Saturday, Nov 22, 2014

Spending won’t make it better

The quality of care standards in hospitals rarely focuses on the patient or functions in the interest of the patient. (AP) The quality of care standards in hospitals rarely focuses on the patient or functions in the interest of the patient. (AP)
Written by Meeta Rajivlochan | Posted: March 19, 2014 12:13 am | Updated: March 19, 2014 9:47 am

With a new government in the offing, all suggested agendas for health are talking of an increase in health budgets and the fact that at 1 per cent of the GDP, government spending on public health in India is one of the lowest in the world; the rest is out of pocket expenditure. The US is a prime example of the fact that an increase in health budgets is no guarantee of better healthcare. Until such time as we are able to achieve some transparency in pricing and some standardisation in hospital processes, there is every likelihood that a mere increase in budgets would only mean healthier balance sheets for hospitals.

Today, almost 72 per cent of healthcare-spending in India is in the private sector, and all indications are that this is going to be the case in future too. The private sector today accounts for almost 52 per cent of all inpatient care and 82 per cent of outpatient care. There is nothing wrong in such a trend: if private hospitals deliver better value for money, certainly they should be funded. However, a mere look at how private hospitals and health insurance function makes this a questionable proposition.

Health premiums have skyrocketed in recent years. This, however, has not meant that the policy holders are any better off. Grievances have increased at practically the same rate as health premiums. The rise in premiums mostly has to do with hospitals. Most health insurance companies in India have adverse claim ratios of over 100 per cent, which means that the entire premium is swallowed up in claims. Audit reports routinely say that the public insurers should reduce the costs of medical services by standardising procedures and costs. This is something that neither private nor public insurers have been able to do.

One reason for this has been that hospital charges for procedures are not transparent. Hardly any hospitals have standardised packages for high-cost procedures, like bypass surgeries, which include all costs from start to finish. Unless the consumer knows for instance that a bypass in a five-star hospital costs Rs 4 lakh in contrast to Rs 1.5 lakh in a smaller hospital, there is no way that he can compare the two. The insurers, for their part, have clearly said that they are unable to persuade the hospitals to offer package rates.

Second, and more importantly, even if one’s health insurer is willing to pay Rs 4 lakh for that heart surgery, the quality of service provided is uncertain. There is no central data repository in the government or with the insurers on the relative health outcomes for these procedures. So we have no way of comparing the performance of any given hospital continued…

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