Sunday, May 21, 2017

Winds of change - 5

(This is the fifth part of a short story which is entirely a work of fiction.)

A few weeks later, as Dr. Som was finishing his OP consults for the day, he got an email from Vasudha. The subject was ‘Price increase’. In the email, Vasudha had forwarded the Finance department’s proposal for price increases for various procedures, investigations and other services the hospital offered. Dr. Som opened the attachment to take a look at the details.

Since the opening of the hospital, prices had never been increased. The focus was on setting up a reputation and getting a good patient base. Three years is a long time. With inflation, everything had become more expensive. Manpower costs, electricity tariffs, the prices of consumables - everything had shot up but the prices that Narayana charged for the services had remained the same. The Finance team had brought this to the notice of Vasudha in a detailed presentation. They explained that a steep price hike was essential to control the financials.

The Finance team had come up with an initial proposal which Vasudha reviewed and asked them to modify. She did not want to take any chances with the patient base. Over the last three years, they had been able to develop a loyal following and many people saw the hospital as a high quality, reasonably priced and ethical institution. Vasudha reviewed the modified price hike proposal and sent it to Sheshu for review.

Dr. Som saw the details. He understood that prices had not been changed for three years. He realised that a price hike at that point was necessary. He went over the list. He made some minor corrections at a few places. However, his eye stopped at a line towards the end of the file. The line indicated that the plan was to increase Inpatient charges for the same services by 50% more than the Outpatient charges. An example was given that to get Hemoglobin tested, an outpatient currently paid Rs. 100, while an inpatient paid Rs. 110. The plan was to increase the outpatient charges to Rs. 110 while the inpatient charges were to be increased to Rs. 165. He found that to be extraordinary. He sent an email back to Vasudha saying that he was ok with everything but he thought there was mistake in the Inpatient charges clause and asked her to get that checked and revert.

Within a minute, Vasudha responded saying that it was correct and that was the plan. Dr. Som responded to the email, “Let us discuss.”

Vasudha came over to Dr. Som’s cabin. She told him that they did not have too much scope in OP prices because the competition was getting tough. IP prices were the only area they could be a little more ambitious. Sheshu countered, “It is unfair to charge so much higher for IP cases.”

Vasudha was getting impatient. “The whole world does this Sheshu. What is wrong with this? When someone is admitted in the hospital, they do not have any other option but to get their investigations and procedures done here. We can and should charge more! For OP, they can go anywhere else so it is important to keep prices low and attract more patients.”

“That inflates the bill artificially. When the patient sees his hospital admission bill, they would feel cheated. They can always go to other hospitals the next time because of this. In the long run, we lose their business.”

“It does not work that way Sheshu. All other hospitals do the same thing. Everyone does this.”

“Exactly. Just because everyone does this does not mean we should do this. It is wrong to charge more for IP just because they don’t have any option.”

“It’s not that alone. IP cases need more care because patients are inherently more sick when they are admitted.”

“Taking a Hemoglobin sample involves exactly the same effort whether it is IP or OP”

“The sample has to be collected by visiting the ward or the room. That requires more effort.”

“Not 50% more effort as OP.”

“Sheshu, every single hospital in the country charges more for IP. That’s where everyone makes their money. Why should we be any different?”

“We started this hospital to be different. Not to take the easy way out. We were doing fairly well in comfortable jobs. We did this to do something challenging.”

“We have too many challenges already Sheshu. We cannot take on more.” Vasudha stormed out of Sheshu’s cabin.

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