The Competition Commission of India (CCI) has raised significant concerns regarding pricing practices at private super-speciality hospitals in the Delhi-NCR region. In a comprehensive order examining how admitted patients are directed towards in-house pharmacies, diagnostic services, and consumables, the regulator highlighted that patients often become 'locked-in' once they are admitted to a facility.
Background of the Investigation
The order, specifically related to Sir Ganga Ram Hospital, is part of a broader probe involving 12 major private hospitals. The CCI examined whether these hospitals compel patients to purchase medicines, devices, and diagnostic services exclusively from hospital-linked facilities, thereby restricting their choices and potentially charging higher prices.
Response from Sir Ganga Ram Hospital
Reacting to the order, Dr. (Prof) D.S. Rana, Chairman of the Board of Trustees at Sir Ganga Ram Hospital, stated, 'We have received the order and are studying it. It is a welcome step by the CCI. We will respond after a thorough review.' The case originated from a complaint filed in 2015, which alleged inflated pricing of syringes in a hospital. During the investigation, the Director-General expanded the scope to cover other hospitals as well.
Key Findings of the Commission
The commission observed that hospitals frequently create a 'locked-in' effect for patients by encouraging or effectively restricting them to use in-house pharmacies and diagnostic tests. In-patients, according to the CCI, 'almost always use a hospital's in-house pharmacy and laboratories.' The investigation found substantial mark-ups in several diagnostic tests at Sir Ganga Ram Hospital between 2015 and 2018 when compared with external diagnostic chains. Specifically, liver function tests, renal biochemical profiles, reticulocyte counts, and blood culture tests were priced significantly higher than average rates in some years under review.
Imaging Tests and Pricing Analysis
The commission also examined the pricing of imaging tests. Some procedures were found to be priced over 50% higher than those offered by independent diagnostic centres. However, the CCI noted that the methodology used was inadequate, as procurement cost alone cannot be used to calculate excessive profit. Additionally, there was no finding that the prices exceeded the maximum retail price (MRP).
Hospital's Defense and Conclusion
Sir Ganga Ram Hospital informed the CCI that it functions as a charitable trust and uses revenue from paying patients to subsidise treatment for the needy. The commission ultimately closed the proceedings, stating that the evidence did not conclusively establish abuse of the hospital's dominant position.
