Number of Cardiac Stents Implanted in India

Data collected from various sources and estimation made for 2016 on cardiac stents implanted in India over the years is presented below.

We observe a spike in implantation data in 2010 and 2014, the two years where the increase has been significantly high. What was significant about these two years? The general discussion on this issue suggest that not all implantations are necessary. Knowing the fact that there is serious supplier-induced demand problem in general in health care, it may be worth examining how much of this implantation are necessary and how much fall in the category of really "not-needed"?  On financing side, it may be interesting to find how many patients paid the cost "out-of-pocket" and how many were insured? It is estimated that about 60 percent of these stents are imported. It may interesting to examine the political economy of stents. 

When it comes to health, we are really in a data starved situation and can not argue effectively on many policy issue. Some speculations are, however, inevitable. Indian medical system predominantly works on fee-for-service based payment method. In this context understanding, the impact of the price cap on stents would be an interesting area to research. Prediction of a few consequences include: (a) the price control will weed out unnecessary implantations because of removal of perverse incentives and thereby resulting in lower implantations - a desirable outcome, (b) hospitals will reallocate resources affecting lower volume of implantations because treatment of patients becomes less remunerative as compared to relative activities - called substitution effect, not desirable from overall societal viewpoint, (c) hospitals modulating and strategizing the service configuration and increasing prices of other services - price effect, non-desirable, (d) hospitals increasing the volume of implantations to compensate for loss of revenue - revenue effect, desirable and (e) the formation of cartels by companies to weaken the price control. On the last one there is an interesting study published on mitigating regulatory impact: the case of partial price controls on Metformin in India, Health Policy and Planning 2017. The study found that firms coordinated to increase the price of the regulated formulation in the period before regulation, which led to a higher ceiling price and this coordination was stronger among larger firms and for time-release formulations. The study presents anecdotal evidence to suggest that pharmaceutical trade associations facilitated coordination among firms, and conclude that partial price control of Metformin in India is, at best, a modest improvement over no regulation. 

Which effects will play out in actual practice are hard to predict. Some studies from insurance based markets in US suggest when the reimbursements in insurance are reduced, a 1% reduction lead to 0.40% increase in treatment volume. This is will happen when hospitals follow target revenue approach. What will be the effect of the price caps on practice is an important area of research. One also wonders that why Indian healthcare providers  have not been able to do what Aravind did in manufacturing of intraocular lenses at an affordable cost.