Regulating the private health care sector: the case of the Indian

HEALTH POLICY AND PLANNING; 11(3): 265-279 © Oxford University Press 1996

Regulating the private health care sector: the case ofthe Indian Consumer Protection ActRAMESH BHAT

Indian Institute of Management, Ahmedabad, India

Private medical provision is an important constituent of health care delivery services in India. Thequality of care provided by this sector is a critical issue. Professional organizations such as the MedicalCouncil of India and local medical associations have remained ineffective in influencing the behaviourof private providers. The recent decision to bring private medical practice under the Consumer Pro-tection Act (COPRA) 1986 is considered an important step towards regulating the private medicalsector. This study surveyed the views of private providers on this legislation. They believe the COPRAwill be effective in minimizing malpractice and negligent behaviour, but it does have adverse conse-quences such as an increase in fees charged by doctors, an increase in the prescription of medicinesand diagnostics, an adverse impact on emergency care, etc. The medical associations have also arguedthat the introduction of COPRA is a step towards expensive, daunting and needless litigation. A numberof other concerns have been raised by consumer forums which focus on the lack of standards forprivate practice, the uncertainty and risks of medicines, the effectiveness of the judiciary system, andthe responsibility of proving negligence.

How relevant are these concerns? Is the enactment of COPRA really appropriate to the medical sector?The paper argues that while this development is a welcome step, we need to comprehensively lookinto the various quality concerns. The effective implementation of COPRA presumes certain condi-tions, the most important being the availability of standards. Besides this, greater involvement of pro-fessional organizations is needed to ensure appropriate quality in private practice, since health andmedical cases are very different from other goods and services.

The paper discusses the results of a mailed survey and interview responses of 130 providers fromthe city of Ahmedabad, India. The questionnaire study was designed to assess the opinion of pro-viders on various implications of the COPRA. We also analyze the data on cases filed with the Con-sumer Disputes and Redressal Commission in Gujarat since 1991. Four selected cases filed with theNational Commission on Consumers Redressal are discussed in detail to illustrate various issuesaffecting the implementation of this Act.

IntroductionPrivate provision of health care is an important con-stituent of the health care delivery system in Indiaand its role has increased considerably over time(Bhat 1993). At present about 70% of hospitals and50% of hospital beds are in the private for-profit andnon-profit sector. This sector employs about 70% ofqualified doctors (Jesani and Anantharam 1989).Most of the newly qualified doctors prefer either tostart their own private practice or to work in privatehospitals. Utilization studies show that health care ser-vices provided by this sector are used not just by theaffluent classes; a large number of poor people usethem and have exhibited their preferences in ap-

proaching private doctors for their health problems(Duggal and Amin 1989). The share of the privatehealth care sector in GDP is estimated to be about5% (Satia et al. 1987).

The growth of the private sector raises a number ofconcerns (Bhat 1993), most of which stem fromreasons of market failure. The State is supposed toplay an important role in regulating this sector butit has so far remained passive. State interventionshave been minimal, leaving this sector to growlaissez-faire. The role of medical associations andmedical councils has been equally minimal.Undesirable practices have grown considerably, thus

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266 Ramesh Bhat

affecting the quality of care. The growing dissatisfac-tion with the services offered by this sector, and in-creases in medical negligence cases, have attractedthe attention of the consumer movement in the coun-try. Private medical practice has now been broughtunder the Consumer Protection Act (COPRA), 1986.

This paper discusses the issue of bringing privatemedical practice in India under the COPRA. Itaddresses the following questions arising from recentexperience:

• Is a private medical service1 a type of commer-cial service? Can a consumer of medical servicesseek redressal in consumer courts for malprac-tice and negligent treatment?

• How have medical associations and medicalcouncils viewed the inclusion of private medicalpractice under the jurisdiction of COPRA?

• What are the concerns and issues raised in casesfiled with the consumer forums?

• Do private providers think COPRA will be ef-fective in its objective? What are the implicationsof bringing private medical practice underCOPRA?

The application of COPRA to private medical prac-tice is considered an important step in ensuring thatpatients receive an appropriate quality of care. Themedical associations have not welcomed this develop-ment. The medical councils have refrained from mak-ing any comment on this Act. The findings of thecurrent study reveal that private providers believeCOPRA will be effective in minimizing malpracticeand negligent behaviour. However, the legislationdoes have a number of adverse consequences,including: increases in fees charged by doctors,increases in the prescription of medicines and diag-nostics, adverse impacts on emergency care. Anumber of other concerns have been raised in con-sumer forums during the hearing of complaints.These concerns relate to the lack of standards forprivate practice, difficulty in differentiating betweenmistaken diagnosis and negligent behaviour, risks anduncertainty in the medical sector, the effectivenessof the judiciary system, and responsibility to provenegligence.

While this development is a welcome step, the paperargues that a broad strategy is needed to look atvarious concerns afflicting the private health care sec-tor. Health and medical care services are very dif-ferent from other goods and services. The effectiveimplementation of the Act presumes certain condi-

tions, the most important being the availability ofstandards. We suggest that though the COPRA ishighly desirable, health and medical cases should bedealt with differently from other services. We alsosuggest that the quality of private health care shouldbe viewed in a broader context and attempts shouldbe made to address all the issues. Professionalorganizations such as medical councils and medicalassociations should have an important role in thisarea.

The paper discusses these questions using cross-sectional data collected from a survey and interviewsof doctors in Ahmedabad. The study also uses infor-mation relating to cases filed with the National Com-mission and State Commission in Gujarat. Part I ofthe paper explains the broad purpose of the ConsumerProtection Act, 1986, and its applicability to privatemedical practice. Part n delineates the issues raisedin consumer forums. For this purpose we haveselected four cases heard by the National ConsumerDisputes Redressal Commission, New Delhi, from1989 to 1993. Part m discusses the findings of thesurvey and interviews of doctors in Ahmedabad city.The final part summarizes the policy implications ofthis paper.

Part I: The Consumer Protection Act 1986It is well established that leaving health care to marketforces does not lead to an effective and efficient healthcare system (Bennett et al. 1994). This is because acomplex set of market distortions and market im-perfections interact with moral hazard problems ofmarket and information asymmetry, leading themarket to be inadequate and to have high costs. Itis argued therefore, that the state has an importantrole in ensuring the safe and appropriate delivery ofhealth care services from this sector. However, notmany initiatives have been taken by the state toregulate the sector's services, though the sector hasgrown significantly. As far as the introduction oflegislation is concerned, there are only a few ex-amples of regulations promulgated by the state at localgovernment levels, e.g. the Nursing Home Acts ofDelhi and Bombay. The implementation of theseregulations has always been a problem (Nandraj1994), and most of the provisions of these legisla-tions are now outdated anyway. Since health is a statesubject in India, a large number of local governmentshave not implemented similar types of legislation.Other regulations and standards (e.g. the Drugs and


Regulating private health care in India 267

Cosmetics Act, Pharmacy Act, Bureau of IndianStandards, etc.), which have implications for qualityof health care, have been ineffective in regulating thissector.

The professional bodies governing the medical pro-fession, such as the Medical Council of India, areanother source of influence on the behaviour ofprivate providers. These professional bodies prescribethe code of conduct which each practising memberis supposed to observe and ensure that he behavesaccording to the expectations of these bodies.Generally, it is expected that the medical professionwill work through self- and peer-regulation.However, over time the medical associations andcouncils etc., which were expected to play this role,have lost their influence in regulating the behaviourof private providers. Also, a large number of physi-cians are not active members of these associationsand those who are are often not very concerned aboutassociation guidelines.

As a result, with the growth of this sector theprevalence of certain practices, such as fee-splitting,over-prescription of medicines and drugs, inadequatesterilization procedures, and employing untrainedpersonnel, has increased. These undesirable practicesare known to adversely affect the quality of healthcare. Apart from unnecessary and ineffective care (asa result of demand inducement), the negligent prac-tices cause immediate harm to the patient, becauseof not following minimum standards or lack ofdesirable skills. This has attracted the attention of con-sumer movements in India. Recent legislative reformsin India have brought medical services provided bythe private for-profit sector under the Consumer Pro-tection Act (COPRA), 1986.

The COPRA was promulgated to protect the interestsof consumers through the establishment of consumercouncils. The objectives of this Act are: 1) to pro-mote and protect the rights of consumers; 2) toprovide a right to information and to protect the con-sumer against unfair trade practices; 3) to ensure thatconsumers' interests will receive due considerationat appropriate forums. These objectives are promotedby the consumer protection councils established at thedistrict, state and national level. Speedy and simpleredressal is provided by quasi-judicial bodies, againat district, state and national levels. According to thisAct, a consumer of services is a person who 'hiresor avails' services for a payment. This also includesthe beneficiary of such services other than the person

who actually hires the services. Services of anydescription made available to potential users are in-cluded in the Act.

The purpose of the COPRA is to provide less costlyand speedy remedy to aggrieved consumers than thealternative, time-consuming and expensive processof civil litigation. The Act specifically invests theredressal forums with the powers vested in the civilcourt for the summoning of witnesses and their ex-amination under oath, the production of documentsand other materials as evidence, etc. (COPRA 1986).

Redressal mechanismsUnder this Act a complaint can be filed by an in-dividual consumer, a registered consumer associa-tion or the central or state government and a groupof consumers with the same interests. A complaintcan be lodged if the consumer of services suffers froma deficiency that could be a fault, imperfection, short-coming or inadequacy in the quality, nature, or man-ner of performance that is required in relation to aservice. The state governments have establisheddistrict forums and state level commission to handlethe redressals. The central government has alsoestablished a national level commission to address theconsumer disputes redressal.

The 'district forum' consists of a president (qualifieddistrict judge) and two members who are appointedby the state government. The district forum considerscomplaints where the value of goods and services andthe compensation does not exceed Rs. 5 lakhs (aboutUS$17 000). Appeals against orders of the districtforum can be made to the State Commission withina period of 30 days. Like district forum, the StateCommission also consists of a president and two othermembers. The State Commission has the jurisdictionto consider complaints where the compensation isbetween Rs. 5-20 lakhs (about US$17 000-70 000)and appeals against the order of the district forum.Similar to district forum, appeals against StateCommission orders can be made to the National Com-mission. The National Commission consists of apresident, who is or has been a judge of the SupremeCourt and is appointed by the central government,plus four other members. The National Commissionhas the jurisdiction to consider complaints where thevalue of goods, services or compensation exceeds Rs.20 lakhs (about US$70 000) and appeals against theorder of the State Commission. The orders of theNational Commission can be appealed against in theSupreme Court.


268 Ramesh Bhat

Provider — Patient • Complaint

St«t» NationalCommotion Comrnii

MCopy of cnmpUM.wtinii «v4d«nc«, ontar

~ fcr companmimi, W H O M I of d

LawyerDefence

Export Opinion

Figure 1. Redressal mechanism for handling complaints

The district forum, State Commission and theNational Commission will not admit a complaintunless it is filed within one year from the date onwhich the cause of action has arisen. Every orderpassed by any of these three councils will be enforcedin the same manner as if it were an order made bya court. If the person against whom the complaintis made fails to comply with the order, then he/sheis punishable with imprisonment for a minimum ofone month and maximum of three years and/or witha fine between Rs. 2000-10 000 (about US$75-300).The procedure of handling the complaints is explainedin Figure 1.

Upon receiving a complaint, the district forum refersa copy of the complaint to the opposite party direc-ting them to give their version of the case. If the op-posite party denies or disputes the allegations, thedistrict forum proceeds to settle the dispute. Thedistrict forum can summon, enforce attendance of thedefendant and witness, and examine the witness underoath. Every proceeding before the district forum willbe a judicial proceeding to be tried under the IndianPenal Code (sections 193 and 228) and the districtforum will have the powers of the civil court (section195 and chapter XXVI of the Code of CriminalProcedure, 1973). If the district forum is satisfiedwith the allegations contained in the complaint, it will1) issue an order to the opposite party directing themto pay such amount as may be awarded by it as com-pensation to the consumer for any loss or injury suf-fered due to the negligence of the opposite party, 2)remove the deficiencies in the services in question,and 3) provide for adequate costs to the parties. Everyproceeding requires the presence of the president ofthe district forum and at least one member of theforum.

A number of concerns have been raised about the ap-plication of this Act to private medical practice. In-ter alia these include whether medical services fall

under the broad definition of the Act, and whetherthe legal heirs of the deceased are consumers. Theseissues are discussed below.

Is medical service a type of personal service?

The COPRA does not include medical services in itslist of specified services. The word 'service' can beinterpreted to include every conceivable kind ofservice in which any benefit, use or advantage isderived for a payment. However, two categories ofservice are exempted from the purview of this Act.These are services rendered free of charge or underthe contract of personal service. However, the natureof personal services has not been explained orclarified in the Act.

The implication of these two exemptions is thatmedical services in the public sector are excludedfrom the Act. Private providers have argued that aservice rendered by a medical practitioner is a typeof 'personal service' and is not the same as a servicerelating to a 'commercial transaction' that is includedin the Act. Private providers, therefore, argue thatthe services provided by them should not be included.

In two cases, Mis. Cosmopolitan Hospitals andanother (appellants) vs. Vasantha P Nair (respon-dents) and Vinitha Ashok (complainant) vs. LakshmiHospital and Others (opposite parties), filed with theState Commission, the defendants (private doctors)claimed that these cases could not be tried under theCOPRA. They argued that the services rendered tothe patients were in the nature of personal servicesnot commercial transactions and, hence, did not fallunder the purview of the Act. They also argued thatthe aggrieved party cannot be considered 'consumers'of the services and, therefore, cannot file a complaintof medical negligence. The State Commission re-jected the claim of the defendants and they appealedto the National Commission. The National Commis-sion ruled that the judgement of the State Commis-sion was appropriate. The Commission gave thefollowing reason:

'According to the act, service is defined broadlyand applies to every situation where diere is a'contract for service' in which the renderer of ser-vice is independent of any supervision or controlof the person who demands service. In the caseof medical service, the patient is not in a positionto exercise any control over the work of thedoctor. This is a case of a principal-agent rela-tionship, where the principal (i.e. the patient)authorises the doctor (i.e. the agent) to act on his



behalf so that in essence, the principal is hiringprofessional help for something of which he hasno knowledge. Personal service, on the otherhand, involves the 'contract of services' whichimplies a master-servant relationship whereby themaster directs the servant to perform services ofa certain kind in a certain manner (i.e. mastersupervises the Tenderer of services). Therefore,professional services and technical services, suchas those of surgeons, lawyers, accountants,engineering contractors, etc., are covered underCOPRA.'

The court also passed the judgement that the com-plainants are legal representatives of the deceased andhence are vested with the inheritable rights of thedeceased. They are vested with the power of enforc-ing the cause of action and can be considered 'con-sumers' under the Act.

In summary, recent legislative judgements have nowmade it possible to bring private medical practiceunder the purview of COPRA. The term 'personalservice', exempted by the Act, has been interpretedas a service provided by a private individual to a par-ticular person or relating to persons, and such ser-vice has been performed with the intervention of thelatter. Medical services definitely do not fall into thiscategory.

Response of medical associations to thesedevelopmentsThe Indian Medical Association has challenged thejudgement in the Supreme Court on the grounds thatit cannot include personal contracts within its pur-view. ' All personal contracts are exempted from theAct. They argue that the Act reduces the medical ser-vices to a seller-buyer relationship. In the Mis.Cosmopolitan Hospitals and another vs. Vasantha PNair case the Indian Medical Association and theQualified Private Medical Practitioners Association,Kerala, appealed to intervene on behalf of the defen-dants. They argued that the issues raised were ofgrave concern and interest to members of the associa-tion and the medical profession at large. The twoassociations pleaded that this case should be triedunder the Indian Medical Council Act, 1956, becausethis Act covers medical doctors and supersedes theConsumer Protection Act, 1986. They argued thatthe COPRA cannot have any application to themembers of the medical profession.

The National Commission did not find merit in thisplea. The Commission argued that the Indian Medical

Council (IMC) Act provides for membership guide-lines to the medical council, recognition of medicalqualifications awarded by universities or medical in-stitutions in India, and the maintenance of a medicalregister in every state in which it is required that everyperson wanting to practise medicine has to registerwith the council. Furthermore, the IMC Act providesfor the prescription of minimum standards of medicaleducation, for granting degrees, for professional stan-dards, and a code of ethics for medical practitioners.The IMC Act empowers the council to remove anyperson from the register on grounds of professionalmisconduct. However, this Act does not contain pro-visions to protect the interests of persons who maysuffer because of any negligence or deficiency in ser-vices rendered by members of the medical profes-sion, i.e. the rights of a patient. It was ruled that sincethe IMC Act does not provide for the rights of thepatient, this case should be tried under the ConsumerProtection Act.

Another argument made by medical associations anddoctors opposing the COPRA emanates from fearsof the misuse of the Act against private providers.However, this argument seems to be unfounded. Welooked at cases filed with the Consumer Disputes andRedressal Commission (CDRC), Gujurat. Figure 2presents data on the number of filed and disposed ofcases with the CDRC, Gujarat, since 1991. Of thetotal number of cases disposed of, 71% went infavour of doctors.

In summary, legislative rulings have ratified thatprivate medical services are in the nature of 'con-tract for services' where the relationship betweenthe patient and doctor is of principal and agent. Thedoctor takes all decisions on behalf of the patient andtherefore such services are within the purview of theCOPRA. It has also been established that the relativesof the deceased are legal representatives with all therights of the deceased and are vested with the powerof enforcing the cause of action. However, themedical councils and medical associations have notyet accepted COPRA's applicability to privatemedical practice in principle, though the argumentthat COPRA will always be unfavourable to doctorsis unfounded.

Part II: Issues raised in consumer forumsMany other concerns have been raised in consumerforums by providers and consumers. This section ex-amines the four cases of medical negligence filed


270 Ramesh Bhat

Cases ffled with CDRC, Gujarat Pending cases & disposal of Red cases withCDRC, Gujarat (No of cases = 78)

In favour ofdoctor 38.5% In favour of

complainant 15.4%

28.6% ofdisposedcases

Pending 46.2%

1990 1991 1992 1993 TUIJuty1994

Figure 2. Medical cases filed witb the Consumer Disputes Redressal Commission (CDRQ, Gujarat, 1990-1994

with the National Commission from 1989-1993.2

The main issues are as follows:

• How important are uncertainties and imperfec-tions in medicine?

• Whose responsibility is it to prove medicalnegligence?

• Is the judiciary system effective?

The outcome and main issues arising out of theanalysis of these cases are discussed below.

Uncertainties and imperfections in medicineAre doctors expected to use the highest level of skill?Is it possible to make a distinction between mistakendiagnosis, negligent behaviour and cause of death?How important are uncertainties and imperfectionsin medical interventions and procedures? These aresome of the concerns raised in various cases filed withthe consumer forums. According to the complainantin the case Vinitha Ashok vs. Lakshmi Hospital andOthers an unnecessary operation was performedresulting in the removal of a vital organ. The com-plaint filed was that the operation was conductedwithout proper examination and diagnosis, andtherefore the doctor should be held liable fornegligence.

The consumer forum examined the case with the helpof an expert (professor and head of the departmentof obstetrics and gynaecology) and ruled that it is notnecessary to establish that the doctor should use thehighest degree of skill. It is enough for the doctorto show that he/she has acted according to the generaland approved practice. A mistaken diagnosis is notnecessarily a negligent diagnosis. A practitioner canonly be held liable if his/her mistake is of a natureto suggest absence of reasonable skill as comparedto the ordinary (expected) level of skill.

In another case, Renu Jain and Others vs. EscortsHeart Institute and Research Centre, the consumerforum was confronted with the question of determin-ing the cause of death where a complicated procedurewas performed. The consumer forum observed thatgenerally there is a problem in establishing medicalnegligence because the lines between error of judge-ment, unforeseen complications and negligence areblurred.

The above cases highlight the point that, in medicalpractice, even if the doctor has acted according togeneral and approved practice, his action may stillcause loss to the patient. This may happen becauseof the imperfections in medical science or may be dueto diagnostic procedures. The doctor should not beheld responsible for any loss arising out of these im-perfections. These cases have recognized two points.First, almost all medical interventions and procedureshave inherent risks, and secondly, doctors face a con-siderable amount of uncertainty. The nature of apatient's problem and its outcome contribute to theuncertainty. In the medical profession, for any pro-cedure (including accepted diagnostic techniques) andintervention there is always some small probabilityof adverse consequences. This means that while alarge number of patients derive advantage from aprocedure, a small percentage may be affectedadversely. It may not be possible for the physicianto eliminate this possibility completely and to predictthe potential sufferer and the loss it may cause. It isalso possible that the doctor will use a procedure tominimize the ill-effects of some larger risk and in theprocess may cause some injury or harm to the patient.

Furthermore, where the treatment of a patient is arace against time (e.g. in the case of an operation,the consumer forums have made allowance in favour



of the provider by applying a risk-benefit test. If thedoctor follows a course of treatment or proceduresaccepted and followed by a responsible section of theprofession, he/she is not guilty of negligence evenif another section of the profession does not subscribeto that practice. The National Commission hasrecognized this fact. It has ruled that if a doctor hasacted according to general and approved practice, hecannot be charged under the COPRA for the inherentimperfections and risks in medical practice.

One may also observe from these cases that the con-sumer forums are not equipped with the necessaryexpertise to handle medical negligence cases and,therefore, the practice of co-opting a physicianmember in the forum has been developed to handlesuch cases.

Whose responsibility is it to prove medicalnegligence?In cases of medical negligence, the onus of provingthat the mistake was a result of negligence is onthe complainant. In the cases of Vinitha Ashok vs.Lakshmi Hospital and Others and Renu Jain andOthers vs. Escorts Heart Institute and ResearchCentre complainants faced problems in getting quali-fied medical practitioners to testify on their behalf,whereas the defendants did not. Getting doctors totestify and explain the finer points of medical jargonmay be difficult in cases of medical negligence. Thecomplainants in the above cases were unable to fur-nish adequately qualified witnesses on their behalf.

Thus, one problem for patients when trying to provenegligence is access to experts with their specialistknowledge, and hence, access to specialist informa-tion. Doctors are usually in a more advantageousposition, having more information on the case. Underthe present scenario, in most cases private providersdo not make the diagnosis information available totheir patients. In many situations where the providersare dispensing their own medicines, patients have noknowledge of the medicines they consume. Underthese circumstances, a patient is not in a position toput together all the necessary information anddocuments as evidence, and may have to incur highertransaction costs if he/she decides to file a negligencecase in the consumer court. The effect of all this isthat the patient suffers economically as well asphysically.

The responsibility for implementing the code lies withthe medical associations and councils, but we havefound no evidence of these institutions assuming anysuch responsibility for implementing the code orother regulations. Doubts have been raised about thecapacity of these institutions to implement suchguidelines; they do not have the necessary infrastruc-ture and lack effective mechanisms to handle theseissues. No attempt has been made by these institu-tions to develop an inventory of standard norms forgeneral and approved practice. Without such stan-dards, the rulings and judgement in consumer forumswill likely be affected by whoever makes a moreforceful argument and amasses more evidence. Judge-ment of non-technical persons is influenced by expertopinion; thus the procedure is prone to considerablesubjectivity. Certainly, the COPRA does not ensureimplementation of a code of conduct or code of ethics.Whoever can mobilize expert opinion in his/herfavour will have the advantage.

These cases illustrate that filing a complaint ofmedical negligence may prove to be a costly businessfor a patient. It certainly requires financial and otherresources to put together the minimum amount ofevidence and witnesses. This also requires someknowledge of medicine. Though the Act offers arelatively quick and low-cost way of redressal, itis likely that the proportion of cases filed by thelower socioeconomic classes will be minuscule; inmost cases they will probably decide not to file thecomplaint.

Is the judiciary system effective?There are cases where the complainants have ex-perienced considerable difficulty in interpreting thelaw and the position taken by various councils. Thecomplainant in the case of S. K. Abdul Sukur vs. Stateof Orissa alleged that there was negligence in thecross-matching of blood and that hospital authoritieswere also negligent in completing certain formalitiesconsidered necessary in the case. The State Commis-sion disposed of the complainant by arguing that oralevidence and cross-examination were necessary forthe purpose, and hence the competent forum in thiscase would be the civil court. The National Commis-sion reviewed this case and ruled that the State Com-mission was not justified in referring the matter tothe civil court. The National Commission observedthe following:

Present medical practice is primarily governed by thecode of conduct laid down by the medical council.

' . . . The COPRA clearly indicates that theredressal forums are to decide the cases filed


272 Ramesh Bhat

before them after taking such oral and documen-tary evidence into account. Decline of jurisdictionby the special redressal forum on the mere groundthat examination and cross-examination ofwitnesses would be necessary would amount tounjust denial of the benefits of the Act to theaggrieved consumer by erroneous abdication of itsduties.'

The functioning of consumer forums is another areathat is considered a major obstacle in implementingCOPRA. At present there are about 500 consumercourts in the country. These are not adequately staffedand face considerable difficulty due to the lack of in-frastructure. The number of cases filed with consumerfoTums is growing rapidly and they are unable to settlethe cases within the stipulated time. As a result, thenumber of pending cases is also increasing; in totalabout 200 000 cases are currently pending with theseforums. In the medical sector about 50% of themedical cases filed with the CDRC, Gujarat, werepending as of 30 June 1995. Part of the problem maybe related to the complexity of medical cases and theinability to co-opt a medical person on the panel. Ithas been argued that in future it will be difficult forconsumer forums to handle the pressure, and con-sumer redressal forums will soon become clogged andineffective (Economic Times 1995).

In summary, the consumer forums have addressedsome of the issues confronting the implementation ofCOPRA. On the uncertainties and risks inherent inthe medical sector, the forums have observed that adoctor needs to establish that he has acted accordingto approved practice. Understanding the difficulty inwhere to draw the line between a mistaken diagnosisand negligent behaviour, consumer forums are likelyto be guided by a doctor's ability to apply reasonableskills and not whether he exercised the highest degreeof skill in a particular situation. The complainants facedifficulties in mobilizing expert opinion/support toplead their case as this support has to come from thedoctor fraternity. Finally, there are still many legalhassles in terms of whether a case can be tried in theconsumer courts. Moreover, the number of casespending in consumer forums is on the rise.

Part III: Private providers' awareness ofCOPRAThe previous section discussed various concernsraised by the application of COPRA to privatemedical practice. This section examines awareness

among private providers of the broad objectives ofCOPRA and discusses the extent to which they thinkCOPRA will be effective in regulating privatemedical practice.

In India the state and local governments have pro-mulgated a number of regulations to protect the in-terests of patients. Most of these legislations are drugrelated. The most important regulation in thiscategory is the Drug Price Control Act which hasbeen effective in keeping drug prices under control.Few legislations address the issues of quality of healthcare offered by private providers, for example theNursing Home Act of Bombay and Delhi, and theConsumer Protection Act. We developed a list of themost important legislative Acts and examined theawareness of practising doctors in Ahmedabad, ques-tioning them on the main purposes of these regula-tions and their effectiveness (see Appendix 1).

Figure 3 presents the results of mailed and interviewresponses of private doctors in Ahmedabad. It isnoteworthy that, of the various regulations, COPRAgets the top score. About 93 % of responses indicatedawareness of the main objective of the COPRA. Incomparison, a majority of respondents indicate lowawareness of the main purposes of various other Acts.With the exception of the Indian Medical CouncilAct, the Medical Council of India - Code of Ethics,the Drugs and Cosmetics Act and the DangerousDrugs Act, the majority of responses indicate lowawareness of other Acts: the Drugs (Price) ControlAct, Pharmacy Act, Nursing Homes Acts and Bureauof Indian Standards. In all these cases less than 50%of doctors indicated awareness of their main pur-poses. One important aspect of COPRA is its ap-plicability nationwide. It does not fall within thecategory of legislations, such as health legislation,that are state subjects. The high level of awarenessof COPRA among practising doctors in Ahmedabadindicates its importance as a legislation affectingprivate practice in India.

A question about the effectiveness of all these legisla-tions and specifically about COPRA was asked of par-ticipants of this survey. Figures 4 and 5 present thesefindings. Only 11 % of respondents think that, over-all, these legislations are not effective in protectingthe interests of patients. About 76% believe thelegislations are moderately to highly effective in pro-tecting the interests of patients. Respondents tendedto believe the legislations are effective in protectingpatients' interests but raised doubts about their properenforcement.



Regulations/GuidelinesIndian Mecfical Council Act

Code of EthicsInternational Code of Ethics

Declaration of GenevaConsumer Protection ActDrugs and Cosmetics Act

Dangerous Drugs ActDrugs Control Act

Drugs Price Control ActPharmacy Act

Nursing Home ActBureau of Indian Standards

Pubflc Nuisances Act

Responses

=350%3145%

88%89%

356%a 93%

3 45%355%

0% 20% 40% 60% 80% 100%'

Figure 3. Awareness of various regulations/declarations affecting private practice in India

Effects

Highly effective

Moderately effective

Not effective

Don't know

Responses

y/////////ZVZf///Aw

0% 10% 20% 30% 40% 50%

Figure 4. Effectiveness of regulations in protecting the interests of patients

Effects

Highly effective

Moderately effective

Not effective

Don't know

Counter-productive

Responses

0% 10% 20% 30% 40% 50%

Figure 5. Effectiveness of COPRA in protecting the interests of patients: providers' views

A specific question about the effectiveness of COPRAwas asked. About 65% of respondents think thatCOPRA is effective, moderately to highly, in pro-tecting patient interests. About 16% think thatCOPRA will be counter-productive to patients. About12% of respondents were unable to say anythingabout the effectiveness of this legislation. About 8%believe the COPRA is not at all effective in protec-ting patient interests.

The inclusion of private medical practice underCOPRA is replete with arguments that it will be

counterproductive to the interests of patients. Thestudy questionnaire contained questions on effects ofCOPRA on provider behaviour and on the followingaspects of private medical care:

• doctors fee• cost of diagnostics• prescription of diagnostic procedures• prescription of medicines• time spent wim patients• information provided to patients• emergency care• patient awareness


274 Ramesh Bhat

Table 1 . Tbe effects of the Consumer Protection Act on various aspects of private practice (mailed responses = 108, and interviewed= 22; all figures in percentages)

Aspects of privatepractice

Doctors fee

Cost of diagnostics

Prescription ofdiagnostic procedures

Prescription ofmedicines

Time spent with eachpatient

Information given topatients

Emergency care

Patient awareness

Increasesignificantly

38%

5 9 *

55%

26%

19%

23%

27%

36%

Increasemoderately

41%

32%

36%

39%

39%

40%

18%

44%

Effects

Remain thesame

20%

9%

7%

29%

39%

33%

27%

17%

Decreasemoderately

2%

1%

2%

4%

2%

3%

12%

2%

Decreasedrastically

0%

0%

0%

2%

0%

1%

17%

2%

Table 1 presents responses of doctors on the effectsof COPRA on various aspects of private medicalpractice. Respondents believe COPRA will sig-nificantly increase doctors' fees, with about 79%indicating that the Act will lead to a moderate tosignificant increase in doctors' fees. Another majorconcern is the increase in diagnostic charges becauseof overuse of diagnostic procedures. Over 91% ofrespondents think that cost of diagnostics andprescription of diagnostics will increase moderatelyto significantly, and that this will emerge as a majorproblem of COPRA. About 58% of respondentsbelieve that the implementation of the Act will in-crease the amount of time a doctor spends witheach patient compared to 39% who feel it will notchange.

Information is one very important component that canbridge the communication gap between doctor andpatient. About 63 % of respondents think that COPRAwill lead to a moderate to significant increase in in-formation sharing with the patient, whereas 33%foresee no change. Only a small percentage ofrespondents think that information provided to thepatient will decrease.

About 29% of respondents indicated that the im-plementation of COPRA will lead to a moderate tosignificant decrease in treating patients needing

immediate care. Forty-five per cent think thatdoctors will pay more attention to treating emergencycases. A large number of doctors, about 80%, thinkthat patient awareness will increase because ofCOPRA.

In summary, the survey findings reveal that aware-ness of the broad objectives of COPRA is very highamong physicians, with the percentage of respond-ents in this study being over 90%. The majority ofphysicians believe the Act will have a desirableeffect in protecting the interests of patients and insharing more information with them. However, thiswill be at the cost of over-prescription of diagnostictests, medicines and drugs, and an increase in doc-tors' fees. These are also some of the reasons for thefuture increase in health care costs. The view of theeffect of COPRA on emergency care is mixed.

Part IV: Policy implicationsThe legislative judgements regarding the applicabilityof the Consumer Protection Act, 1986, to the privatemedical sector are considered an important policydevelopment. This change has been instrumental inrecognizing the patient's rights in medical services.It establishes that the patient has a right to questionthe treatment and procedures in consumer forumsif the provider fails to treat the patient as per the


Regulating private health care in India 275Constraints1. No data on providers2. No standards3. Petitioner's responstoffity4. No orientation programme5. No continuing education

program me6. Highly technical flekJ-sutoJectlvtty7. Pattern circumstances8. COPRA Infrastructure

Defensive medicineFigure 6. Implementing COPRA: constraints and consequences

Consequences1. Desirable

Increased awarenessIncreased concentfor qualityInformation How

2. UndesirableCost of careInappropriate careEmergency care

standard medical practice or if the provider has nottaken adequate care in following accepted standardsand, therefore, has been negligent in treating the pa-tient. The previous sections have discussed the re-cent legislative judgements that have made it possibleto bring private medical malpractice cases under thepurview of COPRA. The experiences of the last fiveyears in implementing the Act to the medical sectorreveal the following:

• Analysis of selected medical negligence casesfiled with the National Commission demonstratesthat consumer forums at national level recognizethe uncertainties and imperfectioiis of the medicalsector.

• The medical associations have opposed thisdevelopment.

• Analysis of cases filed with the CDRC, Gujarat,show that about 71 % of cases have gone in favourof doctors.

• Complainants face considerable difficulty in get-ting experts to defend their cases; the number ofcases filed with the CDRC, Gujarat, show thatabout half of the cases remain pending.

• The private sector institutions lack strong peerpressure, standards for appropriate and generalpractice, and strong mechanisms to implementexisting guidelines.

• Currently there is no provision to identify orpenalize complainants filing false cases.

At the same time there are apprehensions that thefuture of private practice will see a dramatic changeas a result of the introduction of COPRA. The directoutcome of COPRA is anticipated to be a growingtendency towards a more defensive medical systemamong doctors. They are likely to become extremelycautious in treating their patients as COPRA influen-ces their attitudes to risk handling. The implicationsof this Act are considered to include an increase inthe prescription of unnecessary diagnostics and an in-crease in investigations before treating any patient,resulting in a higher cost of health care.

Given the various undesirable consequences ofCOPRA, the successful and effective implementationof this Act remains an important issue. There are alsoa number of constraints under which the Act is beingimplemented and which may affect its effectivenessfor the private medical sector (Figure 6). Policy-makers need to attend to these adverse consequencesand constraints in order for the Act to be implementedeffectively.

The major constraints (as listed in Figure 6) are: lackof a database on the providers and their practice; lackof adequate standards or comparison of comparativeperformance; lack of a epidemiological database todetermine the risk factors of various disease patterns;lack of a database on risk factors of various diagnosticsand procedures; lack of an orientation programme forthe doctors; COPRA infrastructure; and absence ofan effective continuing education programme.

Making COPRA more effectiveThe application of COPRA to the private medical sec-tor is just the beginning in ensuring an appropriatequality of care in tfiis sector. However, its implemen-tation has faced problems. For implementation to besuccessful we need to minimize the undesirable con-sequences of COPRA. These concerns are pressingand require the urgent attention of policy-makers.Some of the broad recommendations are detailedbelow.

Firstly, one major problem envisaged is theemergence of a defensive medical culture which willlead to a considerable increase in the cost of care.To overcome this, agencies such as the IndianMedical Council and Association should look at thecharge structure for various procedures. Alreadysome concerns have been voiced in Parliament aboutdoctors' fees. The thirteenth report of the upper houseof Parliament discusses the arbitrariness in the feestructure of doctors and the lack of transparency inproviding information to patients and in financial


276 Ramesh Bhat

matters. The committee has recommended that eachdoctor should provide the Medical Council of Indiawith a schedule of fee charges, and me Council, inturn, should make this information available to thepublic. It is recommended that the Medical Councilshould have responsibility for checking that doctorsdo not charge higher fees than those notified. Thereport also contains recommendations on developinga ceiling on doctors' charges.

It is argued that part of the problem of medicalnegligence and inadequate standards arises from thestate structure for entry into the medical profession.It is known that the number of medical collegeshas mushroomed and among them private collegeshave grown considerably. Admission to these collegesis conditional on the payment of large sums ofmoney. For most of the prospective professionalsthese funds come from their own sources or fromloans. Arguably, this then forces prospective doctorsto be more commercially minded, resulting in variousundesirable practices which have a significant impacton the quality of care. It has been suggested that anindependent Medical Education Commission shouldbe set up to look after, inter alia, the finances of andadmission to these colleges.

Sometimes newcomers to private practice have littlechoice because of pressures to earn an adequate returnon their capital. New practices also face problemsin mobilizing adequate finances at reasonable cost andcan end up with a vulnerable mix of loans and bor-rowed capital. Our survey results show that the in-terest on capital in these ventures can be as high as18-22%. Reforms are needed in the financing ofprivate health care providers to ensure them areasonable cost of capital investment.

Secondly, the Act, at present, has no provision forpunishing people who file false cases. There is strongapprehension among providers that the number offalse cases will increase and that the legislation willbe used for harassing and blackmailing providers. Tominimize the misuse of the legislation, the formationof a screening committee has been suggested toreview cases before they are formally taken beforethe consumer forums. The screening committeeshould also categorize cases in order that only medicalnegligence cases posing damage or loss to the patientshould be pursued further. In cases where the screen-ing committee finds serious problems with the qualityof care, the matter should be referred to the medicalcouncil. To this end, there should also be a provision

for tackling false complaints and the Act should besuitably amended.

Thirdly, most doctors feel that the absence of medicalprofessionals on the panel of councils is a majordrawback of the COPRA. Health sector providerswere not involved in enacting COPRA nor duringlater developments in the legislation. It is argued thatnon-medical people sit in judgement when they arenot qualified to make accurate assessments of medicalevidence. Thus the suggestion has been made thatmedical professionals be given greater representationin order that a fair view of medical negligence casescan be obtained.

Finally, there should be an orientation programmefor newly graduated doctors who want to start privatepractice. The adoption of service delivery practicesis considerably influenced by the environment inwhich the newly graduated doctors start practising.From the beginning they adopt me existing practices,most of which are not appropriate. The survey ofdoctors has shown that the prevalence of practicessuch as fee-splitting, over-prescription of drugsand diagnostics, inadequate standards, etc., is quitehigh. To combat this, regular continuing educationprogrammes should be introduced with attendancecompulsory. It is well known that a large number ofcommercial companies send their executives tomanagement development programmes to acquirenew skills and to learn of developments in theirrespective fields. In a large number of companies,promotion policies make it mandatory for executivesto attend these programmes. This need not just applyin the commercial sector.

Medical councils and associations have a critical rolein these areas. The Medical Council of India shoulddevelop a long-term plan of continuing education.This could involve a system whereby membershiprenewal for providers is conditional upon attendanceon the education programmes.

This education role is currently quite effectivelyplayed by the drug companies to harness their profitmaximizing objectives. This aspect of invisible con-trol by drug companies also needs to be regulated ifwe want to see a vibrant and effective private medicalsector free from the ills of malpractice.

Quality of care remains an important issueThough the consumer forums recognize that the riskand uncertainty of medical practice is a complicating



factor, this does not extend to all the other complex-ities of the health care sector. The most importantcomplexity, inter alia, is measurement of quality inhealth care. In the case of consumer goods, com-parative information is typically available on theproduct and its quality. This makes it easier for con-sumer forums to handle issues of quality in consumergoods. The problems of quality measurement aremore profound in the medical sector. The availabilityof information may partly solve this problem. Thereis currently little information available in this areaas the data collection efforts and comparative per-formance evaluation of private providers in the healthsector are in their infancy.

Besides this, there are other fundamental differencesin the way quality is defined in health care comparedto other goods and services. Considering the perspec-tives of government, consumer and provider, Palmer(1993) defines quality of care as 'the production ofimproved health and satisfaction of a populationwithin the constraints of existing technology,resources, and consumer circumstances'. For this thedimensions which may need measurement are: pro-vider competence (technical components includingcognitive, manual and perceptual skills, and interper-sonal components), accessibility of care (at the marketlevel and at the beneficiary/consumer level) and ac-ceptability of care (according to the expectations ofthe individual consumer). The provider is responsiblefor optimizing these dimensions under three impor-tant constraints: limitations of the effectiveness oftechnology /diagnostics/procedures (i.e. inherentrisks); limitations of financial and manpower res-ources (the given environment); and differences inpatient circumstances.

The quality of health care services revolves aroundthese issues. The enactment of COPRA considers theview of the consumer alone.' This legislative stand-alone cannot be effective given the complexities ofthe health care sector.

Aside from these concerns, the COPRA does not:

• guarantee the implementation of the code;• ensure the development of standards and con-

cerns for quality;• provide mechanisms of peer review and peer

pressures;• guarantee that all malpractice cases get reported;• provide insurance cover for risks in health care.

It is not possible for any single legislation to addresswide-ranging concerns and issues in a comprehen-sive manner. The COPRA is no exception. A com-prehensive and integrated mechanism is needed toaddress the various dimensions of quality in healthcare and to design an appropriate strategy to deal withthe various issues. The preferred way in the long.runis to introduce separate, comprehensive legislation.A majority of doctors in our survey also favouredthe enactment of separate regulations for me medicalprofession. Such legislation should be developed afterconsidering the views of government, consumers andproviders. The medical associations and councilsmust be given an appropriate role with responsibilityfor developing standards and ensuring the availabilityof information. As discussed earlier, there is nodocumentation on the general and approved medicalpractices in India.

To facilitate the development of a data base on privatepractice, the first step is to implement a separateregistration system for all doctors who set up inprivate practice. At present there is no such system.Their registration is part of the overall system ofregistering any business establishment. Some struc-tural information, such as types of equipment, loca-tion, number of doctors in the practice, numbers ofpara-medical staff, etc., is not readily available.

We suggest that a separate registration system forprivate practitioners, with structural information onthe establishment, should be mandatory. Without suchcritical information, the development of norms andstandards is impossible. It may also make it impos-sible to implement quality assurance strategies, suchas medical audit and accreditation of health carefacilities. The implementation of any programme toimprove the quality of care will be considerably con-strained by the absence of quality measurementstandards. The responsibility for developing a com-prehensive information and data base for measuringquality should be entrusted to the medical councilsand associations.

Endnotes1 In the landmark judgement the Supreme Court in India has

upheld the order of the National Commission bringing all privatesector health services under the purview of me Consumer Protec-tion Act.

2 The details of selected medical negligence cases filed with theNational Consumers Redressal Commission, New Delhi, from1989-1993 are available from the author.


278 Ramesh Bhat

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Jalgaonkar M. 1994. Consumer Protection Act: An introspectionby a General Practitioner. Medical Ethics November: 12-13.

Jesani A, Anantharam S. 1989. What it is and how to fight it: Areport of a workshop by Medico Friend Circle (Bombay Group).Medico Friend Circle Bulletin May.

Medical Ethics, April-June, 1995. Editorial.Medico Friend Circle Bulletin, December 1988.Medico Friend Circle Bulletin, July 1991.Nandraj S. 1994. Beyond the Law and the Lord: Quality of private

health care. Economic and Political Weekly July: 1680-5.National Consumers Disputes Redressal Commission, New Delhi,

1989-1993.Palmer RH. 1991. Striving for Quality in Health Care: An inquiry

into policy and practice. Ann Arbor, Mich.: Health Administra-tion Press.

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AcknowledgementsThis paper is part of the policy formulation case study completedduring the Phase I activities of the Health Policy DevelopmentNetwork (HELPONET), India project supported by the Inter-national Health Policy Program (IHPP), Washington DC. Theearlier version of the paper was presented at the Regional Con-ference on Health Sector Reforms in Asia organized by the AsianDevelopment Bank, Manila, International Health Policy Programand the University of Philippines in May 1994 and Sixth AnnualMeeting of the International Health Policy Program at Beijing,People's Republic of China, in October 1995. The author gratefullyacknowledges the support of the IHPP and Indian Institute ofManagement, Ahmedabad, India. The author wishes to thank ProfRandall P Ellis, Economics Department, Boston University,

Dr Dileep Mavalankar, Indian Institute of Management,Ahmedabad, and an anonymous reviewer for providing useful sug-gestions on the earner drafts. The author gratefully acknowledgesthe research assistance of Ms Avni Amin and Mrs Kiren Hegde.

BiographyProfessor Ramesh Bhat, PhD, is currently working on private healthcare sector issues and other research interests including health in-surance mechanisms, national health accounts, and health manage-ment and health financing issues. He is coordinator of the HealthPolicy Development Network (HELPONET) in India, supportedby the International Health Policy Program, Washington DC.

Correspondence: Dr Ramesh Bhat, Professor of Finance, IndianInstitute of Management, Ahmedabad 380 015, Gujarat, India.

Appendix 1. Methodology and sampleA questionnaire was sent to 495 private doctors prac-tising in Ahmedabad city. The doctors were selectedrandomly from a list of 2920 doctors registered withthe Ahmedabad Medical Association (AMA). In total108 doctors responded to our questionnaire, a res-ponse rate of 20%. This was simultaneously followedby in-depth interviews of 22 private doctors. A listof 70 doctors was generated using random selectionfrom the AM A list (excluding the list of 495 doctorsselected for the questionnaire study) for this purpose.

The questionnaire consisted of a set of closed-endedquestions and a few open-ended questions which pert-ained to the operational activities of private practi-tioners and their opinions regarding cost, quality ofcare and regulatory mechanisms affecting the privatemedical practice. Before sending the questionnaire,a pilot study was conducted to assess the relevance,clarity of language and content matter of the ques-tionnaire, for which 7 doctors from differentdisciplines were interviewed. A two-pronged ap-proach of mailed questionnaire and interview wasused to check whether the mailed responses containeddifferent responses from the interviews. We reportboth sets of results. In this section we present onlya part of the findings pertaining to COPRA and otherlegislation and their view on the implications of thesechanges on private medical practice. Tables Al andA2 provide the number of years of experience andspecialization profile of respondents.

Respondents of both groups, mailed and interview,have varying lengths of experience. About 41% ofrespondents from the mailed group have less than. 10



years experience, compared to a figure of 47% for groups are practising as general physicians. The otherthe interviewed group. About 10% and 14% of the specializations are represented almost equally in bothrespondents have private practice experience of more groups. Over 90% of the respondents in each groupthan 30 years for the mailed and interviewed groups are registered as the sole proprietors of their privaterespectively. A majority of the respondents in both practice establishment.

Table A1. Number of years in private practice

Number of years Mailed % (108) Interviewed % (22)

< 5 years 19 5

5 > 10 22 32102: 20 23 18202: 30 27 36>30 years 10 14

Total 100 100

Table A2. Specialization profile of respondents

Specialization Mailed % (108) Interviewed % (22)

General Physician 42 59

Surgeon 9 5Anaesthetist 5 5Paediatrician 7 14ENT Specialist 2 5Orthopaedic 5 5Gynaecologist 8 5Obstetrician 22 5

Total 100 100


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Regulating the private health care sector: the case of the Indian