[Ip-health] Hospitals make a killing on medical devices like stents, implants

K.M. Gopakumar kumargopakm at gmail.com
Tue Jul 15 06:29:38 PDT 2014


Hospitals make a killing on medical devices like stents, implants
Rema Nagarajan
<http://timesofindia.indiatimes.com/toireporter/author-Rema-Nagarajan.cms>,
TNN | Jul 13, 2014, 12.58AM IST
[image: pacemaker]
In several hospitals, margins on devices like stents and pacemakers could
add up to as much as 30% of their profits.
The cost of medical devices like stents and pacemakers is enough to give
anyone a heart attack. TOI found that patients were being forced to pay
double or even triple the price for medical devices at hospitals. As most
of these are not available in the open market, patients can't check prices
and are held hostage by hospitals, which force them to buy at the price
they quote.

Sources in the healthcare sector told TOI that in several hospitals, the
margins on devices — ranging from stents, implants and pacemakers to
artificial joints, titanium plates for fractures, and valves — could add up
to as much as 30% of their profits. Hundreds of such devices are used in a
hospital every day. Of course, it is the patient who pays for these
handsome margins.

Take what happened to a lawyer whose father was admitted to a 'charitable'
hospital in Kochi. The doctors advised that the patient needed three drug
eluting stents at Rs 95,000 per stent. Since he knew the pharma and medical
devices market reasonably well, the lawyer went directly to the hospital's
supplier, who offered the same stents for about Rs 40,000 each, a rate much
higher than would have been charged to a bulk buyer like a hospital. But
the hospital refused to use a stent bought by him. He had no option but to
take the stent provided by the hospital as his father could not be shifted.
After much haggling, the hospital offered to give three stents for the
price of two, charging him Rs 87,000 for each. The final price of each
stent, including the 'free' one, was effectively Rs 58,000.

"The actual cost at which the hospital gets it is probably in the range of
Rs 30,000 or even less. That's a mark-up of almost 300% on just one stent.
And this was a top-of-the-line branded stent from one of the biggest
multinationals. There were many patients there who were being charged the
full amount. Even the supplier gets a cut from the company. Imagine what
the actual price might be if directly sourced from the company, probably
about Rs 20,000," said the lawyer.

Adding to the margin on devices is the profit hospitals make billing
patients for medicines using the same principle of buying cheap in bulk and
selling at a much higher price to the patient. In fact, devices, medicines
and diagnostics could account for as much as 70% of a hospital's profit.
Some very reputed doctors confirmed to TOI that this was the case, but
asked not to be named.

Experts feel that making it mandatory to declare the maximum retail price
on each device could help cap the price and make companies compete to offer
lower prices. However, doctors point out that having an MRP has not
prevented profiteering in medicines, with the MRP being fixed high enough
to accommodate commissions since there is no limit on what the MRP can be.
Moreover, while MRP is mandatory on everything manufactured in India, many
devices are imported and escape this stipulation.

Another suggestion is that devices be prescribed by doctors but left to
patients to buy from pharmacies where several brands could be stocked to
allow patients to decide. "After all the sterility required of a medical
device like an implant is of the same level as a syringe or bandage. If
those can be bought in pharmacies, why not devices? This system of
hospitals meant to sell services becoming peddlers of wares compromises the
right of a patient as the consumer to choose," argued one expert in favour
of open purchase. But not all patients would relish the extra hassle of
having to purchase each item themselves. They might also feel they do not
know enough to make an informed choice.

A surgeon in a corporate hospital narrated how a company offered him a
stapling gun used in surgeries at Rs 20,000, which he found to be as good
as the one he was using regularly but which cost about Rs 22,000. "Since it
saved the patient Rs 2,000, I decided to use the cheaper one. But I got a
call from the purchasing section of the hospital to go back to using the
earlier one since the company gave it to the hospital for Rs 14,000, which
meant a mark-up of Rs 8,000, while the other company offered its gun to the
hospital for Rs 16,000, which meant only Rs 4,000 for the hospital," said
the surgeon. He went back to the one that cost Rs 22,000 since both were
equally good. In most hospitals, if two devices are more or less equal, the
choice of which one is used depends on which fetches the hospital a bigger
cut.

"If the Telecom Regulatory Authority of India (TRAI) can regulate and
prescribe ceiling rates for call charges or roaming charges, why is there
no government regulation on what hospitals can charge for medical
procedures and devices? Just as there is a National Pharmaceutical Pricing
Authority (NPPA) for medicines, there ought to be an authority that
regulates the price of devices. Why is the government allowing hospitals to
loot patients like this?" asked the lawyer whose father had three stents
implanted.

*Behind the ballooning bills*

· Whether it's drugs or devices, hospitals buy cheap in bulk and sell at a
much higher price to patient

· If two devices are more or less equal, hospitals choose the one that gets
them a bigger cut

· Experts suggest making MRP mandatory on devices or a price regulatory
authority

· Another option is to let patients buy from marke
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