‘Private hospitals make a profit of more than 100% in each episode of hospitalisation’.

New Delhi: Hospitalisations in the private sector has always been a cause of concern for the general population in India as it has more often than not burnt a hole in the pocket of the middle class and this has been proven in a recent study which shows that a common household in India spends almost three times more in a private hospital than they would in a public hospital for the same disease and for same period of hospitalisation.
The study conducted by Indian Institute of Technology (IIT) Jodhpur, which has been published in an international peer reviewed journal, Health Economics Review, says that a single day of hospitalisation in the public healthcare would cost Rs 2833, while for the same diseases, a single day hospitalisation would cost Rs 6,788 in a private hospital. Interesting to note here that, while factoring in the cost of Rs 2833 for a single day hospitalisation in the public sector, the researchers at IIT Jodhpur have taken into consideration all the costs that a hospital has to bear even in the public sector and while calculating this cost, they have not taken into account the subsidy that is provided by the government in public health care facilities. Dr Alok Ranjan, Professor, School of Liberal Arts, IIT Jodhpur, told The Sunday Guardian, “While doing this comparative study, we have taken into account the real cost of human resources, land, building, maintenance, services and all other such expenses that is incurred in running a hospital and we have come to this conclusion that the cost of treatment for one day in a public hospital is almost three times less than that of the private hospital.”
“We have also calculated the cost of land at market value for public hospitals since they do not have to pay for the land and also the maintenance at real time value of the market; despite that, we have seen that there is a huge difference in costs for treatment between public and private hospitals,” Dr Ranjan said.
Dr Ranjan further added that to be true and fair to the study, they have also taken into consideration the hospitalisation for the same diseases in the public and private hospitals. The study also further provides information on the disparity in the cost of an episode of hospitalisation for same diseases, both in the public and private hospitalisation. According to the study, one episode of hospitalisation on an average could cost the common man somewhere between Rs 14,000 to Rs 15,000 in a government public healthcare facility, while for the same diseases and same duration of hospitalisation, it could cost the common man over Rs 38,000 in a private hospital, indicating that private hospitals make a profit of more than 100% in each episode of hospitalisation.
“As I had mentioned earlier, we have taken every aspect of the cost that is incurred during a hospitalisation and the huge difference between the two. The only reason for this could be that the profit margin at private hospitals is very high, while government hospitals make no profit,” Dr Ranjan told this newspaper. This study also gives credence to activists who have been wanting that the government help in improving and providing much of the healthcare to Indians through the public health care system. Dr Ranjan also suggested that it is better for the government to invest more in the public healthcare system and provide healthcare to the public through the public sector rather than purchasing it from the private sector. “This finding has important implications for the allocative efficiency and the desired public-private provider-mix. Using public resources for purchasing inpatient care services from private providers may not be a suitable strategy for such contexts,” Dr Ranjan said. Asked if the private hospitals IIT Jodhpur studied had better machinery, technologies, and senior consultants and surgeons which could have increased the cost of hospitalisation in the private sector, Dr Ranjan said, “We have factored also those aspects. We have also seen that on many occasions, private hospitals do compromise on the qualification of nurses and pharmacists, and doctors are equally qualified in the public sector.”
This comparative study was conducted in Chhattisgarh in 2019 by a research team from IIT Jodhpur, including Dr Ranjan, Dr Samir Garg, Executive Director, Narayan Tripathi, programme coordinator and Kriti Kumar Bebarta, programme associate, State Health Resource Centre (SHRC) Chhattisgarh.