What is the issue?
- The Delhi government has recently released a proposal to cap hospital’s profit on drugs and devices.
- This will lead to major concerns in provision of healthcare.
What is the decision of the Delhi government?
- Many cases were charged by the patients against the private hospitals for billing exorbitant prices.
- To address this, an expert committee was formed to reduce the out of pocket expenditure of patients and improve overall access to healthcare.
- National Pharmaceutical Pricing Authority (NPPA) also reported that private hospitals’ profit-margins on various medicines and other consumables were between 350% - 1,740%.
- Therefore, to reduce the health burden of patients, the Delhi government released this proposal to cap 50% of private hospitals profits.
What are the concerns with this proposal?
- The reports and recommendations have failed to include the high capital and operational expenditure of private hospitals when calculating their profits.
- Land costs of private hospitals were not considered which are comparatively higher than the government hospitals as they are present in all major cities and in easily accessible locations.
- The net profit margins reported by the private medical institutions themselves are nowhere near the numbers reported by NPPA.
- Therefore to maintain their current profit levels, private hospitals could end up increasing the cost on rooms and surgeries.
- There is already a huge shortage of hospitals and doctors in Delhi where only 2.7 beds are available for 1000 people, the WHO recommended beds being min 5.
- Therefore, capping hospitals will do more harm than good to the public and hence it has to be let go for better healthcare measures.
Source: Financial Express
