CCI To Probe Pricing Ways Of Super-Specialty Hospitals In Delhi

The Competition Commission of India will probe super-specialty hospitals in New Delhi for possible unfair pricing in services and products provided to their patients, according to an official release.

After finding that “huge profit margins” are being earned by super-specialty hospitals through “sale of products to the locked-in in-patients”, the fair trade regulator has decided to widen the scope of the investigation.

In November 2015, CCI directed its investigation arm -- the Director General -- to probe alleged violation of Sections 3 and 4 of the Competition Act by Becton Dickinson India Ltd. and Max Super Specialty Hospital, after finding “prima facie” that they had contravened the same. While Section 3 deals with anti-competitive agreements, Section 4 pertains to abuse of dominant market position.

“The Commission has directed the DG to complete investigation expeditiously,” the release said. The DG had considered the market for “provision of healthcare services/ facilities by private super-specialty hospitals within a distance of about 12 kilometres from Max Super Specialty Hospital, Patparganj” as the relevant one.

In an order dated August 31, CCI said that with respect to the abusive conduct of Max, it is noted from the DG's report that the hospital had earned huge profit margins ranging from 269.84 percent to 527 percent in 2014-15 and between 276.96 percent and 527 percent in 2015-16 by sale of different syringes.

Also, with view to earn more profit, Max had shifted its procurement or purchase from flow wrap syringes to blister pack syringes during 2015-16, CCI said. It added that it has also been found by the DG that the hospital had been compelling its in-patients to purchase products only from its in-house pharmacy once they are admitted.

As per the DG's report, such conduct of Max amounts to contravention of the provisions of Section 4 of the Act, the CCI said. The regulator observed from the DG's report that there is a reference to Max's alleged conduct as being akin to “aftermarket abuse”. However, it has not investigated the same in “greater detail”.

“It is common knowledge that this practice of exploitative pricing from the locked-in patients is followed with impunity by most of the hospitals,” CCI added.

Noting that the present investigation report of the DG suffers from some inconsistencies, the regulator said that “further investigation in this matter is required”.

The CCI said that the investigation may especially focus on the products sold by the super-specialty hospitals to their in-patients, which are not required on an urgent basis for any medical procedure or intervention or which do not involve any high degree of quality issue from the medical procedure point of view.

The probe can also focus on the products for the purchase of which, the patients have the time and scope to exercise their rational choice to avail them from open market as well as where such products may be available at lower rates, it said. According to the order, the relevant market definition as provided in the DG's investigation report “may be revisited”.