Charitable Hospitals

Charitable trust Hospitals in India and Mumbai are loosely defined as hospitals registered under the Bombay Public Trust Act of 1950 which governs all non profits and are answerable to the Charity Commissioner. A majority hospitals fell under two categories, the public hospitals run by the state and central governments and in some cities by the local municipal corporations and the private hospitals run by charitable trusts for providing medical relief to society at large. There are only a handful of hospitals which are purely profit driven hospitals and run as business houses for profit. The Association of Hospitals has been established to create a collective voice to represent the charitable or non profit hospitals. Non profit hospitals are not literally loss making units but include successful and profitable units which plough back their profits into sustenance, advancement and expansion of scope and services.

Historically hospitals and health care originated from temples and religious bodies and
therefore even today a significant number of healthcare setups are owned or run by religious
trusts. These hospitals are patronized by the persons who are unhappy with public hospitals
which are overcrowded, unhygienic and manned by medical students. Often times the quality
of care is compromised even though the cost is low. In the olden days when medical care
costs were low and the quantum of philanthropy high, the charitable hospitals could sustain
themselves and in some cases prosper. As the costs of health care increased and with the
advent of higher technologies, these hospitals who had the experience and skilled human
resource started creating a dual system of paying for profit beds which enabled the hospitals
to offset the losses on account of the general and subsidized wards. Charitable hospitals were
very often built on land which is given by Government on long term leases on condition that
they fulfill the charitable objectives for which the trust was formed. Other tax write offs on the
donations received and some equipment are useful for sustenance.

The increasing privatization of healthcare and commercialization resulted in some hospitals
prospering and becoming rich and profitable. The middle class started to get alienated from
the hospitals.  A hostile media represented by the tabloid print media and audiovisual media
started targeting and attacking these hospitals. This resulted in a slew of public interest
litigations in which courts intervened to compel charitable hospitals to fulfill the objectives of
their trust deeds. The most famous of which is the High Court verdict which obligated hospitals
to set aside 20% of beds in every department for patients who are considered indigent (unable
to pay) and from weaker section who can partially pay for treatment. The indigent patients
qualify based on the family income being less than Rs. 82,000/- per annum and the weaker
sections qualified based on the family income being less than Rs. 1,65,000/-. All charitable
hospitals were made to create separate fund which may be called Indigent Patients’ Fund
it was decreed that they shall credit two per cent of gross billing of all patients (other than
indigent and weaker section patients) without any deduction to this fund. Also the supreme
court has made it obligatory to the charitable hospitals to treat acid burn victims free of cost.
This not only includes the initial treatment, but also reconstructive and cosmetic surgery for
life.

As in all cases where compulsion and coercion occurs the problems of misuse and non
compliance occurs. Typically the bureaucratic solution to a social problem results in
manufacturing papers to prove eligibility. Family incomes of less than Rs. 82,000/- to
Rs., 1,65,000 per annum in the present scenario are very low and a majority of people cannot
fulfill this criteria to avail free or 50% cost treatment. Whereas those who are genuinely poor
but actually having even marginally higher incomes than the prescribed become ineligible for
treatment free of cost or at 50% of the cost. Sometimes merely because a patient is not from
the region in which the hospital is located renders him or her ineligible for treatment. A flexible
approach wherein the hospitals voluntarily work towards a low cost model with cost cutting
approach and efficient functional no frill approach can result in a win win situation for both the
hospitals and society at large. There is no doubt that there are certain areas of health care
where technological advance and highly super specialized surgery are so prohibitively
expensive that even a small number of patients treated free in these areas can have a
massive impact on the balance sheets of charitable hospitals which survive on donations
and philanthropy.

The national health policy acknowledges the failure of the public healthcare system to provide
universal health cover. But instead of increasing the investment in public health care, the
Government wishes to abdicate its responsibilities towards its people and passes the buck
on to the private health care sector. Government owned insurance and universal health
coverage using a public private partnership where government strategically purchases health
care are the ways the government believes it will achieve its targets. However, often the rates
offered by the insurance companies are not realistic or acceptable to majority of hospitals.
Also the guidelines to decide on strategic partnerships specify that charitable trusts should be
given precedence over private hospitals.

The realistic solutions to this problem is an approach of target pricing and cost reduction.
This can be achieved by special subsidies on basic amenities like water, electricity etc. Also
bulk procurement and availability of essential drugs at low prices can help. Charitable
hospitals are more than willing to walk the extra mile and work with the government of the
day to achieve Universal Health coverage.