Governance
Not-for-Profit Hospital Model Study: NITI Aayog
- 30 Jun 2021
- 5 min read
Why in News
Recently, the NITI Aayog released a comprehensive study on the Not-for-Profit Hospital Model in the country.
- It is an initiative in a step towards closing the information gap on such institutions and facilitating robust policymaking in this area.
NITI Aayog
- It is a public policy think tank of the Government of India, established with the aim to achieve sustainable development goals with cooperative federalism by fostering the involvement of State Governments of India in the economic policy-making process using a bottom-up approach.
- It was established to replace the Planning Commission. The Prime Minister is its ex-officio chairman.
Key Points
- Major Findings:
- Low Charge:
- Most of the not-for-profit hospitals charge lower than the for profit hospitals.
- Prices of Rural Community Based Hospitals are lower, while Rural Cooperative Hospital prices are comparable with government hospital rates.
- Empanelment:
- Most of the Not-for-profit Hospitals are empaneled with State or Central Government Healthcare schemes.
- Expenditure:
- The not-for-profit hospitals use various levers to facilitate their low cost of clinical care and reduced operational expenditure.
- Following levers are used - multitasking of workforce, In-house manufacturing of equipment, such as beds, dental chairs, etc.
- Not for profit Hospitals have lower operating costs as compared to For-Profit Hospitals.
- The not-for-profit hospitals use various levers to facilitate their low cost of clinical care and reduced operational expenditure.
- Quality:
- There is a strong focus on quality care across all categories of not-for-profit hospitals, as most of them had some form of accreditation for their services.
- Low Charge:
- Challenges:
- Recruitment:
- Most of the hospitals find it difficult to recruit and retain doctors and staff.
- Reimbursements:
- Delayed reimbursements and long-pending amounts, despite their persistence, causing strain in their cash flows, and in turn, burdening their operations.
- Funding:
- Many of these hospitals are dependent on external funding in the form of philanthropy and grants for capital expenditure components, such as infrastructural expansion, purchase of new technology, and advanced equipment.
- Compliance burden:
- Some of the hospitals, especially those in remote areas, reported challenges because of the high compliance burden of staffing requirements of the Regulations for running a blood bank 1999, Clinical Establishments Act 2010, Pre-Conception and Pre-natal Diagnostic Techniques (PCPNDT) 1994, and Quality standards.
- Recruitment:
- Suggestions:
- Policy Interventions:
- Short- and long-term policy interventions—such as developing criteria to identify these hospitals, ranking them through a performance index.
- Tax Exemptions:
- To promote these hospitals, the government should increase the tax exemption for donations and membership fees of these hospitals.
- Using their Expertise:
- Promoting top hospitals for practising philanthropy, among others. It also highlights the need to use the expertise of these hospitals in managing human resources with limited finance in remote areas.
- Policy Interventions:
Not-for-Profit Hospital
- About:
- Private hospitals are largely divided into for-profit hospitals and not-for-profit hospitals.
- Cumulative cost of care at not-for-profit hospitals is lesser than for-profit hospitals by about one-fourth in the in-patient department.
- For-profit hospitals account for 55.3% of in-patients, while not-for-profit hospitals account for only 2.7% of in-patients in the country.
- Not-for-profit does not make profits for its owners from the funds collected for patient services. The owners of these hospitals are often charitable organizations or non-profit corporations.
- The fees for service at these hospitals are generally lower than for-profit hospitals and the income from fees (above the cost of service) are reinvested in the hospital.
- These hospitals are a potential remedy to the challenges of unavailability and unaffordability of healthcare in India.
- Private hospitals are largely divided into for-profit hospitals and not-for-profit hospitals.
- Significance:
- The infrastructure, services, and charges of these hospitals are positioned to cater to the unreached and underprivileged population of the country.
- The not-for-profit hospital sector provides not only curative but also preventive healthcare.
- It links healthcare with social reform, community engagement, and education. It uses government resources and grants to provide cost-effective healthcare to people without being concerned about profits.
- However, over the years, this sector has remained understudied.
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