A patient entering a private super-speciality hospital may still have the freedom to choose where to seek treatment. But once admitted, that choice ‘almost always’ disappears.
In a sweeping order passed after a nearly decade-long investigation into Delhi’s top private hospitals, the Competition Commission of India (CCI) has acknowledged that admitted patients effectively get ‘locked in’ to hospital-run pharmacies, diagnostics and consumables systems because of hospital protocols, convenience and perceived medical risks.
The findings emerged in a case relating to Sir Ganga Ram Hospital, one among 12 private super-speciality hospitals investigated by the competition watchdog over allegations of charging excessive prices for medicines, diagnostic tests, implants and consumables sold to in-patients.
The case itself originated from allegations against Max Super Specialty Hospital, where the complainant had alleged that disposable syringes sold through the hospital’s in-house pharmacy carried higher MRPs than identical products available in the open market. While the CCI eventually found no evidence of collusion between the hospital and syringe manufacturer Becton Dickinson, the investigation triggered a much wider scrutiny into how private hospitals price medicines, consumables and diagnostics for admitted patients.
Interestingly, the Director-General’s (DG) supplementary investigation also noted that among the 12 hospitals examined, St Stephen’s Hospital stood out as an exception. Unlike most hospitals investigated, St Stephen’s was found to allow patients to procure medicines, consumables and diagnostic services from outside the hospital ecosystem. The commission cited this distinction while examining whether private hospitals effectively operate as “self-contained” markets for in-patients. At the heart of the order lies a contradiction that could shape the future debate on private healthcare regulation in India.
While the CCI recognised that admitted patients are nudged toward using in-house pharmacies and laboratories and “almost always” end up depending on them, it stopped short of conclusively calling the conduct anti-competitive abuse, reasoning that patients technically retain the freedom to choose another hospital before admission.
The order paints a detailed picture of how healthcare markets operate differently from conventional markets.
“Due to ease of convenience as well as the hospital’s ‘protocol’ and declaration to the patients regarding potential risks associated, in-patients, almost always, resort to usage of the hospital’s in-house pharmacy and laboratories,” the commission observed.
The CCI noted that this creates a ‘locked-in effect’ upon admitted patients, effectively ensuring that hospitals supply ‘almost the entire’ medicines, consumables and tests required during treatment.
During the investigation, the Director General (DG) compared rates charged by hospitals with those of standalone diagnostic centres such as Dr Lal Path Labs, Goyal MRI and House of Diagnostics. The findings showed striking disparities in several cases.
According to tables reproduced in the order, Sir Ganga Ram Hospital charged up to 243 per cent more for certain tests such as reticulocyte count in 2018 when compared to average standalone lab rates. A BACT/alert aerobic culture test was found to be as much as 238 per cent higher, while several ultrasound and X-ray procedures were priced between 50 per cent and 200 per cent above comparison labs.
For instance, a knee X-ray procedure cost Rs 1,010 at the hospital in 2018, compared to Rs 330 at the reference diagnostic lab cited in the investigation.
Similarly, ultrasound tests for upper abdomen and KUB were found to be 78 per cent more expensive than comparable standalone diagnostic centres in 2018.
Yet, despite documenting repeated pricing disparities, the commission refrained from conclusively holding the hospital guilty of “excessive pricing”.
The regulator reasoned that hospitals and standalone diagnostic labs cannot be compared in a simplistic manner because hospital laboratory’s function round-the-clock, maintain faster turnaround times and operate with significantly higher infrastructure and staffing requirements.
The order repeatedly underlines the absence of a robust regulatory framework governing pricing within private hospitals.
The commission noted that government agencies, including the Ministry of Health and Family Welfare, National Pharmaceutical Pricing Authority (NPPA) and CDSCO, do not regulate prices for most diagnostic tests and several hospital services.
It also referred to a recent Supreme Court judgment delivered in March this year, which observed that the issue of regulating pricing practices in private hospitals ultimately falls within the policy domain of the government and legislature.
In one of the most significant observations of the order, the CCI acknowledged that healthcare cannot be viewed like a standard consumer market because patients entering hospitals are not merely purchasing goods, but seeking treatment during moments of physical and emotional vulnerability.
The commission nevertheless concluded that patients seeking elective treatment generally possess sufficient information beforehand regarding estimated treatment costs and therefore retain the ability to compare hospitals before admission.
That conclusion ultimately became central to why the commission hesitated to define the hospital ecosystem as a separate ‘aftermarket’ monopoly under competition law.
Still, the order may have opened a larger public policy debate. Because even while declining to decisively categorise the conduct as abusive, the country’s competition regulator has now formally recorded something patients across private hospitals have long experienced silently – once admitted, choice becomes largely theoretical.