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India’s small and medium-sized hospitals facing existential crisis

In India, small and medium-sized hospitals have played a crucial role in serving the healthcare needs of the population since independence. However, recent years have witnessed a growing trend of these institutions struggling to survive. Almost daily, reports surface of hospitals being put up for sale, signaling a systemic crisis. Let’s explore the key reasons behind this troubling trend and its implications for the future of healthcare in India.

The rise of cashless healthcare
One of the most significant challenges small and medium-sized hospitals face is the rise of cashless healthcare through insurance schemes. This system, intended to reduce out-of-pocket expenses for patients, has inadvertently favored larger corporate hospitals over smaller healthcare centres with limited resources and modest facilities. Consequently, smaller hospitals, unable to compete with the extensive resources of larger entities, are struggling to attract patients.

Stringent rules and regulations
India’s healthcare sector is subject to a host of stringent rules and regulations. Hospitals must comply with various requirements, such as fire No Objection Certificates (NOCs), biomedical waste disposal rules, Clinical Establishments Act (CEA), and other licenses. Meeting these regulatory demands adds to the operational costs of smaller hospitals, making it increasingly difficult for them to sustain their operations.

The burden of accreditation
Accreditation has become another obstacle for small and medium-sized hospitals. Although accreditation aims to ensure quality healthcare, it has often translated into higher costs without significant improvements in patient outcomes. Many developed countries are moving away from accreditation, yet in India, it is becoming more prevalent. Hospitals in Tier 2 and Tier 3 cities are pursuing accreditation to gain easier empanelment and better package rates in insurance schemes. However, this trend is leading to increased costs without tangible benefits.

Medicolegal issues and defensive medicine
The exponential rise in medicolegal issues has compelled hospitals to adopt a more defensive approach to medicine. Hospitals now invest heavily in legal services, higher indemnity coverage, and meticulous documentation. This defensive approach has contributed to the perception that larger hospitals are safer, resulting in smaller hospitals losing patients to their bigger counterparts.

Corruption and bureaucratic hurdles
Corruption is a pervasive issue in the healthcare sector, impacting every step of the empanelment, accreditation, and licensing process. Hospitals often face bribery demands and bureaucratic red tape, further increasing their operational costs. This corruption, coupled with an already challenging business environment, makes it challenging for small and medium-sized hospitals to thrive.

Increasing patient expectations and technological advances
Today’s patients have high expectations for world-class facilities and perfect outcomes. Meeting these expectations requires significant investments in new technology and equipment, adding to the financial burden on smaller hospitals. Additionally, competition from a growing number of new hospitals in Tier 2 and Tier 3 cities has restricted smaller hospitals’ ability to increase their charges, resulting in decreased revenue.

The future outlook
The future for small and medium-sized hospitals in India appears bleak. With mounting challenges from all directions, it’s only a matter of time before even in smaller towns, these small centers are replaced by large corporate hospitals. The implications of this shift could be far-reaching, leading to reduced access to affordable healthcare for many and the erosion of community-based medical services.

In conclusion, addressing these issues requires a comprehensive approach involving regulatory reforms, reducing corruption, and fostering a more patient-centric healthcare system. Without meaningful changes, the demise of small and medium-sized hospitals could become an unfortunate reality. The Pacemakers

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