Aesthetic Practices in the Era of GST

Shriyal Sethumadhavan examines the diverse effects of GST on aesthetic medical practices, noting both its benefits and drawbacks, underscoring the need for strategic adjustments and clear patient communication.

As the healthcare industry navigates through regulatory changes, professionals in the aesthetic medicine field must stay informed about relevant policies that may impact their practice. One such policy that has garnered attention is the Goods and Services Tax (GST) on medical fees. Understanding the implications of GST on medical fees is essential for practitioners to effectively manage their finances and provide transparent billing to patients.

AMI asked some experienced aesthetic dermatologists and aesthetic plastic surgeons, given the implementation of GST on medical fees, how do you perceive its impact on your practice, patient interactions, and overall financial management? To follow are excerpts from what we gathered:

Dr Sonia Tekchandani, Consultant Dermatologist, Tender Skin International

“Like all other industries, we also have to be open to regulatory changes that may become applicable to the healthcare sector from time to time. Especially in the cosmetic dermatology space, many elective cosmetic procedures attract GST, and IADVL has been helpful to us by issuing a list of procedures that fall under the exemption as they are pure dermatology treatments for disease management and not cosmetic procedures. Today’s patients are also well aware of the government implications and are open to paying the applicable taxes. To make it easy, we have kept our price list inclusive of GST so it does not cause any confusion during billing, and everyone receives an invoice for the same. Once you understand the regulations and put a process in place, it can all work as a well-oiled system. In terms of its impact on the practice, the way GST works is it allows you to take input on your purchase bills and collect output on your sales, and the net balance is what you owe the government. So, it is a fair mechanism according to us and has brought about a lot of organised and registered suppliers in the market, which has driven accountability among the vendor partners as well.”

Dr Priya Bansal, Consultant, Cosmetic Plastic Surgeon, Rosewalk Healthcare, CK Birla Hospital, Fortis La Femme

“The aesthetic surgery landscape is experiencing a transformative phase, marked by dynamic shifts in consumer behaviour, technological innovations, and regulatory frameworks. Among these changes, the implementation of GST has emerged as a significant factor reshaping the landscape of the aesthetic industry. The added 18 per cent tax pushes procedures beyond the reach of many patients, spanning various income groups, potentially driving them towards unsafe, unregulated alternatives. Unlicensed practitioners often evade GST, offering cheaper but potentially risky procedures, creating unfair competition for ethical surgeons adhering to regulations.

Communicating the GST on the final bill can sometimes be misunderstood as profiteering, affecting patient trust and transparency in pricing. Another key factor to note is that India’s cost-effectiveness is a key draw for medical tourism, which is now significantly hampered by the GST, making destinations with lower tax rates more attractive. This could harm India’s image as a leading healthcare destination. In addition, complying with complex GST regulations increases administrative burdens and costs, diverting valuable time from patient care. While GST on medical fees poses said challenges, its benefits cannot be overlooked. GST ensures a more transparent and uniform tax system, which can ultimately lead to a more organised and efficient healthcare sector.

In conclusion, the introduction of GST has brought about notable changes in the aesthetic surgery industry, affecting patients and practitioners alike. However, a balanced approach that considers the unique challenges of the aesthetic surgery sector could further improve affordability and competitiveness, enhancing the overall positive impact of GST on medical bills.”

Dr Parag Telang, Director &Chief Plastic Surgeon, Designer Bodyz Centre for Advanced Cosmetic Surgery

“We have successfully implemented GST in our practice since inception. We offer comprehensive packages for all surgeries and procedures, inclusive of GST. To discourage cash payments, we provide discounts to patients paying via online or bank transfer methods. Additionally, we issue invoices in either the patient’s personal name or company name, allowing them to claim input on the GST amount paid. With proper explanation, most patients understand, and we have not experienced any change in the number of surgeries or procedures performed since GST implementation.”

Positive implications of GST on medical fees: Implementing GST on medical fees can boost government revenue, funding healthcare initiatives, infrastructure, and public health programmes. It also promotes standardisation, ensuring consistent and transparent pricing across medical services. Additionally, GST mandates proper record-keeping, enhancing tax compliance and reducing evasion in the healthcare sector. Healthcare providers can claim input tax credits, offsetting GST costs and improving financial stability. Moreover, revenue from GST can modernise healthcare infrastructure, invest in technology, and enhance healthcare delivery. Overall, GST implementation offers multifaceted benefits, from revenue generation to modernisation, shaping a more robust healthcare system.

Negative implications of GST on medical fees: Implementation of GST on medical fees could increase healthcare expenses for patients, particularly impacting uninsured or underinsured individuals and those with chronic conditions.

This heightened cost may disproportionately affect low-income groups. Additionally, GST compliance imposes administrative burdens on healthcare providers, especially smaller clinics and individual practitioners, necessitating additional resources for tax administration. The complexity of healthcare services, with various components like consultation fees and diagnostic tests, makes determining applicable GST rates challenging, and potentially confusing. Higher healthcare costs may impede access to essential services, especially for vulnerable populations, potentially compromising health outcomes. Furthermore, enforcing GST compliance in the healthcare sector poses challenges, raising concerns about tax evasion and revenue loss.

Its impact on practice…

• Dermatologists may encounter heightened financial burdens due to GST imposed on their professional services, potentially increasing operational costs as they invest in accounting systems and staff for GST compliance. This may lead to either absorbing or passing on the GST cost to patients, affecting patient affordability and healthcare access.

• Moreover, GST compliance demands meticulous record-keeping, return filing, and adherence to tax regulations, diverting dermatologists’ time and resources from patient care. Small clinics and individual practitioners may particularly struggle with the added administrative workload.

• Medical billing complexities, encompassing consultation fees, diagnostic tests, and treatment procedures, further complicate the process, potentially resulting in errors or disputes.

• Consequently, patient dissatisfaction or confusion may arise, necessitating effective communication to clarify cost increments and reassure about care quality despite tax implications.

• Collaborative efforts through professional associations and advocacy groups are crucial for addressing GST concerns, advocating fair treatment and seeking exemptions for essential medical services.

• Additionally, ongoing training is essential for dermatologists and staff to navigate GST regulations accurately, ensuring compliance and accurate reporting.

While GST implementation may pose challenges for dermatologists initially, proactive adaptation, effective communication, and collaboration with relevant stakeholders can help mitigate potential negative impacts and ensure continued delivery of quality healthcare.

Managing patient interactions and overall financial management

In the context of GST implementation on medical fees, this requires careful planning, communication, and adaptation. Here are some strategies to consider:

• Transparent communication: Inform patients about GST implementation in advance, explaining reasons, impacts, and any fee adjustments. Provide written materials for education.

• Fee structure adjustments: Review and adjust fees transparently, either absorbing or passing on GST costs. Clearly outline GST amounts on invoices.

• Financial planning: Analyse practice finances considering GST impact. Develop a plan to manage transition, possibly setting aside funds or adjusting budgets.

• Staff training: Train staff on GST regulations, calculations, and patient communication. Provide resources for addressing patient inquiries confidently.

• Streamlined billing processes: Update billing systems for GST calculations and accuracy. Implement checks for compliance and prompt discrepancy resolution.

• Patient education and support: Offer resources for understanding GST’s impact on healthcare expenses, assisting with insurance and financial assistance.

• Seek professional advice: Consult tax or financial experts for personalised guidance on GST implementation and management. These strategies ensure a smooth transition for patients and practice alike.