What ails India’s Massive Diagnostics Sector?

Context: India’s diagnostics sector is fast-growing but remains fragmented, under-regulated, and unevenly distributed.

Issues Affecting India’s Diagnostics Sector

Shortage of Trained Personnel

Lack of qualified pathologists, microbiologists, lab technicians, and radiologists.

• Many labs may not be able to employ well-trained staff, affecting quality.
• “Ghost employees and doctors”: labs obtaining licenses by falsely claiming to have qualified staff.
• Eg., a Final-year MD pathology student in Kolkata reports a huge workload (800+ tests/day) with serious staff shortages.

Under-Regulation and Poor Implementation

Fragmented market with many small, unorganized labs.

• Clinical Establishments Act (Registration and Regulation) 2010 was not fully adopted or implemented effectively across all states.
  • Only 12 States and all Union Territories, except Delhi, have adopted this Act.
• Lack of a strong regulatory environment leads to varying standards.
• Lack of proper biomedical waste management, potentially leading to outbreaks.
• Eg., Tamil Nadu government’s announcement in 2009 to constitute a State Council for Laboratory Technicians is yet to be implemented.

Fragmented and Competitive Market

• Low barriers to entry.
• Many standalone players.
• This leads to inconsistent quality standards.

Varying Standards and Quality Concerns

Many labs are not accredited.

• Uneven quality standards due to a lack of resources for advanced technologies and inadequately skilled manpower.
• Emphasis is needed on the quality and accuracy of results.

Ethical Issues and Fraudulent Practices

“Bought out” signatures from doctors in exchange for money, without proper supervision.

• Labs fraudulently using doctors’ names and signatures.
• Technician-only facilities not run or owned by qualified pathologists.
• E-signatures by pathologists connected to multiple labs without limits on the number of labs.

Urban-Rural Divide

Diagnostics are concentrated in urban areas.

• Only 24% of diagnostics revenue is from rural areas (as of FY23), despite nearly 70% of the population residing rurally.
• Gaps exist in government labs, making them less favoured (lack of upgrades, limited operational hours, unavailability of specialists).

Pricing Problems

General concern regarding pricing in the private health sector.

• Telangana Diagnostics Programme (‘T-Diagnostics’) provides some relief by offering tests at no cost and has saved significant out-of-pocket expenses for patients.
• However, supply issues (e.g., reagents) can mar these programs.

Unrealistic Requirements

Lab representatives report that the space and educational requirements under the Kerala State Clinical Establishments Act are unviable.

• The State government also does not recognise paramedical degrees/diplomas even from recognised institutions in other states.
• Amendments to the Tamil Nadu Clinical Establishments (Regulations) Rules, 2018, stipulating minimum space for sample collection for clinical laboratories — 300 sq ft in rural areas and 500-700 sq ft in urban areas.

Way Forward

• Stronger Regulations & Enforcement: Make NABL accreditation mandatory for all diagnostic labs.
  • Expand The Clinical Establishments Act to cover all States.
  • Impose strict penalties for fake reports and ghost pathologists.
• Address Manpower Shortage: Set up specialized training programs for lab technicians.
  • Increase microbiologist and pathologist recruitment in rural areas.
  • Implement needs-based licensing to prevent lab saturation in urban areas.
• Improving Rural & Public Healthcare Infrastructure: Upgrade district hospital labs to reduce the burden on urban hospitals.
  • Ensure free/subsidized diagnostic tests in government hospitals.
• Standardization of Pricing & Service Quality: Introduce government-regulated pricing for common diagnostic tests.
  • Mandate uniform testing protocols for all labs.
• Public Awareness & Patient Rights: Educate patients on lab accreditation and quality checks.
  • Set up grievance redressal mechanisms for diagnostic fraud complaints.

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