Maharashtra charitable hospitals have long enjoyed perks – without meeting obligations to the poor

The Maharashtra state charity commissioner a few months ago issued directives asking all private hospitals run by public charity trusts to add the word “charitable” to their names. This is a welcome step, given that there are many complaints against charitable hospitals. Chief among them is their reluctance to admit poor patients, even though they are supposed to have beds reserved for people from marginalised sections under the Maharashtra Public Trusts Act, 1950 (originally called the Bombay Public Trusts Act).

Maharashtra had 444 hospitals registered as charitable trust hospitals under the Maharashtra Public Trusts Act in 2017. All public charitable trusts registered under the provisions of the Act that run charitable hospitals, nursing or maternity homes, dispensaries or any other centers for medical relief and whose annual expenditure exceeds Rs 5 lakhs are classified as “state-aided public trusts”. They are supposed to reserve at least 20% of their beds for free and concessional treatment of patients who cannot afford to pay for medical services at market rates.

Many of these hospitals like Lilavati Hospital, PD Hinduja National Hospital, Saifee Hospital, Breach Candy Hospital, Nanavati Hospital and Jaslok Hospital in Mumbai and Ruby Hall Clinic and Apollo Jahangir Hospital in Pune have a posh ambience, good infrastructure and medical costs at par with private corporate hospitals. As a result, many people seeking healthcare do not even know that these hospitals are charitable health facilities and may not approach them for treatment at concessional rates. Mentioning the word “charitable” in the name will let the public know that patients can avail free or concessional treatment. While this decision is a step forward, there are other lingering problems of implementation of the Act.

Many subsidies but limited charity

Trust hospitals often find themselves in controversies due to noncompliance with the provisions of the Act, especially Section 41AA, which specifies that charitable hospital must reserve beds for both free and concessional medical treatment. Private hospitals registered as a charitable trust hospital get hefty subsidies on medical equipment, land, utility bills and can also claim exemptions on income tax. Some hospitals like Kokilaben Dhirubhai Ambani Hospital and Sushrut Hospital have been given plots of land on lease by the Mumbai collector for a concessional rent of one rupee per year.

In return, are expected to:

• Reserve 10% of the total number of operational beds for indigent patients (patients with annual income of between Rs 25,000 and Rs 50,000) and provide medical treatment for treatment free of cost.
• Reserve 10% of the beds for the weaker section patients (patients with annual income between Rs 50,000 and Rs 1 lakh) for treatment at concessional rates.
• Transfer 2% of total patient billing to an Indigent Patient Fund to be utilised on the treatment of indigent patients.

Despite these provisions, several studies and government audit reports show that for many years charitable hospitals have been remiss in implementing them. A sample survey by the state health department indicated that the Jaslok Hospital, Breach Candy Hospital and Bombay Hospital used only between 4% and 4.5% of their beds to treat poor patients. A report by the Comptroller Auditor General of Maharashtra in March 2015 on 11 top charitable hospitals in Mumbai showed that hospitals availed of the concessions without fulfilling their responsibilities to poor patients. Four hospitals – Bombay Hospital, Lilavati Hospital, Saifee Hospital and PD Hinduja Hospital – were granted additional Floor Space Index that allowed them to build up more area on the plots of land they were allotted. In return, they were required to reserve 30% of their beds for poor patients. However, these hospitals reserved only 20% of beds.

While charitable hospitals are supposed to be charitable towards 20% of their patients, they are allowed to and do earn profits from the other 80%. Charitable hospitals provide medical services at market rates for this 80% and so are affordable for only wealthy patients. Some of this profit might be justified since it might subsidise the charity, even when hospitals get funding from trusts or corporate social responsibility initiatives. However, the overall trend has been that of charitable hospitals enjoying huge subsidies while evading their responsibilities under the Maharashtra Public Trusts Act. This has led to profiteering, since the law does not regulate hospital rates. There are, of course, a small number of exceptions – hospitals that have been continuously providing medical services in a truly philanthropic spirit.

Poor implementation

Despite evidence that the Act has not been implemented properly, the Maharashtra government has failed in both actively monitoring and taking action against errant hospitals. In addition to making these hospitals change their names to reflect that they are charitable, the government must implement other changes to the Act to make it effective.

• Since some hospitals are granted more Floor Space Index, lease agreements are made with them to provide more reservations for indigent patients. Each hospital should display its quota on its website. This will bring in some transparency in the utilisation of  reserved beds. At present, hospital website do not do so. 
• The website of the office of the charity commissioner of Maharashtra is supposed to display beds available at charitable hospitals but this provision on the website does not work. Real time data on number of reserved beds available in each trust hospital should also be made available or functional on charity commissioner’s website.
• The Maharashtra Public Trusts Act need to be reviewed to increase the percentage of reserved beds in charitable hospitals so that it is commensurate with the subsidies these hospitals get. The Comptroller Auditor General of Maharashtra has recommended that the concessions given to these hospitals be reviewed. The Act should also be modified to specify better monitoring mechanisms and  stiffer penalties in case of noncompliance. As of now, the Act says that anyone who fails to comply with Section 41AA on reservation of beds shall be punishable with imprisonment up to three months or with fine up to only Rs 20,000 or with both.
• Rates charged at charitable hospitals must be regulated. 
• Charitable hospitals need to play a larger role to help strengthen the public health system. The state government should develop a referral system between government hospitals and charitable hospitals so that when government hospitals run short of beds, patients can be sent to charitable hospitals. Lists of charitable hospitals and their available beds should also be displayed at government hospitals. 

The writer is a health system researcher working with SATHI in Pune, an advocacy group that works on health rights through partnerships with civil society organisations.