Exploitation in India’s Health Sector: The Urgent Need for a National Regulator

By Suresh Unnithan

Of all the forms of inequality, injustice in health care is the most shocking and inhuman.”— Martin Luther King Jr.

India’s healthcare once reputed as a pillar of public welfare has now degenerated into a money minting business. The sector prominently dominate by profit mongers have naturally prioritised financial gains over patient well-being. With over 70,000 hospitals across the country, where private facilities dominate 63% of the landscape and handle approximately 60% of inpatient care, the sector is plagued by unchecked exploitation. This dominance has led to rampant overcharging, unnecessary procedures, and a lack of standardized protocols, leaving millions vulnerable to financial ruin during times of medical need. Critical illnesses, such as cancer, heart disease, and lung conditions, exacerbate the issue, with exorbitant fees turning healthcare into an unaffordable luxury for the average citizen. The absence of a robust national regulator has allowed this crisis to fester, with decentralized and inadequate oversight failing to curb abuses. This article delves into the depths of this exploitation, highlights real-world examples, examines the flawed regulatory framework, and argues for urgent reforms, including the establishment of affordable public facilities akin to the Pradhan Mantri Jan Aushadhi scheme.

A Private-Dominated Industry

India’s healthcare infrastructure is vast but imbalanced. As of 2025, the country boasts around 70,000 hospitals, including approximately 26,000 government-run facilities and over 43,000 private ones, with an additional 500 to 1,000 operated by trusts or NGOs. Private hospitals account for a significant portion of service delivery, contributing to 54% of empanelled facilities under national health insurance schemes and handling the majority of complex cases. However, this reliance on the private sector comes at a steep cost. Projections indicate that by 2025, India will need an additional three million hospital beds to meet the target of three beds per 1,000 people, alongside 1.54 million more doctors. The public sector, chronically underfunded, struggles to fill this gap, pushing patients toward private providers who operate with minimal accountability.

This imbalance fosters exploitation, particularly in a country where out-of-pocket expenses constitute a large share of healthcare costs. Private equity firms have increasingly invested in hospitals, viewing them as lucrative businesses rather than essential services, which drives up costs through unnecessary treatments and inflated billing. Illiteracy and low health awareness among the population further compound the issue, allowing stakeholders to manipulate vulnerable patients. Women, in particular, face severe exploitation, with under-investment in public health leading to serious risks during maternity and other care.

Unchecked Exploitation: From Arbitrary Billing to Fraudulent Practices

Exploitation in India’s health sector manifests in various insidious ways. Private hospitals often lack standardized protocols for treatments, medications, admissions, room rents, and service charges, enabling them to set prices at their discretion. Room rents can vary wildly, from ₹5,000 to ₹50,000 per day, with surprise “service fees” and inflated medication costs adding to the burden. For critical illnesses like cancer, charges can skyrocket into lakhs or crores, often without price caps or justification.

A common tactic is overcharging through non-itemized bills, unnecessary procedures, and referral chains that prioritize commissions over care. Fraud in public health insurance schemes is rampant, with providers exploiting loopholes to inflate claims, making detection difficult and increasing overall costs. During the COVID-19 pandemic, this reached egregious levels: surveys in Maharashtra revealed average overcharges of ₹155,934 per patient, with irregularities like handwritten bills and false charges for services not rendered. Even vaccines were overpriced, with many hospitals charging ₹800-1,000 per dose of Covishield, far above regulated limits.

Unnecessary interventions, such as excessive diagnostic tests or surgeries, are another hallmark. In one analysis, private hospitals were found charging more than the maximum retail price for medical aids, violating commodity rules. This profit-driven model not only drains patients financially but also pushes millions into poverty annually, as highlighted by experts warning of the exploitative cycle created by inadequate insurance and low health literacy.

Real-Life Examples: Stories of Systemic Failure

Numerous cases illustrate the human cost of this unchecked system. In Mumbai, seven top hospitals were caught overcharging patients for medical aids, breaching pricing regulations and highlighting widespread violations. During the pandemic, insurers reported claims exceeding ₹1.95 crore for just 90 COVID-19 patients in private hospitals, far above reasonable costs, prompting accusations of systematic overbilling. In another instance, a private hospital in Jammu and Kashmir was fined for ambiguous billing and overcharging during orthopaedic treatments.

Patients fighting back have seen some success, such as in Maharashtra where hospitals refunded excess COVID-19 bills after public outcry and audits. Yet, these are exceptions; most victims, especially from low-income backgrounds, lack the resources to challenge bills, leading to debt or forgone care. Foreign ownership of hospitals adds another layer, raising concerns over data exploitation and tailored vulnerabilities based on genetic or regional traits.

The Inadequate Regulatory Framework

India’s healthcare regulations are decentralized and fragmented, contributing to the crisis. Key laws include the Clinical Establishments (Registration and Regulation) Act, 2010, which aims to standardize facilities but has seen poor implementation across states. The Medical Council of India was reformed into the National Medical Commission in 2019 to address education and professional standards, but broader service regulation remains weak. Pricing is partially controlled by the National Pharmaceutical Pricing Authority for drugs, yet hospitals evade this through bundling.

Digital health adds complexity, with no dedicated law for health data protection, leading to ethical concerns over privacy and sharing. The Ministry of Health and Family Welfare oversees broad policies, but enforcement is state-dependent, resulting in inconsistencies. Analysts argue that this bureaucratic approach has failed, with market-based alternatives like consumer protections underdeveloped. Chronic underfunding—healthcare spending hovers below global averages—exacerbates the issue, as states struggle to provide universal access.

Impact on Public Health and the Economy

The consequences are dire: millions slip into poverty due to medical bills, with profit-driven care pushing families to sell assets or borrow at high interest. This erodes trust in the system, deterring preventive care and worsening health outcomes. Economically, high costs strain national resources, while fraud in insurance schemes inflates premiums and diverts funds from genuine needs. Vulnerable groups, including women and rural populations, suffer disproportionately, perpetuating inequality.

Urgency of a National Regulator

A centralized national regulator is essential to impose uniformity, enforce price caps, and standardize protocols. It could oversee all hospitals, mandate transparent billing, and penalize violations effectively. Drawing from global models, this body would integrate payer-provider systems, promote ethical practices, and address regulatory failures in architecture and enforcement. Without it, the sector’s growth—projected to reach USD 264.8 billion by 2033—will continue benefiting private entities at public expense.

Proposed Solutions: Building on Successful Initiatives

India has precedents for affordable access. The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP), launched in 2008, provides generic medicines at 50-90% lower costs through over 16,000 Jan Aushadhi Kendras, saving billions for citizens. Similar initiatives include Ayushman Bharat’s Pradhan Mantri Jan Arogya Yojana (PMJAY), offering insurance coverage for tertiary care to 500 million people, with 31,846 empanelled hospitals as of 2025. Free drugs and diagnostics services have also been rolled out nationally.

Building on this, a “PM Jan Hospitals” network could create people-friendly facilities with capped charges for critical operations like heart surgeries, lung treatments, and cancer care. These government-backed centers would prioritize affordability, integrate with existing schemes, and reduce reliance on exploitative private providers. Such a model would restore equity, ensuring healthcare as a right, not a commodity.

Conclusion: Restoring Trust Through Reform

India’s health sector stands at a crossroads, where unchecked exploitation threatens lives and livelihoods. With private dominance fuelling arbitrary practices and inadequate regulations failing to intervene, the need for a national regulator is not just urgent—it’s imperative. By standardizing operations, enforcing transparency, and expanding affordable initiatives like PM Jan Hospitals, the government can protect the public, curb profiteering, and rebuild trust. Only then can healthcare truly serve the nation’s 1.4 billion people, transforming crisis into care.