Delhi government profit capping policy: Will patients actually benefit? | Latest News Delhi - Hindustan Times

Delhi government profit capping policy: Will patients actually benefit?

May 31, 2018 12:42 PM IST

Medical experts say the Delhi government’s draft policy that introduces high-risk packages and waivers for eemergency patients could prove counterproductive.

New Delhi: In a move hailed as patient friendly aimed at bringing down the cost of treatment at private hospitals in the city, the Delhi government announced its profit capping policy.

The draft policy caps the profit margin on drugs and consumables at 50 per cent of purchase price.(Shutterstock)
The draft policy caps the profit margin on drugs and consumables at 50 per cent of purchase price.(Shutterstock)

Hospitals will have to halve the bill amount in case a patient dies within 6 hours of coming to the emergency department, according to the draft policy. If a patient dies within 24 hours, hospitals have to waiver 20% of the bill.

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This is the most controversial provision of the policy, which also caps the profit margin on drugs and consumables at 50% on the purchase price and for implants at 35% of the purchase price.

The question is, whether the patients will actually benefit?

“Yes, most definitely,” said Dr Rakesh Gupta, former president of the Delhi Medical Association and one of the members of the committee that recommended the policy.

“The monetary benefits of capping the mark-ups on drugs and consumables and the waiver of parts of the bill will be directly transferred to the patients. In fact, while discussing the issues, we realised that when it comes to emergency treatment, most hospitals and nursing anyhow charged nominal rates, it is for the rest that we needed the policy,” he said.

However, it is a blanket policy applicable on all hospitals, with no specification of a particular amount over which the hospitals have to offer such discounts. This means even hospital treating emergency patients on “nominal rates” will have to slash the amounts due.

And, Dr Gupta suggests a way around it.

“For charitable hospitals and hospitals that are already charging nominal rates, they must have an institutional policy of maybe increasing the rates for all patients a bit and then giving a discount to those who die. We are suggesting that the maximum number of patients bear the cost of treatment of a few,” said Dr Gupta.

Cross subsidy not loss

This principle of subsidising bills from a common pool is also the principle behind the high-risk packages suggested by the policy.

The draft says that in cases where complications are expected, a high-risk package should be offered costing 20% more than normal rates, but insuring patients against paying more in case the complications do happen.

This method of cross-subsidy could run smaller hospitals and nursing homes to the ground.

“The rationale behind the high-risk package was that of the pool of people who do pay for it, only a few would end up requiring it. Hence, the money collected could be used for the treatment of the few. But, in cases of smaller nursing homes and hospitals, with fewer beds, this might not be feasible. Maybe, there should be a graded formula,” said Dr Girish Tyagi, secretary, Delhi Medical Council.

For normal treatment packages, in case of complications, the hospitals would have to charge the patients half the rates for all follow-up procedure.

“We are not fixing prices for the procedures or packages, but saying that the ultimate cost to the patient should be within a reasonable range of the estimate provided. And, in case of halving the procedure cost, it is something that is already being followed by CGHS (Central Government Health Scheme),” said Dr Gupta.

Restricting choice

Would having a clause that will penalise a hospital for emergency treatment lead to hospitals turning away patients? Yes, say most experts.

“When patients come to the hospital’s emergency department, they are in a critical condition. And, despite the doctors’ best efforts some of them will die. Why should the doctor or the hospital be made to pay?” said Dr Yatin Mehta, chairman of institute of critical care and anaesthesiology at Medanta-The Medicity.

“If such a law comes in, it is possible that hospitals start referring critical patients to the public health facilities, which already have a very high patient load and may not be equipped to deal with more patients,” he added.

In fact, patients might spend the golden hour, the first hour after an emergency event when the chances of survival are the highest, travelling from hospital to hospital.

“This is draconian and not well thought through. Clearly, it is a move to please the voters for the upcoming elections,” said Dr Mehta.


Capping prices of medicines and consumables, having fixed packages, and paying private hospitals the bare minimum CGHS rates for all schemes like treatment of accident, burn and acid attack victims has made it difficult for hospitals to get their fair share, hospitals say.

“Yes, there should be transparency and the mark-ups on drugs and consumables shouldn’t be as high as 1,000%. In fact, hospitals can comfortably work with just a 50% mark-up, provided that this mark-up is applicable for all services,” said Dr. Aashish Chaudhry, Managing Director of Aakash Healthcare Super Speciality Hospital.

With the government asking hospitals to formulate treatment packages and not to add any “arbitrary charges”, the hospitals are at a loss for how to charge patients for their services.

“Forcing hospitals to stick to ‘packages’ and not levy additional charges will reduce operational efficiency. How will the hospitals charge patients for the maintenance of infrastructure, providing housekeeping services, or infection control measures? Something that is not mentioned separately in the bills at the moment,” said Dr Chaudhary.

It will ultimately affect the kind of services provided at the hospitals.

“Healthcare is a very competitive market and to provide good healthcare at cheaper rates, hospitals will have to develop packages that focus on the clinical aspects only. We would have to ask patients to pay separately for ‘luxuries’ such as four meals a day or air conditions,”

“Most private players are making loses or single digit returns which don’t even cover the cost of capital. Some of the recommendations may adversely impact patient care and quality,” said Max Healthcare authorities in a statement.

“The government can implement such policies for hospitals they have given land to at subsidised rates, but not for those competing with others at market rate,” said Dr Ashish Chaudhary.

Under the policy, which is currently in the draft phase open for public consultation, the government will have the power to cancel the license of erring hospitals.

The draft is yet to be uploaded for public consultation on Delhi government’s official website. (Check before story goes to print)

In December last year, the government had cancelled the license of Max hospital, Shalimar Bagh for wrongly declaring a newborn dead. The court of the financial commissioner has given the hospital interim relief to stay open and the Delhi Medical Council has found that there were procedural lapses, but the doctors were not negligent.

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