The case for a hospital regulator

India’s healthcare sector has made impressive strides over the past few decades, with modern treatments, advanced medical technologies and specialist services now accessible to millions. Yet, this progress masks an uncomfortable reality — hospitals in India operate without a dedicated regulator. Unlike banking, securities or insurance — overseen by the Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi) and Insurance Regulatory and Development Authority (IRDAI) — hospital administration and billing practices remain largely unchecked. This regulatory vacuum leaves patients and insured individuals vulnerable to financial exploitation at a time when they are most helpless.

Insurance companies enter into structured tariff agreements with network hospitals, covering surgeries and medical procedures at pre-negotiated rates. In practice, however, these agreements often exist only on paper. Patients are frequently billed far beyond the contracted rates, particularly during emergencies when they have little bargaining power or time to explore alternatives. The very purpose of cashless claims or capped insurance packages is defeated when hospitals inflate bills under various pretexts.

Worse, there have been alarming instances of hospitals claiming reimbursement for procedures never performed, charging for consumables not used, or adding hidden costs that are not covered under insurance. Several facilities have been blacklisted by insurers for such unethical and fraudulent practices. These incidents are not isolated aberrations; they are symptoms of a larger, systemic failure. The absence of a statutory framework to ensure transparency and fairness in hospital operations has created fertile ground for such exploitative practices.

The time is ripe to establish a National Hospital Regulatory Authority (NHRA) — a dedicated watchdog with statutory powers, akin to IRDAI or Sebi. Such a body must go beyond mere registration or accreditation. It must have the authority to monitor, audit and penalise errant hospitals.

The NHRA should focus on: (I) Standardising tariffs for common procedures and treatments to ensure uniformity across hospitals; (ii) enforcing compliance with insurance-linked fee structures, preventing arbitrary billing; (iii) auditing claims to detect fraudulent or exaggerated reimbursements; (iv) linking accreditation and licensing to adherence to ethical billing and quality care; (v) providing a robust grievance redressal mechanism for patients facing overcharging or unfair treatment. 

Without such a regulatory framework, hospitals will continue to wield unchecked pricing power, leaving patients and their families trapped in a maze of inflated costs and opaque billing.

Lessons from other sectors

India’s financial markets once suffered from lack of transparency and rampant malpractice. The creation of Sebi changed that narrative by ensuring fairness, bringing accountability and protecting investors’ interests. Similarly, IRDAI has streamlined the insurance industry, standardised products and safeguarded policyholder rights. These regulators have proven that a well-designed statutory authority can transform an entire sector.

Healthcare, which directly impacts human life and well-being, needs similar systemic oversight. If capital and insurance markets — where the stakes are financial — deserve strict regulation, why is healthcare, where lives are at stake, left to market forces? A dedicated regulator could ensure cost standardisation, root out unethical billing and bring much-needed transparency.

Healthcare is not just another commercial service; it is a lifeline. Unchecked profiteering by some private hospitals has eroded the trust that patients once placed in the medical profession. With healthcare costs soaring and health insurance becoming the primary gateway to private care, the need for regulation is urgent and unavoidable.

A National Hospital Regulatory Authority could restore balance in the system. It would create an ecosystem where hospitals are held accountable for both pricing and quality of care. The presence of an independent regulator would also give patients confidence that they are protected against unfair billing practices and unnecessary procedures. India cannot aspire to become a global medical hub while allowing its healthcare ecosystem to be tarnished by unethical practices and profiteering.

The message is unmistakable: hospitals, like banks and insurers, need a watchdog — one with real teeth. Leaving healthcare entirely to market dynamics risks turning it into a profit-driven industry, undermining its true purpose of service. A strong regulator with statutory powers is the scalpel India needs — to cut out exploitation, restore trust and ensure that healthcare remains a public good rather than a commercial gamble.

If we can regulate money, markets, and insurance to protect consumers, why not healthcare, where the stakes are far higher? The time for systemic reform is now. Without decisive action, patients will remain at the mercy of a system that prioritises profits over people. A National Hospital Regulatory Authority is not just an option; it is an imperative.

(The writer is a practising advocate at the Madras High Court)

The views expressed above are the author's own. They do not necessarily reflect the views of DH.