The imperative for fair and sustainable treatment costs

The ministry of health's recent initiative to engage private hospitals in consultations on standardising treatment costs reflects a groundbreaking moment in India's health care ecosystem. With the Supreme Court advocating for uniformity in charges, this move is promising for millions grappling with disparate health care expenses. However, as stakeholders converge for discussions, it's quite evident that achieving fair and sustainable pricing is a multifaceted challenge.

The Association of Healthcare Providers (AHPI) rightly emphasises the importance of adhering to scientific principles when determining the costs of medical procedures. The incurred capital expenditures (Capex) are susceptible to variations across diverse geographical locations and facility standards. The intricacies of health care pricing, influenced by geographic factors and varying facility quality standards, demand a nuanced approach to pricing strategies. Recent data indicating a medical inflation rate of 14% underscores the escalating operational expenses faced by health care facilities. The operational expenditures (Opex) sustained within the health care sector similarly exhibit variability across distinct geographical locales.

The National Sample Survey (NSS) on health provides a comprehensive view of India's health care scenario, highlighting that a significant majority (66%) of the Indian population relies on private health care services. However, the substantial expenses associated with private treatments often place vulnerable groups under significant financial strain. Despite this, private hospitals play a crucial role in the Indian health care system, offering advanced medical care and contributing significantly to health care infrastructure development. Balancing accessibility and affordability while maintaining quality standards remains a critical challenge that health care providers and policymakers must address to ensure equitable health care access for all.

India's health care expenditure continues to lag behind global benchmarks, standing at a mere 2.6% in the recent budget allocation. This stark disparity highlights the pressing need for comprehensive reforms in health care economics to achieve affordability without compromising on quality standards. As consultations and discussions on health care reforms progress, addressing concerns from all stakeholders becomes imperative. This includes hospitals, insurance entities, policymakers, and most importantly, patients. The disparity in access to affordable health care is a pressing social justice issue that requires urgent attention. While government schemes like PMJAY aim to bridge this gap by providing financial relief, the challenges related to participation and quality standards need to be addressed comprehensively. Encouraging renowned health care providers to participate in such schemes through incentives and streamlined processes can enhance accessibility to high-quality health care for the underprivileged.

One of the key challenges in health care economics reform is aligning pricing structures with the actual costs of providing quality health care. This involves considering factors such as medical technology advancements, infrastructure maintenance, staff training, and regulatory compliance. Failure to address these cost-related challenges can lead to financial strain on health care providers, potentially compromising the quality of care offered.

Ensuring that the tariffs offered to service providers under government schemes are reasonable and reflective of the actual cost of providing quality care is crucial. This not only safeguards the interests of patients but also incentivises providers to maintain and improve the level of care that is delivered.

Instead of standardising pricing models, standardised billing practices are required nationwide, outlining cost headings to promote transparency in medical billing. Standard billing practices are necessary to promote transparency and equity. It's equally crucial to implement capping procedures that ensure quality remains uncompromised. This collaborative effort fosters transparency, empowers patients to make informed decisions, and ultimately contributes to the efficiency and sustainability of the health care system. This delicate balance acknowledges the operational realities faced by health care providers while prioritising the delivery of high-quality treatment.

The collaboration of all stakeholders in capping costs procedure-wise can promote fairness and accessibility in health care services. Uniform treatment costs face challenges due to pricing complexity, considering the Capex and Opex and OPEX of medical facilities and the quality of resources deployed, alongside the impact of rising inflation. Collaborative efforts among stakeholders, including health care providers, insurers, regulators, and policymakers, are crucial in achieving a balanced and patient-centric pricing structure, bracketing treatment costs based on the level of quality delivered and the experience of the care provider. Introducing a procedure-wise ceiling cost with bracketed treatment costs can be a forward approach instead of standardising costs. Ceiling costs can be helpful in motivating the ecosystem to develop cost-effective clinical devices, medicines, and consumables. This perspective adds a dynamic element to pricing strategies, encouraging innovation and cost-efficiency within the competitive health care sector.

This collaborative approach fosters transparency, allowing patients to make informed decisions about their health care options and understand the associated costs. This not only benefits patients but also contributes to overall health care system efficiency and sustainability for the care providers as well, ultimately enhancing patient outcomes and trust in the health care system.

This article is authored by Sabine Kapasi, co-founder and MD, Enira Consulting Pvt Ltd and Ashish Panghal, senior consultant, Enira Consulting Pvt Ltd.