Recently I went to Miraj, the small town in western India where I grew up. There, on the five kilometer long road, I saw more than 50 multi-specialty hospitals, testing centers and health clinics.
Many of these hospitals and testing centers have opened only in the last five years. However, this city of Maharashtra has long been a major treatment center for the surrounding areas.
These new hospitals and testing centers opening in such large numbers show how rapidly India's private health sector has grown in recent years.
Hospitals are expanding rapidly by adding thousands of new beds every three months. The companies running testing centers are reaching small towns. Medical institutions are raising crores of rupees from the stock market to expand across the country.
In early August, India's largest multi-specialty hospital company Manipal Health raised about Rs 9600 crore from its IPO.
It became India's second largest IPO this year.
no shortage of investment
This area has also become the choice of big companies making private equity investments across the world.
Between 2022 and 2024, about 600 mergers, acquisitions and private equity deals took place in Indian health and pharmaceutical companies. Their total value was Rs 2.88 lakh crore.
According to Grant Thornton data, 40 percent of this amount went to hospitals.
Recent figures obtained by BBC from a consultancy company show that in the last two years this sector has also raised an additional amount of Rs 1.92 lakh crore.
With this wave of investment, health facilities in the country have increased and access to treatment has become easier for people.
But due to this rapid expansion, the treatment has become so expensive that crores of Indians cannot afford it.
expensive treatment
A government committee has said in its new report released recently that the benefits of the rapidly growing health sector in India are not reaching all the people equally.
The report expressed serious concern over the deepening crisis in affording treatment in private hospitals. The report found that treatment in private hospitals is often five to 10 times more expensive than in government hospitals.
This difference increases even more in the treatment of serious diseases like cancer, heart disease and kidney failure.
The report said that clinics, nursing homes and testing centers are expanding without any restriction. Also, the rules and standards related to treatment are not being implemented equally everywhere.
Because of this, there is a huge difference in the quality and cost of treatment in the private health sector.
Patients may be charged arbitrary amounts and are also at risk of receiving substandard treatment. The report also blamed the rapid commercialization of private health services as responsible for the increasing complaints from patients.
These include excessive billing, unnecessary tests and rapidly increasing expenses on routine procedures like childbirth.
According to the report, this is directly impacting the weak families. They are in huge debt and trouble. Many families have to sell their property for treatment.
Government committee gave suggestions
Earlier this week, Maharashtra's food and drug regulator also found that sets for giving medicines or liquids through IV were being sold in hospitals at a staggering profit of up to 2,800 percent.
This has raised questions on the prices of medical equipment. According to the regulator, there is almost no monitoring of their prices.
The government committee has given many suggestions to deal with these problems. There may be controversy over some of these.
The committee has suggested that the room rent in a hospital should not be more than the room rent in the nearest three-star hotel.
The prices of essential treatments, tests and common medical procedures should be fixed in all private hospitals. To prevent over-treatment, specific rules of treatment should also be made.
The committee has also expressed concern over more than 51 percent foreign stake in the hospital chain. Private hospitals in India have opposed some of these suggestions.
Siddharth Bhattacharya, general secretary of NetHealth, an organization representing India's private health sector, said in a statement to the BBC that the government should focus on reducing the basic cost of providing health services instead of fixing treatment rates.
This cost includes taxes, land, capital, employees and expenses incurred on complying with government rules.
According to him, health services require a lot of capital and investment. The return on capital invested in this sector is around 10 percent.
This is much less than many other sectors of the economy, where the return on capital is one and a half to two and a half times more.
He also warned against comparing hospital room rates with hotel room rates.
He said that while making such comparisons, the important rules that hospitals have to follow are ignored.
These include standards to prevent infection and rules related to patient safety. All this costs money.
From Max Healthcare to Fortis, the country's biggest hospital companies have warned that such an arbitrary cap will "put a halt" to investment in the health sector.
If foreign investors do not get risk-free returns on their money, they may also step back from investing.
But public health experts say that there must be a debate on the rules for setting prices in India's private health sector.
The reason for this is that at present private health services in India are completely run by sellers. This means that hospitals and treatment providing companies have the biggest role in determining the price.
Dr. Srinath Reddy of the Public Health Foundation of India told the BBC, "Money from big foreign private equity companies is coming into hospitals, especially for critical and specialized treatment. In such a situation, decisions related to the cost of treatment are basically being made by people sitting outside the country. This should not happen."
Vivek ND, another health policy expert, said that government intervention is necessary because many of these hospitals are making huge profits.
He said, "The increasing emphasis on conducting various tests in these hospitals and putting pressure on conducting such tests which may not even be needed, should also be investigated."
According to Vivek, some suggestions of the committee can help in reducing the cost of private treatment. These include suggestions for a more equitable system of Goods and Services Tax i.e. GST.
However, he also said that before making any suggestion mandatory, there should be a large-scale conversation with people associated with the health sector.
Doctor Reddy also agrees with this. He said that before the government decides the price of treatment arbitrarily, there is a need to find out how much private treatment actually costs across the country.
He said, "The cost of treatment will be different in every state and every city. Therefore, the same limit cannot be imposed across the country."
India needs additional investment of $300 billion
Experts say that to reduce the expenses of patients, the biggest emphasis should be on strengthening government health services. The government committee has also given the same suggestion.
The Indian government currently spends 1.4 percent of the country's gross domestic product (GDP) on health services.
This is less than the target of 2.5 percent set in the National Health Policy almost a decade ago. WHO has advised five percent for this and India's expenditure is far behind that.
The report of the government committee also says that the government's expenditure on the treatment of common and serious diseases is much less as compared to the requirement.
Because of this, people have to go to expensive private hospitals and spend so much from their own pockets for treatment that they get into serious financial trouble.
In such a situation, policy makers face a double challenge. They also have to see that investors do not leave the sector and also ensure that essential health services do not become out of reach of the common people.
