Karnataka's Attempt to Regulate Private Health Care - A Collective Need to Correct Information Asymmetry
Karnataka’s attempt to monitor
the functioning of private healthcare providers through an amended law has left
both practitioners and patients at a loss.
A simple Internet search will throw up scores of news reports of alleged
medical negligence and malpractice India -from botched surgeries, to wrong
diagnosis and treatment leading to permanent damage to patients, and even
death. Several such instances of medical
negligence also led to violence against practitioners and health care providers
by kin of those affected. These situations point toward a deep malaise that
affects India’s healthcare system.
Consider this: India has a
shortage of an estimated 600,000 doctors and two million nurses.[1] This has led to a proliferation of the
private healthcare industry. Around 70%
of healthcare in India is provided through the private sector, thus creating a
virtual monopoly over services offered.[2]
Moreover, the patient always has to trust the doctor and the treatment process. Patients are not aware of the extent of treatment
required, neither are they in any position to evaluate the efficacy of medical
advice being offered. Clearly, information
asymmetry in the healthcare industry has made it inefficient leading to a
market failure. Given this background
governments, both central and state, came up with laws to better regulate the
health sector and the services they provide in order to ensure that the
patients were better informed and information equilibrium created.
Karnataka
was one of the first states in India to address this issue through the Karnataka
Private Medical Establishments (KPME) Act 2007. [3] However, in the year 2015-16, several cases
of unwarranted hysterectomies, especially those involving tribal and Dalit
women in Karnataka came to light.[4] As furore grew, the Government of Karnataka
decided to make the law more “citizen-centric” and “protect welfare of
citizens” by constituting a committee led by Justice (Retd.) Vikramjit Sen to
provide recommendations for amendments to the KPME Act 2007. [5]
Based on
the committee’s recommendations, the Karnataka Government proposed the
following amendments to the KPME Act of 2007: a cap on procedure and treatment
rate; patients’ rights charter; imprisonment and penalties on doctors and
hospitals in instances of established medical negligence; an elaborate
grievance redressal mechanism for patients; and protection from private
hospitals withholding dead bodies until the payment of dues.
While
these recommendations may flow from noble intentions that a welfare state
advocates, it makes for bad economics.
Be it food grains, housing rental, or healthcare, it has been proven
worldwide that price control has failed to provide succour to those it was
intended to benefit. In fact, such
measures have only exacerbated the problem, driving quality down, creating
shortages, and worsening the market at large.
Take for example the cap on medical procedures and treatment rates. It is no secret that our public health care
system is in shambles, driving up the demand for private medical establishments
(PME). Setting up a hospital is a
capital intensive exercise. Apart from
investing substantial capital upfront on infrastructure, equipment, and hiring
trained doctors and staff, these PMEs have to obtain a host of certifications
and clearances from both state and central regulatory bodies. Like every other economic activity, health
care too comes at a price. Capping prices negatively impacts the ability of
PMEs to keep up with innovation in healthcare and maintenance of facilities, thus
affecting the quality treatment provided to patients.
A deeper
problem arises when those willing to pay for treatment above the price cap,
will stealthily receive medical care, while others will be turned away under
some excuse or the other. Like any
licensing system, such regulation also provides avenues for corruption where
PMEs will be forced to bribe government officials, who then would turn a blind
eye to violations of the Act. In some instances, hospitals have even resorted
to reuse of catheters and guide wires in stenting![6] All
in all, this is a perfect recipe to create a black-market in the private
healthcare sector in Karnataka, not only depriving citizens access to quality
medical aid, but also forcing PMEs to shut shop leaving fewer players in the
market.
The amendment
to create a Patients’ Rights Charter provides individuals the valuable
information about procedures and treatments that they would receive. It allows them to make an informed decision
before agreeing to undergo any procedure at a PME. However, the Grievance Redressal Committee
recommended in the amended Act is fraught with challenges as it puts immense
pressure on incumbent government officials who already have a lot on their
plates, to provide timely relief to patients who approach the Committee. A bigger fear is the chance of regulatory
capture where a strong, unscrupulous lobby of PMEs could easily subvert the
redressal mechanism by influencing key members of the government-heavy
Committee.
Markets have
their own mechanism to self-correct extremes in supply and demand, sectors like healthcare have always struggled in attaining efficiency. While policy
makers will never be able to replace markets in efficiently setting price
levels, stakeholders and service providers can work toward reducing information asymmetry, driving healthcare costs down and benefiting both the producers and consumers in this market. Additionally, Karnataka needs to
bolster its own capacity by increasing GDP spend on healthcare.[7] The state government’s per
capita health spending in 2015-16 was as low as Rs. 791, while out of pocket
spending for patients was 74.3%. [8] Till it approaches these issues more
pragmatically, good intentions will always trip over the hard realities of
market economics.
Access Barriers to Antibiotics. Washington, DC:
Center for Disease Dynamics, Economics & Policy. 2019.
[2] Sema
Sgaier, Amod Kumar, How patient feedback
can transform India’s public health system, Jan 11, 2018 https://idronline.org/how-patient-feedback-can-transform-indias-public-health-system/ (Accessed on March 19, 2020)
[3] Several state
governments also brought in their own legislation later. The Clinical
Establishments (Registration and Regulation) Act, 2010 was enacted by the
Central Government and provided for registration and regulation of all clinical
establishments in the country. Most
recently West Bengal passed the Clinical Establishments (Registration, Regulation
and Transparency) Act, 2017 which brings private hospitals, nursing homes,
clinics, and even dispensaries under its ambit.
[4] Ila Ananya. Doctors Are Forcing Women in Karnataka To
Have Hysterectomies https://www.newslaundry.com/2017/02/20/doctors-are-forcing-women-in-karnataka-to-have-hysterectomies
(Accessed
on Feb 28, 2020)
[5] Akhila Vasan, E
Premdas Pinto, Vinay Sreenivasa, Vijayakumar S.
Political Interests and Private
Healthcare Lobby Collude to Stifle Patients’ Rights in Karnataka. Economic
and Political Weekly. Vol. 52, Issue No. 50, 16 Dec, 2017.
[6] Somalaram Venkatesh. Coronary Stent Price Control in India: Two
Years and Counting.
https://thehealthcareblog.com/blog/2019/03/04/coronary-stent-price-control-in-india-two-years-and-counting/
(Accessed
on March 1, 2020)
[7] According to the
Economic Survey of Karnataka (2017-18), hospital beds per lakh population has
gone down considerably from 112 in 2010-11 to 80 in 2016-17. In 2018-19, the
spending in the health sector was a meagre 3.2 percent of the total budget.
[8] Shamika Ravi; Rahul Ahluwalia;
Sofi Bergkvist. Health and Morbidity in
India (2004-2014). Brookings India Research Paper No. 092016. (2016). Pg.
45
https://www.brookings.edu/wp-content/uploads/2016/12/201612_health-and-morbidity.pdf (Accessed on March 1,
2020)
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