The Competition Commission of India (CCI) has raised concerns regarding pricing practices at private super-speciality hospitals in the Delhi NCR, particularly focusing on Sir Ganga Ram Hospital. In a detailed 32-page order, the CCI examined the routing of admitted patients toward in-house pharmacies, diagnostic services, and consumables, highlighting that patients often feel “locked-in” once admitted.
This order is part of a broader investigation involving 12 major private hospitals in Delhi. The CCI scrutinized whether these institutions compel admitted patients to procure medications, devices, and diagnostic services exclusively from their affiliated facilities, significantly limiting patient options during treatment.
Dr. (Prof) D S Rana, Chairman of the Board of Trustees at Sir Ganga Ram Hospital, stated that the hospital is reviewing the findings. “We have received the order and are studying it in detail. Prima facie, it is a welcome step by the CCI. We will get back further after studying the order in detail,” he remarked.
The case initially stemmed from a 2015 complaint regarding inflated syringe pricing at a Delhi hospital. As the investigation progressed, the Director General (DG) broadened the scope to include multiple super-speciality hospitals across the capital.
The Commission noted that admitted patients are often locked into using the hospital’s in-house pharmacy and laboratories. The order indicated that “in-patients, almost always, resort to usage of the hospital’s in-house pharmacy and laboratories.”
The DG’s inquiry found significant mark-ups in several diagnostic tests at Sir Ganga Ram Hospital from 2015 to 2018 compared to standalone diagnostic centers. Tests, including liver function tests, renal biochemical profiles, reticulocyte counts, and blood culture tests, were reported to be priced considerably higher than average market rates during various years under examination.
Additionally, the Commission assessed the pricing of MRIs, X-rays, and ultrasound procedures, recording that some imaging tests were more than 50% higher than those charged by independent diagnostic facilities during parts of the review period.
However, the CCI noted that the DG’s methodology for determining unfair pricing was inadequate, asserting that procurement costs alone could not appropriately measure excessive profit margins as they do not take into account storage, supply chain, staffing, and operational costs incurred by hospitals.
The Commission indicated that hospitals are not legally obliged to pass on procurement profits to patients. Importantly, the order found no evidence that prices charged by the hospital exceeded the Maximum Retail Price set by manufacturers for medicines or consumables.
Furthermore, the CCI recognized that hospital-based diagnostic services operate round the clock and incur higher staffing and infrastructure costs than standalone labs, complicating direct price comparisons.
In its defense, Sir Ganga Ram Hospital argued that it operates under a charitable trust model, using revenue from paying patients to subsidize treatment for economically disadvantaged individuals. The hospital also contended that its charges reflect costs related to 24/7 emergency preparedness, specialized staff, advanced medical equipment, and overall hospital infrastructure.
While the CCI expressed concerns regarding pricing practices and the phenomenon of patient lock-ins, it ultimately decided to close the proceedings against the hospital, stating that the evidence collected during the investigation did not conclusively demonstrate any abuse of dominant position under the Competition Act.
