Opinion

This Medicine Kills the Patient

The amendments to the Karnataka Private Medical Establishments Act hurt both doctors and patients, especially the poor ones.

Over 40,000 doctors in Karnataka refused to report for out-patient duties on November 3, 2017. On November 13, doctors from all over Karnataka convened en masse in Belgavi, where the winter session of the State Assembly is taking place. Most hospitals and clinics across the state have been shut down or are treating only emergency cases in the state since November 14, as doctors have called for an indefinite strike in the state.

The altercation between the Karnataka government and the medical fraternity in the state can be attributed to a set of proposed amendments to the Karnataka Private Medical Establishments Act (KPME). The KPME, when introduced in 2007, had sought to weed out quacks and identify genuine medical practitioners in the city. It had mandated licensing for all medical establishments, which had to be renewed once every five years. The Act also required each medical establishment to acquire a certificate from the State Pollution Control Board, by entering into a contract with a government-approved bio-medical waste treatment agency. Finally, the Act had asked all hospitals to display the prices of all procedures and treatments that it provided.

While these provisions in the Act were troublesome for many hospitals – getting a licence was never easy and treatment costs varied from patient to patient, which meant that displaying the prices like a café was difficult – the Act was seen to be largely toothless in its power to enforce the laws. The proposed amendments seek to remedy that through the most expected knee-jerk solution that governments usually think of – price caps. The amendment proposes to fix the prices of all treatments, surgical procedures, operations, and diagnostic services in the state. In case of a violation of the price cap, the doctor/hospital can face a fine from Rs 25,000 upto Rs 5 lakhs.

It is truly incredible to see how governments across the world believe that price caps can be an effective solution, despite overwhelming evidence to the contrary. It is a tempting solution, no doubt. When the prices of essential commodities and services are deemed too high and the poor cannot afford it, it is indeed tempting for the policy maker to be the messiah and implement a price cap. However, price caps just do not work and have never worked almost anywhere in the world. Why would any government think that it would be different this time around?

Take the example of a recent price cap by the Union Government on coronary stents, used in heart operations. The price cap created shortages in stents; stent manufacturers pulled out the high-end versions of their products from the Indian market and will be highly reluctant to introduce any new innovation in India.

In addition to the price cap, the amendments also seek to introduce a consumer Grievance Redressal Committee at every district. The Committee has the power to summon any doctor and impose fines for any misconduct, which include overcharging, prescribing unnecessary treatments, not maintaining patient records, or any violations of the patient’s rights. The amendment gives the committee all the powers of a civil court.

While a consumer redressal forum isn’t necessarily a bad idea, the Indian Medical Association has argued that there are plenty of other legal avenues that already exist for redressing consumer complaints and trying erring doctors. There is the Indian and Karnataka Medical Council, District/State/Central Consumer Redressal Forums, Civil and criminal courts at every administrative level. Yes, our courts are burdened and justice might take some time, but that is not an excuse to set up kangaroo courts for specialised purposes.

The end result of the price cap and the strict punishments associated with ‘erring’ doctors will end up harming the public. Doctors will move out of Karnataka to neighbouring states where there are no price caps. Many small hospitals will find it unviable to operate and will shut down. Prices of any part of availing medical services that is not covered by price caps will shoot up. One can imagine hospitals using innovative methods to raise revenue, such as visitor fee, patient registration fee, maintenance and cleaning charges, ambulance charges, and so on.

Price caps will also severely impede new hospitals from being opened. At a time when many rural areas in Karnataka desperately needs private investment in health care facilities, the price cap will ensure that no new hospitals spring up. Establishing and running a hospital is an expensive affair. Many of the medical machinery, tools and equipment are expensive and have to be imported. It takes a long time for a hospital to recover these costs under normal circumstances. With a price cap, there is a good chance that the hospitals will not make any profits for a long time.

Doctors will also be extremely wary of every decision they take or recommendation they make to the patients. They will be disincentivised to take proper precaution and care.  Consider this scenario: should the doctor prescribe a post-operative patient to be kept in ICU for a day more for close monitoring? Will the grievance redressal committee consider this as overcharging or prescribing unnecessary procedures? Patients often complain that hospitals prescribe far too many tests to make money. Will doctors now be cautious against making patients undergo some diagnostic tests to understand their patients better? This will end up creating an anxious and uncertain environment for the professionals we entrust our lives to. Doctors will now be prone to take ‘safe’ options that may not be in the interest of the patients. For complicated cases, where expenses may escalate or many complicated procedures have to be conducted, the safe option for doctors is to refuse treatment altogether.

The other amendments to the bill are also equally bizarre. Licences have to be renewed every 3 years as against 5 previously, which is bound to increase rent seeking among officials and increased costs to medical professionals. The amendment also mandates that there shall be no private clinic with diagnostic facility within 200 metres of a government hospital. This is anti-competitive in nature. The most bizarre aspect of the entire Act is that all these provisions are applicable only to private hospitals and not to government hospitals.

Affordability and accessibility of good healthcare is a genuine problem. Many Indians and people of Karnataka cannot afford quality healthcare. There are also genuine cases of hospitals abusing the information asymmetry present in the system. Some erring doctors might abuse the ignorance and fear in patients and prescribe unnecessary and expensive treatment. However, the proposed amendments are not solutions to the problem. They will only worsen the status quo and end up harming the poor, by denying them service altogether.

A universal health care plan or insurance scheme is a better option than price caps. Information asymmetry can be fought through easy availability of second opinions (even government provided) and user-generated ratings and reviews. The government should also look at cleaning up its own house and upgrade the standards of public hospitals. Finally, it would be useful to look into the reasons for the high costs associated with medical care. The government can reduce the import duty on medical equipment, make it cheaper and easier to obtain licences, reduce unnecessary regulatory burden and compliance costs, and ensure that there’s adequate competition in the industry.

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About the author

Anupam Manur

Anupam Manur is a Research Fellow at the Takshashila Institution. He was previously working as a Research Associate at the Indian Institute of Management – Bangalore. His policy research areas are at the intersection of economics, technology, and public policy. He is currently working on digital payments, blockchain and bitcoins, urban transport, and unaccounted income in India.