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Private hospitals divided on Rs 150 cap on COVID-19 vaccine administration charges

Corporate hospital chains such as Apollo, Max Healthcare, Fortis Healthcare, Narayana Health and Manipal Hospitals have shown huge interest in offering COVID-19 vaccination.

June 07, 2021 / 08:43 PM IST
Public health activists say the government should create a compensation mechanism on the lines of countries like the UK. (Representative image: Reuters)

Public health activists say the government should create a compensation mechanism on the lines of countries like the UK. (Representative image: Reuters)

 
 
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Private Hospitals are divided on Rs 150 cap on COVID-19 vaccine administration charges by the central government.

Apollo Hospitals, India largest hospital chain, said that the Rs 150 cap on COVID-19 vaccine administration charges doesn't make any difference to their vaccination programme.

"We are doing this (COVID-19 vaccination) in the national interest," Sangita Reddy, Joint Managing Director of Apollo Hospitals Enterprises, told CNBC-TV18

"It's fine, we will continue with the programme," Reddy said.

Apollo Hospitals charges Rs 200 as administration fee per vaccination, which is over and above the procurement cost. Apollo has so far administered 1.2 million vaccine doses.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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The Union government has liberalised the procurement of COVID-19 vaccines from May 1 by allowing private hospitals and corporates to directly buy vaccines from manufacturers and administer them to people.

In the private market Serum Institute of India's (SII) Covishield is sold at Rs 600 per dose, Bharat Biotech's Covaxin at Rs 1200 per dose and Dr Reddy's Sputnik V vaccine at Rs 995 per dose.

According to an April 21 note from Jefferies India, private vaccinations can generate up to $1.4 billion in revenues in FY22. COVID-19 vaccination is estimated to contribute about 5-10 percent of revenues for corporate hospital chains.

Large hospitals are hoping COVID-19 vaccination will benefit them in the long run as it will help them get higher consultations,  cross-sell wellness packages and other things.

Corporate hospital chains like Apollo, Max Healthcare, Fortis Healthcare, Narayana Health and Manipal Hospitals, among others have taken a huge interest in offering COVID-19 vaccination.

Other hospital executives are not on the same page as Reddy of Apollo. They believe that Rs 150 is too low, with little scope for realisations.

"We are happy that the private sector role in this national program has been recognised by allocating 25 percent to the private sector," Fortis said in a statement.

"Unfortunately, the cap of service charge at Rs. 150 will not cover the additional costs incurred for such offsite vaccination camps which involve substantial costs like Ambulance, transport, extra staff and doctor, plus TDS involved in many cases. We urge the govt to consider a higher charge for off-site vaccination camps to enable expanded coverage," Fortis added.

Dr Alok Roy, Chairman of Kolkata-based Medica Superspecialty Hospital and also the Chair of FICCI health Services Committee, told Moneycontrol the capping administration charges is a "retrograde step".

"A uniform price cap of Rs 150 isn't a good thing, as price differs based on services and convenience. If you are providing vaccines in a comfortable air-conditioned environment, using best consumables, having skilled nurses and doctors at site, keeping an emergency ambulance and beds ready as part of the protocol, it will definitely cost higher," Roy said.

"If the government wants to really subsidise the COVID-19 vaccination in the private sector, it should have capped the prices of COVID-19 vaccines. Why COVID-19 vaccines are so expensive for the private sector," Roy added.

Another executive of a large private hospital chain, who didn't want to be named, told Moneycontrol that at least Rs 200 would have been an ideal price to keep the hospitals motivated to do more.

Please read here on how COVID-19 vaccination is becoming more convenient as private hospitals, labs and pharmacy chains reach out to customers through drive-ins and vaccination camps at offices and apartment complexes.

Rs 150 cap not bad

In contrast, Dr.Girdhar Gyani - Director General - Association of Healthcare Provider (AHPI), which represents smaller hospitals, nursing homes and clinics, welcomed the cap.

"AHPI from the beginning has been advocating for Rs 150 cap, the government finally realised. Some private hospitals took advantage of a free market, and were charging Rs 500-1000 as administration fee, which is unfair," Gyani said.

Gyani alleges that the large private hospitals with financial muscle have cornered the COVID-19 vaccination in the private market, since it was open from May 1, and made a lot of money.

"COVID-19 vaccination is not the core business, this is just part of your CSR activity, why are they cribbing about the cap," Gyani questions.

"It is high time government should think about ensuring vaccine supplies to smaller hospitals and clinics, so that they can take the COVID-19 vaccination to smaller towns, slums and rural areas," Gyani added.
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: Jun 7, 2021 08:20 pm

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