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Should All States Follow Telangana’s Plan to Grade Hospitals to Keep Prices in Check?

Taking note of the repeated complaints by patients against overcharging at private hospitals, Telangana plans to introduce a grading system for hospitals.

With several super-specialty hospitals offering medical care at rates much lower than that in the developed world, India is progressively becoming the preferred global destination for medical tourism. Incongruously, at the same time, healthcare has become increasingly unaffordable for most Indians, thanks to the rising medicals bills in the recent years.

According to a survey conducted by the National Sample Survey Office (NSSO), over the past decade, the cost of medical treatment has risen at a double-digit pace of growth, outpacing average inflation in both rural and urban India.

The findings also add that, on an average, admission is more than 3 times as costly in a private hospital as in a government facility ( more than 6 times in eye cases and more than 7 times in neonatal cases).

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Additionally, according to a report by audit and consulting firm EY, the cost of key surgeries and medical procedures in many private hospitals is higher than the annual household income of between 60% and 80% of India’s population! Even the recent Tamil potboiler, Mersal, pertinently pointed out how the citizens of India, especially the underprivileged, are suffering because most hospitals give higher priority to profits than to their social responsibility.

It is with the intention of countering this trend that Telangana’s health authorities are planning to introduce a grading system for hospitals that will be put in place over the next two months.

The idea for this noteworthy initiative came as a response to repeated complaints by patients about being overcharged at private hospitals. If implemented successfully, it will make Telangana the first state in India to bring in such a grading system!

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According to the ongoing discussions about this soon-to-be-launched initiative, hospitals will be graded and placed in different slabs with a price cap being put on surgeries and other key procedures. A team of chartered accountants and medical professionals will also work out to the costs for recurring procedures (during prolonged treatments) and for procedures that need to be carried out simultaneously.

Once this system is in place, it will address the “information symmetry” in India’s healthcare sector that leads to escalated costs and malpractice — unlike doctors and hospital authorities, patients have practically no information (or competence) to know about costs or cheaper options while availing medical treatment.

Thus, grading of hospitals will enable patients to make an informed decision while choosing a hospital for treatment. It is also expected to increase transparency and help bring down prices of key medical procedures.

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However, private hospitals, especially super-specialty ones, insist that they need the freedom to fix their own price as per their investment to remain competitive. A senior official from the state’s health department told The Times of India,

Currently, the scenario is such that small hospitals are benefiting from this competitive pricing. But bigger ones lament that they are facing losses and hence want the liberty to decide on pricing.  So, we are trying to work out a grading system based on all the factors like quality of equipment, procedures as well as investment.”

Interestingly, the National Pharmaceutical Pricing Authority (NPPA) recently imposed a price cap on coronary stents and knee implants in major relief to cardiac and orthopedic patients across India. The reasoning behind this decision is clear from the fact that though nearly 20 million Indians require arthroplasty every year, only about 100,000 of them manage to afford it.

While a hospital grading system can help control the escalating cost of medical treatment in India, much more needs to be done to change the ground reality of the country’s overburdened health sector. The government also needs to address the systemic rot in public hospitals, which are saddled with both mismanagement and inadequate resources — human and infrastructure.

A step in the right direction is Niti Aayog’s recent decision to start ranking district hospitals (in collaboration with the Health Ministry) on the basis of their performance on health indicators such as doctor per OPD, stock out rate of essential drugs, blood bank replacement rate, post-surgical infection rate and number of functional hospital beds per 1,00,000 population.

A not-so-subtle nudge to government hospitals to improve the quality and competitiveness of their health services, the ranking index will also analyse feedback from patients to assign a patient satisfaction score to each hospital.


Also Read: This Lawyer Is Responsible for Heart Stents Becoming Super Cheap in India


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Written by Sanchari Pal

A lover of all things creative and happy, Sanchari is a biotech engineer who fell in love with writing and decided to make it her profession. She is also a die-hard foodie, a pet-crazy human, a passionate history buff and an ardent lover of books. When she is not busy at The Better India, she can usually be found reading, laughing at silly cat videos and binge-watching TV seasons.