Grants, concessions and exemptions given to the hospitals far exceed the cost of free treatment they are asked to carry out
Posted On Thursday, April 26, 2012
The death of accident victim Reena Kutekar, whose husband Ram desperately hunted for a hospital that would save her life, has brought into focus how badly poor patients are treated in private medical facilities across the city.
The story in most other hospitals in the city is alarmingly similar: though they are required by law to treat a certain number of economically backward patients, most people come away empty handed in their time of need.
The contention of the hospitals – from Jaslok to Breach Candy, from Lilavati to Hinduja – is that taking care of poor patients is a huge burden on them, and that they are asked to provide free treatment for nothing in return.
What these hospitals fail to reveal, however, is that the grants and concessions they are given by the government far exceed the cost of free treatment they are being asked to carry out. Running as charitable public trusts, their list of unaccounted-for exemptions is staggering:
1. Cheap land
If any charitable trust wants government land to build a hospital, it is charged only one-tenth of the market value in the island city, and one-twentieth of the market value in the suburbs. If the land is on lease, the price can be as low as Re 1 per square foot per year.
“Several facilities, such as Jaslok, Hinduja and Bombay Hospital, are on government land given to them on a Re 1 lease. Now they’re earning crores annually but still make excuses when it comes to treating poor patients,” said advocate Sanjeev Punalekar, who had filed a PIL on the issue in 2004.
2. Extra FSI
While the rest of the city’s commercial establishments have to make do with an Floor Space Index of 1.33 to 2, public trust hospitals get an additional FSI of up to 5.32 in the island city and up to 5 in the suburbs.
The FSI determines the height of the structure, which in turn translates into more room for patients, and more business. But the taller hospitals have hardly been of help to poor patients.
“The additional FSI and all other rebates come from the government. The rest of the money comes from patients. Ultimately, it is the government and public money that adds up to the surplus funds of hospitals,” said health activist Leni Chaudhary. “Then why not ensure that poor patients get treated?”
When contacted, Dr Pramod Lele, the CEO of the Mahim’s Hinduja Hospital, admitted that additional FSI proved beneficial in increasing the hospital’s “bed- strength”, but contented that they were asked to pay a premium for it. Not the best argument considering the demand-supply ratio of hospital rooms guarantees that this money is easily recovered.
3. Income Tax rebate
The exact rate of exemption varies from hospital to hospital, depending on how much money it makes. On average, however, 85 per cent of a public trust hospital’s income is exempt from tax. Even the remaining 15 per cent can be set aside as a corpus fund, ensuring that most hospitals have to pay no tax at all. The only catch is that anything accumulated above this 15 per cent in their account is taxable. Hospitals registered as research institutes are given similar concessions.
4. No Octroi
While Octroi rates in Maharashtra are inordinately high, hospitals are exempted from any additional tax for transporting equipment and machinery. In 2003, the BMC withdrew Octroi exemption from a few hospitals for not doing enough charity work. When contacted, a senior doctor from Lilavati hospital agreed that there had been several complaints made to the Charity Commissioner about norms being flouted, which had resulted in some rebates being pulled back for certain hospitals.
5. Duty free
All public trust hospitals are exempted from customs duty on imported machinery and medical equipment, as opposed to 10 per cent for all non-public-trust hospitals. When contacted, Customs officials said machinery and medicines from abroad were one of the most common items brought into the country. “As per the law, we clear them immediately,” an officer said.
6. Cheap Medicines
Hospitals procure generic drugs at nominal costs, and several medicines which are made available by the government under various programmes such as Tuberculosis and Malaria eradication are given to them at a fraction of the cost. However, health experts point out, that these drugs are then sold to patients at the market rate.
7. Low water and electricity rates
Despite being commercial establishments, hospitals are charged residential tariffs for water and electricity, which in itself is a huge benefit. The Residential rate for water per 1,000 litres, for example, is Rs 2.25 as opposed to Rs 38 for commercial use.
What hospitals are supposed to do
According to a Supreme Court judgment, charitable hospitals must admit a patient brought in an emergency and provide “essential medical facilities” until stabilisation. Transportation to a public hospital should be arranged, if necessary, and no deposit should be asked for.
Each hospital has to transfer 2 per cent of its income to an Indigent Patients Fund (IPF). The hospital has to reserve 10% of its beds for indigent patients (annual income less than Rs 25,000) who should be given free treatment.
A further 10% of its should be reserved for economically weak patients (annual income less than Rs 50,000) who should be treated at concessional rates. At the time of admission, all a patient has to provide is a certificate from the Tehsildar or a ration card or BPL card.