Narayana Hrudayalaya to increase prices for angioplasty procedure

Mumbai: Bengaluru-headquartered hospital chain Narayana Hrudayalaya Ltd plans to increase its charges for performing the angioplasty procedure as a sharp reduction in coronary stent prices by the government has hurt profitability.

The angioplasty surgery is performed in cardiac patients to open blocked arteries. A stent, a tiny tube-shaped device, is placed in the patient’s narrowed or blocked coronary artery to maintain normal blood supply.

On 13 February, India’s drug price regulator, the National Pharmaceutical Pricing Authority (NPPA), slashed prices of coronary stents by up to 85% in a bid to provide relief to patients.

The ceiling price of bare metal stents was fixed at Rs7,260 per unit and that of drug-eluting stents and biodegradable stents at Rs29,600 per unit. Adjusting to inflation, the prices were revised to Rs7,400 for bare metal stents and Rs30,180 for drug-eluting stents on 1 April.

“We would definitely have prices revised upwards as far as procedure prices are concerned. When the government came up with the directive of control on stent pricing, they had suggested that for six months, prices of procedures cannot be changed and we followed that. Now since the six months period has passed, I would believe that the prices will have to be revised to make them realistic,” Ashutosh Raghuvanshi, chief executive officer and vice chairman of Narayana Hrudayalaya, said.

“Earlier procedures were underpriced and implants were overpriced, so the entire profitability was coming from that (implants) segment. Now that correction will happen,” Raghuvanshi said on the sidelines of Confederation of Indian Industry’s (CII) Healthcare Conclave 2017 held in Mumbai on Wednesday.

The cardiac segment accounts for 40% of Narayana Hrudayalaya’s revenue. In a post-earnings conference call with analysts on 4 August, the company said it expected a hit of Rs40-45 crore on an annual basis due to the cut in prices of coronary stents by the government.

In financial year 2016-17, the hospital chain reported consolidated revenue of Rs1,878.2 crore, as against Rs1,613.8 crore a year earlier. Its net profit was Rs82.97 crore, up from Rs20.82 crore in the previous year.

After stent prices were cut by the government, analysts and industry officials had expressed concerns that this step alone might not be enough make angioplasty affordable for patients as overall package costs of hospitals may not come down much.

During the six-month period when package prices were not allowed to be changed, Narayana Hrudayalaya had passed on the benefit of stent price cut to patients, Raghuvanshi said, adding that surgery cost for patients had come down by 10-12%.

However, with procedure prices likely to increase, surgery costs for patients will be almost the same as before the stent price cut.

“I don’t think patient will get a very significant benefit out of this (stent price cut). When I say patients will not get benefit means, the (surgery) prices will remain static,” Raghuvanshi said.

“As an industry, what hospitals need to do is that medicines, consumables, and implants should be charged as per what they are procured at and not with an undue margin. We should build up the rest of it into packages, as procedure charges,” he said.

He also said that if doctor or surgeon fee is excluded from package costs, then prices of angioplasty surgery have not increased hugely over the last many years.

On the NPPA’s recent decision to cap prices of orthopaedic knee implants, Raghuvanshi said this development will not have any major impact on the company as orthopaedics contribute only about 4-7% to its revenue.

While pricing interventions by government do have an impact on hospitals’ earnings, they are likely to bring in transparency in the healthcare sector, he said.

At 11:00am, shares of Narayana Hrudayalaya were trading 0.6% down at Rs303.35 on the BSE, while the benchmark Sensex index was almost flat at 31,574.28 points.