Rs 700-cr fine Delhi hospitals is wrong

The Delhi government’s decision to impose Rs 700-crore penalty on five hospitals for refusing free treatment to the poor has been contested by the alleged offenders. The government expected free treatment in lieu of the land it had provided to hospitals at concessional rates. At least one of penalized hospitals has announced that it would challenge the fine in the court. Whatever may be the outcome, the issue has exposed the gross inadequacies of private hospital policy in particular and the institutionalized statism in the system.

As many as 43 private hospitals in Delhi were allotted land at cheaper rates with the condition that 10 per cent of their in-patients and one-fourth of out-patients would be treated without any charges. The idea was to help people from the economically weaker section (EWS). PTI quoted (June 12) Hem Prakash, Additional Director (EWS), Health Department, saying that five hospitals—Max Super Specialty Hospital (Saket), Fortis Escorts Heart Institute, Shanti Mukand Hospital, Dharamshila Cancer Hospital, and Pushpawati Singhania Research Institute—were provided lands at concessional rates between 1960 and 1990 on the condition that they will treat the poor free of cost.

“These five hospitals have not abide (sic) by the conditions. We had earlier in December 2015 sent notices to these hospitals seeking their explanation as to why they failed to treat the poor and why they should not be fined. But none of them gave satisfactory replies so we initiated action against them,” said Prakash.

But the question is: why were these hospitals given cheaper land plots in the first place? Won’t it have been better for the government to sell land at the market price and use the amount to build medical facilities for the poor? It would surely have been a much better and simpler idea but then government—any government, especially any government in India—doesn’t want anything good and simple. In government functioning, the longest distance between two points is the straight line.

Even after a quarter of century of the initiation of economic reforms, the institutional mindset is interventionist. The politician and the bureaucrat are loath to let any economic activity continue under its own steam. They always find one pretext or the other to meddle in every sector—for fair play, for consumer protection, and most importantly to help the poor, the weaker sections of society, etc. As former US president Ronald Reagan once said, “No government ever voluntarily reduces itself in size. Government programmes, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth!”

Eternal and always expanding. As I pointed out in my last article, the Telecom Regulatory Authority of India now also wants to be a cop, with the powers to imprison and prosecute the errant telecom firms. Other publicly-funded bodies too, like the market regulator Sebi, want more powers and greater role to mess around.

We shall disabuse ourselves of the notion that authorities have any concern for the poor in the healthcare sector (or, for that matter, in any other area); had it been so, they would have strived to improve the functioning of primary healthcare centres, government-run hospitals, and so on. They just want to keep their finger in the pie, every pie—healthcare, industry, agriculture, aviation, Railways, education.

In fact, education has a situation similar to that in healthcare. As to hospitals, schools are also allotted cheaper land for schools, and then are asked to admit poor students free of cost.

Such policies are chalked out because they offer maximum opportunities of intervention, which often mean opportunities of extortion. An EWS provision means perennial state intervention. There has to be a mechanism to regularly check whether a certain percentage of patients are getting free treatment, a certain percentage of students getting free education; somebody will monitor that mechanism—some supervisor, inspector, official. Intervention gets perpetuated.

If there is violation, as in the instant case has been alleged, there is again government intervention.

The need of the hour is a policy framework that keeps government out of every activity, particularly economic activity. Given the statist streak in the institutional mindset, though, it is doubtful if this will ever be done. In fact, no political party on the horizon—from the Bharatiya Janata Party, despite its maximum-governance-minimum-government slogan, to the Aam Aadmi Party—is interested in opening up the economy in a significant manner.

So, state intervention will continue. Penalties will be imposed on big players—for instance, Max Super Specialty Hospital (Saket) and Fortis Escorts in this case—to give the impression how government is not the handmaid of the corporate tycoons, that it can take them on. Being anti-rich is supposed to be pro-poor. There will be court cases, controversies, allegations of rent-seeking.

Theatrics will continue.