As incomes have grown in the post-liberalisation period and public health services have remained in the doldrums, growing numbers of private hospitals have come up to meet the burgeoning demand for healthcare of some quality. This process is similar to the growth in private colleges - and the two share the same dissonance between quality and costs. The mismatch is visible in many private hospital lobbies. Very ordinary people who would never go to a posh restaurant or a five-star hotel are visible there, having dipped into their long-term savings to grapple with a medical emergency in search of quality care.
The business of private hospitals is driven by the dynamics of patient acquisition and falls into two broad categories: consultant-driven and hospital-driven. Old-school doctors who value doctor-patient relationships would prefer to hold a patient's hand right through a therapy. But if you choose a hospital as a brand, you can't choose under whose care you will be.
A lot of the ills of private hospitals are attributed to consultants who only care about maximising their earnings. So at least one corporate hospital tried to eliminate them and rely fully on its own in-house consultants, but eventually it had to give up. It and some others have gone for a hybrid - consultants plus full-timers.
Newer or unbranded private hospitals seek to rope in consultants with a package. They offer, say, 10 per cent of bed charges, 25 per cent of out-patient diagnostic billing, 15 per cent of in-patient billing and 60 per cent of consulting fees. The final outcome is negotiated. A rule of thumb is that the consultant has to bring the hospital business equal to 10 times of what he earns. If he underperforms, he is first warned and then asked to go.
How much a patient ends up paying is partly determined by the hospital's assessment of what he looks good for. Whether he has medical insurance or non-resident Indian children is an important factor. Corporate hospitals and well-known names have quality certifications for processes and protocols for therapies. But you don't take an ISO certification for ethical billing. Medical insurance providers seek to impose some norms through third-party administrators (TPAs) and standard packages for common procedures; but at the end of the day, the hospital tells the patient what insurance will pay and what he has to spend. There is that elusive creature called "cashless insurance", which you sight only after you have paid a hefty cash advance on admission and after the TPA has cleared a permissible amount.
One way in which some private hospitals try to partially get out of the clutches of consultants is to convert themselves into teaching hospitals. Many consultants with thriving practices also like to teach in order to remain abreast of the latest scientific developments and interact with younger minds. The hospital gains by being able to engage the service of low-paid interns who keep the system running.
Within private hospitals, size matters. A large private hospital of, say, 500 beds has to maintain a flow of patients, just as a hotel has to avoid losing room nights. So they go in for agreements like those to treat patients covered by the central government health service or the armed forces. The consultants bring in the creamy layer and there is some cross-subsidising. Yet another category is hospitals run by religious institutions. They do not extract a corporate profit or promoter's share, but the need to have good consultants on your panel who will bring in patients makes all private hospitals the same, up to a point. And to categorise hospitals on ethics, geography becomes useful. At the top are Kerala and Chennai, then Bangalore and Hyderabad, and the last three are Kolkata, Mumbai and Delhi, in that order. As this list will tell you, private ethics are better where public health service runs better.
An institution builder overseeing a private hospital doubts if you can square the circle - be fair to patients and keep producing good quarterly financial results. To minimise the cost to patients, you need to be a social entrepreneur and be satisfied with minimal returns. A doctor with a lifetime's ethical practice behind him says you need an ombudsman for private healthcare as consumer courts deal with negligence, not overbilling.
But perhaps the sharpest comment I heard while researching this piece was from the head of one hospital: "Wherever you dig there is a cut. I have marketed consumer durables in the India of shortages. Those dealers were more ethical than some of the stakeholders I have to deal with today."
subirkroy@gmail.com
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