Prescription for an Unhealthy India Private Corporate Healthcare and Its Empty Promises

Prescription for an
Unhealthy India
Private Corporate Healthcare and
Its Empty Promises

Society for Labour & Development 2
Prescription for an Unhealthy India:
Private Corporate Healthcare &
Its Empty Promises
A Report on Indian Large Corporate Hospitals by
Society of Labour and Development
New Delhi
2009

"Social injustice is killing people on a grand scale."
"(The) toxic combination of bad policies, economics, and politics is, in large measure
responsible for the fact that a majority of people in the world do not enjoy the good
health that is biologically possible."
------- The Commissioners of the
WHO Commission on Social Determinants
of Health in Closing the Gap in a
Generation: Health Equity through Action
on the Social Determinants of Health. 92

Table of Contents
 Executive Summary 5
 Chapter I: An introduction to emerging private health care in India
 Chapter II: Methodology of the study 8
 Chapter III: The Private Health Care Industry: An Overview of its nature and
effects 15
 Chapter IV: The changing role of the state in health care in India 22
 Chapter V: Understanding the dynamics within: Analysis and findings from the
study 35
 Chapter VI: Case study of three large hospitals: Issues and themes in private
health care 50
 Chapter VII: Where do we go from here? Conclusions and Recommendations
80
 References 101

Acknowledgements
This study was conducted by the Delhi-based Society for Labour and Development, with
the support of Jobs with Justice, a labour rights organisation, in the United States. This
follows a similar study done by the Society for Labour and Development, Jobs with
Justice, and the Hospital Employees Union regarding public sector healthcare in India.
The model chosen for both the studies emphasises the need to study healthcare from
multiple perspectives – workers, patients, management and government. Such a
perspective allows for comprehensive strategies to be developed; and encourages
alliances that are rarely seen – between labour and patients, between unions and the
people’s health movements. This model also demonstrates the need for corporate and
management research so that the movement fighting for justice in healthcare can
develop strategic interventions.
The research was coordinated by Dr. Habibullah Ansari and guided Dr. Selvaraj Sakthivel.
A team of field surveyors were involved. The final report was written by Dr. Nandita
Bhan.
Anannya Bhattacharjee
Secretary, Governing Board
Society for Labour and Development

Executive Summary
Background of the Study
Private health care in India has been growing at
an unprecedented rate propelled by
globalisation and its impact on the political
economy of health. This privatisation in health
care has led to the emergence of corporate
hospitals and an intricate network of health
enterprises. The costs of healthcare in these
private hospitals, particularly their burden on
low-income households in India has been much
discussed among health and development
practitioners.
However, apart from the issue of cost, there
remain other issues that continue to be
unaddressed. These pertain to the impacts of
the rise of these hospitals in the context of
India’s changing neo-liberal environment. They
are particularly visible through the dynamics of
employee welfare and patient care within the
hospitals, the reality of claims made by the
hospital management, accessibility and
affordability issues in health in these hospitals
and through regional satellite centres and
clinics, the quality of hospital processes and
accreditation, and the impact of this health
care system on the unmet burden of disease.
Objectives
This report synthesises findings from a multi-
dimensional study on large corporate hospitals
in India. The concerns of the stakeholders on
this issue have been regarding the building of
an effective health care system in India which
can provide affordable health care to the
patients and healthy work environments to the
employees.
In particular, the study has two main
objectives:
1. To understand the issues and concerns
in the working of the emerging large
corporate hospitals in India
2. To understand the critical concerns
regarding equity, quality and
accessibility with regard to private
corporate health care.
Methodology
The study methodology is cross-sectional, using
a combination of qualitative and quantitative
approaches. Evidence is drawn using surveys
from three large private hospitals in New Delhi
where 300 employees and over 150 patients
were interviewed, identified through purposive
sampling. To complement the survey, key
stakeholder interviews with important
management staff of the hospitals on diverse
aspects – such as history of the hospitals, their
profile and context and their functioning and
operationalisation – were conducted. Key
government officials were interviewed and
information was assimilated through a wide
variety of secondary sources.
Structure of the Report
This report is structured and written in eight
chapters that highlight the process of the study
and link the objectives of the study with the
findings. In effect, it brings together the
processes and products of the study.
Chapter 1 titled “An Introduction to Emerging
Private Health Care in India” outlines the

motivation for the study and the changing
neoliberal context and scenario under which
these hospital enterprises have emerged. It
describes the major features of the private
healthcare system, which are further
elaborated on and investigated during this
study. Chapter 2 discusses the methodology of
the study describing both the qualitative and
quantitative aspects of the study and the study
design aspects. Chapter 3 titled “The Private
Health Care Industry: An Overview of its Nature
and Effects” provides the core of the study. The
chapter highlights the nature, growth, structure
and character of the private healthcare
industry. Chapter 4 titled “The Changing Role of
the State in Health Care in India” reviews the
government policies and practices that have
promoted the growth of the private sector in
health in recent times. Chapter 5 titled
“Understanding the Dynamics within: Analysis
and Findings from the Study” is divided into two
sub-sections. Part I of the survey findings on
hospital employees look at aspects pertaining
to the labour market, organisation of the
workforce, nature of the workforce and the
wage, benefits and other perspectives of the
workers. Part II of the chapter outlines the
patient perspective – the nature of patient
pool, their expectations from private health
facilities and the burden of the cost of health
care felt by them. Chapter 6 titled “Case Study
of Three Large Hospitals: Issues and Themes in
Private Health Care” raises the diverse themes
and macro issues within the private health care
corporate structure. Chapter 7 on Conclusions
and Recommendations highlights the findings
from the study and provides recommendations
for future action.
Main Findings
Some of the major findings from the study are
summarised below:
1. We find that the accessibility of the
private healthcare system is limited to
those who are upwardly mobile, urban
and belong to higher socioeconomic
position, have high levels of education
and belong to higher castes. Healthcare
remains out of reach of the poor, the
working class, those belonging to the
informal sector, the less-educated and
those socially not well-connected.
2. The employment patterns for hospital
workers were also dominated by
younger and upwardly mobile urban
groups, though the workforce is seen to
largely come from low to middle income
households.
3. The costs of private healthcare including
emergency care and super specialty
care are unreasonably high, and this is
validated by the study. The burden of
this care is borne through the out-of-
pocket payments and savings of these
households.
4. A range of unreasonably high fees and
costs are seen in the form of
consultation, bed charges, admission
charges, charge for emergency care,
charges for medication, price of
diagnostics and several other admission
charges in the private hospitals.
5. One of major health financing
mechanisms to emerge with regard to
the private health system is private
health insurance. A range of new health
care insurance companies have
emerged in recent times, almost in
alignment with the growth of these
hospitals. However, only those patients,
to whom this health insurance is

available, are able to access health care
at these facilities.
6. We find a gender bias in both the
employment in these hospitals as well
as through examining patient care.
More men are employed compared to
women. We also find that treatment in
these large private facilities sees more
men than women, showing the intra-
household neglect and discrimination in
health care that women and girls face.
7. Large discrepancies are seen in the
employment conditions and contract of
the hospital workers. Low salaries,
inadequate information on employment
benefits and sub-contracted nature of
the work are some of these factors.
8. Most patients are seen to belong to
middle to high income groups. The
hospitals are not seen to respect their
commitment to offering health care to
the deprived sections, based on which
they were granted government
subsidies such as land.
9. We also find difficult working conditions
with which some of the low and middle
level employees struggle. These include
overwork, exhaustion, stress and
occupational health problems.

Chapter One
Introduction to Emerging Private Healthcare in India
India’s Health Needs
The Indian health experience offers rich
and valuable lessons in the
development of policy and systems of
health care. India’s health policy journey
began with Bhore Committee Report41
(1946), which was rooted in the British
Beveridge Report that stressed the need
for a strong role for public institutions in
addressing issues of health care and the
health burden. Over time, Indian health
policy has been marked by several
discontinuities which have seen the
dominant role in healthcare swinging
from the government (post
independence) to private healthcare
system (as it stands today). The health
system models adopted by other
nations are seen to have varied in their
ideology, composition, nature and
frameworks, but have remained loyal to
the goals of Health For All made at Alma
Ata93
(1978).
It has been argued that the Indian
thinkers on health and health systems
have been ahead of their time in
propounding the tenets of primary
health care. Yet, India has been unable
to capitalise on its comparative
advantage through its vision and
advances in thinking translating into
practice and implementation. If health
indicators and indices are generally
compared, the Indian performance can
be termed as disappointing and
abysmal.
India’s population growth has until
recently remained uncontrolled and
unsustainable. In 2008, according to the
World Health Statistics94
, life expectancy
at birth was 62 years for men and 64
years for women, which is way below
the 80 year mark achieved by other
nations. The adult sex ratio remained
unfair and inequitable at 933 females
per 1000 males (attributed to gender
discriminatory practices in India). About
one-fourth (23%) of the babies born
were considered low birth-weight
babies51
and immunisation coverage
(complete) for infants reaching first
birthday was as low as 44%. In 2001,
access to improved water and sanitation
remained at 85% and 52%, respectively.
In 2005-06, Infant Mortality Rate (IMR)
was seen to be 57 per 1000 live births,
and according to the Registrar General
of India, the Maternal Mortality Rate
between 2001 and 2003 was 301 per
100,000 live births42
. The World Health
Report in 2005 showed the lack of social
security or of any alternative health
financing measures to pay for health
costs -- in 2003, the out-of-pocket
(OOP) expenditure as percentage of
private expenditure on health was as
high as 97%, 95
while OOP expenditure
as a percentage of overall health
expenditure was 70%in. This is
considered to be one of the most
inefficient and inequitable healthcare
spending patterns.

With regard to the burden of disease in
India, India increasingly faces what is
popularly called the Double Burden of
Disease8
. On the one hand, the burden
of communicable diseases, diarrhoeal
deaths and perinatal deaths remains
critical, and on the other hand, there is
a significant rise in the burden of
chronic diseases in India – particularly
diseases of the heart as well as cancer
deaths. Further, diseases previously
believed to be communicable diseases
have emerged as chronic causes of
morbidity and mortality in India such as
HIV-AIDS and Tuberculosis.
Systemic Response to the Health
Needs
Given that India is grappling with
addressing several levels of health
needs, it would be imperative that a
comprehensive and strong national
policy and framework on health be
implemented with a focus on public
institutions. Health policy development
in India has shown a somewhat reverse
trend in this matter. The Indian state
realised the need for a macro policy on
health as late as 1983 when it
formulated the National Health Policy
(NHP)35, revising and broadening its
scope subsequently in 200037
. It was
then in 2000 that the Indian health
policy brought into focus discussions on
development, decentralisation and
operationalisation in health.
One of the major policy thrusts in recent
times has been the National Rural
Health Mission (NRHM)31,33
which is
now set to be followed by the National
Urban Health Mission (NUHM). While
the NRHM focused on accessibility
issues of health in rural areas, the
NUHM would have to acknowledge the
emerging health challenges due to
globalisation, manifesting through
nutrition, urban lifestyle on stress and
chronic diseases, urban transport and
infrastructure on disability and road
traffics and injuries, and of poverty and
squalor and urban residential systems
on spread of infections and epidemics.
The high and increasing disease burden
indicates not only the new risks of
morbidity and diseases, but also the
failure of the health system to address
the pre-existing challenges. In the
context of these health risks, there is a
need for the Indian state to evaluate its
approach so far and bring about new
and innovative mechanisms to
strengthen existing health systems as
well as introduce new systems where
gaps exist.
Instead, the Indian government has
been increasingly shirking its
responsibility in health care especially
since the 1990s. “Uncontrolled
privatisation and the international
privatisation of public sector and
paucity of funds are leading to the
collapse of public health institutions”29
.
There is a rise of private players
especially large capital-intensive
enterprises in the health care market,
setting up not only hospitals but also
chains of several allied health services.
Health care in India is seen to be
undergoing “structural changes”4
with
increasing involvement of the corporate
sector.
With the advent of globalisation in
India, private health care has emerged
as an important player and provider in
the health sector in India. Around the

same time, several state governments in
India were seen to “restructure their
secondary level hospitals with loans
from the World Bank”4
. These structural
transitions have led to a decline in the
role and magnitude of the state in
addressing health care needs and led to
the introduction of high capital
enterprises in health care.
The declines in state health services as
well as in the regulatory frameworks
have given further impetus to these
growing forces in health care that
include non-state actors such as the for-
profit private sector, small health
providers including mushrooming
registered medical practitioners (RMPs)
and the non-for-profit voluntary or NGO
sector providers. The emerging private
health sector in India is large, “perhaps
the largest in the world”29. Estimates
from the Review of Healthcare in India
show about 68% of hospitals, 56% of
dispensaries and 37% of the beds being
in the private sector.29
Bhat5
estimates
that 57% of the hospitals in India and
32% of the hospital beds are in the
private sector, with the share of private
sector investment in total health care
infrastructure being quite significant.
Further, in the year 2000, 550,000
registered allopathic doctors and
700,000 non-allopathic doctors were
enumerated which comprised 1.25
million practitioners of which 1.04
million were estimated to be in the
private sector29
. Bhat5
quotes figures
from an earlier work which reveals that
about 80% of the 390,000 qualified
allopathic doctors registered with
medical councils in India work in the
private sector. The Planning
Commission30
has pointed out that
650,000 alternative health care
providers exist in India most of whom
work in the private sector.
While small private providers have
burgeoned in towns and villages where
they run largely unregulated practices,
the critical mass in pushing private
health care in India emanates from large
capital intensive corporate enterprises,
which have capitalised on the new
opportunities and have invested in the
health sector. In 2005, the private
health sector accounted for 82% of the
outpatient visits, 58% of total in-patient
care and 40% of births in institutions.9,81
These figures clearly show the strong
and increasing presence of large
corporate sector in the Indian health
care system. These large corporate
hospitals dominate through, both
influence and capital in India.
With the decline in the role of the state,
the rising vulnerability due to issues of
health financing is clearly one of the
largest emerging realities. The
restructuring of the health care system
has meant transferring the burden of
health care increasingly on the
household. Health expenditure has
emerged as a catastrophic expenditure
burden on the household especially
during health emergencies. Large
corporations and private health care
organisations provide health care “to
make money”81
. Restructuring public
systems has also led to introduction of
user fees in several secondary hospitals
in the state level health facilities.4
The
shift to insurance as a health financing
mechanism, with the rise of numerous
private insurance companies leading to
a nexus between the large hospitals and

private doctors is an area of concern.
This type of insurance is largely
restricted to those in urban areas and
formal economic systems, and hence a
large share of the population remains
bereft of these mechanisms. Large
corporate hospitals also emerge as
critical employers and this role has
remained unexamined.
Characteristic Features of the
Private Health Care System
During recent times, with the waning of
state interest and control over the social
sector particularly health – there has
been a rise of private interests in the
health care delivery system. From the
population perspective, the increasing
health needs of the population have
remained un-addressed by the public
health system with a large unmet
demand for provision of health care.
Since health is a critical good (illness and
disease potentially risk life of a
household member), households are
often willing to pay large amounts of
money for treatment. This supply-
demand gap has led to the emergence
of the for-profit private corporate
sector, which has brought in capital,
technology and care resources into the
health sector. Aligned with the rise of
these large corporate hospitals is the
growth of private practitioners,
specialists and nursing homes, chemist
shops, pharmacies and pharmaceutical
corporations, suppliers of equipments
and medical technology, advanced
medical treatments, private health
insurance companies; third party
administrators, and international trade
and travel for health.
These factors have encouraged the
growth of the private health sector and
are critical areas for debates on the
changing structural aspects of the
health system together with the
dynamics affecting its functioning.
Whereas the proponents of the private
health care system have defended it on
the grounds that the sector addresses
the unmet health needs of the nation,
the extent of truth in this proposition
remains unclear.
Most of the debates on the growth of
large private healthcare in India have
remained centered around the twin
issues of cost and quality5
. While the
burden of treatment costs is a major
issue, we hope to go beyond this aspect
and understand the dynamics behind
the working of this system. Some of the
salient features of the private health
care system in India – which will be
tested further in the study – are listed
below as characteristics/features of the
system.
1. The motivation and driving force
of the private healthcare system,
especially large corporate
hospitals is profit-making. The
unmet demand/need for
healthcare is capitalised by this
sector, and has led to its
emergence as a viable
alternative to government
health care system.
2. Private health care system
particularly large hospitals are
run like corporate enterprises
(no different from a commercial
enterprise). The nature of this
enterprise sees expansion into

other segments of health care
system such as pharmacies and
drug value chains, diagnostic
services and other areas that
capture the breadth of the
health care market and are
linked through a nexus of related
doctors and health institutions.
3. Large corporate hospitals bring
in massive capital, capital-
intensive technology and
specialist areas – which did not
previously exist in the health
care system in India. These
provide a sense of specialist care
to households seeking
healthcare creating dependency
on “specialists” doctors who
come at a higher price. In doing
this, the existing burden of
diseases constituting the burden
of communicable and chronic
diseases tends to get
overlooked. For instance, the
burden of diarrhoeal infections
or malaria in India is likely to be
overlooked in these specialised
health facilities.
4. Large corporate hospitals offer
health care at higher prices that
is likely to increase the cost
burden on the household by
increasing out-of-pocket
expenses on health care. This
pushes the household into
alternative health financing
mechanisms which include
formal systems like health
insurance and informal systems
like money-lending and
borrowing-related services.
5. The regulatory mechanisms to
ensure accountability and
responsibility in private health
practice remain weak and the
onus for ensuring accountability
lies on the consumers’ initiative.
Hospitals are governed by their
own codes and norms rather
than national or state systems of
practice. This means that in case
of malpractices within the
hospital in patient care or
grievances of employees, it is the
prerogative of the individual to
seek accountability and redressal
as a consumer or employee. The
accountability mechanisms seen
in public health care are not
seen in the private sector.
6. The systems of care in the
private hospital are stronger
since consumer satisfaction
plays an important role in
ensuring continued use. Hence,
the hospitals may go out of their
way to make hospital visits
pleasant and even desirable,
pursuing unnecessary processes
rather than focusing on essential
health care delivery.
7. The private system with its
lucrative salary structure and the
promise of a glamorous
corporate culture may seemingly
offer a better work environment,
drawing upwardly mobile and
educated health workers at all
levels including from
government health care system.
However, recruitment
procedures remain ad-hoc and
hospitals even poach on health

human resources from other
facilities. This may in fact
weaken the overall health care
delivery system.
8. Medical tourism and
international services are a
growing part of the hospital
services and culture which have
led to diversion in focus and
resources towards the
international wealthy clientele
rather than focusing on health
needs within the nation. Medical
tourism brings in critical revenue
for the corporate hospitals and
hence attention of medical care
is diverted towards these
aspects.
9. The large corporate hospitals
that run like enterprises are
likely to discourage any form of
unionisation of the labour force
employed. The emerging Indian
corporate sector does not
encourage labour unions as
existed within the industries
before the 1990s. Hence worker
rights and laws come under the
sole jurisdiction of the
management or governing
boards. In these circumstances,
employee rights are likely to
compromised or remain
subservient to the management
regulations.
10. In a quest of misguided
priorities, the large private
hospitals despite citing
international standards are not
seen to adhere to national
accreditation systems like NABH.
They are often seen to follow
certain international
accreditations especially to
encourage the international
wealthy clientele that is aware of
these accreditations.
11. A number of the large private
hospitals have been set up aided
by the incentives given by the
government which include
subsidised land, tax rebates,
bank loans and other related
subsidised facilities. These
incentives were encouraged on
the pre-condition that the
hospitals would provide free
care to vulnerable sections of
society including BPL families. It
remains unclear whether this
practice is followed, and how the
subsidies are justified.
Overview of the Present Study
The present study is an attempt to
understand the motives and workings of
the private health care system,
particularly large corporate hospitals as
it emerges as an influential health
provider in India. The study would
provide insights into the political
economy of private health care system
in India -- its operationalisation,
functioning and management, and
would attempt to understand its
implications on addressing health needs
of the population. The report
synthesises the study rationale and
draws linkages with its results using
data from three large private hospitals
in New Delhi. Overall, the study
provides insights and perspectives into
the private health care system in India.

The transitions seen with the
globalisation of the Indian economy, the
decline of the role of the state in
welfare schemes and the growth of the
private players may not be reversible. It
is crucial however for research
institutions, academic bodies, civil
society and people’s rights groups to
put a check on the uncontrolled
situation caused by the private players,
in the name of free enterprise which is
harming the health needs of the Indian
population. We feel that growth in
healthcare must be equitably
distributed in the shape of accessible,
quality and affordable health to all. In
our view, the private health care system
may actually be increasing existing
health inequalities and we wish to
investigate the need for it to shift
towards a redistributive nature
addressing the larger sections of the
society. This is the strong and clear
message we wish to convey through this
study.

Chapter Two
Methodology of the Study
This study on large private hospitals in
India is the first attempt to look at
working of large hospitals in the context
of the rise of corporatisation of
healthcare in India after the 1990s. It
attempts to understand and unravel
some of the dynamics within these
hospitals -- their working, the issues and
themes that emerge from the
operations, and the impact on patient
care and workers’ rights.
This study is second in a series of those
undertaken by the Society on Labour
and Development (SLD) to understand
the transitioning health system and its
impacts. The first study in the series
looked at the public health care delivery
system and was published in July, 2007.
It was titled “India’s Health Care in a
Globalised World: Health Care Workers’
and Patients’ Views of the Delhi’s Public
Health Services”47
. Its objectives were to
understand and examine the working
conditions of the health workforce in
Delhi’s public health care institutions,
and the access and quality of health
care from the patient’s perspective.
Some of the issues that the study tried
to address included outsourcing of
services, contractualisation of
government departments, demoralised
management and working,
institutionalised social discrimination,
unregulated, publicly subsidised private
services etc.47
The present study looks at the private
corporate health care system, which is
the other end of the spectrum in
healthcare. The focus of the study is on
the corporatisation of healthcare
coupled with the emergence of large
private hospitals and related value
chains.
Objectives
This study attempts to understand
issues of accessibility of health care to
large populations and addressing health
needs as well as the concerns of
building an effective health care system
that can provide healthy work
environments and job satisfaction in
work for practitioners and health
system workers.
In particular, the study has two main
objectives:
a. To understand the issues and
concerns in the working of the
emerging large corporate
hospitals in India
b. To understand the critical
concerns regarding equity,
quality, and accessibility with
regard to private corporate
health care.
Study Design
The study uses a combination of
qualitative and quantitative approaches.
The former has a cross-sectional study-
design with evidence drawn using

surveys from three large private
hospitals in New Delhi. It collected data
from 300 hospital employees and over
150 patients in the three institutions.
Quantitative data techniques were
supplemented by the use of qualitative
approaches that consisted of key
stakeholder (informant) interviews.
These were conducted with important
hospital management in order to
develop an understanding of these
facilities, to trace their profiles and
understand operationalisation and
aspects of their functioning. Key officials
from the government were also
interviewed including officials from the
Ministry of Health and Family Welfare
(MoHFW), Directorate General of Health
Services (DGHS) of the Govt of India and
NCT of Delhi. All this information was
utilised not only to prepare background
information prior to the actual surveys
of the hospitals but also to assimilate
and compile detailed case-studies of the
three hospitals in order to draw out
emerging issues and themes on the
private health care system.
We also used information from
secondary sources such as reviews of
literature and research observations at
these facilities. Information was also
procured through filing of an Right to
Information (RTI) appeal at the office of
the DGHS Karkarduma (New Delhi) in
order to gather official records on
government health policies,
programmes and various regulatory
authorities. A secondary literature
review was conducted of the official
policies and of government documents.
The major documents reviewed
included the National Health Policy
(1983 & 2002), the Mission Document
of the National Rural Health Mission -
NRHM (2005), the X (2002-07) and XI
(2007-12) Five Year Plans documents,
reports of the Working Group
Committee on Health of the Indian
Parliament, Higher Level Committee on
Service Sector of Planning Commission,
Clinical Bills on Health Reforms,
Regulatory guidelines for hospitals and
nursing homes of the National
Accreditation Board for Hospitals and
Healthcare Providers (NABH) released
by The Quality Council of India (QCI).
The secondary literature review also
consisted of international and national
research papers as well as news
bulletins and was supplemented by grey
literature from NGOs and other civil
society organisations on relevant
themes.
Sampling Technique
Hospitals: We short listed three large
private hospitals in New Delhi, owned
and managed by the corporate sector.
Currently, there are over 460 private
hospitals in Delhi that are registered
under the Directorate of Health Services
(State Government of Delhi). These
hospitals comprise the more critical and
influential section of the private hospital
sector categorised under profit-making
and non-profit making hospitals. The
profit making hospitals comprise small
hospitals like private clinics and small
nursing homes, as well as large super-
speciality and big corporate hospitals.
The focus of this study is on large
corporate hospitals, taking into
consideration the political economy of
health that is at work through these
enterprises. The study provides an in-
depth view into the workings of private

health care industry and facilitates a
comparative view of the study on public
health care institutions done previously.
Purposive sampling was used to identify
and select three large private hospitals
in Delhi (NCT), which are run by
corporate houses/registered companies.
These hospitals are large and influential
in their reach, capacity (bed-numbers
and personnel), infrastructure and
provide speciality services, attracting
large numbers of national and
international patients. The hospitals are
also in the process of launching new
future ventures in other cities in India
and their impact on health care delivery
system in India is growing at a fast pace.
The three hospitals identified and selected include:
Hospitals Identified Parent Company
Max Super Speciality Hospital (200 beds)
situated at Saket New Delhi; owned and
operated by Max Healthcare Institute
Limited (MHIL).
Max India Limited (MIL)
Indraprastha Apollo Hospital (560 beds)
situated at Sarita Vihar, New Delhi owned
and managed by Indraprastha Medical
Corporation Limited (IMCL)
Apollo Hospitals Enterprises Limited
(AHEL)
Fortis Facility (200 beds), Vasant Kunj, New
Delhi
Fortis Healthcare Limited (FHL)
Workers: Within the three hospitals
identified, 300 hospital
workers/employees were identified and
interviewed through convenience and
snow-ball sampling techniques. These
hospital workers comprised employees
at all levels of functioning (lower to
middle), and 100 workers were selected
from each of the three facilities. The
profile of employees included
laboratory technicians, admission staff,
accountants, patient welfare staff,
receptionists, pharmacists, nurses,
ayahs, ward boys, drivers, security
supervisors, security guards, floor
sweepers, toilet cleaners, kitchen
assistants, cooks, male general duty
assistants, female general duty
assistants, vehicle parking staff, building
maintenance staffs, AC operators,
washer men, window glass wipers,
sanitary inspectors, plumbers, and few
doctors and assistant doctors. The study
team feels that the variety of personnel
provides a representative and holistic
picture of those working within these
private hospitals.
Patients: A random sample of 150
patients, about 50 from each of the
three hospitals in Delhi was obtained
using the convenience sampling
techniques. The purpose of the
information from this sample is to study
and understand the patient perspective
in health care at private facilities.

Data Collection Methods
The study used mixed methods for the
design and collection of data from the
three hospitals in Delhi. It used a
quantitative survey of workers and
patients from these facilities in order to
obtain an understanding of the
dynamics of health care delivery. In
addition, it conducted in-depth
interviews to compile theme-based case
studies from the three hospitals to get a
holistic picture of the hospital
management structure, quality of care
and compliance with regulations. The
study obtained information on these
aspects separately from the hospital
management as well as workers and
patients, and tried to triangulate in
order to check for validity of the
evidence and consolidate findings. For
both quantitative and qualitative data
collection aspects, the research team
trained separate investigators. It was
decided that both groups of
investigators would be making
standardised observations regarding
some critical aspects of interest –
including physical infrastructure,
working conditions and health hazards
of the hospitals among others during
their data collection visits.
Data Collection Tools:
Data collection tools were prepared
separately for workers as well as
patients.
The schedule for the workers included
information on household
socioeconomic status, individual
characteristics (such as age, sex, caste
and religion), local and permanent
residence information, data on marital
status, education, monthly household
expenditure, household size, transport
facilities and general costs of living. It
also included work and employment
information such as salary particulars,
mode of payment, nature of job, timings
and shifts of work, employment
benefits, insurance and social security
benefits such as retirement pensions,
and the workings of employee/labour
unions in the hospital for management
and facilitation of work environments.
Mechanisms for grievance redressal,
under staffing, productivity and
performance targets and health
conditions such as sickness, stress and
leave benefits were also included in the
tools for data collection.
The data collection tool for the patients
assimilated information on their
socioeconomic profile (age, sex and
caste), education levels, occupation,
income, place of residence and origin
and other socioeconomic variables of
interest. It also included questions on
the nature of illness, costs of treatment,
perception of the quality of services,
problems faced in access of health care,
past history of illness and the different
health care facilities visited in prior
months.
Pilot visits to the facilities were made
for pre-testing the schedules along with
a validity test for the tools. Any
modifications made during these were
recorded and the tools were updated
and finalised for changes.
Operationalisation of Survey:
The implementation of the actual data
collection presented many foreseen and
unforeseen challenges, including those
which the study team had not

encountered in a similar study in
government hospitals. Access to
workers on duty was difficult with their
work schedules not allowing any time
especially during working hours. The
workers’ fear of loss of job in case the
management found out was another
challenge we faced. The study team
took the difficult decision of speaking to
the workers without the consent of
their managers so that management did
not influence the version of information
provided by the workers. With
consistent efforts and perseverance, the
investigators were successful in building
healthy rapports with employees. This
was done through regular interactions
within canteens during lunch hours and
outside the hospital premises after work
hours and completion of duty. Through
a snowballing effect, the investigators
were able to reach out to more workers
in the hospital and fellow employees
and succeeded in getting appointments
with workers at their residences and
other places for detailed interviews/
discussions.
The survey on the patients presented
other challenges. Meeting the patients
in the hospital was difficult due to
hospital norms of special visitor passes
and limited meeting hours. Investigators
often had to await the discharge of
patients from the hospital, which led to
loss to follow-up as patients were in a
hurry to leave and would not spend
time with investigators. Out-station
patients could not be followed up at
residences. The investigators met
families and relatives of patients who
were not acutely sick, and were able to
interview them.
Case studies:
In-depth qualitative interviews were
used together with secondary sources
of reference in order to build case-
studies on some of the themes and
aspects of the operationalisation in the
hospitals. Using multi-dimensional
approaches the investigators and the
researchers were able to develop case
studies and profiles of the three
identified hospitals.
Primary Resources Secondary Resources
Interviews Literature
Managing Directors, Vice Chairpersons,
and Personnel Managers
Hospital brochures, annual reports, and
websites
Observation:
Apart from direct information gauged
through both primary and secondary
methods, the investigators used their
own observations on certain pre-
decided and standardised areas of
interest. These included the physical
environment of the hospitals, health
hazards, infrastructure, employee’s
behaviour, patients and their relatives’
behaviours, which were later
incorporated in the qualitative data
collected.
Management of Data
Qualitative Data: For qualitative data,
information gathered on the various
themes and profile features of the
hospitals was summarised, interpreted

and categorised under certain pre-
decided heads. These included
corporate management, company
history, types of ownership,
departments, wards, specialty, bed
capacity, governance, delivery of
services, financial performance and
investment, shareholder, share market,
public private partnerships (PPP),
benefits from government(concessions,
tax holidays, free land); domestic and
international patients, medical tourism,
quality control, accreditation, labour
issues (hours and wages, union,
grievance procedure, unfair labour
practices), future projects, etc. Later,
during the survey of the workers and
patients, certain qualitative information
regarding various issues was used to
compose quantitative questions for the
respondents.
Quantitative Data: All the administered
schedules on 300 workers and 156
patients were analysed using the STATA
(ref) computer software package and
frequency tables and contingency tables
were prepared. Data were analysed
using simple methods of calculating
proportions and percentages of the
responses gathered.
Chapterisation Plan
This report on the study has been
structured under eight chapters
describing and linking the processes and
products of the study.
Chapter 1 titled “An introduction to
emerging private health care in India”
outlines the motivation for the study
and the changing neoliberal context and
scenario under which these hospital
enterprises have emerged. It describes
the major features of the private
healthcare system, which are further
elaborated on and investigated during
this study. The chapter tries to provide
an overview of the themes and
discussions of this study.
Chapter 2 discusses the methodology of
the study describing both the qualitative
and quantitative aspects of the study
and the study design aspects. It
describes the study design, the sample
selection, the primary and secondary
data collection methods,
operationalisation of the data collection
and the data analysis issues. The
chapter gives a brief outline of the
structure of the report.
Chapter 3 titled “The Private Health
Care Industry: An overview of its nature,
growth and structure” provides the core
of the study. The chapter highlights the
nature, growth, structure and character
of the private healthcare industry. It
begins by outlining various aspects of
the growth of private health industry –
trends, projections and the shifts in the
industry. It provides a description of the
trajectory of its growth highlighting the
priorities of the industries, structures
and nodes, providing examples of new
ventures in private investment in
health, and discusses the emerging
opportunities and issues such as
medical infrastructure, medical tourism
and telemedicine. Finally the chapter
launches itself into some of the new
debates in the area – including rise of
FDI, public-private partnerships and lack
of regulatory controls.
Chapter 4 titled “The changing role of
the state in health care in India” reviews

the government policies and practices
that have promoted the growth of the
private sector in health in recent times.
It tries to understand the changing
relationship between the state and
private capital in health, since
independence. The chapter describes
the legislative and policy frameworks
that have been available and their
impact on the growth of the sector. The
National Health Policies are examined in
some detail particularly their openness
to private capital in health. Issues such
as accreditation, opening of health
insurance and the role of judiciary are
discussed in this chapter.
Chapter 5 titled “Understanding the
dynamics within: Analysis and findings
from the study” is divided into two sub-
sections. Part I of the findings
represents results from the quantitative
study on hospital employees in the
private hospitals. Survey findings from
here look at aspects pertaining to the
labour market, organisation of the
workforce, nature of the workforce and
the wage, benefits and other
perspectives of the workers. Part II of
the analysis represents findings from
the quantitative study on patients in the
private hospitals. The section highlights
the patient perspective in issues – the
nature of patient pool at private
hospitals, their expectations from
private health facilities and the burden
of the cost of health care felt by them.
Chapter 6 titled “Case study of 3 large
hospitals: Issues and themes in private
health care” raises the diverse themes
and macro issues within the private
health care system. Data for this
chapter was collected through different
sources – key stakeholder interviews
with the management, hospital
employee interviews and secondary
sources of data collection and
triangulated to understand the concerns
in a holistic perspective. Further, the
data from the 3 hospitals was organised
by themes instead of hospitals – in
order to get an understanding of the
issues pertaining to these corporate
enterprises. Some of the themes which
the case studies were organised on
included ownership and control,
business strategy, medical tourism,
business operations, labour issues and
policies towards employees, training to
staff and code of conduct, industrial
relations, plans for expansion,
regulation and media interaction.
Chapter 7 titled “Where do we go from
here? Conclusions and
Recommendations”, highlights the
findings from the study and provides
recommendations for future action.

Chapter Three
Disentangling the Private Health Care Industry:
Insights into the Effects of Privatisation in Healthcare
Overview
India’s private health care sector has
grown at a tremendous rate over the
past two decades59,71,81
. In 1947, only 5-
10% of patient care was provided
through the private health sector81
.
More than fifty years on, this has grown
to an estimated 68% of hospitals, 56%
of dispensaries, 75% of allopathic
doctors and 37% of beds – which are in
private sector control29
. By 2005, the
private sector is said to have accounted
for 82% of outpatient and 56% of
inpatient expenditure29
.
In economic terms, the implications of
this growth can be seen in the size of
the health care industry. The private
health care sector has grown from USD
4.8 billion to USD 34.2 billion in 2006.
According to Thornton89
, the revenues
are estimated to increase to USD 50
billion in 2011 and then further to USD
75 billion in 2016.
India ranks among the top 20 of the
world’s countries in terms of a
dominant private sector and the
predominance of private spending on
healthcare. This can be further seen
through the abysmal levels of public
spending on healthcare which stands at
0.9% of GDP, among the lowest in the
world. India’s unmet demand for health
care facilities, rapidly changing
demographics, increasing private
spending on health care and a readily
available intellectual pool have all
fuelled the growth of the private health
care industry in the country, making it
highly attractive for international
investors.23
Important economic and
political changes that have propelled
and encouraged these changes include
the fiscal compression on health
expenditure brought about by economic
reforms in the 1990s, rapid influx of
medical technology and a burgeoning
middle income class5
.
These events have huge resounding
implications for healthcare in India
where accessibility and availability of
health care are major issues. The
economic effects of private health care
are critical especially for a large portion
of the population (three fourths) that
“lives below or at subsistence levels
[meaning] 70-90% of their incomes goes
towards food and related
consumption.” Further, a majority of
spending on private health care in India
(82%) is said to be funded through
personal savings. A large majority of
India’s labour force is in the
unorganised sector, which does not
have systems to ensure insurance or
other facilities of availing subsidised
healthcare. The section engaged in the
organised sector receiving access to
health care through employee insurance
schemes is expected to be under 8%
and in some estimates comprise a mere
3.2% of India’s population. This only

further highlights the inequalities with
respect to the access in healthcare
offered by these hospitals.
The burden of health care on India’s
population is also seen through out-of-
pocket expenditure incurred by
households. Families are seen to incur
large debts and sell primary economic
assets like land, property and other
utilities with more than 40% of people
admitted into hospital having done one
or the other to finance their treatment.
Financing of health care is a major
demand-side constraint that is further
accentuated by the growth and spread
of private health care in India, especially
large corporate hospitals. Distrust in the
public health care system or inadequacy
in health provision drives millions of
Indians into the hands of private health
care providers, crippling them
financially, despite their being aware of
cost implications or the lack of
accountability in these facilities.
The increasing shift towards private
health care among consumers shows
the growing dissatisfaction and
disillusionment of the households with
the public health care system. It
highlights the under performance of the
public system in providing good quality
health care, especially to poor
households. The ground realities of the
public health care system in India were
highlighted in the first of our studies on
public health care system and the
changes due to globalisation47
. Our
study47
found that among the patients
surveyed in Delhi’s public health
facilities, 25% reported unclean drinking
water, 50% said there was no water in
toilets and others spoke of
malfunctioning equipment. In addition,
diagnostic services which used to be
free in public facilities have now
commonly become outsourced and
patients have to pay for tests and drugs
during their ‘free’ treatment. Studies
have shown the extent of bribes in
government hospitals as well as the use
of influence to get appointments and to
avail other services.
While public health care system has not
been provided attention or resources by
the Indian government, the growth of
the private health system has been
encouraged through incentives
comprising legal frameworks and
economic decisions. The private sector
has been subsidized in different ways
through land grants, tax concessions,
import opportunities, encouragement
to capital-intensive and technology
initiatives. Land has been provided at
low rates on the condition that free care
would be provided to low income
patients, “a condition that is rarely
met”. In addition, private companies are
provided exemptions from taxes and
duties on imported drugs and medical
equipment.
Further, the lack of regulation and
accountability systems make the private
health system an open field where
suppliers have a free reign and
accentuate the authority and control of
the sector. These make a single
individual or household – employed in
the system or as patient in the system –
highly vulnerable from seeking any
accountability against malpractices.

Structure and nodes of the
private health care system
The private health care sector is not a
homogenous entity. It represents a
diverse distribution of health
providers who vary in size of capital,
type of medicine, practice variation,
service, methodology and belief
systems, costs, relationship with the
household demanding healthcare and
quality of health care provided.
Among these, allopathy has emerged
as the predominant form of medical
care and practice.
The private health sector can also be
stratified as 'for-profit' and 'not-for-
profit' service providers. The latter
includes various health services
provided by NGO's, charitable
institutions, missions and trusts. The
former consists of different
practitioners and institutions that
engage in health care driven by profit
motive and look at health care as a
business practice. It incorporates
forms of ownership that range from
individually owned practices to large
public limited corporate entities.
Health infrastructure is another
defining point of the private health
care system. The health infrastructure
in the private sector ranges from
single bed nursing homes to large
corporate hospitals, medical centres,
medical colleges, training centres,
dispensaries, clinics, physiotherapy
and diagnostic centres and pathology
labs. Ancillary enterprises such as
pharmaceutical and medical
equipment manufacturing companies
are increasingly also part of this
sector, wanting to gain dividends from
this enterprise. Hospitals have been
classified into 3 categories based on
the availability of the number of beds.
 Category A hospitals are multi-
specialty, have more than 100
beds and attract more
prominent doctors.
 Category B hospitals are more
basic, with between 31-100
beds and some specialty and
investigative facilities.
 Category C hospitals are clinics
or nursing homes having 30 or
fewer beds.
In this study we focus on operations of
Category A hospitals that are providing
health care in urban areas with respect
to patients and employees in these
hospitals.
The growth of the Private Health
Care Sector: A macroeconomic
view
The private health care sector in India
has grown at an unprecedented pace in
terms of “physical size, investments,
expenditures and utilization”. The pace
of privatisation and the entry of private
capital have already exceeded the level
of commitment made by the Indian
government to the World Trade
Organisation (WTO) under the General
Agreement on Trade in Services (GATS).
In coming years, this investment is
expected to increase manifold. The
stark difference in the magnitude of
investment made in healthcare by the
government and the private sector is
immense. Trends show that investment
in government expenditure during

2007-2012 is expected to be Rs 36,000
crore while the private sector’s
contribution towards development of
healthcare infrastructure for the same
period is pegged at Rs 3,13,650 crore. A
whopping 89.5% of future investment in
healthcare infrastructure is expected to
come from the private sector. The
proponents of privatisation have
referred to this development as being
an “engine of economic growth with
lucrative pockets of opportunity”. This
growth however may not alleviate
problems of equity in health care and
may actually increase inequalities
instead of reducing them.
Despite the realisation that growth
without development and equitable
distribution are meaningless, the
obsession with growth continues. The
increasing burden of disease in India is
often cited as the cause why health
infrastructure needs meteoric rises.
The inability of the state to match
these investments has legitimised the
role played by the private sector in the
investments.
The shifting disease profile in India
from infectious to lifestyle-related
diseases, have also given importance
to tertiary care. Life-style diseases are
chronic which take longer and are
more expensive to treat. The opening
of the health care markets and the
introduction of health as an industry
have further highlighted the lucrative
aspect of the health care industry.
Estimates from developed nations like
the US highlight this point. In 2001,
the average inpatient cost for lifestyle-
related diseases (cardiac problems,
digestive issues) was US$ 658
compared to US$ 91 for infectious
diseases. Demographic trends and
disease profiles patterns show that
India is set to follow similar patterns
as the developed nations. Diseases
like CVDs, asthma and cancer are
likely to dominate and in-patient
spending is expected to represent
nearly 50% of total healthcare
expenditure. In addition it is
suggested that “health spending will
be sustained by two demographic
trends: increased life expectancy and
an ageing population”. Life expectancy
is expected to rise from an average of
63.3 years in 2000-04 to 66 years in
2006-10. The proportion of the
population aged 65 years and over is
also expected to increase from 4.7% in
2000 to 5.8% in 2010.
Increasing Private Investment
Private investment in the health sector
has been channelled through different
forms such as private equity,
acquisitions, FDI (foreign direct
investment), FII (foreign institutional
investor), NRI (non-resident Indian) and
PIO (person of Indian origin)
investment, joint ventures, and Venture
Capital. Among these, significant growth
has been registered in Private Equity
(PE) investments with an expected
increase from $448 million in 2007 to
approximately $5 billion between 2008
and 2011. Certain large corporate
entities in India have also been
particularly active in investing in health
care avenues and areas. Among them,
the major players include the Apollo
group (which is the largest private
hospital network in Asia), Max Health
Care, Fortis Healthcare (associated with
the Ranbaxy group) and Wockhardt.

Examples of recent investments by joint
Indian and international stakeholders
include cases like:
 Apax Partners owns a 12% stake
in Apollo Hospitals Enterprise Ltd
having invested Rs 426.40 crore;
 ICICI Venture making multiple
healthcare investments of Rs 40
crore in RG Stone Hospital, Rs
140 crore in Pune's Sahyadri
Hospital, Rs 65 crore in Kolkata's
Medica Synergie and Rs 96 crore
in Mysore’s Vikram Hospital.
 Narayana Hrudayalaya Pvt Ltd
has sold a 25% stake to the
private equity arms of American
International Group Inc (AIG)
and JP Morgan for a $100 million
joint venture.
Significant interest is also being shown
by potential FDI players interested in
investments into health care in India.1
1
1. Pacific Healthcare Holdings, one of
Singapore’s leading healthcare service providers
- which is coming up with Pacific Medical
Centre, an international medical centre at
Hyderabad in a joint venture with Vitae
Healthcare Pvt Ltd.
2. The Singapore-based Parkway Group
Healthcare PTE Ltd came up with its first Indian
project in 2003 through a joint venture with the
Apollo Group to build the Apollo Gleneagles
Hospital, a 325-bed multi-specialty hospital at a
cost of US$ 29 million and has now entered into
a joint venture with the Mumbai-based Asian
Heart Institute and Research Centre (AHIRC) to
set up specialized centres of medical excellence
in Mumbai (with Parkway holding the majority
stake).
3. Malaysia-based Columbia Asia has set up its
first 75-bed hospital in Hebbal, Bangalore
through FDI.
4. The EMAAR Group from Dubai has plans to
set up more than 100 hospitals in India.
Emerging Opportunities and
Issues
The increase in opportunities for
investment have opened new doors for
private investment but have also
introduced new themes, avenues and
challenges for the private sector with
implications for national health needs
and welfare. There is an expansion to
abundant opportunities for private
investors across different aspects of the
sector. For instance, the need for
doctors and other medical staff means
an urgent need for increase in the
number of medical colleges. Training
and development of capacities and
environments for nurses and medical
technicians are also required in light of
the advanced changes in medical
technology and the import of capital-
intensive health care in recent times.
Some of these issues are discussed here.
Medical Infrastructure: Medical
infrastructure is a key area for private
sector interest and investment. The
current gap in demand and supply in
health infrastructure in India makes this
a needed as well as lucrative area of
investment. The availability of beds in
India is less than one-third of the world
average. China, Korea and Thailand have
a bed to person ratio of 4.3 per 1000
people whereas in India this is 1.03.
While the number of persons reporting
ailments per 1000 population has grown
5. Institutions such as Harvard Medical
International and the Cleveland Clinic have
entered the country through joint ventures.
6. The Parkway Group from Singapore and
Prexeus Health Partners from the US have
announced plans of proposed investments in
medical equipment manufacturing through joint
ventures or wholly owned subsidiaries.

by 66%, the total number of beds has
gone up by only 5.1%. To try and bridge
this gap, it is estimated that almost one
million beds will be added to the
healthcare system by 2012 and 896,000
of these are expected to be in the
private sector. A report by Ersnt and
Young22
on the comparisons between
India and China showed that to reach
even half of China’s current beds per
1000 population over the next 10 years,
India would need an additional 920,000
beds entailing an investment of
between 32 billion dollars and 49.1
billion dollars.22,23
The government provides many
incentives to the private health system.
In the Indian legal framework and the
SEZ Act 2005, healthcare is defined as
an approved service like any other
economic service. Governments have
set up incentives such as rewarding
setting up of hospitals in Tier II and III
cities with a 5-year tax holiday. India
also sees the development of 15-20
Health Cities – meaning setting up
regional networks for health care
provision, but which would be mostly
confined to peri-urban areas.
Some of the major proposed and
newly established hospital projects
are:

Dr Naresh Trehan’s Medicity,
Gurgaon (Rs 1,200 crore- 1,600
beds)

Apollo Health City, Hyderabad
(Rs 1,000 crore- 500 beds);

Fortis Medicity, Gurgaon (Rs
1,200 crore- 600to 800 beds);

Fortis Medicity, Lucknow (Rs
500 crore to Rs 800 crore-800
beds);

Health City, Bangalore (Rs
2000 crore -5000 beds);

Bengal Health City project
spread over 800 acres about
20 kilometres from Kolkata
However, the lack of regulatory
mechanisms implies accountability
issues. The quality of health care
provided in these hospitals and
awareness of rights and processes of
redressal and other institutional
relationships remain weak links.
Further, the accessibility question
remains unaddressed with the cost-
burden persisting.
Medical Tourism: One of the most
talked about development in Indian
health care has been its potential in
attracting a global clientele. Medical
tourism has two sides – one of the
availability of health care in India at
lower relative costs compared to global
prices, and second being its emergence
as a global healing market.
Medical tourism is predicted to become
a US$ 2 billion-a-year business
opportunity by 2012. With the
proliferation of corporate multi-
specialty hospitals offering ‘world class’
healthcare at a major comparative cost
advantage, India is seeing a surge of
patients from developed countries as
well as from countries in Africa, and
West & South Asia. According to
industry estimates, the medical tourism
market in India was valued at over $310
million in 2005-06 with 1 million foreign
medical tourists visiting the country

every year. Medical tourism is growing
by 30% every year and patients from 55
different countries have been coming to
India for treatment. Some of the major
treatment areas sought by medical
tourists include cardiology, cosmetic
and orthopaedic surgery, dentistry, eye
care and preventive health checks, hip
replacements, organ transplants,
cosmetic, dental surgery and vision
correction.
The Indian private health care system
has also gained validations through
international accreditations. Corporate
hospitals, akin to luxury hotels, have
managed to allay concerns about quality
of medical care in developing countries
by seeking international and national
accreditations which have helped them
in getting approval from foreign
insurance firms, some of whom now pay
for their clients to have treatments in
India. For example, US-based private
health insurers Blue Cross and Blue
Shield and British health insurer Bupa
now insure clients treated at a number
of private hospitals in India.
The corporate hospitals offer treatment
packages to international clientele,
which include facilities like visas, flights,
treatment, hotels, and often a post-
operative vacation. For instance the
Apollo Group of hospitals runs an
international patients department,
offering assistance to patients from the
time they land in India to the time they
depart. Similarly, the Escorts Hospital in
Delhi (now part of the Fortis Group) has
an “in-house hospitality department
that provides all pre and post-treatment
assistance, including receiving patients
at the airport, arranging
accommodation and travel packages to
various tourist destinations in the
country”.
Since medical tourism offers
tremendous potential in bringing in
major foreign revenues into India, it is
being increasingly supported and
endorsed by the Indian government and
its policies in the sector. The
Government propounds that medical
tourism will eventually strengthen
general healthcare in the country.
However, critics have shown that
despite encouragement by the
government in the form of subsidies and
tax concessions to hospitals providing
care to foreign patients, the extra
revenue from medical tourism in the
hospitals is not in any way trickling
down to support public health of the
masses in India. In fact, they contend,
“the price advantage of the medical
tourism industry is paid for by Indian tax
payers who receive nothing in return”.
The challenges of equity and social
responsibility that are brought in by this
issue are yet to be tackled.
Health Insurance: Health care in India
continues to be largely financed through
out-of –pocket expenditure by the
households. Currently, only 10% of the
Indian population has health insurance.2
This includes mainly public social health
insurance schemes such as the
Employees State Insurance Scheme
(ESIS) for industrial workers, the Central
2
http://www.siliconindia.com/shownews/Only_
17_percent_insured_Indians_get_medical_reim
bursement-nid-41749.html

Government Health Scheme (CGHS) for
employees and pensioners of the
Central Government and the Ex
Servicemen Contributory Health
Scheme (ECSH) for former armed forces
personnel apart from private voluntary
health insurance schemes.
The business of health insurance has
gained and grown tremendously since
the 1990s. The Indian health insurance
enterprises have been growing at 50%,
most of which is accounted for by
private non-life insurance companies.
More than 12 million people are
covered by health plans today, which is
a huge increase from 4-5 million who
were covered 6 years ago. The health
insurance sector is projected to be
worth US$ 5.75 billion by 2010. It is
estimated that one-fifth of India's
population is likely to have medical
insurance by 2015, leading to a
substantial estimated increase in
consumer spending on healthcare.
The government has also provided
support to encourage the growth of the
private health insurance sector,
increasing the FDI limit from 26% to
51%. International insurance companies
such as Iffco Tokio, Miliman and Chubb
have entered into partnership with
Indian players already, and others
including Aetna, Brooke Shield and Blue
Cross have been on the look-out for
potential partners as well.
Medical equipment: The rise of
corporate health care has given
tremendous impetus to medical
infrastructure and equipment
enterprises, including the trade of
medical technology. The medical
equipment market is increasingly
being considered promising due to the
general growth and proliferation of
high-end hospitals creating an
increasing demand for high tech
equipment. The medical infrastructure
and equipment segment was valued at
US$ 2.17 billion in 2006 and is
estimated to grow to $5 billion by
2012. Domestic production of medical
equipment mainly comprises of low-
tech devices and almost 90% of the
demand for higher technology
products is being met by imports from
countries like USA, Japan and
Germany. This translates into
significant opportunities for foreign
companies to set up manufacturing
bases in India.
Several international medical device
companies have recognised this
opportunity and have been seeking
investment to set up local bases in
India. For instance, the Israel-based
US$ 2 billion Europe-Israel Group of
companies has been looking into
setting up a US$ 222.2 million medical
equipment factory in West Bengal.
Steris, a US$ 1.1 billion healthcare
equipment company has plans to set
up a wholly-owned arm in India to sell
its devices and products and also to
provide servicing of medical, surgical
and other sterilisation products.
Telemedicine: The growth of
technology in healthcare together
with innovative ideas has led to
thinking regarding the use of
telemedicine technology to address
the Indian health care needs
especially for those living in
inaccessible areas. 73% of the

population in India lives in rural areas
but 80% of the medical facilities are in
urban areas. Only 25% of medical
specialists reside in semi urban areas
and a paltry 3% in rural areas. This
skewed distribution means that access
to any proper healthcare for those
living in remote rural areas is virtually
impossible. Telemedicine is said to
potentially increase patient base and
productivity as well as enable cost
effective delivery of medical services
to remote patients. Investment
opportunities therefore exist for
setting up telemedicine centres within
hospitals and creating networks of
hospitals and clinics in different parts
of the country.
The growing use of telemedicine is a
recent development in healthcare in
India. Telemedicine can be categorised
as synchronous and asynchronous.
Synchronous telemedicine refers to the
presence of two medical professionals
at either end of a ‘tele’ link allowing
real-time interaction to take place,
while asynchronous telemedicine does
not require medical professionals to be
simultaneously present. The latter
involves acquiring and storing medical
data such as x-rays, pathology slides or
ECGs, which can be viewed by
specialists at the other end offline at a
time convenient to the latter.
In 2001, a pilot project was launched by
the Indian Space Research Organization
(ISRO) which linked 78 hospitals in
remote areas to super specialty
hospitals in the cities. The Apollo
Hospitals Group established India’s first
formal telemedicine centre in a village
in Andhra Pradesh, linking it to its
hospital in Chennai. The group has also
created a telemedicine link between IP
Apollo Hospital in Delhi and Apollo
Information Centre, Lahore. The Asian
Heart Institute (AHI) is planning to
establish 60 telemedicine satellite
centres across the interiors of
Maharashtra and plans to expand its
telemedicine operations across the
country. In addition, Escorts Hospital
(part of the Fortis Group), Wockhardt
Hospital & Heart Institute and Max
Healthcare are other private players
providing telemedicine services.
While these initiatives may be looked
at through the lens of these large
hospitals reaching out to the rural
areas, the bigger question revolves
around the hospitals focusing on
tertiary care and trying to do lip-
service through measures like
telemedicine, whose reach remains a
question. Also, telemedicine requires
certain local initiatives in the
inaccessible areas that wish to be
connected to the nodal points in the
cities, which may not exist or may be
fostered. It is also questionable
whether telemedicine will emerge as a
strategy to draw new clientele for
these hospitals, as referrals may be
misused in order to reach out to new
catchment areas by these hospital
enterprises.
Pathology Services: Pathology services
currently account for almost 2.5% of the
overall healthcare delivery market. In
developed nations like the US there is
currently a $500 million domestic
pathology industry which has been
growing over the last five years at an
estimated Compound Annual Growth

Rate (CAGR) of 20% per annum. In
India, the laboratory testing market is
largely serviced by smaller unorganised
practitioners and hospitals. There are
40,000 independent pathology
laboratories in the country and the
industry is highly competitive.
Some of the private companies have
grown and are beginning to develop
national networks. These include Dr.
Lal’s Pathlabs, Metropolis, SRL Ranbaxy,
Thyrocare, and Nicholas Piramal. Large
and better-known path labs are
expanding regionally also exploring
international markets. For instance, SRL
Ranbaxy has 17 labs and 550 collection
centres distributed in 350 towns across
the country. It is now looking at both
franchisees and acquisitions in all the
major cities of the country. Metropolis
Health Services which currently has 13
labs, has plans to open 9 more - is also
expanding its collection centres and
franchisee systems. Some national
players have been successful in
attracting the interest of foreign
investors. For instance, WestBridge
Capital Partners has acquired 26% stake
in Dr. Lal’s Pathlabs for US$ 9.7 million.
Outsourcing is another aspect which is
increasingly being linked to the private
health care system, particularly to
diagnostics. Outsourcing of pathology
and laboratory tests by foreign hospital
chains to Indian enterprises is fast
becoming a viable business due to the
advantageous cost advantage in India.
Examples include those of the Chennai-
based Metropolis Labs which has
partnered with a US-based consortium
to bid for outsourced pathology work
from the National Health Services (NHS)
of the UK. Another such venture is the
tie-up between a large UK hospital and
SRL Ranbaxy who will handle their
diagnostic analysis in India.
Understanding some debates and
challenges
The growth of the private health care
sector has brought forth many
challenges for the health system in
India as a whole. These include
challenges related to regulatory,
infrastructural and human resource
constraints. Some of these are
discussed below:
a. Staff shortages: India’s
healthcare system suffers from a severe
shortage of human resources. In a
report by Ernst & Young22
, it is
estimated that to match China’s levels
of physician availability (1.1 per 1000
populations) over the next 10 years, an
additional 818000 physicians would be
needed.22,23
The shortage in medical
staff extend to doctors and nurses but
also to dentists, paramedics, front and
back end support staff, managers and
hospital administrators. In addition the
quality and standards of the available
pool of human resources are
questionable due to high variability in
training across institutions. Government
hospitals are also hit by high rates of
attrition and poaching of trained quality
staff, and demand is constantly seen to
outweigh the supply of health staff.
The scarcity of human resources in
healthcare is further compounded by
government regulations that limit
setting up of medical colleges due to
scarcity of resources as well as the need

to ensure a certain quality of training.
Recent debates in medical education
have seen the demand for the opening
of medical education to private
organisations who should be made
partners in education, and that the
hospitals should be linked with the drive
to create more health manpower. The
ability for non-profit actors to create
more medical schools in India is limited
by their financial and capital constraints.
However, these recommendations for
opening of medical education to private
enterprise may come at some costs in
the long term. The high costs of medical
education in private colleges may lead
to the tendency of doctors to prefer
service in the private sector given the
likelihood of higher consultancy fees.
This may lead to further
commercialisation of the medical
sector.
b. Foreign Direct Investment (FDI):
In the previous two decades, the
regulatory environment has become
liberal allowing up to 100% FDI in
hospitals. Despite this, the FDI amount
is not expected to be very large with
investments remaining small - below
US$ 1 million. NRI investors are said to
constitute a large proportion of FDI
investment with the main countries
which contribute to this being the US,
UAE, Singapore, UK, Mauritius, Australia
and Canada.
Large FDI of US$100 million or more
would only be possible from large
chains and corporate hospitals which
are unlikely to enter until profits and
returns are ensured, the markets
remain friendly and unregulated. They
would also look for major players within
India as vital entry points who are well-
versed with local market knowledge and
understanding of strategic points.
c. Lack of Regulatory Controls: The
lack of regulatory framework is an
aspect that encourages privatisation
through provision of an unregulated
environment for the functioning of the
private organisations. Critics argue that
this is creating unintended and
disastrous consequences for the overall
healthcare system. “Growing costs of
private healthcare, widening equity and
access problems and concerns about
quality of care are emerging as major
issues and are set to threaten the basic
fabric of the healthcare system in
India”.3
With the exception of Delhi,
Maharashtra and Karnataka there are
no mandatory standards prescribed and
enforced for hospitals, nursing homes,
clinics or establishments undertaking
diagnosis or treatment of disease. This
implies lack of any regulations in terms
of staff qualifications, costs of
treatment or ensuring minimum
standards on quality of care.
The lack of regulation has also allowed
undesirable practices such as over-
prescribing of drugs and diagnostic tests
as well as suggesting unnecessary
treatments leading to spiralling
healthcare costs. Various types of
malpractices can be seen – such as a
percentage fee during referral.
Individual doctors have also got into
3
Characteristics of Private Medical Practice in
India: A Provider Perspective, p. 33. Ramesh
Bhatt, Indian Institute of Management,
Ahmedabad. Health, Policy and Planning, 14 (1),
26-37. OUP 1999.

agreements with specific drug
companies to endorse and prescribe
their products. It has also been
suggested that the influx of high-tech
diagnostic equipment has had an
adverse affect on care provided to
patients with doctors spending less time
on clinical diagnosis and in consultation
with each patient.
The legitimacy of medical councils has
been questioned as according to
reports, “registers are not updated,
elections to the council are rigged, the
trails are held in camera, and in many
state(s) medical councils action has not
been taken against a single doctor in
spite of complaints.”4
This lack of
enforcement of standards is a critical
point. A study found that less than 50%
of doctors surveyed were aware of the
main objectives of the few acts that do
legislate the sector. Although they did
indicate a high level of awareness about
the Indian Medical Council Act and the
Consumer Protection Act, it is clear that
even where directly relevant legislation
exists, implementation of these laws is
critically lacking.
d. Public Private Partnerships:
Public private partnerships are an
important development that implies
shared responsibility between the
government and the corporate partner.
“Although inequitable, expensive, over-
indulgent in clinical procedures and
without quality standards or public
disclosure of practices, the private
sector is perceived to be easily
accessible, better managed and more
4
“Unhealthy Prescriptions: The Need for Health
Sector Reform in India” Sunil Nandraj, Cehat.
efficient than its public counterpart. It is
assumed that collaboration with the
private sector in the form of
Public/Private Partnership would
improve equity, efficiency,
accountability, quality and accessibility
of the entire health system.”90
In the corporate for-profit sector, a
model of PPPs shows that the
government and the private partner
work together within the same facility
(such as the Fortis Hospital at Raipur).
Another model that has worked well has
been where the government has
provided the infrastructure but the
hospital group provides the operational
input. For instance, the Rajiv Gandhi
Super-Speciality hospital in Raichur,
Karnataka was built at a cost of Rs 600
million but since the government was
unable either to deploy or retain
specialist doctors, and hence the
hospital was lying unused. Apollo
Hospitals Ltd, a corporate hospital
chain, which was seeking to establish its
own hospitals in the region engaged
with it through this PPP. Through this
initiative, a private hospital group like
the Apollo was able to establish its
business operations without having to
invest in physical infrastructure.
Government incentive schemes such as
land concessions or subsidized land at a
nominal fee of 1 rupee/acre are also a
mode of PPPs. Regulations and
conditions attached to concessional
land include providing free treatment
for below poverty line (BPL) groups and
indigent patients. Given the gains of
valuable land at a fraction of its cost,
this pre-condition becomes a small price
to pay. There has been a fair amount of

controversy over this practice,
especially highlighting that hospitals
often do not kept their side of the
bargain. A recent report submitted to
the government found that only 3
private hospitals out of the 26 in the
capital city that had been land
beneficiaries complied with the lease
agreement and provided free treatment
to poor patients.90
. In response to a
Public Interest Litigation (PIL) filed on
this issue, the Delhi High Court ruled last
year that all private hospitals that had
been granted public land at cheaper
rates would need to comply with
regulations and provide free treatment
to poor patients. They further stated
that all treatment had to be free for
these patients including “admission,
bed, medication, treatment, surgery
facility, nursing facility and consumables
and non-consumables.48
Understanding the challenges:
This study tries to understand the
direction of the growth of private
healthcare system and its implications
as a large employer as well as a major
provider of health care services in India.
The rise and growth of private health
care in a fast globalizing world is
inevitable and irreversible. However,
the decline in government’s sense of
responsibility for the citizens’ healthcare
needs to be reversed; and private
healthcare needs to be reined in for the
public good that it is. It is critical for
activists, researchers and development
practitioners to ensure that India’s
government, through public investment
and through regulated private
partnerships, reverses the current
dangerous trends and puts in place a
healthcare system for the majority of
Indians.

Chapter Four
Changing Role of the State in Health care in India:
Relationship between the State and Private Capital
Overview
Since 1990s, the discourse in health
policy has been dominated by
discussions on the changing dynamics of
private health care in India and its
interaction with the state, together with
role of the state in health care
provision. Private health care has been
booming in India’s growing economy
and health care (service delivery,
insurance and other demand side
mechanisms, and ancillary products and
services) among other sectors has been
increasingly brought under the ‘invisible
hand’. Data from the National Sample
Survey (NSS) in 2008 showed that over
60% of the cases of hospitalization were
being attended to by private health care
providers. Sengupta and Nundy81
show
that 82% of health care is paid through
personal funds81
. Health care provision
by the private sector has increased from
5-10% of total patient care in 1947 to
about 82% of outpatient visits.81
The rise in influence of the private
sector in health is accompanied by a
decline in the role played by
government in health care. The Indian
government has actively encouraged
privatization and liberalization in
health care, introducing 100% FDI in
the health sector. This has led to
robust corporate sector growth in
health care provision supplemented by
multifaceted growth in areas like
health insurance, medical tourism and
telemedicine. On the other hand, the
government has paid little or no
attention to a crumbling public health
care system, which has seen little
impetus or investment. Neglect in
areas of medical personnel, medical
equipments, patient care and referral
systems – have all led to a weak public
health system – that drives
populations into the hands of private
health providers. This growth and
diversification of private health care in
the past two decades has had
implications for both urban and rural
health care, and hence for health
inequalities.
Frameworks of healthcare
With the opening of the Indian
economy to private capital, healthcare
in the private sector has experienced
tremendous growth. This growth is
instantly visible through data on
different areas of patient care. The
government’s decision to open the
healthcare sector has led to the
growth of ancillary sectors like
pharmaceuticals, medical technology
and equipment, health insurance and
medical tourism.
The Indian government has been
aware and encouraging the growth of
the private sector. The Planning
Commission32
stated that “with no
regulatory impediments on the
expansion of private healthcare the

expectation is for sizeable investment
by private players in the sector in the
next few years. A FICCI/Ernst &
Young23,24
study projected that of the
1 million beds that are likely to be
added in the country up to 2012, as
many as 896,000 will be added by the
private sector”.
While the Indian government has
neglected the fearful implications of
this unchecked and unlimited
privatization, and resultant
corporatisation of the sector, sharp
criticism of this sector has emerged
from the civic and political groups
active in development areas29
. Even
the World Bank91
has cautioned the
Indian government and policy
makers against allowing an
unregulated private sector, coupled
with an existing regulatory framework
that is weak and ineffective.
Muralidharan and Nandraj66
stated
that “where laws do exist, they are
inadequate and are not being
enforced. The current laws do not
provide a framework to ensure that
private providers are maintaining
minimum standards. Furthermore, no
laws regulate the geographical
distribution of providers, the types of
technology to be made available, the
way charges are levied, or the prices
themselves”.
A big concern has been regarding the
lack of any centralized mechanism in
the nation to check and monitor the
rise and workings of the private health
care sector, especially since the
government also plays a crucial role in
delivering health care services. There
has been a call for new legislative and
administrative initiatives to evolve
regulatory mechanisms at par with
global models/standards through the
processes of accreditation and
licensing. This new focus has emerged
due to a strong consumer lobby that
stresses on ensuring good quality of
services. However, the rising
preoccupation with quality in health
care has emerged due to the
educated, upwardly mobile and high-
end users of healthcare and has been
missing in the health care access by
the common masses.
This chapter focuses on the existing
and growing legal frameworks in India,
that would affect the changing
dynamics of private health care. These
are elaborated in the sections below.
Rules and regulations in the post
independence period
The Constitution of India does not
explicitly state health as a
fundamental right of the people. But it
vests with the state governments, the
responsibility of providing health care
to people. Hence, constitutional
obligations have been applied for the
government structures which are
directly involved in the delivery of
public health care and its practice.
The operations of private health care
providers have existed for a while, and
it is only in recent times that they have
started playing larger roles. Despite
their rise, they have remained outside
the purview of formal legislative
systems and public discourses. The
absence of a centralized regulatory
environment has meant that private

actors have escaped any legal or
punitive measures. In India, very few
states have enacted specific laws to
deal exclusively with issues of
registration and licensing in private
hospitals. However, the standards
across states remain non-uniform
bringing in problems in building a
comparative argument.30,67,91
The government has created elaborate
organizational structures at the
national, state and local levels for
managing health care in the country.
The Ministry of Health and Family
Welfare (MoHFW) has administrative
and technical wings that comprise civil
service officers (in the first wing) and
doctors (in the second wing) at the
national level. The Secretary - Health
heads the former and Director General
– Health Services heads the latter;
both of them report to the Health
Minister. The Department of Family
Welfare looks after various
programmes in the Ministry which run
under the control of the Secretary
assisted by Additional, Joint, Deputy
and Under Secretaries. The Director is
in charge of the technical wing with
the support of Additional, Joint,
Deputy and Assistant Directors. Similar
administrative structures are more or
less followed at the state levels as
well. At the district level, the District
Medical Superintendent is in charge of
the District Hospital and the Chief
Medical Officer or District Health
Officer undertakes non–hospital
functions. Local governments in the
municipal and corporation areas also
have hierarchical administrative
structures of their own.
Legal framework for licensing of
practice
In India, as of now, there are 13 state
governments that have enacted laws
pertaining to registration and
licensing of clinical establishments
and nursing homes. States like Delhi,
Maharashtra and Tamil Nadu have
enacted specific laws on registration
and licensing; in other states, where
specific acts do not exist, registration
is provided under the Shops and
Establishments Act or the Societies
Act. Important legislation in this
regard includes The Bombay Nursing
Homes Registration Act (1949); Delhi
Nursing Homes Registration Act
(1953) and Tamil Nadu Private
Clinical Establishments Act (1997).
Uniform standards are not followed
pertaining to these laws. Apart from
these laws, statutory procedures
exist through Boards, Trusts and
Societies in order to fulfill standard
requirements regarding laws of the
state. Hospitals are to seek clearance
from a number of other government
agencies not directly linked to
healthcare that include agencies like
the Municipal Corporations, Pollution
Control Boards, Housing and
Sanitation departments, Industry
Dept, etc. in order to fulfill all
obligations.
As per rules, licenses are provided by
the different agencies for
establishment of a hospital and its
renewal after proper investigation.
Authorities have to be convinced
regarding the fulfillment of standards
and requirements prescribed by the
Clinical Establishment/Nursing Home

Acts. It is also acknowledged
statutorily that running any clinical
establishment without proper
licensing and renewals is a criminal
offence on the part of the owner.
Breach of any provision in the
licensing and registration laws is also
subject to punishment for the owner
of the establishment.
Legislations regarding safety of
workers
A number of Acts exist which try to
ensure the safety of workers, at the
risk of exposure to various
radioactive radiations emitted
from x-ray machines and other
medical equipments, exposure to
anaesthesia, bio-medical waste
handling and exposure to various
communicable diseases. Hospital
waste-disposal is a serious threat to
the hospital employees as well as the
general populations if not treated
properly before disposal.
Acts like the Atomic Energy Act
(1962), the Radiation Surveillance
Protection Rules (1971) and the Bio-
Medical Waste (Management &
Handling) Rules (1998) are important
in this regard. These acts have also
been amended over time. The
Atomic Energy Act (1962) has been
amended thrice and ensures safe
disposal of radioactive wastes and
secure public safety of persons
handling radioactive substances.
Private clinics and hospitals where
radioactive wastes or substances are
managed need to be registered
under this Act. The Government of
India has the power to enforce and
make laws regarding this issue.28
The other laws pertain to safety of
people and personnel within and
outside the hospital and are also
mandatory for the owner of the
hospitals. In 2004, a rule was
brought in by the Department of
Atomic Energy (Mumbai) regarding
the above-mentioned Acts and Rules
called the Atomic Energy (Radiation
Protection) Rules (2004). These rules
emphasise on safety responsibility of
the employers and insist that licenses
be only issued after proper
examination of the mechanisms for
surveillance, safety codes and
standard measures for the safety.
The government also brought in a
safety code in 2001 called the Safety
Code for Medical Diagnostic X-Ray
Equipment & Installation (AERBS No.
AERB/SC/MED-2 (Rev-1)) dated
October 5, 2001. This has a number
of clauses that regulate the ill-effects
of radioactive rays on workers
including constituting research teams
to visit the clinical establishments.
However, in the absence of proper
assessment reports by authorities
regarding the amount of harm due to
x-rays, gamma rays and ultraviolet
rays, these measures have not been
proved empirically significant.
Legislation on environmental
protection
The Ministry of Environment and
Forests (Government of India) brought
in the Bio-medical Waste
(Management & Handling) Rules 1998

in order to set procedures for hospital
waste management under health care
institutions under the Environment
(Protection) Act (1986). All hospitals
and clinical establishments are to be
registered under this rule to be
enforced by all state governments.
According to this rule, each state has
to constitute a regulatory authority at
the local level to control hospital
waste management. The Central
Pollution Control Board (CPCB) is a
statutory organization that was
constituted in 1974 at the national
level for guidance and suggestions on
the pollution problem.
Several cases of violation have been
reported from across the country.
According to a study conducted by the
National Environmental Engineering
Research Institute (Nagpur), about
0.33 million tonnes of hospital wastes
are generated in India annually. The
study found that these wastes were
collected in a mixed form, transported
and disposed off along with municipal
solid wastes19
. Another study
conducted in Mumbai revealed that
private hospitals were bigger
offenders than civic and government
hospitals54
. It is reported that, “the
‘green’ record of healthcare providers
in Delhi has turned out to be not so
healthy. Of the 1,720 healthcare units
in Delhi, only 1,261 had applied for
authorisation from the Delhi Pollution
Control Committee (DPCC), even as 10
tonnes of bio-medical waste is
generated on a daily basis”50
. Another
survey conducted by the Central
Pollution Control Board (CPCB) has
revealed serious discrepancies in the
waste management practices followed
by hospitals in Delhi. 11
Legislations to curb malpractices
Legislative frameworks have enacted
rules to curb malpractices of health
care organisations. These preventive
legislations include the Pre-Natal
Diagnostic Techniques (Regulation and
Prevention of Misuse) Act - PNDT
(1994), and. Transplantation of Human
Organ Act -THOA (1994). The
government brought in the PNDT Act
in 1994 to check medical malpractices
like female foeticide and illegal
abortions. The number of abortion
cases was seen to have increased
exponentially with the introduction of
medical technology that could also
identify the sex of the foetus, which
was seen to impact sex ratios in
Punjab, Haryana, Rajasthan,
Chattisgarh, Maharastra and Delhi.
According to this Act, medical
practitioners are legally bound to
report cases of sex determination and
medical malpractices, keeping records
of ultrasound tests or pre-natal tests.
The government of India brought in
the Transplantation of Human Organ
Act in 1994 (THOA) and guideline rules
thereafter in 1995 in order to prevent
illegal transplants of human organs.
According to this law, transplants of
human organs would be allowed only
for therapeutic purposes and any new
donations by close relatives of the
recipient or the donor on humane
grounds would have to be approved by
the authorisation committee
constituted by the state. This law
prohibits sale of any human organ on
payment of money and it is mandatory

for private hospital/clinics to register
themselves for any transplant-related
services offered.
The human organ racket is a major
crime racket reported nationally as
well as internationally including
infamous organ transplant examples
such as kidney transplant rackets in
Chennai, Kerala and Gurgaon. Private
hospitals and practitioners have been
involved in this inhuman trade and
prosecution among violators has been
weak with involvement of even the
police. Poor and vulnerable
populations - migrant labourers or
victims of disasters are often easy
target of this inhuman trade. Medical
councils and organisations have been
criticised for not being active in
checking this growth. In this context,
the government of India amended the
Bill and called the new law the
“Transplanting of Human Organ
(Amendment) Rules 2008. It
authorizes a committee at the national
level under certain guidelines
prepared by the Ministry of Health to
monitor the required facilities of
hospitals. No hospitals will be granted
certificates of registration under THOA
unless they fulfil requirements of
manpower, equipments, specialized
services, and facilities.
Major legislations discussed in the
chapter related to the private health
providers have been highlighted in
table 4.1. Barring the rules directed
towards registration and licensing of
the hospitals, other rules have not
been made exclusively for private
players. Major labour laws applicable
to private hospitals and clinical
establishments include the Contract
Labour (Regulation and Abolition) Act,
1970; the Employee’s Provident Funds
and Miscellaneous Provision Act, 1952;
the Employee State Insurance Act,
1948 and the Minimum Wage Act,
1948 28
. The passing of the Consumer
Protection Act (1986), also applicable
to health care services, empowers the
consumers to question and challenge
the quality of services received though
patients showing low levels of
awareness and use of law.64

Prescription for an Unhealthy India Private Corporate Healthcare and Its Empty Promises

Prescription for an Unhealthy India Private Corporate Healthcare and Its Empty Promises

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