Apollo, Max Healthcare fall as SC directs Govt to standardise healthcare procedure rate

Shares of leading hospital chain operators Apollo Hospitals and Max Healthcare slumped on Thursday after the Supreme Court cautioned the government on its failure to implement a decade-old law to standardise hospital treatment charges.

The top court warned the Central Government that it will directly implement standardised rates for treatments as prescribed under Central Government Health Services (CGHS) across the country after the next court hearing if the government fails to come up with a concrete proposal for CGHS law implementation. The next hearing will come up after six weeks.

Following this, private healthcare provider Max Healthcare stock declined over 9% intraday, while Apollo Hospitals shares dropped up to 4.7% intraday.

Other hospital chain operators, Fortis Healthcare Ltd shares fell over 2.5% to a day low of ₹408.1 before some recovery. Shares of Metropolis Healthcare, Krishna Institute of Medical Science and Rainbow Children's Medicare were also down by 1.8%, 1.7% and 5.45%, respectively on NSE.

Hearing a public interest litigation (PIL) filed by the NGO 'Veterans Forum for Transparency in Public Life,' the apex court slammed the government for failing to specify the range of rates within which private hospitals can charge for their treatment services.

Why is this important?

Enforcement of CGHS-based rates is important as there is a wide difference between treatment and service costs charged by private and government hospitals. For instance, angioplasty surgery in private hospitals located in metro cities ranges between ₹1.5 lakh to ₹3.2 lakh, while the same treatment costs less than ₹1 lakh in government hospitals.

The PIL was filed seeking the Centre to come up with a fee structure for patients in accordance with the Clinical Establishment (Central Government) Rules, 2012. The regulation mandates all registered medical facilities to display the service charges in English and the local language. The pricing should be in the range fixed by the Centre in consultation with the state governments.

The Government submitted before the SC that the Centre has written to states on multiple occasions on the matter but yet to receive any reply. The government’s response, however, did not satisfy the apex court, which said this could not be a ground for the Centre to get away with its responsibility. Hence, the SC has directed the union health secretary to convene a meeting with states within a month to devise a proposal by the next date of hearing on notifying standard rates.

In its observation, the SC added that if the government fails to find a solution, it could consider the petitioner's plea for implementing CGHS-prescribed standardised rates.