Medical costs may rise on insurance, new approach

The landmark judgment by the Supreme Court to award Rs 1 crore to a patient for medical negligence is likely to push up medical costs for patients and force doctors and hospitals to adopt a defensive healthcare approach.

Doctors and hospitals are likely to rush for higher cover, the cost of which will be passed on, while patients may be asked to undertake more tests as a protective measure.

“If the sum assured increases, it may increase the medical cost, as doctors will pass on the higher costs to the patients,” said Tata AIG MD and CEO Gaurav Garg.

The Supreme Court on Saturday asked a Hyderabad hospital to pay Rs 1 crore compensation to a Bangalore-based software engineer, Prashant S Dhananka, enhancing the Rs 15 lakh penalty awarded by the National Consumer Disputes Redressal Commission (NCDRC) in a case dating back to 1990. The compensation is believed to be the highest ever, awarded in a case related to medical negligence in India.

The large award may now spur the demand for professional indemnity cover or error and omissions cover in smaller urban centres. Professional indemnity provides insurance cover for claims against the policyholder due to their professional negligence. This indemnifies hospitals and doctors against loss incurred out of their negligent act, error or omission in carrying out the business.

“This is a one-off case, but an eye opener. Indemnity cover against medical negligence is more prevalent in doctors and hospitals in metros. This will probably raise awareness,” said Oriental Insurance General Manager AK Saxena.

Presently, doctors practicing in hospitals based in metro cities take a cover of Rs 25 lakh to Rs 50 lakh depending on their risks while hospitals take a cover for Rs 1 crore to 5 crore. Some doctors, however, manage with a lower cover of Rs 5 lakh – Rs 10 lakh. The healthcare industry fears the judgement could spur more such litigations from sensitive consumers.

“The quantum of compensation will cause unrealistic expectations among many consumers to opt for litigation to claim money on grounds of medical negligence. At the same time, this will cause hospitals to adopt ‘defensive medical practices’ (more foolproof tests and procedures to secure diagnosis and treatments including surgeries), which will ultimately increase healthcare costs for the consumer,” said Vishal Bali, chief executive of Wockhardt Hospitals Group. In developed countries, hospitals and doctors follow a defensive healthcare approach, including asking for a mandatory 15-20 tests for minor ailments, as doctors and hospitals have to deal with a large number of possible litigation, said Bali.

Frivolous complaints against doctors on medical negligence have increased after the medical service was included under the Consumer Protection Act, the Supreme Court said in a recent judgement. To prevent a spurt in rash of litigations, the apex court restrained courts and consumer forums from issuing notices to doctors for alleged medical negligence without seeking on opinion from experts. The law protects doctors and hospitals against criminal procedures.

“While this court has no sympathy for doctors who are negligent, it must also be said that Courts must first refer complaints of medical negligence to a competent doctor or a panel of experts in the field before issuing notice to the allegedly negligent doctor,” the Supreme Court said in a recent ruling.

Consumer activists and legal expert say instances of negligence are often a function of inadequate infrastructure or overworked professionals.

“In most of the cases, doctors are not the real culprits, but hospital environment, equipment and substandard drugs. However, a few over-worked doctors, either due to pressure from employers or for lure of money, may cause medical negligence,” said A Ayyappan Nair, general secretary of Consumer Vigilance Centre (CVC), Thiruvananthapuram, who has handled numerous medical negligence cases on behalf of consumers.

“We at Apollo make sure that patients and relatives understand the seriousness of the disease and risks involved in various procedures,” noted Suneeta Reddy, executive director, Apollo Hospital Group. The group runs 43 hospitals in India and abroad. Still, not all hospitals follow guidelines that are prescribed by their own apex body in a bid to standardise medical procedures and curb incidences of medical negligence.