Need for Regulation – Diagnostics Industry

Abhishek Bondia

Have you ever wondered if the thousands of rupees that you spend on doctor’s fees or medicines are they truly worth it? The reason why I am asking this is that about 70% of our treatment decisions are based on the tests done at pathological labs, which may not be trustworthy. It’s a strange fact but still true that out of about 40000 testing labs in the country only about 60 are accredited. The entire credit to this skewed number goes to the absence of any regulation in this regard. Currently there are no enforceable regulations in the country that are mandatory for diagnostic laboratories to follow. A person can start a diagnostic laboratory simply by following the Shop & Establishment Act, which is even applicable to the nearby grocery store. To think of it, human life is as cheap as the toothpaste we use daily!

As diseases get more complex, doctors are increasingly relying on report results as compared to clinical observations. This is fair since it’s an attempt to reduce the dependence on chance and a move towards greater accuracy. However the same doctors act as an impediment to this genuine effort by charging referral payments. The industry is highly competitive and price sensitive, hence referral payments cause a pressure on the margins of these diagnostic laboratories. In the absence of any specified quality standards these laboratories provide sub-standard service by hiring under qualified technicians. Research indicates that only about 5-10 per cent of the total number of private pathology labs in the country are run by individuals with ideal qualification. This results in using sub-optimal methods of testing and inaccurate results. For instance, a diabetes test is done by arbitrary calculation in 80-90 per cent of the cases. As per large laboratories this method is unreliable and instead direct estimation would offer much accurate results.

Laboratory testing is not a core business for the hospitals hence they seldom develop the capability to conduct the full range of tests. They increasingly outsource these services to units providing only pathology services. However in the absence of established big chains of diagnostic laboratories, a patient has to fall prey in the hands of the nearby laboratory, which may not be the most appropriate one. As a matter of fact there are only 4-5 reputed names in the industry. This lack of reliance on brand name is used by many firms to enter the market and setup a shop.

This being said, the pathology market is not to be ignored. Large players are planning massive investment in this sector. More than one million patients are tested everyday. The pathology market is currently 2.5 per cent of the overall healthcare delivery market that is more that Rs. 2000 crores. With an expected growth rate of 20% in the coming years the potential of this industry is not to be underestimated. However, the blind eye of law for this industry is giving many a player an opportunity to earn good money at the cost of the patient. As these laboratories equip themselves to provide tertiary services like regular health check-ups, check-ups on life style diseases like obesity etc, the market is going to expand. These laboratories would eat some bit of the hospital market which provides some of these services. An industry, such potent, certainly does not deserve to go unregulated.

Medical tourism is one of the key areas that the Government is targeting. In any treatment the diagnosis is the key step. Unless the foreign tourists are assured that the initiation of their treatment is in safe hands, the trust on the entire value chain seems to be a distant dream. And to think of it, can you actually expect them to bestow their trust. Should a foreigner leave his country and come to India to get diagnosed cheaply only to get it wrong? India today does not just need to prove itself cost-effective but also a quality service provider. It is only then that we can actually cater to a larger market than limited to our national boundaries.

The Government should come up with adequate rules to ensure quality service. There should be a minimum qualification criteria required for a person to operate pathology labs. Currently though some institutes provide diplomas in this field, to run a lab it is not mandatory to obtain such diplomas. There should be guidelines which lay out the infrastructure required to conduct specific services. The Government can categorize labs as primary, secondary and advanced, depending on the complexity of diseases diagnosed there. With increase of each level the requisite quality standards should increase accordingly. There could be procedures laid out for conducting different kinds of tests. Based on these criteria licenses should be issued, which would be contingent on the fulfillment of the above criteria. I think the above would help a long way to ensure a much healthy India!