Despite curbs, hospitals find ways to give payouts for referrals. Patient is left footing the bill.
By Rema Nagarajan (Times of India)
Is your doctor referring you to a top hospital for a procedure because he is getting a commission? Can you be sure you need that procedure when the size of the commission depends on the cost of the procedure? The practice of giving ‘cuts’ or commissions to doctors is prohibited by the National Medical Commission, but the fact that it happens is an open secret. Some corporate hospital chains and even mid-sized hospitals have found ways to get around the rules by using euphemisms such as facilitation charges and continuum-of-care charges.
Hospitals have various strategies
- ‘Money-minded’ doctors are offered cuts on tests and procedures.
- Egoistic ones are lured with dinners and a chance to interact with the hospital’s star doctors on stage.
- ‘Ethical doctors’ insist that their patients get discounts.
TOI spoke to several doctors and reviewed documents, including a PowerPoint presentation made to a hospital by a consultancy, to piece together the whole business of referral commissions for doctors in the healthcare sector.
Big Bill, Big ‘Bonus’
While cash-in-envelope type of transactions do exist, corporate chain hospitals have ‘professionalized’ the whole business of commissions. They pay by cheque or bank transfers with tax deductions and make referring doctors sign MoUs or agreements as ‘partners’ or ‘associates.’ Doctors can be ‘associates’ of one or more corporate hospitals. They get 10-15% of the bill minus the cost of drugs, implants, and consumables, which leaves items like room rent, operation theatre charges, and diagnostics. Sometimes, doctors’ consultation charges are also excluded.
Referrals constitute 15% to 30% of the revenue of hospital groups, with the industry average pegged at 25%. It is a win-win for these hospitals as it helps push up occupancy, which averages 65%, and brings in several hundred crores.
Sales Targets
Doctors on hospital sales and marketing teams' lists are classified as active or dormant depending on how many referrals they provide every quarter or six months. Each sales executive has a designated area, and like medical representatives, they are expected to visit doctors regularly and track their referrals. They have targets for referrals.
Some doctors send just a few referrals and get a few thousand rupees, but big hitters earn lakhs. For instance:
- A diabetologist earned ₹24 lakh in a little over a year by referring more than 100 patients, most for cardiac procedures.
- Another cardiologist earned ₹12 lakh in referrals for one hospital alone.
- Some lucky ones earn a windfall from just one patient, since the commission is a percentage of the bill. On a ₹1 crore plus bill from a 2.5-month ICU stay, one doctor earned ₹2 lakh.
- On a ₹50-lakh bill in the CCU, a referral doctor earned ₹1 lakh.
- Smaller hospitals pay larger commissions. Even small-town doctors earn lakhs through referrals.
Transplant Windfall
Those who refer for high-value procedures like kidney or liver transplants get ₹50,000 to ₹1.5 lakh per transplant. Hospitals are in a race to attract more transplant patients, and they have to pay as much commission as their competitors to secure referrals. Doctors track going rates for referrals.
Pressure Tactics
Doctors with many referrals threaten to send patients elsewhere if the payout is delayed. Some are loyal to one hospital, while others keep their options open.
To retain doctors, hospitals offer:
- Discounted check-ups and diagnostics for doctors and their families.
- Advance deposits to prevent delays.
Doctor Categories
The "money-minded" (as referred to in internal presentations) demand cuts on tests and procedures.
Egoistic ones are lured with dinners and interactions with star doctors at hospitals or events where they can share the stage.
‘Ethical doctors’ ask for discounts for their patients rather than direct commissions. Discounts are also used to attract doctors who serve low-income patients.
In-house Lobby
Senior doctors within hospitals lobby hard for timely payments and increased payouts for doctors who regularly refer patients to them. Some even persuade marketing teams to add billing heads or increase the price of consumables to fund higher commissions.
Many hospitals pay commissions even to their own doctors if they refer patients for expensive investigations like CT scans or MRIs. Even those who don’t refer patients directly but order a lot of tests can make several lakhs just from in-house referrals.
In short, the referral commission system is deeply embedded in hospitals despite regulations, often at the expense of patients, who ultimately foot the bill. Even in case of referral under central Govt, schemes like CGHS &RELHS hospitals play mischief raise exorbitant Bills in the name of disposable so much so CT scan and consultant fee is charged from the attendants of the serious patients referred to by Rly doctors under RELHS & when reimbursement is claimed Rly doctor classify these items as disposable.
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