India's new government vows clampdown on healthcare graft

NEW DELHI Tue Jul 22, 2014 1:38pm EDT

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NEW DELHI (Reuters) - India's health minister called for tougher laws on Tuesday after a media report alleged that laboratories had offered kickbacks to doctors who referred patients to their diagnostic centers.

Harsh Vardhan has lashed out several times in recent days against bribery in the $74 billion healthcare sector, signaling that the new government will make tackling the corruption that blighted the outgoing administration a priority.

An undercover investigation by Hindi news channel News Nation that ran on Monday showed footage purportedly of reputed private laboratories offering commissions as high as 50 percent to doctors who referred patients to their diagnostic centers.

Officials at one laboratory visited by the channel's undercover reporters said they had kickback arrangements with 10,000 doctors, with monthly payments running into tens of thousands of rupees for some doctors.

Himself a doctor with a reputation for probity, Vardhan last week called the country's drug approval agency a "snake pit of vested interests."

Speaking in parliament on Tuesday, he said a panel of doctors and lawyers would advise on changes to the law specifically to prohibit kickbacks.

With about 40,000 laboratories in India, the diagnostic market is the fastest growing segment of India's healthcare industry, according to PwC, with the segment forecast to grow to $17 billion by 2021 from $3.4 billion in 2011.

Vardhan ordered an inquiry into News Nation's findings and asked the TV channel to submit a copy of the sting operation. He also directed the Medical Council of India to hold an emergency meeting of its ethics committee.

"A GRADUAL PROCESS"

Private players, including listed companies, dominate the healthcare system, while government hospitals remain overcrowded and lack the resources to cater to growing demand. Laboratories are mainly run by Indian firms, with foreign players such as Roche, Abbott and General Electric also selling diagnostic equipment in the country.

"Some individuals who are indulging in such unethical conduct should be identified and disqualified," Vardhan said in parliament, referring to the program's revelations.

Unethical practices such as doctors receiving extra payments for referring patients to a particular test center or receiving gifts from companies for prescribing their drugs are common in India, doctors say.

"The laissez-faire spirit that dominates this business in India works to the disadvantage of the consumer and needs correction," Vardhan said.

In the last few weeks, leading doctors and advocacy groups in India have teamed up to try to eradicate corruption from the healthcare system, forming anti-graft panels at hospitals and writing open letters to Vardhan.

"You can't make a difference in one day," said Balram Bhargava, a doctor who is forming a 'Society for Less Investigative Medicine' at the All India Institute of Medical Sciences. "It has to be a gradual process."

The anti-corruption debate gained momentum in India after Australian doctor David Berger wrote a column in May describing his encounters with corruption at a charitable hospital in the Himalayas.

Amit Mookim, head of healthcare at consultants KPMG India, welcomed Vardhan's intiatives.

"Like in all markets it will go a long way to building trust and transparency in the sector," he said.

"In our experience, across markets in the world, corruption in healthcare exists and is a function of the maturity of the industry. In the long run it will only benefit all businesses."

(Reporting by Aditya Kalra; Editing by Krista Mahr, Nick Macfie and Mike Collett-White)

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