Sidharrth Shankar, Partner, and Eshika Phadke, Senior Associate, at JSA Advocates & Solicitors explain how recent regulatory and judicial decisions are shaping a systems-based approach to healthcare regulation, pricing and service delivery
Healthcare delivery is among the most complex service sectors. A single episode of care may involve multiple physicians, specialists, nursing staff, diagnostics, imaging, medicines, consumables, specialised equipment and support services. Each performs a distinct function and could be treated as a separate service in isolation. Yet patients rarely experience healthcare in this fragmented manner all these elements form part of a single treatment journey. Similarly, hospitals view them as interconnected components of care, often inseparable from the overall clinical outcome.
This raises a recurring regulatory question: should healthcare delivery be assessed by isolating each element, or by examining the system through which care is actually provided? In recent years, hospital pricing has attracted sustained attention from regulators, policymakers and consumer groups, with questions around pricing strategies for medicines, consumables, diagnostics and other components. The industry has argued that healthcare economics cannot be understood by examining these elements in isolation-the cost of care is distributed across infrastructure, personnel, technology, compliance and clinical services that collectively contribute to patient outcomes.
Until recently, regulatory and judicial analysis did not always engage directly with this complexity. Two recent decisions – one from the Competition Commission of India (“CCI”) and the other from the Karnataka High Court – suggest this debate is entering a more nuanced phase. The CCI orders demonstrate how competition law analysis may account for patient choice, market power and integrated hospital operations. The Karnataka High Court judgment shows how tax characterisation may similarly turn on the substance of healthcare delivery rather than the form of commercial arrangements. Together, these decisions indicate a growing willingness to examine how different components interact within the broader healthcare system.
A more nuanced view of hospital markets
The CCI recently dismissed allegations of abuse of dominance against leading private hospitals over their pricing practices. The fundamental question was the appropriate level at which hospital conduct should be analysed: whether through narrow examination of individual transactions or through broader assessment of how hospitals function as healthcare delivery systems. The significance lies not only in the conclusion reached, but also in the methodology adopted.
The CCI’s analysis considered the realities of inpatient care, the role of consumables, pharmacies, diagnostic and imaging services within the treatment process, and the extent to which patient choice is constrained once treatment commences. Importantly, the CCI did not assume that differential pricing or integrated service delivery necessarily translates into anti-competitive conduct. Instead, it examined whether the evidence demonstrated abuse of market power in the context of how healthcare services are actually delivered.
The CCI closed the matters, finding insufficient basis to conclude that the hospitals had abused dominant positions. It recognised that hospitals do not operate like conventional retail markets and that questions of pricing, choice and market power cannot be assessed without regard to clinical care realities. This does not suggest that antitrust concerns in healthcare have diminished- the depth of the Commission’s analysis demonstrates the scrutiny hospitals can expect. What has changed is that scrutiny appears increasingly grounded in the practical functioning of healthcare systems.
Looking at healthcare delivery as a whole
A similar perspective emerges from the Karnataka High Court’s judgment concerning GST treatment of healthcare services delivered through collaborative commercial arrangements. The dispute concerned tax treatment of services under a revenue-sharing model, but also explored a fundamental question: how should healthcare delivery be characterised when multiple entities participate in providing care?
The Court recognised that modern healthcare is frequently delivered through arrangements involving different organisations performing specialised functions. Hospitals routinely partner for diagnostics, specialty services, equipment management and other aspects of care delivery. While these arrangements may involve complex commercial structures, the Court recognised that such complexity does not necessarily alter the essential character of the underlying activity.
Notably, the Court focused on the substance of healthcare delivery rather than the mere existence of commercial arrangements. The judgment acknowledges that healthcare can be delivered through multiple entities working together and that a revenue-sharing mechanism does not, by itself, transform the nature of services provided. This reflects an appreciation of a central reality: healthcare delivery is often collaborative, and commercial arrangements are frequently embedded within the process of delivering care.
What this means for the sector
These developments should not be interpreted as a relaxation of regulatory oversight or as a clean bill of health for prevailing business models. However, they indicate that regulators and courts are adopting a more nuanced perspective-showing greater willingness to understand how healthcare systems function rather than relying on simplistic assumptions about pricing or commercial structures. Some matters will warrant close examination of individual transactions, while others may require wider assessment of how healthcare services are organised and delivered.
As healthcare delivery becomes increasingly collaborative and specialised, this choice of analytical lens will become more consequential. The challenge for regulators will be not simply to identify the relevant legal rule, but to determine the level at which healthcare activity should be understood before that rule is applied. For the sector, this represents an increasingly sophisticated regulatory approach: healthcare remains subject to rigorous oversight, but that oversight is increasingly informed by operational realities. For healthcare businesses, commercial and operational models must withstand scrutiny at both the transaction level and the system level, supported by robust documentation.