0
0
A recent report from a brokerage firm has highlighted the practical challenges and feasibility issues associated with implementing uniform pricing across hospitals, following a directive from the Supreme Court (SC) regarding hospital rates.
The SC, responding to a public interest litigation (PIL), directed the Central government to propose hospital rates in accordance with the Clinical Establishment Act (CEA). However, in the absence of such a proposal, the court warned that it would enforce Central Government Health Scheme (CGHS) rates as an interim measure.
In response to this development, Kotak Institutional Equities released a report expressing skepticism about the feasibility of uniform pricing across hospitals. The brokerage firm noted that while the SC’s directive creates an overhang, especially concerning future price hikes and expansion plans, implementing uniform pricing poses significant challenges.
The report highlighted practical obstacles and the financial impracticality of enforcing uniform rates, particularly for prominent hospitals. It emphasized that uniform pricing would likely necessitate legislative changes, as only a limited number of states and union territories have adopted the CEA.
Despite the SC’s firm stance, the brokerage firm believes that the probability of implementing uniform pricing nationwide remains very low. Moreover, the report pointed out that imposing CGHS rates could lead to negative earnings before interest, taxes, depreciation, and amortization (EBITDA) for most hospitals, assuming insurance companies negotiate lower prices.
Additionally, the report raised concerns about the subjectivity and variability in clinical outcomes, the quality of medical professionals, and infrastructure disparities across hospitals. It underscored that implementing uniform pricing would require substantial legislative amendments and comprehensive regulatory frameworks.
The brokerage firm referenced past legal precedents, including the SC’s assertion that governments cannot fix rates for patients in private hospitals. Considering historical trends, including responses during the COVID-19 pandemic, the report questioned the government’s willingness to actively manage public healthcare services.
As discussions surrounding hospital pricing continue, stakeholders are closely monitoring developments and awaiting further clarity on potential regulatory interventions and their implications for the healthcare sector.
