Pricing Structure Revision for Non-citizen Healthcare Services at Negombo District General Hospital, Sri Lanka

Abstract

Background: Increasing numbers of non-citizen patients in Sri Lankan public hospitals have created challenges in healthcare financing and resource management. Revising the pricing structure at Negombo District General Hospital is important to support sustainable healthcare services and efficient hospital administration. Aims: To analyse the gap between the outdated 2017 Ministry of Health fee schedule (Circular 01-14-2017) and current service delivery costs at Negombo District General Hospital (NDGH), benchmark the hospital’s 2023 provisional pricing revision against private sector charges, and identify systemic factors driving pricing inadequacy in Sri Lanka’s public hospital system. Presentation of Case: NDGH, a 800-bed tirtiary care facility 10 km from Bandaranaike International Airport, serves non-citizen patients constituting 8–12% of outpatient visits. By 2022–2023, cumulative healthcare inflation (>45%) and currency depreciation (~50%) had reduced cost recovery under the 2017 circular to 33–37%. In Q1 2023, hospital leadership developed an evidence-based provisional pricing structure, informed by cost analysis and a five-hospital private sector benchmarking survey, and implemented it pending formal Ministry approval. Discussion: The revised schedule raised cost recovery to 85–95% across most service categories while maintaining charges at 30–44% of private sector rates. Total non-citizen service revenue increased by approximately 280% in the first six months, with an 8% decline in patient volume. Ishikawa root cause analysis identified six contributing domains: absence of price adjustment mechanisms; currency depreciation and healthcare-specific inflation; lack of hospital cost accounting systems; private sector competitive dynamics; equipment aging; and human resource gaps. The case highlights systemic deficiencies in Sri Lanka’s healthcare pricing governance, including the absence of periodic review mandates and insufficient financial management capacity at facility level. Conclusion: Locally driven, evidence-based pricing reform is operationally feasible in resource-constrained public hospital settings. However, long-term sustainability requires national-level mechanisms for regular price review, selective pricing decentralisation, and investment in hospital cost accounting infrastructure.