@mclachlan I don't know how unit economics work in this but considering how everything else work in this country, I believe it is to average out the cost for those in general wards.
So what are the fair higher charges for luxury of private or deluxe room?
1) Room Rent + Cleaning/maintainance (obviously)
2) Nursing care (additional effort to see one Patient)
3) Doctor's consultation (additional effort to see one Patient)
What's are the unfair higher charges?
1) Consumables
2) Medicines charged at MRP
Probable reasons why hospital charges these unfair higher charges?
1) To average out the unit economics. Hospital isn't easy to build or sustain. There are visible forces to be paid and there are invisible forces to be paid. You definitely want to provide services to the lower strata and limit their financial burden as much as feasible. You provide them with an option of shared ward where the overall cost reduces. But you have to pay your taxes, your visible and invisible work force and generate income to remain profitable and sustainable. You try to charge those from those who say they can afford the luxury of private space.
2) Hospitals are businesses and should be classified and treated as such. Once administration realises the burden isn't on you but on your insurance companies, the insurance agreed rates are applied. Whenever we treat a patient, either in private or in government (general vs BPL vs Ayushman Bharat vs other schemes), treatment protocols largely remain same but resource utilisation is tweaked in a manner that those paying out of pocket bear least financial burdens while those with insurance/government scheme are charged for the applicable packages.
3) If you afford the luxury of private space, you can afford the consumables and medicines at MRP. The simplest explanation.
I damaged my tail light once. Sent the car for damage repair and claimed insurance. Insurance guys coughed by 40k.
I damaged my car door three months later - got who door denting painting job done by the same authorised facility. Paid out of pocket. It cost me 7k plus charges.
Whether this is an illegal or legal practise? Beyond my comprehension.