Telangana healthcare schemes face crisis as Rs 2,000 crore medical dues remain pending

Telangana’s revamped Employee Health Scheme faces hurdles as over Rs 2,000 crore in medical bills remain pending. None of 360 small and medium private hospitals have signed MoUs, citing low package rates and delayed payments that threaten their financial sustainability.

Hyderabad: With over Rs 2,000 crore in medical bills remaining pending for the past 15 months, Telangana’s healthcare sector is staring at an unprecedented financial crisis. The crisis is also threatening to bring the state’s ambitious revamped Employee Health Scheme (EHS) and the Aarogyasri health safety net to a grinding halt.

Despite the state government starting mandatory deductions of 1.5 percent from the basic pay of state employees and pensioners to fund the Employee Health Care Trust (EHCT), the scheme remains largely non-operational, as 70 percent to 80 percent of the small and medium-sized private hospitals, mostly concentrated in districts, are yet to join the initiative.

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The core of the unrest lies in the State government’s inability to offer sustainable rates for various medical procedures and treatments to private hospitals and the massive multi-crore financial backlog.

According to Telangana Aarogyasri Network Hospitals Association (TANHA) president Dr. Vaddiraju Rakesh, private hospitals are grappling with pending Aarogyasri medical bills scaling upwards of Rs 2,000 crore accumulated over nearly 15 months, alongside old EHS dues.

For small and medium healthcare providers in Telangana, carrying these mounting operational costs without timely payments from the State government has made it impossible to join the new EHS. In fact, none of 360 small and mid-sized private hospitals, which are the backbone of Aarogyasri and previous EHS schemes, have signed MoUs to offer medical services under the new EHS scheme.

The present rates offered by the State government for EHS are far lower than the earlier rates, making it difficult for small and medium hospitals to join the EHS network.

Quite strangely, the State government appears to have decided to ignore such hospitals and instead opt for corporate hospitals. Top corporate hospitals in Hyderabad have accepted the EHS framework because they have been allowed to collect co-payments from patients in the form of room upgrades, extra services, and diagnostics, cushioning their revenue streams. “In contrast, the small and medium hospitals, which deliver the bulk of grassroots care, are unable to participate because of a lack of rates that will allow them to sustain,” Dr Rakesh points out.

For instance, certain medical procedures that previously paid Rs 32,100 under Aarogyasri, and were briefly adjusted to Rs 40,000, have been slashed to Rs 26,500 under the new EHS structure, which is lower than historical baselines.

“With zero profit margins, no allowance for co-payments, and delayed payments stretching past a year, smaller hospitals cannot cover staff salaries or basic upkeep,” Dr Rakesh points out.

• Telangana’s healthcare network is paralyzed by over Rs 2,000 crore in pending medical bills accumulated over 11 to 15 months.
• MoUs for EHS not signed with all hospitals by State government but government deducts 1.5% basic pay from employees
• None of the 360 small and medium private hospitals have signed MoUs for the revamped EHS.
• Corporate hospitals join EHS, as they are allowed to collect co-payments
• Co-payments are for room upgrades and diagnostics, whereas small district hospitals face absolute zero-margin deficits.
• Revised EHS package rates have been slashed below historical baselines, making it unsustainable for private hospitals