Are Private Hospitals Overcharging? SC intervenes, Directs States to Frame Policies

The directive came in response to a public interest litigation (PIL) challenging this practice. The PIL sought a direction preventing private hospitals from mandating that patients purchase medicines, devices, and implants exclusively from hospital pharmacies, arguing that these facilities charge exorbitant rates compared to market prices. They also called for policy intervention from the Union and State Governments to regulate such practices.

A bench comprising Justices Surya Kant and N Kotiswar Singh disposed of the matter, stating, "We dispose of this petition with direction to all state governments to consider this issue and take appropriate policy decision as they deem fit."

The Supreme Court noted that the PIL was based on the personal experience of the petitioners, who had admitted a patient to a private hospital. While the patient eventually recovered, they claimed they had witnessed a systematic practice where private hospitals pressured patients to purchase medicines and implants from specific pharmacies.

In its ruling, the Court also took into account the Union Government’s submission, which stated that there is no legal compulsion requiring patients to buy medicines exclusively from hospital pharmacies. Additionally, State/UT governments questioned the petitioners' locus standi and pointed out the existence of government-run initiatives like Amrit Shops and Jan Aushadhi stores, which provide affordable medicines.

Further, the Court recognized that some state governments have already implemented policies ensuring that medicines, medical devices, and healthcare services are available at reasonable rates.

The Supreme Court emphasized that access to medical facilities is a fundamental right under Article 21 of the Constitution. However, it reaffirmed that framing regulatory policies falls within the domain of policymakers and not the judiciary.

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The Apex Court acknowledged that public health, hospitals, and sanitation fall under List II (State List) of the Constitution of India, meaning individual state governments are best placed to address such issues based on local conditions. While recognizing concerns about patient exploitation, the Court held that issuing mandatory nationwide directives might be impractical and could impact private hospitals' operations. The bench stated;

"It may not be advisable for this Court to issue any mandatory directions which may hamper the [...] for hospitals in private sector but at the same time, it is necessary to sensitize state governments re: the alleged problem of unreasonable charges or exploitation of patients in private hospitals."

LiveLaw reports that the Court also debated whether a nationwide regulatory policy should govern every aspect of private hospitals' operations. It concluded that policymakers, rather than courts, are better positioned to take a comprehensive approach. The bench noted;

"Policymakers are best equipped to take a holistic view of the matter and frame guidelines as may be required to ensure that there is no exploitation of the patients and their attendants and at the same time, there is no discouragement and an unreasonable restriction for the private entities to enter the health sector."

Further, the court deprecated states across the country over their failure to provide adequate health infrastructure. This failure, the Court said, has led to the setting up of private hospitals (albeit renowned and specialized) to cater to the needs of all kind of patients, reports LiveLaw

"...in proportion to the population of this country, the states have not been able to develop the requisite medical infrastructure to cater the needs of all kinds of patients. The states have therefore facilitated and promoted private entities to come forward in the medical field, as a result of which, numerous renowned private hospitals, well known for their specialties, and which are no less than any hospital [all over] the globe, have been setup through the country...Not only the people, even the state also look for these private entities to provide basic and specialized medical facilities to the public at large", observed a bench of Justices Surya Kant and N Kotiswar Singh.

Referring to Part IV of the Constitution (Directive Principles of State Policy), the Court further opined that, "Provision of medical facilities to one and all is a right traceable to Article 21 of the Constitution. The states are therefore committed themselves to provide the medical facilities to people in furtherance of their duty envisioned in Part IV of the Constitution."