Hospital chain Narayana Health (formerly known as Narayana Hrudayalaya) said it will hike the prices of angioplasty packages shortly as the government embargo period of six months ended this month.
"When the government came out with the directive of control on stent pricing they suggested that for six months the prices of procedures can not be changed, and we followed that in letter and spirit," said Dr Ashutosh Raghuvanshi, Vice Chairman, Managing Director and Group CEO at Narayana Health to Moneycontrol on sidelines of an industry event in Mumbai.
"We would definitely have the procedure prices revised upwards," Raghuvanshi said.
A stent is a tiny expandable metal scaffold to open up narrowed or weakened arteries to ensure blood flow preventing heart attacks. The minimally invasive procedure to put stent in the artery is called angioplasty.
The Indian drug price regulator - the National Pharmaceutical Pricing Authority (NPPA) -- in February imposed a ceiling on the prices of coronary stents citing huge unethical markups at each stage of the supply chain.
The price caps brought down the prices of stents by as much as 85 percent. The widely used drug eluting stent (DES) price was fixed at Rs 29,600, exclusive of GST.
The price control of stents hit hospital bottom-lines as realisations on stents went down significantly while the volumes largely remained static.
Now hospitals are trying to recoup a further slide in revenues by raising package costs that include doctor consultation fee, anesthesia charges, facility and room rents, food, medicines and other consumables.
An angioplasty package costs anywhere between Rs 1 and 3 lakh depending upon hospital to hospital, number of stents and type of stent, facility, type of room and the location.
Raghuvanshi said prices caps on stents brought down the angioplasty cost by 10-12 percent.
Narayana Health, which makes little over 40 percent of its revenues from cardiac services, was also hit by the price control on stents.
The company expects it would lose about Rs 40-45 crore in revenues due to stent price control in FY18, directly impacting its margins and profits.
In pre-price control regime hospitals had margins of 50 to 60 percent on stents and in some cases by about 100 percent, whereas the procedure prices were kept low.
"We basically want to sort of remove the anomaly of where the procedure prices have typically been priced low and material prices were priced higher," Raghuvanshi said.
Even the introduction of Goods and Service Taxes pushed the costs of hospitals, Raghuvanshi said.
While healthcare services are exempt from GST, all other materials and services consumed by hospitals saw an increase in taxes to the tune of 3 percent.
Narayana Health said the impact of NPPA's recent move to cap the prices of ortho knee implants is negligable.
"For us it is orthopedic constitutes 4-7 percent depending on various centres; as such the margins on joints were not that huge compared to stents," Raghuvanshi said.
Founded by renowned cardiac surgeon Devi Prasad Shetty in 2000, Narayana Health has a network of 23 hospitals and seven heart centres across the country with a bed capacity of 7000.
Narayana Health which has acquired Gurgaon-based multi-speciality hospital NewRise Healthcare from drug maker Panacea Biotec for Rs 180 crore in April said it's constantly evaluating various assets for acquisitions, leasing and public private partnership opportunities in the geographies where it is already present to deepen its business.