Indian healthcare industry during COVID times: Are the fundamentals right?

August 11, 2020

By – Devendra Tayade, Indian School of Business, Hyderabad

India recorded its first case of COVID-19 on 30th January 2020. In the next two months, the numbers started to rise, forcing the government to take some drastic measures such as the total lockdown of the country. This has not happened at any point in time in independent India, except for the national emergency declared by the then Prime Minister of India, Indira Gandhi during 1975 to 1977. China, which was in focus and was topping the charts for COVID-19 cases in January 2020 is nowhere in the top 20 nations seven months later, while India has moved to the third position, next only to USA and Brazil, with two million cases to its credit. Since the last two weeks, India has been recording more than fifty thousand cases every day (“WHO Health Emergency Dashboard”, 2020). The rising numbers of COVID-19 cases and the total lockdown in the country indicated that these were indeed unprecedented times that required a well-coordinated response. Alas, except for a few states, as a country, we have been woefully lacking in terms of appropriate responses required to tackle this pandemic.

The apathy

As the COVID-19 started gaining its foothold in India, some chilling reports of the treatment being meted out to the patients facing other health situations started coming in. Out of fear, most of the hospitals across the country were either closed or admitted limited patients based on undefined criteria. In Delhi, a pregnant woman lost her life in an Ambulance, when despite knocking doors of half a dozen government as well as private hospitals for thirteen hours, no hospital bothered to admit her (‘Denied admission’, pregnant woman dies in ambulance”, 2020). This was not a one-off case, as several such cases were reported in Telangana, Rajasthan, and Manipur. The lockdown also proved to be bad news for the patients requiring regular hospital visits for dialysis and chemotherapy. (Lalwani, 2020).

As the public healthcare system geared up for the COVID-19 patients, while ignoring or neglecting patients with other health conditions such as TB, HIV, Malaria, etc., it did not ensure that even the COVID-19 patients received the best possible treatment. A particular case that sent chills down the spine was the one from the Government Medical College in Jalgaon, Maharashtra. An 82-year-old woman was found dead in the toilet of one of its ward, eight days after going missing from the ward. The death came to the notice when the patients complained of the foul smell coming from one of the toilets (“‘Missing’ Covid-19 Patient Found Dead inside Hospital Toilet in Jalgaon Hospital”, 2020). Incidents such as these increased fear among the general public, not only about getting infected by the virus but also about the apathy they would have to face if admitted to the government hospital. If such incidents dented the trust of the public on the public healthcare system, the country’s leaders getting admitted to corporate hospitals upon getting infected didn’t serve as a good advertisement for the public healthcare system either (“Majority of Politicians Who Contracted COVID-19 Have Preferred Private Hospitals”, 2020). This nudged the general public, especially those who could manage to pay the hefty prices being charged by private hospitals, towards the latter.

The loot

While the patients visited private hospitals in the hope of being able to save their lives even if it came at an expense, they were soon to receive a shock as various hospitals across the country asked the patients for a deposit of an amount in the range of INR 0.1 million to INR 0.5 million at the time of admission (Ravi & Babu, 2020.) Those who were insured were turned away by the hospitals, as they denied them a cashless facility. Black marketing of the beds surfaced as another issue; on a live call by a news channel, a hospital in Delhi denied the availability of any beds in the hospital and then upon insistence asked for an advance of INR 0.8 million (Ravi & Babu, 2020). While the hospitals claim that they refund the unused amount, the question remains as to where do the patients, especially belonging to the lower and middle-income classes, get such huge amounts of money to make the advance payment, and what was the rationale used by the hospitals to ask for a particular sum as an advance? Some hospitals claimed that they had incurred huge losses in the last few months; they had to cut the salaries of their staff and were just recovering the costs as they served COVID-19 patients. This leads to another question: If the staff was not paid full salaries, then what formed the major component of the costs incurred by the hospitals?

The innovation

Another shock awaited those who survived the hiccup of the admission: the hyper-inflated bills, often INR 0.1 million for one day, building up to INR 0.4-1.2 million for a ten-day stay at the hospital. As more and more complaints started pouring in, certain state governments took a notice of it and capped the prices that were charged to the patients. In Telangana, the prices were capped to INR 4,000/ day for general ward bed, INR 7,500 for ICU bed, and INR 9,000 for ventilator bed (Apparasu, 2020). Similar capping was done by several other states such as Maharashtra and Delhi. However, as they say, necessity is the mother of all inventions; the private hospitals came up with innovative ways to charge patients by adding additional heads such as hygiene charges, N95 allocation charges, PPE kit charges, staff management charges, fumigation charges, etc. in addition to the regular costs (as capped by the governments)(Marpakwar & Baliga, 2020).

In response to a PIL filed in the Telangana High court against exorbitant charging by the hospitals, Yashoda Super specialty Hospital, Medicover Hospital, CARE Hospital, and Sunshine Hospital were issued notices (Rupavath, 2020). In some stricter actions, Deccan Hospital and Virinchi Hospital were stripped of the permission to treat COVID-19 patients over proven charges of “charging exorbitant rates,” and indulging in “improper and surplus billing” and not adhering to the ceiling guidelines (“Hyderabad’s Virinchi Hospital too loses licence for treating COVID patients”, 2020). While these actions by the state health bodies are welcome, were they enough? Moreover, would the patients who suffered at these hospitals receive any remedial support?

Opportunism and the loss of rationality

In an announcement, when the State’s Director for Health, Government of Telangana announced that the capped prices of the beds at private hospitals did not apply to the insured patients (“COVID-19 | Capped charges not applicable for those who avail insurance, says Telangana”, 2020), it made one wonder if the capped prices by the government were based on any rational logic. If the capping was logical, how was charging insured and uninsured patients differently rational?

With the increasing demand and focused manufacturing, one expected the cost of treating COVID or at least the cost of essentials and consumables to go down. But this didn’t happen.

As the fear gripped the country, hand sanitizers and face masks started going off the shelf. The size of markets for both the products increased multi-fold. While the government classified hand sanitizer as an essential commodity, it was interesting that it attracted 18% GST, while other products in the same category attracted 12 % GST. Authority for Advance Ruling (AAR) in July, 2020 ruled that these sanitizers, being alcohol-based, will attract 18% GST as is the case with other alcohol-based products (Sharma, 2020)!

The N95 masks also witnessed a significant rise in their prices since January, 2020. The same masks that were procured by the government agencies in January for INR 17.33 (including taxes), according to a price list released by National Pharmaceutical Pricing Authority (NPPA) in June, 2020, were available for MRPs in the range of INR 95 to INR 165, indicating an increase of prices by 450% to 850% (Nagarajan, 2020).

While healthcare workers at public hospitals conducted sit-ins to protest the lack of PPE kits, the private hospitals were flush with the same. In May, 2020, the central government announced that around 0.3 million PPE kits and N95 masks were produced daily in the country. Also, 11.11 million N95 masks and 7.45 million PPE kits were provided by the central government to states, union territories, and the central institutions (“PIB’S DAILY BULLETIN ON COVID-19”, 2020). This leads to the question of where were they supplied to and why did the doctors conduct sit-ins at various institutions across India?

Irrational use and pricing of the kit was another problem. Patients across the country were charged somewhere to the tune of INR 3,000 to INR 10,000 per day for the PPE kits. Considering that the Tamilnadu government procured good quality kits that included triple-layered N95 masks at INR 362 per kit, one can question if these kits were being used and if so, were the patients being charged rationally (Bhuyan, 2020).

If the hand sanitizers, N95 masks, and PPE kits are the essentials in the fight of COVID-19 then why have their prices not been regulated?

The suffering of the Healers

While various cartoons and jokes were being shared about the doctors looting the patients, to a call by the central government for volunteers, around 38,000 doctors who were either retired from their services or ran their private practices, registered with NITI Ayog, making themselves available for COVID-19 duties (“More than 38,000 doctors volunteer to join fight against Covid-19”, 2020). While doctors and nurses responded to the call of duty, their employers and the society betrayed them. In private hospitals, healthcare workers had to take a salary cut of 50 to 80% and in certain cases had to face lay-offs. There were several cases in various cities where the Doctors living in the rented homes were asked to vacate by the society boards (“Amid fears of Covid-19, two doctors asked to vacate rented homes in Pune”, 2020). Amid the lack of PPE kits, absence of measures to ensure their safety, and the non-payment of their salaries, the doctors, discharging their duties at government hospitals, had to approach the supreme court. Responding to the PIL filed by Dr. Arushi Jain, the supreme court deemed withholding salaries of the COVID warriors as criminal and ordered the central government to ensure that the salaries of the healthcare workers doing COVID duties were not withheld and that they are provided with adequate protection and facilities for isolating themselves while being under mandatory quarantine (“Coronavirus | Direct States to pay salaries to doctors, Supreme Court tells Centre”, 2020). In unprecedented times, when the healthcare workers fought at the forefront of what is now termed a “war”, did the society and the government bodies adequately support COVID “warriors”?

The way ahead

The way in which the Indian healthcare industry has responded to the COVID-19, raises the question on whether the fundamentals that guide the healthcare industry are right? Is the healthcare industry on the right path? Is it serving the purpose that it was designed for? Does it have a purpose? Do all its stakeholders, namely, the public hospitals, private hospitals, the pharmaceutical industry, manufacturing industry, insurance, government health agencies, regulatory bodies, etc., share the same purpose? While dealing with the COVID-19 situation and even otherwise, are they on the same page? Right now it doesn’t appear so.

So what is the way ahead?

Listen and act synergistically

Till date, the government bodies have been communicating with the hospitals through government orders, without taking them into confidence and addressing their issues such as lack of resources, delayed or non-payment of insurance amount receivable by the hospitals, etc. There is certainly a trust deficit among all the stakeholders of the healthcare delivery in India. COVID-19 is a God-sent opportunity for the medical community and the healthcare industry to regain the trust, that they have lost in the eyes of the community, by supporting the community in these difficult times. The government bodies need to sit down at the drawing table alongside other stakeholders, listen to them, and discuss what can be done to ensure access to quality care to everyone during the COVID times. The unprecedented times require unprecedented efforts that can be achieved through collaboration.

Articulate a vision

In the longer run, the government, various government healthcare agencies, and various stakeholders must sit together and articulate a vision that will direct their actions. The bad shape of healthcare is not due to doctors but due to the lack of purpose, vision, and alignment among all the stakeholders.

Identify partners in purpose

The government must identify organizations that would be their partners in achieving the core purpose and then be an enabler for them to take healthcare to everyone. India has enough healthcare models that have been attempting on their own to make quality care accessible to everyone. They need to be supported while they go about doing their work with a clear conscience, and consulted while designing the policies. The government must also realize that not all hospitals would be interested in its call to serve people because they never were. They were in the healthcare “industry” for the sake of profiteering. Making them fall in line would require extra effort which cannot not be done at this time of crisis. They will, in any case, find new ways to bypass the orders and loot the patients to maximise profits. The regulatory bodies may tighten the noose on these mercenary healthcare providers, but without any expectation of them mending their habitual ways.

Use well-tested management principles

It is a known fact that buying in bulk reduces the cost. In addition to capping the prices of consumables, the government can procure all the consumables centrally and distribute it to its partner hospitals.

Take care of the warriors

The healthcare workers have been putting in a herculean effort during the COVID times. The least their employers can do is to ensure their safety and pay them on time. When we call COVID-19 a war-like situation, the soldiers cannot be expected to fight with full motivation in the absence of required resources and on empty stomachs. They need to be trusted and cared for.

Become “Atmanirbhar” (Self-reliant)

If anything good has happened during the COVID-19 situation, it is that the real character of various stakeholders has been unmasked. Currently, 80% of the outpatient services are taken care of by the private sector, which has clearly not risen to the occasion. By the time another COVID like situation arises, the government would not want to be in a similar situation. For that, the government will have to increase its public healthcare spending in a meaningful way. The public healthcare system, especially the primary and the secondary care systems would require strengthening in terms of good HR and quality systems, ensuring that the common man does not have to face apathy of the system again.

Right now, the fundamentals that have been guiding the healthcare system are weak but as Victor Frankl says, “He who has a why to live for can bear almost any how,” the Indian healthcare system too can manage calamities if it has a strong “why.”

To discover the “why,” the leaders will have to stand up and use the Talisman given to our country by the father of our nation, Mahatma Gandhi, to discover the right path:

“I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions? Then you will find your doubts and your self melt away.” (Mahatma Gandhi – The last phase, 1958)


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