Private hospitals behave like predators: NPPA

Profit margins are as high as 1300 to 2000%

Private hospitals make a killing at the cost of hapless patients as they enjoy a profit margin as high as 1300-1700% on disposable syringes, more than 2000% on intra-venous infusion set and nearly 600% on medicines, according to a new government report released on Tuesday.

The report by the National Pharmaceutical Pricing Authority said, "the major beneficiaries of profit (due to inflated pricing) are hospitals rather than drugs and device manufacturers."

Take the case of IV set for example. An IV set was sold at Rs 5.2 to the distributor and Rs 8.39 to the hospital, which makes bulk purchase from the manufacturer.

But when the hospital sells the same to the patient, it sells at a MRP of Rs 115 “ a margin of 2,112% on the distributor price.

Similarly for disposable syringes, the margin (against the distributor price) varies between 1,286% on the lower end to 1,697% on the higher end of the spectrum.

On 3-way stop cock valve, the margin is more than 1700% while on surgical gloves, it is 661%. The margin for elastic adhesive bandage is 625% while it is 344% for alcoholic swab.

The NPPA made the 20-page report based on the bills supplied by four big private hospitals in and around Delhi against whom patients complained of overcharging.

The authority held back the names of three hospitals, but the fourth one is Fortis in Gurgaon that courted controversy last year after billing Rs 16 lakh to the father of a girl child who died of dengue after spending 15 days at the ICU of the hospital.

"Institutional bulk purchase by private hospitals makes it easier for them to get very high profit margin and indulge into profiteering on drugs and devices, even without the need to violate the MRPs which is already inflated. It is a clear case of market distortion" NPPA said.

The margin is significantly higher on consumables and medical devices as against medicines. The NPPA notes doctors and hospitals prefer prescribing and dispensing non-scheduled branded medicines than scheduled medicines that are under price control.

On non-scheduled medicines, the margins are as high as 1,293% (Adrenor 2 ml injection), 1,125% (Emtig 50 mg injection) and 930% (Treonam 1 gm injection). Even on medicines under price control, the hospitals make profit on some of the items like Amlip 5mg tablet (438%) because of the flawed MRP and bulk purchase at discounted price. On normal saline, the margin is 680%.

The total expenditure on drugs and devices and diagnostics is substantially high (46%) and is not a part of the much publicised 'estimate' or 'package' (in case of implant) offered by the hospital. They are also much more than the room rent or procedure charges, notes the report.