Refer a patient, get a cut: Commission game is back in a murkier avatar

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 thrives is an open secret. Some corporate hospital chains and even mid-sized hospitals have found a way to get around the rules by using euphemisms such as fee-splitting, facilitation charges and continuum-of-care charges.TOI spoke to several doctors and reviewed documents, including a power-point presentation made to a hospital chain by a consultancy, to piece together a picture of just how the whole business of referral commissions for doctors works in the healthcare sector.BIG BILL, BIG ‘BONUS’While cash-in-envelope type of transactions do exist, corporate chain hospitals have ‘professionalised’ the whole business of commissions. They pay by cheque or bank transfers with tax deduction at source 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 TARGETSDoctors on the lists maintained by hospital sales and marketing teams are classified as active or dormant depending on how many referrals they do every quarter or six months. Each sales executive has a designated area and like medical reps, they are expected to visit doctors in that area regularly and track their referrals. They have targets for referrals.There are doctors who just send a few and get paid a few thousand rupees, and then there are the big hitters. One diabetologist earned almost Rs 24 lakh in a little over a year by referring more than 100 patients mostly for admission to the cardiac care unit (CCU) and a few cardiac procedures. He earned the hospital over Rs 5 crore in revenue. Another, a cardiologist, earned over Rs 12 lakh in a year through 40 referrals that brought in over Rs 2.5 crore for the hospital.Some lucky ones get a windfall from just one patient who runs up a huge bill, since the commission is a percentage of the bill. On a Rs 1-crore plus bill from 2.5 months’ stay in the intensive care unit (ICU), one doctor earned Rs 2 lakh. Similarly, from a Rs 50-lakh bill in the CCU a referral doctor earned Rs 1 lakh. Smaller hospitals pay larger commissions. Even some govt doctors earn lakhs through referrals.TRANSPLANT WINDFALLThose who refer for high-value procedures like kidney or liver transplants get Rs 50,000 to Rs 1.5 lakh. Hospitals are in a race to attract more transplant patients and have to pay as much commission as competitors do. Hence, they closely track going rates for referral.Doctors with many referrals can threaten to send patients elsewhere if the payout is delayed, and many do. Some are loyal to one hospital while others like to keep options open. For the loyal ones, hospitals throw in freebies like free or discounted check-ups or diagnostics for them and their families, and give advance deposit to prevent payout delays.Strategies are drawn up for reluctant ones depending on their categorisation. The ‘money-minded’ (as they are referred to in the powerpoint) are offered cuts on tests and procedures, egoistic ones are lured with dinners and interactions with star doctors of the hospital or talks where they share the stage with them. Then there are ‘ethical doctors’, who ask that the payouts be in the form of discounts to their patients. Discounts are also a draw for doctors who see a lot of low-income patients.INHOUSE LOBBYSenior doctors within these hospitals lobby hard for timely payment and increased payouts for doctors who regularly refer to them. Some even take the initiative to persuade marketing teams to add billing heads or push up the price of consumables to make the extra money needed to pay higher commissions.Many hospitals pay commissions to their own doctors for referrals for procedures and a percentage of the bill if they refer for investigations like a CT scan or MRI. Even here, those who refer for a lot of investigations can make several lakhs just from these.Referral payouts, whether for inhouse or outside doctors, finally come from the patient’s pockets and add to the cost of healthcare. As the competition between hospitals to lure patients heats up, the referral game is getting murkier and more expensive.