The Delhi High Court recently passed a ruling for effective implementation of the commitment made by hospitals to serve poor patients in return for getting land at concessional rates. Land was allotted by the Delhi Development Authority (DDA) to hospitals in exchange for free treatment to 25 per cent of in-patients and 40 per cent of out-patients.

Objective of the policy

The main objective of the policyseems to be to provide free treatment to poor patients by encouraging private hospitals through incentives. Actually, the main aim should have been to promote hospitals, given the acute shortage of beds. Incorporating a condition to serve the poor is a good move. .

So also with the Customs duty waiver on hospital equipment. The Health Ministry can only certify the hospital's eligibility and the Customs Department scrutinise the certification. Neither can vouchsafe for actual implementation of the commitment. Some hospitals are known to turn away even emergency cases if they are not convinced about the paying capacity of the patients. The policy should have spelt out the process of identifying poor patients, maintaining information about their profile and case-sheets and a monitoring mechanism.

Eligibility criteria

Identifying poor patients and setting up a referral system are major problems. To be eligible for treatment, the patient must be earning below Rs 2,000 a month; already, there are suggestions that this limit be increased. The policy does not mention what is to be provided free and what can be charged. Some hospitals have indicated that free treatment refers only to bed charges or to those equipment for which duty waivers were obtained. Apatient with a monthly income of Rs 2,000 cannot afford, for example, Rs 20 for a cup of coffee or Rs 5 per telephone call, which some hospitals charge. Imagine filling prescriptions that can be equal to their half yearly income.

Way forward

What, then, are the options? . The high Customs duties, the prohibitive land cost and the sub-optimal capacity utilisation have affected the viability of hospitals. The huge overheads of land and equipment costs are why their charges have become so huge If the Government wanted to allot subsidised land without riders, it could have stipulated a lease rate close to the market rentals. According to reports, some hospitals are even willing to settle the amount on a `one-time basis'. This is like a deferred levy, which becomes leviable once the venture becomes profitable. Alternatively, the Health Department can stipulate an amount to be incurred annually by each hospital towards meeting its obligations. This can be distributed to the eligible poor patients.

The Department can get into a contract with each hospital, depending on the type of treatment. This will ensure that the patients enjoy full fee waiver. The exact amount spent by each hospital can be monitored by the panel appointed by the Court . Of course, land should be repossessed from parties which do not start the hospital. Often investors get lured by the incentives offered by the government, without anticipating the consequences. Also, it is as much the responsibility of the government to look at the issue from the perspective of the investors. This might help get the best out of a poorly designed policy.

(The author is a Visiting Professor at IIM Bangalore.)

G. Ramesh

© Copyright 2000 - 2009 The Hindu Business Line