Private firm milks profits at govt-run GT Hospital

Oct 08, 2011, 07:24 IST | Priyanka Vora

A CAG report says that the private-public partnership model allows the agency to mint money by operating an MRI machine, paying far less than it should to the hospital

A CAG report says that the private-public partnership model allows the agency to mint money by operating an MRI machine, paying far less than it should to the hospital
Even as the state Medical Education Department toys with the idea of using the public-private-partnership (PPP) model as a one-stop solution to upgradation of medical facilities in the state, an audit of the state-run GT Hospital in south Mumbai set in motion through a Right to Information (RTI) enquiry has revealed that the model doesn't safeguard the financial interest of the government.

The CAG report claims that the private firm used an MRI machine donated to the hospital free of cost for 9 months, and is still not paying rent for the plot of the hospital premises occupied, or for the electricity and water used.

The report has revealed that the agreement between the two
parties is more profitable for the private player

In tertiary government hospitals, patients have to wait for months together to get their MRIs or CT scans, which are often crucial in determining coutse of the patient's treatment.
To speed things up, the Oil and Natural Gas Corporation (ONGC) donated an MRI machine worth Rs 7 crore to GT hospital in 2009.

However, the CAG report has revealed that the instead of running it independently, the hospital entered into an agreement with the private firm, First Health Care Private Limited, allowing it to operate the machine within its premises.

Unevenly distributed profits
In their report, auditors say that outsourcing use of the machine to a private firm 'disregards the financial interest of the government'.
The auditors have also raised eyebrows at the fact that the private firm was allowed to use the machine free of cost, for the prolonged period of nine months, from March 2010 to January 2011.

Dr A P Chaudhari, medical superintendent of GT hospital, however, explained, "Though we received the machine in March 2010, some technical snags cropped up, as a result of which we decided to hand it over to the private firm on August 31, 2010.
The machine was officially handed over to them in October 2010, and this was followed by a three-month trial period, which ended in December 2010. Since then, the private firm has been paying us rent."

According to the agreement, the private firm was asked to perform at least 12 MRIs at the subsidised government hospital rates daily for Rs 1,800 each, after which they could offer the same services to private patients as well.
The agreement also stated that in lieu of using the machine, the private firm would be paying the hospital Rs 4,01,052 a month.

However the auditors have alleged that the 'the agreement was not reviewed jointly'.

The auditors expressed concern that the firm was only paying rent per month for the machine, but not paying additional charges for use of electricity and water, or the occupancy of hospital space, all of which was being borne by the government.

The report also points out the that the private agency paid the government Rs 28,10,514 for the period September-March 2011, which is far smaller than the sum of Rs 53,05,599 paid by the government for installation of the machine and electricity consumed by the machine. The private agency rather, earned Rs 43, 47,000 in the process.

'PPP model profitable'
Dr Chaudhari, however, insisted on the viability of the PPP model, saying, "We have been able to perform around 200 MRIs every month.

The hospital is not only earning revenue in the form of rent for the machine but also an additional Rs 1,800 per MRI.
If we try to develop a department, we will have to employ staffers and even pay them salaries, and our total expenditure would rise.

The PPP model is profitable for us. We have also received a CT scan machine from ONGC, which we will be handing over to a private firm soon."

Dr Viral Shah, promoter for First Health Care, said, "The PPP model is a win-win system for the government. In fact, it is we who have been incurring huge losses, as the CT scan machine is yet to be installed.

We had been told that both the machines would be functional together, and now we have to pay extra staffers.
While we charge Rs1,800 for patients of the government hospitals, we charge private patients a nominal fee of Rs 3,500, which is far less then what is charged at other private centres.

After we started operating, the waiting list for MRI scans at JJ hospital got shorter in just four days. At GT hospital, the waiting list cleared up in just a day.

The sum of Rs 4 lakh that we are paying includes rent for both machine and the occupancy of hospital space."

Rs 4 L
Rent paid for the MRI machine

Go to top