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Journal of the Academy of Hospital Administration

A Study of the Direct Costs Incurred by Type-2 Diabetes Mellitus Patients for their Treatment at a Large Tertiary-Care Hospital in Karnataka, India

Author(s): V.P. Bhaskaran*, N.R. Rau**, Satyashankar***, Ravi Raj Acharya****, Chinnappa S. Metgud*****, Tarun Koshy******

Vol. 15, No. 2 (2003-07 - 2003-12)


Background: Much has been said about the socio-economic changes sweeping across India and the effect it is having on the population. Prevalence of diseases hitherto considered "rich man's disease", are disturbingly on the rise across all categories of society. One of the most morbid among these is Diabetes Mellitus. The cost of treatment of this disease per se and its accompanying complications can ruin families.

The median annual direct medical cost for patient with Type-II DM without complications was Rs. 14,507/-.

  1. Patients with Type-II DM and CRF requiring dialysis spent 14 times than those without any associated complications.
  2. About 80% patients self finance their treatment; and spent about 50% on drugs and 21% on hospitalisation.
  3. Average length of stay was 10.3 days, and average expenditure incurred as indoor patient was Rs. 871.85/-.

Keywords : Type-2 Diabetes Mellitus, Cost of Treatment, OHA, Insulin.


Decision makers need to have India-specific cost information in order to develop an accurate picture of diabetes management.


We studied 150 patients (100 out-patients and 50 in-patients) with Type-2 Diabetes Mellitus visiting one Unit in the Department of Medicine at our hospital from March 2000 to September 2001. Demographic characteristic, age at diagnosis, diabetes treatments, complications and details of expenses was collected using a questionnaire and medical chart reviews.


The median annual direct medical costs for patients with Type-2 diabetes mellitus without complications, was Rs. 14,507/-. Patients with Type-2 Diabetes Mellitus and CRF requiring dialysis spent 14 times more than those without any associated complications. Our study shows that 80% of the patients self-finance their treatments. Analysis of the expenditure incurred by the 150 patients in the study population showed that 49% of their annual expenditure was on drugs and about 21% on hospitalization. The average length of stay in the hospital was 10.3 days and the average expense incurred by the patient, while admitted was Rs. 871.85/- per day. 75% of the patients in our study group were on Oral Anti-Diabetic Drugs (OHA). Of these only 23% required hospitalization during the study period, while 63% of those being treated with Insulin required hospitalization. Our study also shows that patients on Insulin incurred double the expenditure than those on Oral Anti-Diabetic Drugs.


Insulin treatment has substantial impact on the direct medical costs of Type-2 Diabetes Mellitus. The estimates presented in this model may be used to analyze the cost-effectiveness of intervention for Type 2 Diabetes Mellitus.


Diabetes mellitus is a hormono-metabolic disease characterized by hyperglycemia resulting from deficiency in insulin secretion, insulin action or both. One estimate indicates that there are about 120 million persons suffering from diabetes in the world and this figure is expected to increase to about 300 million by 2025 AD, with most case being in India, China and the USA.1

The prevalence rate of diabetes mellitus in our country is 1 to 2% comprising of urban population ranging from 0.95% to 3.8% while the rural population ranging from 0.60% to 1.93%.2 A recent diabetic survey in India showed that the prevalence rate of Diabetes in Bangalore and Hyderabad was 12.9% and 16% respectively.3 An increase in the incidence of Diabetes Mellitus is being observed across the country. This is mainly because of lack of awareness about the disease among the public as well as not seeking early identification, timely treatment and improper monitoring of disease by the health authorities.

Analysis of Medical Records Statistics at the Study Hospital showed that the prevalence of diabetes patients admitted in the hospital had increased from 2.62% in 1996 to 3.29% in 2000. The prevalence of diabetes patients admitted in the Medicine wards during the same period rose from 8.65% in 1996 to 11.44% in 2000.

In 1995, it was estimated that India had 19.4 million diabetics, by 2025, this figure is expected to reach 57.2 million.4 Considereing that a diabetic on an average would require 7 days of hospitalization due to acute or chronic complications, the expense to the nation would be to the tune of Rs. 2.6 billion. Thus the economic burden of diabetes mellitus on the Indian economy is enormous.5

The nature and pattern of treatment does vary from society to society. Treatments costs also vary from patient to patient and doctor to doctor. Variations in treatment are also large depending upon the residence, age, socio-economic background, source of treatment etc. In the absence of adequate public health care programmes to effectively deal with the problems, estimates of treatment costs and prevention assume importance however imprecise they may be.

The costs of diabetes mellitus to patients are considerable and include the following:

  1. Psychological costs, e.g. loss of body "integrity".
  2. Cost of family life, e.g. lack of acceptance of disease by family members.
  3. Social costs e.g. reduced cheerfulness and social life because of constraints of schedules, feelings of isolation and withdrawal.
  4. Financial costs (even from the medically insured), e.g. cost of equipment, mobility aids, special shoes, etc.

King H. et al. mentioned that, Diabetes places a heavy socio-economic burden on the community as a whole and on the healthcare sector in particular.6 Economic considerations are important in medical care because of several reasons. On the one hand they permit the sensitive "disease manager" (the doctor) to optimize the management plan for an individual. On the other hand it helps healthcare financiers to optimize the use of available funds for the highest cost utility.


A Prospective study interviewing 150 patients with Type-2 Diabetes Mellitus visiting one pre-selected unit in the Department of Medicine was conducted, using a validated questionnaire. The unit was selected because statistic showed that it handed about 30% - 35% of the diabetes patients seen in the Department of Medicine. The patients were interviewed in OPD when they came for routine consultations from March 2000 to September 2001 using the questionnaire.

Of the 150 patients mentioned above, 50 had been admitted in the study hospital and their files were retrospectively reviewed.


It was interesting to note that out of the 150 patients surveyed, 64 patients (43%) were housewives, 53 patients (35%) had some form of employment and 26 patients (16% were pensioners.

Out of 150 patients, 5 patients (3.32%) belonged to the age group of 25-39 years, 94 patients (62.64%) belonged to the age group of 40-64 years and 51 patients (33.98%) belonged to the age group of 65-80+ years. Average age at the time of diagnosis was 50.83 years.

Age Distribution of Patients with Type-2 Diabetes Mellitus

Fig 1:

Age Distribution of Patients with Type-2 Diabetes Mellitus. The study population comprised of 150 patients. Average age at Diagnosis was 50.83 years

Study revealed that, 46 patients (31%) were not aware of having diabetes until they approached a doctor for complaints/ diseases other than diabetes.

Out of 150 patients surveyed, 121 patients (80%) were self financing the expenses and did not have any form of health insurance. 22 patients (15%) had medicare coverage, 1 patient (0.66%) as a subscriber of the hospital?s health insurance scheme and the other 6 patients (4%) received either free treatment from the hospital or had their bills reimbursed by their employer.

Out of 150 patients, 50 got admitted in hospital in the last one-year. The average length of stay for a patient was 10.3 days/year. Cost of hospitalization for patients of Type-2 Diabetes Mellitus varied from Rs. 712.67/day to Rs. 925.27/day depending on whether the patient suffered any complications. This cost includes expenditure on food, drugs during the stay in the hospital and also the cost of expenditure of people accompanying patients in the hospital. Graph given shows the break-up of expenses incurred by the patient.

The study found that the Type-2 Diabetes Mellitus patients average expenditure per annum on outpatient care and hospitalization (if required) would be about Rs. 20,500/-.

Method of Payment for treatment

Fig 2: Method of Payment for Treatment. 80% of the patients were self-financing while 15% had some form of Health Insurance.

The study showed that Type-2 Diabetes Mellitus patients admitted with complications had higher average lengths of stay varying from 7 days/year to 12.32 days/year depending on the type of complications.

The study was also designed to study the type of medication the patient was on and the costs involved as a result. Out of 150 Patients, 112 (74.66%) were on Oral anti-diabetic drugs, and 38 (25.33%) were on Insulin.

How the Rupee gets Spent

Fig 3:

Break-up of the Expenses incurred by patients of Type-2 Diabetes Mellitus on Hospitalization (21%), Drugs (49%), Transport of the patient and relatived to and from the hospital (20%) and Investigation and Consultation Fees (10%).

Among the 112 Patients on oral anti-diabetic drugs only 26 (74.66%) were on Oral anti-diabetic drugs, and 38 (25.33%) were hospitalized.

The study revealed that patients on insulin spent-Rs. 18,929.76/year on investigation, drugs and transportation, almost double the amount the amount (210.39%) when compared to the expenses of patients on oral anti-diabetic drugs (OHA) Rs. 8,997.36/year.

The study also revealed that when hospitalized, patients on insulin spend 60.05% more per year (includes drugs, food and transportation of patient and the expenses of one patient attendant during the stay in the hospital) when compared to patients on oral anit-diabetic drugs.

The study showed that patient's of Type-2 Diabetes Mellitus who developed Chronic Renal Failure requiring dialysis spent 14 times more on drugs, dialysis, investigations and hospitalization when compared to patients of Type-2 Diabetes Mellitus without CRF.

Fig 4:

Comparison of Patients on OHA vs Insulin who were admitted in hospital. 26 (23.21%) of the 112 patients on OHA required hospitalization at some time during the study period, whereas among the 38 Patients on Insulin 24 (63.15%) were hospitalized.


Economic implications of diabetes mellitus care are a matter of even greater concern in India than elsewhere because of three important reasons, viz. Demographic factors, Nature of the disease, and Payment sources for treatments.

All recent evidences point towards an increasing incidence of diabetes in the Indian population. Several studies have proposed a link between urbanization, dietary excesses, and sedentary lifestyles with the increase in incidence of diabetes among the urban Indians. The fact that diabetes is a chronic life long disorder, characterized by the invariable development of complications makes it essential to diagnose and begin treatment early. In contrast to developed countries where medical services and aid are heavily funded by the state and through health insurances, in India almost total burden of specialized health care falls on the person in need of it! Diabetes invariably requires life long treatment and therefore the onus of giving the patient a change to continue receiving good hospital-centric care rests on the physicians? ability to minimize his expenses.

The main source of financial support was from family members and personal income. And in cases of hospitalization source of support was family members, personal income, loan from family members and health insurance.

Cost of Diabetes Care

On an average people with diabetes are three times more likely to be hospitalized compared to non-diabetic individuals.8 The excess cost is related to higher cost of treating late diabetic complications and the economic loss due to lost man-days or lost economic opportunity. Diabetic complications account for 60% of diabetic related health care costs (Direct costs) and almost 80-90% of indirect cost.9 Recent studies have shown that health care expenditures are as much as five times as high for individuals with diabetes compared to individuals without diabetes.10

In the CODE 2 (Cost of Diabetes Europe Type 2) study, eight countries (Belgium, France, Germany, Italy, Netherlands, Spain, Sweden and the UK) were compared with regards to costs for diabetes. The main costs were the cost of hospitalization (55%), costs of drugs (21%) and ambulatory care (18%) and the costs of antidiabetic drugs (7%). So, the implication is that to reduce the overall cost for diabetes one should try to reduce the number of days the patient need to stay at hospital.7

So far four main studies on the cost for diabetes and diabetes care have been published; the Diabetes Control and Complication Trial (DCCT), the Stockholm study, the Kumamoto study and the UKPDS. All four studies aimed at investigating if better control of the blood glucose had an effect on late complications. On the basis of this information a calculation was carried out to compare the extra costs with result of intensified treatment. All four studies showed that intensive treatments cost more than traditional treatment; but also generally speaking, had a better effect. The main message was that early intervention and intensified treatment had a b better effect on the later complications.

A Novo Nordisk update by Rhys Williams mentioned that, in 1997, Dr. Ramachandran and his colleagues in Chennai made some calculations concerning the cost of diabetes in India. They estimated that for patients attending their Diabetes Research Centre, the annual costs of care were Rs. 12,000 for patients taking insulin and Rs. 2,400 for those treated with oral hypoglycemic agents. Using the information then available for the prevalence of diabetes in India (17.3 million) with an estimated 20% treated with insulin, they calculated that Rs. 75.2 billion would need to be spent to provide treatment to that standard for all effected people in India. This was about three times the total health care budget for India at that time. Clearly, the majority of those affected must be receiving care much lower standar.11

Importance of Early Intervention

The Institute for Social and Economic Changes (ISEC) in one of their studies, observed, that there was a relationship between the awareness of Diabetes and degree of complications. Those aware were likely to have fewer complications as compared to those not aware of Diabetes. The study has highlighted the basic need for an extensive education Programme and further research in Diabetes care in India.12

Medical innovation, regular diet, exercise and education of the population at large would help delay the onset and slow the progression of diabetes, which has a tremendous potential of economic drain to the national exchequer and the diabetic individuals at large. Prevention of diabetes and related complication would reduce the economic burden on the society.5

Many patients bear the additional costs of long-term complications of diabetes. It is to be hoped that future surveys will show that recent improvements in diabetes care have resulted in corresponding reductions in the prevalence of diabetic complications. Furthermore, this trend can be expected to continue with future improvements in diabetes eduction.13

Limitations of the Study

It was rather difficult to elicit reliable data on income in general and particularly personal income because of various reasons, especially when the patient derives personal income from informal sectors like agriculture, business etc.

The patients background often influences the disease pattern, treatment and costs. Time constraints prevented us from analyzing the background characteristics of the study population.

All the patients studied were treated in one pre-selected Unit of the Hospital and results of the study reflect the treatment policies and practices of that Unit.

Summary and Conclusion

It can be assumed that changing food habits, environmental deterioration, stress-induced living and a host of other factors in addition to hereditary factors have contributed to increasing rates of Type-2 Diabetes Mellitus in India.

It has always been assumed that Diabetes was a disease of the urban population but disturbingly, our study has a higher percentage of patients from rural areas. The actual prevalence of Diabetes among the rural population needs to be further studied. The fact that 43% of patients were housewives and that 80% were self-financing their treatment reveals the economic crises that the patients diagnosed with Diabetes undergo.

Often people may not be aware that they are suffering diabetes 30.66% of the patients studied had approached a doctor for complaints /diseases other than diabetes until they undergo the required test. Hospitals, NGOs, Charitable Organizations and Doctors should give more importance to diabetic education. Screening programmes can help make early diagnoses and the benefits of that to the patients and the community goes beyond economic savings.

The average age at diagnosis in the study population was 50.83 years. However, any association between the age at diagnosis of Diabetes and extent of related complications needs to be further studied.

The importance of screening the population to make early diagnoses and instituting prompt treatment with Oral Anti-Diabetic Drugs (OHA) cannot be over-emphasized. Our study showed that a higher percentage of patients on insulin needed hospitalization and the costs incurred by them as a result was also higher than patients on OHA.

Total number of Hospital-days of admitted patients, in our study, was 515 days. On an average, every Hospitalized patient spent 10.3 Days/Year. Cost of each hospital day for patients of Type-2 Diabetes Mellitus in Rs. 871.85/-.

The study also revealed that patient?s of Thpe-2 Diabetes Mellitus who developed Chronic Renal Failure requiring dialysis spent 14 times more than patients of Type-2 Diabetes Mellitus without CRF for both outpatient and impatient services. The importance of preventing complications in patients with Diabetes has to be realized.

With the increase in prevalence of the disease, costs of treatment appear to have escalated substantially. Therefore, early detection and monitoring of the disease can substantially help to curtail the costs of diabetes.14


  1. King H, Aubert RE, Hermen WH. Global burden of diabetes, 1995-2025, prevalence, numerical estimates and projection. Diabetic Care 1998; 21:1414-31.
  2. Park.K Parks textbook of preventive and social medicine 15th Edition, India, 1997, page 290.
  3. Newspaper article, in 13% of adults in India are Diabetics: Survey, "The Hindu", Mar 26, 2001.
  4. Newspaper article, in Diabetes assumes epidemic proportions in India, "The Decan Herals", Sept 21, 2000.
  5. Siddarth N. Shah "Economic Burden of Diabetes" Medicine Update 2000: P 413-417.
  6. King H, Rewers M, 1991 "Diabetes in adults is now a third world problems" BULL WHO, vol 69:643-648.
  7. Stefan Bjork. Economic Costs of Diabetes-International Studies, P 65-70 "Novo Nordisk Diabetes update 2000".
  8. ADA, Economic Consequences of Diabetes Mellitus in the US in 1997. Diabetes care 1998; 21:296-309.
  9. The Economics of Diabetes and Diabetes Care-A Report of a Diabetes Health Economics Health Economics Study Group. Gruber W, Lander T, Leese B, Songer T, Williams R. An IDF Who Publication 1997.
  10. Gray A, Raikou M, McGuire A, Fenn P. United Kingdom Prospective Diabetes Study Group. Cost effectiveness of an intensive blood glucose policy in patients with Type 2 diabetes: economic analysis alongside randomized controlled trial (UKPDS 41). BMJ 2000; 320: 1373- 1378.
  11. Rhys Williams. "Cost Effectiveness of Diabetic Care Programmes" Novo Nordisk Diabetes Update 2000.
  12. Institute for Social and Economic Changes (ISEC) and Novo-Nordisk, Bangalore, "Study on cost of Diabetes Care in India". Bangalore pilor study, 1998, in press.
  13. J-P. Assal. Cost-Effectiveness of Diabetes Education. Pharmacoeconomics 8 (suppl.1) 68-71. 1995.
  14. P H Rayappa and K N M Raju. Economic cost of diabetes: An Exploratory Study in Karnataka, India, ISEC 1998.

*Medical Suprintendent, Professor and Head of the department, Department of Hospital Administration, Kasturba Medical College and Hospital, Manipal, 576104
** Professor and Head of the Department, Department of Medicine, Kasturba Medical College and Hospital, Manipal, 576104
*** Associate Professor, Department of Hospital Administration, Kasturba Medical College and Hospital, Manipal, 576104
**** Associate Professor,  Department of Medicine, Kasturba Medical College and Hospital, Manipal, 576104
***** Senior Oficer, Medical Operations, University Medical Centre, Mangalore 1, Karnataka
****** Postgraduate, Department of Hospital Administration, Kasturba Medical College and Hospital, Manipal, 576104

Address for correspondence:
Chinnapa. S. Metgud,
Senior Officer-Medical Operations,
University Medical Centre,
Mangalore-1, Karnataka, India; [email protected]

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