In India, where 70% of healthcare is corporate-run, doctors must balance two forces: ethics & profit. The industry's challenges are not for the faint of heart; only a higher calling can prevail. Who gets up at 3 AM to deliver a baby for a paycheck? Yet, any sustainable endeavor needs a healthy cash flow. 

The conflict between values and profits can be observed on multiple levels: doctors weigh whether to serve in government Primary Health Centers (PHCs) or corporate hospitals, clinic owners balance the patient experience with maximum turnover, and pharma reps fine-tune salesmanship with health impact. Let's simplify and note these challenges, as reported by senior doctors.

Ethical Challenges in Modern Indian Healthcare

Medicine is a social science, making every medical professional a social worker. Yet most of India’s healthcare is provided by massive corporations like Fortis, Max Hospitals, Aster, and Apollo Hospitals, which are answerable to shareholders.

This conflict of interest, the company’s need to profit vs. the hospital's role in social service, leads to serious systemic issues. Despite the “Planet>People>Profit” idiom that supposedly guides boardroom decisions, the ground reality in most corporate hospitals involves:

#1. Over-Investment

Overzealous and naive hospital management tends to overinvest in world-class facilities. The idea is that the latest technology will improve footfall by attracting patients. While that may be true to some extent, potential ROI can only be calculated in hindsight, while the actual capital demands a break-even point. This way, overinvestment leads to immense pressure for rapid growth.

#2. Referral Fees

Faced with the pressure of rapid growth, hospitals then offer independent practitioners referral fees to grow their patient base quickly. This practice is widely criticized as deplorable, as it veers dangerously into the marketing & sales domain. What's more, the cost of referral fees ultimately falls on patients, as the hospitals factor it into the bill. This makes healthcare costlier.

#3. Unnecessary Procedures

There are two primary reasons why doctors and hospital management are motivated to undertake unnecessary investigative procedures like diagnostic tests (x-ray, bloodwork, etc.):

1. “Fee For Service” Model

This is not about whether the patient pays cash, has a cashless private insurance, or opts for credit; It's about how the bill amount is calculated. They do it based on the individual services administered throughout the treatment process. When patients are charged separately for each service, hospitals are monetarily incentivized to perform more procedures.

2. Defensive Medical Practices

While no systematic data proves the full extent, medico-legal cases have been rising at an alarming rate. Whether the causes behind it are healthcare's commercialisation, rising patient/consumer awareness, hostility toward healthcare professionals, or something else is uncertain. Regardless, the looming threat of malpractice lawsuits prompts procedures to be done “for the record” and “just in case.”

Yet, the fact remains:

• More tests do not always mean better treatment.

• CT scans & over-diagnosis add risks beyond cost.

#4. Brain Drain

To be clear, we are not calling this (very public) economic issue an ethical conundrum to place the onus on doctors and condemn them for prioritising career growth. We believe this issue belongs on this list because it warrants discussion, particularly among Indian medical students. 

When private institutes overtake public ones, it encourages a brain drain & concentration of talents. The result? 80% of Indian doctors are in cities where only 28% of the population resides. Most doctors struggle with this decision at some point in their career: go where they think they are needed or where they might get paid the best?

Generally, we believe that the best solution is to practice as best as you can wherever you may be. Moving tends to carry greater and less predictable financial repercussions than trying to do better wherever you are. Of course, for more helpful advice, you should give us a call and talk to our advisors who specialise in doctors' finances.

#5. Medical Tourism in India

India holds great potential for medical tourism. Foreigners worldwide often seek out “first-world treatments at third-world prices” here. This is mainly seen as a net positive for both hospitals and patients, and doctors need all the "win-win" situations they can get. 

Without diminishing the positives, there are some ethical implications to be aware of. Many hospitals end up having separate facilities (areas, floors, or even buildings) for the rich and the poor. Separate hospital facilities for affluent patients both symbolize and perpetuate health exclusion.

#6. Polypharmacy

Our pharmaceutical industry is also a worldwide giant, with India being one of the biggest exporters of affordable generic meds. Yet, for being the birthplace of Ayurveda, there is another troubling trend shaping within our borders: Overprescription of medicines to patients.

This might partly be fueled by defensive medical practices (as explained in point #3.2 above), but patients themselves are often unwilling to stop taking medicines. Big Pharma's aggressive promotions can also produce drugs of questionable value. Furthermore, it’s dangerous when pharma companies sponsor medical conferences to push their products. 

Conferences are rare opportunities for busy doctors to stay updated, and this commercialisation of healthcare products (where new, bigger, better drugs are emphasised) also contributes to polypharmacy.

Potential Solutions: Ethical Guidelines

The reason we discuss these issues is that in high-stakes industries like medicine, finance, and law, trust matters most. As the public loses confidence in hospitals, they also lose faith in the doctors, nurses, and staff's ability to help them heal. 

The point is not to play the blame game. It’s to understand why tensions are rising between doctors and patients, and how HCPs can better succeed. Once we acknowledge & accept these difficulties, we can start building sustainable solutions. These rules of thumb, partly inspired by official NMB guidelines, might help:

• Informed consent (clearly explaining procedures, risks, and alternatives to patients).

• Lean Healthcare (invest & expand slowly as income & patients grow organically).

• Transparency in billing and referrals (avoiding kickbacks, unnecessary tests).
  

• Patient confidentiality (protecting medical records and privacy).
  

• Duty of care (prioritizing patient safety and best interest over profit motives).
  

• Competence & accountability (practicing only within one’s expertise, avoiding negligence).

These standards are widely known and practiced by most doctors, but a little revision never hurt. In the first guideline shared above, informing the patient should also include the cost and effectiveness of other centers. When patients are educated & offered second opinions, the clinics providing such excellent service profit in the long term.

Shrouded in Darkness, A Glimmer of Hope

It’s natural to get jaded and lose faith. High-stress situations can make even the most resilient among us feel naive for believing in ideals. Here is a little inspiration:Dr. Govindappa Venkataswamy of Tamil Nadu. Dr. Venkataswamy (affectionately known as Dr. V) had a dream to eradicate blindness from the world.

He founded the Aravind Eye Care System in 1976, which annually treated up to a million people, with 60% of them receiving free treatment. The doctors who participated performed an average of 80 daily surgeries and became renowned for their incredible gentleness. 

A key component of the system was its differential pricing model, which featured tiered charges for individuals in various economic groups. Dr. V said it best:

“If you can’t pay them, you don’t have to. If you can’t come to them, they’ll come to you.”

Business executives might flinch at this philosophy as a business model. But that might reveal a fundamental misunderstanding of profiting in healthcare, more than anything else. As a Harvard Business Review study should prove, Dr. V’s lifelong efforts led to a very successful & financially viable institute that continues to thrive.

Conclusion

This is the mantra of Business in Ethics: the good of the many leads to the good of the few. As doctors, the more good you do in the world, the more likely you are to succeed in the long run- financially, personally, and holistically. I’ll end by quoting Dr. V:

“We identify ourselves with all that is in the world, 

so there is no exploitation.

It is ourselves we are helping.

It is ourselves, we are healing.”

- Dr. Govindappa Venkataswamy

As a doctor, you want to help people. Understanding India's government health schemes can help you serve patients who need it most. But this decision has a massive impact on your practice’s cash flow and long-term success.

Ayushman Bharat is the biggest national insurance scheme, and one wrought with countless difficulties. Navigating it successfully has potential benefits and drawbacks for any healthcare provider. 

If you are a doctor, hospital owner, or clinic manager in India unfamiliar with Ayushman Bharat and its many nuances, this article is for you. It is meant to give a simple, concise, & practical summary from start to end.

What Is Ayushman Bharat PM-JAY?

• Cashless health coverage of ₹500,000 for 10.74 crore (107 million) households on a family floater basis. These families, amounting to 55 crore (550 million) individuals, belonged to the bottom 40% of the Socio-Economic Caste Consensus (SECC) of 2011.

• Coverage for 1,929 procedures + all treatment costs. Includes pre-hospitalisation expenses for up to 3 days & post-hospitalization expenses for up to 15 days.

• In September 2024, the GOI expanded the scheme to include all 70+ senior citizens, regardless of their background, with additional coverage of ₹500,000. That’s another six crore (60 million) seniors the scheme now serves.

How PM-JAY Works: 

The backbone of this scheme is a massive network of around 28,000 “empaneled” public & private hospitals. Together, they work toward achieving universal health coverage. Every state has its own State Health Agency (SHA) in charge of the scheme’s implementation. They follow one of three models for logistics:

• Trust Model: SHA directly manages everything from claims to payments.

• Insurance Model: The SHA contacts one or more insurance companies to manage the logistics.

• Hybrid Model: Combines both in some capacity. SHA manages certain aspects, while insurance companies handle the rest. 

That’s the behind-the-scenes of how the scheme operates. Here is what you need to know as a healthcare provider.

1. Empanelment via HEM:

To accept patients under PM-JAY, private healthcare providers must get empaneled through the Hospital Empanelment Module (HEM). The process is designed to be simple: 

• Visit https://www.pmjay.gov.in/> Menu (Top-Left Corner) > HEM.

• Fill in the details, which are approved by the District Empanelment Committee (DEC) within 15 days, pass the physical inspection, and final approval from the State Empanelment Committee (SEC).

• Minimum requirements might include 10 inpatient beds with ample spacing and quality accreditations, depending on hospital type. (P.S. our PM-JAY: Empanelment Guide)

• Post-empanelment, HEM is also used to update hospital information, learn about new policy developments, view procedure package prices, and ensure compliance with all PM-JAY policies. 

Caution: There have been reports of bribery & corruption to fast-track the process. Empaneled hospitals are also subject to monitoring and disciplinary proceedings. Keep that in mind as you make plans for your practice.

2. Verification via BIS:

Once empaneled, the hospital can start treating beneficiaries (citizens benefitting from the scheme) & get reimbursed under PM-JAY. To do this:

• Once admitted, the hospital must verify the patient’s eligibility through the  Beneficiary Identification System (BIS). It does so by matching the SECC database.

• Staff can input patients' details, such as mobile number, name, age, gender, and Aadhaar number, or they can verify them via BIS with the PM-JAY card.

Note: In the future, the GOI might integrate the Ayushman Bharat Digital Mission (ABDM) with its insurance framework. This might provide the patient’s medical history on BIS.

3. Pre-Verification & Managing Claims via TMS: 

Then comes the most critical part of the process: documentation and managing claims. It’s done via PM-JAY’s Transaction Management System (TMS). How it works:

• A Pre-Authorisation Request (PAR) must be placed for the specific treatment package* in the TMS. The official Turn-Around Time (TAT) for this is just 6-12 hours.

• This request includes documents like the doctor’s notes & test results. These serve as evidence for the treatment’s necessity.

• Once the PAR is approved, the treatment is administered. After the patient is discharged, all final documents are uploaded & the claim is submitted for final adjudication & payment. The whole process happens through TMS.

• The official TAT for the final claim is just 15 days for in-state & 30 days for patients treated outside their home state.

*The GOI has taken a highly controversial measure to streamline the claims process and standardize the procedures covered under PM-JAY. They’ve done this by negotiating fixed rates for each treatment into “treatment packages.” 

Should Your Hospital or Clinic Join PM-JAY?

If you wish to empanel under PM-JAY, it’s vital to know the grave risks and potential opportunities associated with the scheme’s implementation. Here is a simple breakdown:

Pros

• The govt. benefits from private infrastructure, while private hospitals can tap into a new market. 

• Improves the country’s overall quality of life by giving at least some protection to the most vulnerable. 

• Hospitals can fill their beds and improve occupancy, which can lead to improved long-term revenue. They can leverage economies of scale. 

• Massive potential to immeasurably grow your hospital’s goodwill, long-term reputation, and positive impact. 

Cons

• Crippling cash flow disruptions due to systematic delays. According to an audit of the 2018-21 period:

• Pre-authorization usually took longer than the 12 hours, delaying treatment.

• 40.23 lakh claims worth ₹6,052.47 crore were still under process, awaiting approval or rejection.

• Precise documentation and administrative work. It is recommended to keep dedicated staff familiar with the HEM, BIS, & TMS to avoid mistakes.

• Fixed, pre-defined, often lower package rates for procedures (40-50% less than market rates, in some cases). 

• Being forced to “cherry-pick” viable procedures to make ends meet. 

• Ex. A chronic disease treatment might cost more resources than the scheme compensates for. 

• Meanwhile, a complex cardiovascular surgery might cost less than the fixed rate, making it more profitable.

Key Considerations for PM-JAY Participation

It’s important to note that even large, well-established hospitals have said that they make “no discernible profits” from PM-JAY patients and participate primarily to support the needy. 

This does not mean that Ayushman Bharat is a total failure or that treating its beneficiaries is a total loss. Hospitals can earn profits by increasing the volume of treatments. But participation does carry significant risks. Here is our recommendation to balance the two (read our full article on PM-JAY: Best Practices for more):

• Do thorough local research. Reach out to medical associations, look at your state’s PM-JAY data, and even reach out to empaneled hospitals for a feasibility study.

• Prepare for delays without normalising them. Stress-test your financial models for liquidity on 6, 9, & 12-month cycles. Know your threshold for delays according to your required cash flow.

• Dedicate a staff member to specialise in the PM-JAY process. Ensure pristine documentation, systems, and policy compliance to minimize delays and claim rejections.

Conclusion

While Ayushman Bharat has weathered a hurricane of justified criticism and still struggles with massive challenges, hope still lives on. Being one of the most ambitious schemes of its kind, failures and roadblocks are to be expected.

The question for doctors and hospital management is not “Will the scheme work?” but “How can we make it work?” Of course, the implementation has to be financially viable for real, sustainable improvement.

Ultimately, it’s up to the growing corporate medical sector and all its members to hold the administration accountable and lobby for systemic improvements. Read our article on PM-JAY: All You Need to Know for more details.

FAQs

Q1:Who can be empaneled under Ayushman Bharat PM-JAY?
A: Private hospitals, clinics, and single-speciality centers meeting HEM criteria can apply. Government hospitals are automatically included.

Q2:How long does empanelment take?
A: Officially, 15 days at the district level + state approval. Realistically, delays can occur due to inspections, documentation, or other issues.

Q3:What is the Turn-Around Time for claims?
A: Officially, Beneficiary Verification: instant. Pre-authorization: 6–12 hours. Final claim approval: 15 days in-state, 30 days out-of-state. In practice, delays have been reported at various places. Conduct thorough local research to gain a better understanding.

Q4:Is participation profitable for hospitals?
A: It depends. High volumes and efficient management can make it viable, but cashflow delays and low package rates often pose risks.

Q5:Can hospitals update their procedures or policies after empanelment?
A: Yes, via the HEM portal. Updates must comply with PM-JAY policies to maintain empanelment.