CCI flags pricing concerns at Delhi private hospitals; questions patient ‘lock-in’ practices | India News
New Delhi: In a sweeping order probing pricing practices at private super-specialty hospitals in Delhi NCR, the Competition Commission of India (CCI) has raised concerns over how admitted patients are directed to in-house pharmacies, diagnostics and consumables, with the regulator observing that patients often get “locked-in” once.The 32-page order related to Sir Ganga Ram Hospital is part of a wider probe involving 12 major private hospitals in Delhi. The regulator found that hospitals effectively forced admitted patients to purchase drugs, devices and diagnostic services only from hospital-affiliated facilities, leaving them with little practical choice during treatment.Reacting to the order, Sir Ganga Ram Hospital Board of Trustee Chairman Dr (Prof) DS Rana said the hospital is reviewing the findings.“We have received the order and are studying it in detail. Initially, it is a welcome move by the CCI. We will come back further after studying the order in detail,” he said.The case stems from a 2015 complaint alleging price gouging of syringes at a Delhi hospital. During the probe, the director general (DG) widened the probe to cover multiple super-specialty hospitals across the capital.The commission noted that hospitals often create a “lock-in” effect for admitted patients or effectively restrict them to in-house pharmacy and diagnostic facilities. “Inpatients, almost always, resort to the use of in-house pharmacies and laboratories,” the order observes.The DG’s investigation found substantial mark-up in various diagnostic tests at Sir Ganga Ram Hospital between 2015 and 2018, when compared with individual diagnostic chains. According to the mandate, tests like liver function test, renal biochemical profile, reticulocyte count and blood culture test were significantly higher than the average market rate in some of the years under review.The commission examined the value of MRI, X-ray and ultrasound procedures. It recorded that the prices of some imaging procedures were 50% higher than the rates charged by individual diagnostic centers in parts of the investigation period.However, the CCI said that the DG’s methodology for determining unfair pricing was insufficient, noting that procurement costs alone cannot be used to calculate additional profit margins as it does not account for storage, supply chain, staffing and operational costs borne by hospitals.The Commission also observed that hospitals are not under any legal obligation to pass on the purchase profit to the patients.Importantly, the order said there was no finding that the prices charged by the hospital exceeded the maximum retail price fixed by the manufacturers for the drugs or consumables.CCI also acknowledged that hospital-based diagnostics operate around the clock and involve higher staffing and infrastructure costs than individual labs, making direct comparisons difficult.Sir Ganga Ram Hospital has defended its pricing structure before the commission, arguing that it operates under a charitable trust model and uses revenue from patients’ payments to subsidize treatment for economically weaker sections.The hospital also argued that the charges reflect costs associated with 24×7 emergency preparedness, specialist manpower, advanced medical equipment and hospital infrastructure.While raising concerns over pricing practices and patient lock-in, the commission eventually dropped proceedings against the hospital, saying that evidence gathered during the investigation did not conclusively establish abuse of a dominant position under competition law.
