Imperfect competition makes private-sector healthcare pricey: Competition commission

The Bangladesh Competition Commission is scheduled to hold a meeting with stakeholders concerned – including the Health Services Division, the commerce ministry, the health directorate and the Institute of Health Economics – to discuss ways to rein in imperfect competition in the country's private healthcare sector.

The commission called the meeting after its preliminary study found that both the markets for private hospitals and diagnostic centres show an oligopolistically competitive environment at the national level, and a monopolistically competitive nature at the regional level, leading to an arbitrary increase in the prices of healthcare.

Competition Commission Chairman Md Mofizul Islam told The Business Standard, "We've conducted a preliminary study on private sector hospitals and diagnostic centres. We will also conduct studies in the second and third phases later. If any anti-competitive activity is found in those studies, we will take necessary measures to prevent that."

At the national level, a small number of large diagnostic centres and hospitals, including Labaid, Popular, United, Square, etc lead the market, compete within themselves, and have the power to set the price of services, while the others tend to follow them, says the competition commission in its draft study report.

At any specific regional level – Chattogram hospitals compete with each other, each with some degree of market power mainly arising from certain doctors they have, the draft report says, adding as such, the quality and reputation of the doctors set the competitive advantage.

Besides, private hospitals and diagnostic centres emphasise importing costly diagnostic equipment and tend to pass the burden on to patients by hiking the healthcare price without enhancing the quality of basic services.

The cost of private healthcare is so high that it is inaccessible to at least 60% of the population, adds the draft report of the study entitled "Healthcare Market Analysis (Private Hospitals and Private Diagnostic Centres)".

The report says in spite of the almost a five-fold growth in private health care services in the last two decades, the sector is still lagging behind in providing some of the most basic medical services.

Even though the number of private healthcare institutions have exceeded that of public ones, the services provided by the private facilities barely meet customer satisfaction because of a lack of frequent monitoring of articulated policies, it says.

The draft report observes the cost of services at private hospitals and diagnostic centres often go up owing to exorbitant fees or commissions charged by doctors. 

The consultation or visiting fees charged, and commissions earned by doctors for test referrals are often undocumented, uncounted, and unregulated, it says, adding, "This is a significant gray area, which must be brought under the preview of the law. Many hospitals, clinics and diagnostic centres justify their higher cost because they need to pay higher fees and commissions to the doctors."

A regulatory and oversight mechanism to keep fees and commissions to doctors at an affordable level should be implemented as soon as possible to ensure that everyone pays an affordable cost, the report suggests. The uniformity and consistency of such fees and commissions across service providers will in turn ensure lowering of prices and improve the competitive environment in the market, it says.

Imperfect competition in the health sector can take a huge toll on service seekers, including causing losses of human lives, if not controlled immediately with adequate measures, the report mentions. Government officials and established regulatory bodies need to ensure regular monitoring activities to stop this heinous practice for the safety of the people, it suggests.

It also recommends that a doctor referral system be implemented to prevent everyone from going to specialists. Patients should be allowed to visit a specialist only when a general physician refers, it says, adding this will allow the government to minimise unhealthy competition arising due to too much crowd at large hospitals that offer specialised healthcare services.

The report also says a clustre-based market development mechanism can be adopted, and each upazila can be considered as a clustre to ensure a fairly competitive market and service quality at an affordable cost for all.

"The number of hospitals, clinics and diagnostic centers must be restricted to a maximum level considering the number of population and their demographic characteristics of the clustre. Such a clustre-based approach will allow the government to ensure that all can access their desired services at their locality at a reasonable price."  

The report also suggests establishing a "Health Sector Commission" or authorising the Bangladesh Competition Commission to investigate issues of overcharging and take disciplinary actions as per the regular fraudulent acts and health sector laws.

Proper legislative measures can minimise malpractices in private hospitals and diagnostic centres, it says. 

At present 4,452 registered private hospitals are operating in Bangladesh while the number of registered private diagnostic centres is 10,291.

A recent study of Bangladesh Bureau of Statistics (BBS) finds that only 4.25% of private hospitals have advanced life support facilities, whereas it is only 15.09% in basic life support facilities. 

The BBS study discloses that only 9.3% of hospitals have healthcare services facilities to manage sexual and gender-based violence, which is concerning since the number and depth of violence are increasing alarmingly.

Only 8.38% and 15.54% of total private diagnostic centres provide advanced imaging services and basic lab services, respectively, the BBS adds.