One-sided deal: Hospitals get but don’t give back

Hospital, Bandra

Hospital, Bandra (Photo credit: Wikipedia)

Grants, concessions and exemptions given to the hospitals far exceed the cost of free treatment they are asked to carry out

Jyoti Shelar and Lata Mishra, in Mumbaimirror

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.

Reena was first taken to Vile Parle’s Nanavati Hospital, where the authorities refused to take her into the ICU because Ram could not furnish the Rs 25,000 required for admission.

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.

Waiting For A Disaster?- Rohini Hensman

Waiting For A Disaster?
Hope for redevelopment of the aging and degrading housing stock in coastal areas, provided by the new Coastal Regulation Zone (CRZ) Notification, has been belied in the 15 months after it was published.
The purpose of the Coastal Regulation Zone (CRZ) Notification when it was issued in 1991 was to protect the environment along the coast by restricting what could be done in these areas. CRZ was divided into various categories according to the degree of vulnerability of the environment, and in some areas, no construction was to be allowed. In CRZ II—already built-up areas along the coast—the Floor Space Index (the ratio between the total area of a plot and the built-up floor-space on it) was frozen at what it was at the time the Notification was passed. In Bombay (as it was then), this was 1.33 for the Island City and 1 for the suburbs.

To the extent that the regulation has been implemented, it has indeed protected the environment. However in Mumbai, where a large part of the city falls into the coastal zone, a problem has arisen in the case of old, dilapidated and unsafe buildings. In other parts of the city, residents who cannot afford the costs of redeveloping their old buildings can attract builders to undertake the task by offering them extra FSI, which the builders can sell and make a profit. In CRZ areas, this is not possible. As buildings age, the possibility of mishaps and even collapse increases, and residents are put at risk.

The new CRZ Notification of 6 January 2011 that was issued by the ministry of environment and forests when Jairam Ramesh was minister seeks to provide a remedy to this problem. It states clearly that in Greater Mumbai there are ‘a large number of old and dilapidated, cessed and unsafe buildings in the CRZ areas, and due to their age these structures are extremely vulnerable and disaster prone. There is therefore an urgent need for the redevelopment or reconstruction of these identified buildings…The Floor Space Index (FSI) or Floor Area Ratio for such redevelopment schemes shall be in accordance with the Town and Country Planning Regulations prevailing as on the date on which the project is granted approval by the competent authority.’ (pp. 23–24) In other words, the new CRZ guidelines assume that the Maharashtra state government and the BMC will soon be allotting a higher FSI to buildings in these categories in order to encourage their redevelopment, with the express aim of minimizing danger to the lives and homes of residents.

Mr Ramesh’s notification was published 15 months ago, yet to date there has been not a single announcement by either the state government or the Commissioner of any revised Planning Regulations that would allow older and less safe buildings in CRZ areas to be redeveloped with a sense of urgency. When an old (1968) building near Haji Ali by the name of Vellard View recently suffered extensive structural damage and partial collapse due to a landslide, Chief Minister Prithviraj Chavan and the BMC reportedly refused to grant any extra FSI to the residents for redevelopment of their building. The residents were forced into accepting a substantial cut in their carpet areas to be able to finance reconstruction through a builder.

Meanwhile, the Commissioner Subodh Kumar has been lobbying for a 36-km coastal road that will run from Nariman Point to Kandivli, that is slated to cost Rs 8000 crores and has even been described as the Chief Minister’s ‘dream project’. The Maharashtra government’s priorities are truly shocking! Redevelopment in already built-up areas has no negative impact on the environment, whereas a coastal road would tear up the last of Mumbai’s beaches, massively interfere with tidal movements, destroy mangroves and fishing communities, and generate vastly more pollution than the city already suffers from. But apparently cars matter more than people!

Since the new CRZ regulations were issued at the start of last year, there have two significant policy changes involving the allocation and definition of FSI. The first was the state government’s decision to allow the suburbs to enjoy an additional floor space index of 0.33 to iron out a long-standing disparity between them and the Island City. The second has been a new and tighter definition of what counts as FSI, that now includes a whole series of structural elements that were previously treated as exempt. Because the new definition has a substantial impact on their margins, builders are now allowed a “compensatory” FSI of 35% (or 0.35), for which they have to pay a premium except where redevelopment projects are involved.

Since both policy moves are about what counts as “basic” FSI, logically they should be applicable to those categories of CRZ buildings for which Jairam Ramesh’s regulation has made special provision, since the FSI norms have now been upgraded. Yet the plain fact is that there is so little transparency or public understanding of what the state authorities’ policy is for these buildings that builders are currently taking the stand that neither of these changes applies to any set of buildings in CRZ II. In short, all buildings in the suburban CRZ areas remain stuck at an FSI of 1, regardless of the precarious state of many of these structures.

As the housing stock in the coastal areas ages and degrades, repairs are no longer feasible beyond a certain point, which is why Mr Ramesh’s CRZ notification of 2011 sought to encourage redevelopment in those areas as a key priority. Obviously no one seems to be listening at this end. Or are they waiting for a disaster to happen before they move?

Rohini Hensman is a novelist and writer. She lives in one of the old buildings that the current regulations are dooming to stagnation


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