STGs.

2) Rate standardization policies should be feasible, easily implementable, and follow established price discovery practices. There is a need to learn from past and current efforts to improve healthcare financing.

Question for practice

What are the key considerations for addressing healthcare financing challenges?