Parliamentary panel bats for cap on private hospital room rents

The panel has recommended that basic hospital room tariffs should not exceed average room rates at three-star hotels in the peripheral area or vicinity of the facility

Private hospitals may face a huge slash in basic room rent, with a parliamentary standing committee asking ward charges in healthcare facilities to not exceed the average room tariffs prevailing in three star hotels in the peripheral area or vicinity of the hospital. In its 176th report titled "Affordability and Accessibility of Healthcare Facilities in Public and Private Sector," presented to Parliament in August 2026, the committee noted that arbitrary room rents severely inflate overall healthcare costs for patients.

 

In its report reviewing the affordability and accessibility of healthcare in India, the parliamentary committee on health and family welfare said that some private hospitals levy or charge large amounts for hospital stays, especially in metropolitan cities.

   

“Having analysed the break up of the hospital billing structure the committee believes that rationalising of room charges needs to be done on an emergent basis,” the panel headed by Rajya Sabha Member of Parliament (MP) Ram Gopal Yadav stated.

 

Citing the 80th round of the National Sample Survey conducted by the National Statistics Office (NSO) on Household Social Consumption: Health, the committee noted that the average cost of hospitalisation was Rs 6,631 in government hospitals compared with Rs 50,508 in private hospitals. The survey highlights a deepening affordability crisis where treatment in private hospitals is often five to ten times costlier than in public facilities.

 

The average cost of inpatient treatment across India was around Rs 37,858, while average out-of-pocket expenditure stood at Rs 34,064. It also flagged wide variations in treatment charges and differential billing practices, including room rent-linked pricing. It noted that medical inflation and commercialization of private healthcare push vulnerable households into catastrophic debt and forced asset sales.

 

The panel added that hospital room charges may not be uniform and vary across geographic regions and hospitals within the same area due to differences in infrastructure, service levels and operating costs.

 

“The resident doctor cost, nursing cost, disposable costs of consumables, meal charges, laundry charges can be added to the basic room tariff so that the entire cost is rationalised,” the report added. To enforce this, the committee recommended that the Ministry of Health actively coordinate with State Governments to mandate the uniform adoption and strict enforcement of the Clinical Establishments (Registration and Regulation) Act, 2010.

 

The committee argued that the current pricing ecosystem often limits financial capping to acute interventions or surgical procedures, leaving patients highly vulnerable to unregulated out-of-pocket expenses during extended follow-ups, rehabilitation, or end-of-life care. It also recommended the establishment of a unified, fast-track grievance redressal ombudsman specifically designed to audit excessive billing and resolve insurance claim disputes in the private sector.

 

Consequently, it has recommended the formulation and regulatory enforcement of Continuum of Care packages, which bundle preventive screening, diagnostic, curative, and palliative services under a single, capped financial umbrella.

 

This would be done to ensure that economically disadvantaged patients are not forced to abandon care during the critical palliative or supportive phase. Additionally, the panel advocated expanding the scope of existing public health insurance frameworks, such as PM-JAY, to cover outpatient consultations, diagnostic evaluations, and post-hospitalization care.

 

The findings come at time when a case on announcing rate standardisation for hospital charges is stuck in the Supreme Court.

 

The apex court in February 2024 had asked the Centre to hold consultation with state governments to have a standard fee range across facilities under the Clinical Establishment (Central Government) Rules keeping with the living standards of different regions of the country.

 

It had also warned that if a solution was not found, it would be forced to apply Central Government Health Scheme (CGHS) rates for treatment services at private healthcare facilities until standardised rates are set.

 

In April 2024, the Centre had submitted to the Supreme Court that it is urging states and union territories (UTs) to engage in broader consultations with multiple stakeholders to determine standardised hospital rates.

 

The case, however, still remains stuck with no hearing scheduled after September 2024. The current proposals are recommendations of the parliamentary standing committee and will require government acceptance and regulatory action before becoming binding on hospitals. The committee emphasized that establishing a dynamic, consultative pricing mechanism alongside rate caps is necessary to balance patient affordability with the operational viability of private healthcare providers.

 

Industry welcomes report, seeks practical exercise to reduce health costs

 

While welcoming the report’s findings, industry players have asked for a comprehensive costing exercise across different categories of hospitals, geographies and care settings.

 

“As we understand, pricing and costing are not the same, particularly when subsidies and differing operational efficiencies influence the risk-reward equation of various care delivery models,” said Siddhartha Bhattacharya, Secretary General of healthcare industry body Nathealth.

 

He added that healthcare requires over $300 billion in immediate investment capital, while the sector grapples with twin pressures of ensuring affordability and sustainable pricing on the revenue side, while attracting capital despite having one of the lowest returns on investment among the top 20 sectors of the economy. 

 

This, experts say, is a key difference between hospital charges and hotel charges.

 

Market watchers added that unlike the hospitality sector, both public and private healthcare delivery involves significant costs related to infection control, specialised infrastructure, regulatory compliance, medical technology, and round-the-clock clinical support. 

 

“These realities, including more than 25,000 healthcare-related compliance requirements, need to be reflected in any pricing framework to ensure that quality of care is upheld in line with the highest clinical standards,” Bhattacharya said.