Post GST, private health sector can’t absorb over 2% price rise: Apollo chief

While education and healthcare are out of the GST net, various rates are applicable to drugs, equipments, APIs etc.

Written by Abantika Ghosh | New Delhi | Published:June 21, 2017 1:53 am
GST, GST Rollout, Healthcare tax, Private hospitals GST Private hospitals may not be able to absorb more than a 2% rise in input costs after the rollout of GST, said Apollo Hospital chairman. (File Photo)

Private hospitals may not be able to absorb more than a 2 per cent rise in input costs post GST, Apollo Hospital chairman Prathap Reddy said on Tuesday. There are fears of a rise in drug prices once the new taxation system kicks in from July 1 but Reddy’s statement may signal wider concerns for the healthcare and pharma industries.

“We are still examining the impact GST will have on the healthcare industry. We can say that if the costs increase by something like 2 per cent we, the private sector, most of us – may be able to absorb that without impacting patients. However if it is 3-4 per cent or even higher then we will have to pass it on to patients,” Reddy said.

While education and healthcare are out of the GST net, various rates are applicable to drugs, equipments, APIs etc. Active Pharmaceutical Ingredients (APIs) are taxed at 12 per cent and this would have a trickledown effect. A non-profiteering clause makes it mandatory for input tax credit benefits to be passed to customers.

Reddy lauded the health ministry’s decision for universal screening for diabetes, hypertension and some cancers, repeatedly emphasising that non-communicable diseases were India’s big challenge in the coming decades. He cited the example of the 170 hamlets near his own village where the group over the last three years has screened 60,000 people. “We have made a presentation to the Niti Aayog on this model. We were told somebody from health, may be the secretary, should see it,” Reddy said.

He welcomed the government decision to cap stent prices but claimed that supplies of the high-end ones had dried out. “They (stent makers) do not say anything just say that it is out of stock. Some people are going abroad (to get high-end stents). There is not much of a change though. The number of procedures we were doing has not changed. I support the government’s decision. Basically what happens in patent products is that there is a price reduction when the patent period is over. In this case the stent firms were not passing it on to us though they were doing so in Europe.”

However, he said the plan to cap prices of more such devices — the list includes syringes, cannula, catheters etc — would make us a “government control” country, displaying his aversion to the idea. He emphasised the need to promote India as a medical tourism destination.

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