Every hospital that works with visiting consultants eventually faces the same question: how should we pay them? The answer shapes cash flow, dispute frequency, TDS handling, and how easy your month-end close is. There is no single "correct" model, but there is a right model for each speciality, volume, and relationship.
The three core models
Almost every arrangement in Indian hospitals is a variation of three structures. Understanding what each does to risk and administration is the foundation for choosing well.
- Fixed per-visit or per-procedure fee: the hospital pays a set amount regardless of what it collects from the patient.
- Percentage of collection: the consultant earns an agreed share of what the hospital actually collects for their work.
- Hybrid: a guaranteed minimum (often a small fixed fee) plus a percentage above a threshold.
Fixed per-visit fees
A fixed fee is the simplest to administer and the easiest for a consultant to predict. The hospital carries collection risk: if a patient defaults or an insurer short-pays, the consultant is still owed the agreed amount. This model suits high-volume OPD where amounts are small and predictable.
Percentage-of-collection
Here the consultant shares collection risk with the hospital. It aligns incentives, since both parties care about realised revenue rather than just billed revenue, but it demands accurate, transparent collection tracking per consultant. Disputes almost always trace back to a consultant being unable to see what was actually collected against their cases.
Whatever model you pick, give consultants read-only visibility into their own collections. Transparency prevents the majority of fee disputes before they start.
The hybrid model
A hybrid gives the consultant a floor (so a slow month is not catastrophic) and upside (so a strong month is rewarded). It is the most common arrangement for mid-to-senior specialists. The trade-off is administrative complexity: you must track both the guaranteed component and the threshold calculation every cycle.
TDS applies the same way, but timing differs
Regardless of model, consultant fees are professional fees under Section 194J, so 10% TDS applies once annual payments cross the threshold. What changes is timing: fixed fees are easy to deduct at payment, while percentage models require you to finalise the collection figure before computing the fee and the TDS on it. Build that sequencing into your payout cycle.
The fee model is a business decision. The discipline of documenting and tracking it is what keeps the relationship, and the audit, clean.
How to choose and document
- Match the model to volume and risk: fixed for high-volume and low-value, percentage or hybrid for high-value specialities.
- Write the model into the consultant agreement, including the exact calculation, the threshold, and the payout cycle.
- Agree the data source of truth for collections up front, and give the consultant visibility into it.
- Document the TDS treatment and who issues Form 16A, so there are no surprises at ITR time.
The model you choose matters less than the clarity with which you run it. A well-documented percentage arrangement beats a vague fixed one every time, and software that tracks visits, collections, fees, and TDS in one place is what makes any of these models sustainable at scale.
