Mumbai's Tata Memorial Hospital wants to be self-sustaining (and yet remain affordable)

Healthcare facilities need to be self-sustainable to thrive and that is why Tata Memorial Centre in Mumbai, which is considered to be the apex institute for cancer care and research in South Asia, is going to be experimenting with a new financial model.

In the next 18 months, the institute will start charging a surcharge on cancer medicines sold to patients who are paying for treatment at the hospital.

Tata Memorial Centre treats close to 67,000 new cancer patients every year. Around 30% of patients are treated completely free of cost, another 30% pay between 5% and 20% of their bills and 20% of patients pay between 25% to 50% of their bills. The hospital has been able to follow this model primarily because its marge patient load and high medicine consumption allows it to bargain better and procure drugs at lower prices from pharmaceutical companies.

The surcharge on medicines for paying patients will still keep treatment affordable, according to Dr Rajendra Badwe, director of Tata Memorial Centre. “No patient will be charged the price equal to the MRP, but those in the deluxe will pay a surcharge which will be our revenue,” he explained.

Tata Memorial Centre was commissioned by the Sir Dorabji Tata Trust in 1941 and receives assistance from the department of atomic energy. Today, it is falling short of Rs 30 crore to run operations without depending on government aid. Even though government has not announced any cut in funding to the institute, director Badwe is insistent that it would do better without having to to ask for funds every year. The government needs to fund research but hospitals should be self-sustainable for patient care, he maintained.

The new model of cross-subsidising patient care will ensure the same quality of care, which Tata Memorial Centre is known for, across patient categories, Badwe explained with the analogy of air travel. Irrespective of which class you fly, the aircraft and the destination will remain the same, he said. “At the end, operating surgeon and the machine is the same.”

Universal and affordable

Badwe made this announcement at a conference held to commemorate the platinum jubilee of Tata Memorial Centre. The topic of discussion was whether healthcare is a commodity or basic need and doctors came up with ideas to find the right healthcare model for the Indian population. Profit-motivated institutes of healthcare do more harm than good, most doctors said.

The need for universal health coverage was accepted by the United Nations in 2012 to “ensure that all people obtain the health services they need without suffering financial hardship when paying for them.”

Health, however, is clearly still not a priority for the Indian government with health spending at only 1.3% of its Gross Domestic Product. The country stands 12th from the bottom in the company of Myanmar, Haiti, South Sudan, Timor-Leste and Pakistan with respect to healthcare spending. Although India is a global pharmacy, Indians spend two-third of their total healthcare expenditure on medicines. “About 70% of the healthcare expenditure is out of pocket which pushes many below the poverty line,” said a member of an international health organisation who did not wish to be identified.

To achieve affordable universal health coverage, the government needs to focus on strengthening primary and secondary healthcare facilities. “India needs 10 times more general practitioners than specialist doctors,” said Dr Sunil Chandy, director of Christian Medical College in Vellore, which works on the cross-subsidy model of healthcare where revenue earned from patients who can afford to pay is directed towards treatment of those who cannot.

Profits motives

Another reason for the escalating cost of healthcare especially in private and corporate owned hospitals is over-investigation to reach a medical diagnosis with doctors are fishing for harmless diseases, according to Chandy, who is a cardiologist. “Medicine is hand-based, touch-based. Today it has become investigation-based.” At least 30% of investigations performed at profit-motivated health institutes are not useful in diagnosis or treatment, said several doctors at the conference.

Both Badwe and Chandy prefer the cross-subsidy model of running a hospital over public private partnerships that can also help subsidise the cost of healthcare. Badwe said he was wary of public private partnership models that, if not strictly monitored, are unsuccessful and exploitative. Chandy argued that even in a public private partnership, a hospital that runs for profit healthcare will not be affordable.