CCI to impose up to 10% penalties on India’s largest hospital chains through excessive pricing

On 22nd sept as the Indian stock market open, Fortis health care share crashed, and finally at the end it closed with a 20% fall. The impact was due to CCI report.

After four years of investigation, India’s fair-trade regulator found some of India’s largest hospital chains charging excessive price for their medical services and products in contravention of competition laws.

The Competition Commission of India (CCI) will soon meet  with these hospitals chains to weigh in their responses.

cci penlties on hospital chain

The name of these hospitalts are  Apollo Hospitals, Max Healthcare, Fortis Healthcare, Sir Ganga Ram Hospital, Batra Hospital & Medical Research and St. Stephen’s Hospital.

 CCI will then decide whether to impose penalties on these hospitals, said people familiar with the matter.

It is expected that that CCI can impose a penalty of up to 10 percent of the average turnover for the past three preceding financial years of an enterprise that has violated competition laws.

If we find average turnover of Apollo Hospitals that is Rs 12,206 crore  where as turn over of Fortis is Rs 4,834 crore in the past three financial years.

According to the report, The CCI’s director-general found that in National Capital Region 12 super-speciality hospitals are charging “unfair and excessive prices” to their patients for renting rooms, medicines, medical tests, medical devices, and consumables.

According to the findings by the DG, who examines anti-competitive practices, some of the hospital’s room rents are more than 3-star and 4-star hotels,.

Significance of the investigation

This could be the first big action, that is taken by CCI investigation team against exorbitant prices of medicines and services fixed by hospitals.

According to competition lawyers, The watchdog’s action could potentially rein in the prices of medicines and healthcare equipment, or at least, bring transparency in the way hospitals sell these items,.

Of the 12 hospitals that faced CCI scrutiny, six belonged to Max  and two to Fortis.

The CCI and the hospital chains had no comment for this article

Overcharging without checks

According to  CCI investigation report, The hospitals were found to charge excessive price for certain medical tests as well as for X-rays, MRI and ultrasound scans in comparison with other diagnostic centres rates.

According to the CCI report ,For syringes and surgical blades, hospitals charged rates that were higher than those of other consumable makers.

The only exception was medicines, which hospitals sold at the maximum retail price, although they earned significant profits by procuring them at lower prices.

The CCI selected the hospitals for investigation on the basis of the number of doctors, paramedics, beds, and turnover for the period 2015-2018. 

The investigation CCI found that these hospitals doesn’t accept any report , medicines, medical devies or consumables from outside.

Investigative reports pertaining to each of the hospital chains were submitted by the DG to the CCI on December 24, 2021.

The CCI forwarded a copy of these reports to the hospitals on July 12, 2022, and sought their responses, according to the people, who did not want to be identified.

The CCI controls and regulates  the pharmaceutical sector in India for years. Scrutinising the pricing of medicines by healthcare companies.

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