Why is Karnataka handing over a public hospital in Udupi to a UAE company for the next 60 years?

Public-private partnerships have failed to deliver healthcare in Karnataka over and again. What explains the state government's decision?

On August 24, the Karnataka cabinet approved handing over a government maternity and children’s hospital to a company in the UAE to develop into a larger multi-specialty hospital. The company BRS Ventures owned by Indian businessman BR Shetty will be allowed to construct a 200-bed maternity and children’s hospital, a 400-bed super-specialty hospital and an urban community health centre. The memorandum of understanding allows BRS Ventures to run the facilities for 60 years under a build-own-operate-transfer model.

It was only when Karnataka CM Siddaramaiah official twitter handle put out a tweet “A govt hospital in Udupi shall be handed over to Abu Dhabi-based entrepreneur BR Shetty to develop it into a multi-specialty hospital” that the proposed handover became public.

BR Shetty has several business interests, especially in health-related areas. He owns the London-listed NMC Health, UAE's largest private healthcare provider as well as a drug manufacturing company Neopharma. The Karnataka government has also awarded the contract to develop Jog Falls in Shimoga district to Shetty.

Caught between two wrong approaches

Philanthropy, real or disguised, has been the bane of democratization of healthcare. Citizens are caught today between the proverbial rock and hard place. Either they are reduced to the indignity of being recipients of dole and charity or they are expected to be “consumers” in the healthcare “market”. And often, the difference between the two is blurred.

Nowhere is the idea of healthcare citizenship in a democratic Constitutional paradigm articulated. The recent National Health Policy 2015 is a prescription for opening the floodgates of aggressive privatization that seeks to further fragment, weaken and destroy what remains of the public health system. The policy document is unabashed in its celebration of the “healthcare industry” while not even committing to increased allocation for the public health system.

The policy goes on to exhaustively list how it plans to support this industry – lower direct taxes, higher depreciation in medical equipment, income tax exemptions for 5 years for rural hospitals, custom duty exemptions for imported equipment, income tax exemption for health insurance, active engagement through publicly financed health insurance, preferential and subsidized allocation of land, subsidized education of medical personnel graduating from government institutions who work in the private sector and provision of 100% foreign direct investment. Studies have demonstrated that corporate or private sector recipients of such state largesse under public-private partnerships have shown scant respect for the “poor” and have violated memorandums of understanding with impunity with governments unwilling to rein them in.

Spectacular failures

Successive governments in Karnataka have been diligent flag-bearers of various forms of public-private partnerships in healthcare. The government initiated the Arogya Bandhu scheme in 2004 under which ‘C’ category primary health centres – those located in hard to reach areas, those with high levels of maternal and infant mortality rates, those that are more than 15 kilometres away from the highways, those with long-term staff vacancies­ – were handed over to NGOs and private medical colleges supposedly for improving quality and access to healthcare services. The government in January 2016 cancelled the scheme after its own evaluation found no difference in the functioning between the government-run and NGO-run primary health centres.

Similarly the Rajiv Gandhi Super Specialty hospital set up on a 73-acre campus with money donated by OPEC group of nations in Raichur town in Hyderabad Karnataka region was handed over to Apollo Hospital Enterprise Limited for a ten-year period from 2002 to 2011 with a one-time grant of Rs 950 lakhs. An evaluation in 2012 found stagnant utilization rates over the ten years. A mere 44% of beds were functional, there was a drop in bed occupancy from 85% to 58% and a measly 11.42% of beds were allotted to patients from the below poverty line group. The evaluation also found serious financial irregularities and mismanagement.

More shockingly, the proportion of below poverty line patients accessing care had plummeted from 94.7% to 21.4% for inpatient care and from 92.8% to 7.5% among outpatients event though they had been paying higher tariffs than the above poverty line patients.

This evaluation was an indictment of the profiteering interests, the exploitative nature of public-private partnership arrangements that push the most vulnerable to the brink and break down public health systems. While the government has taken back the Rajiv Gandhi Super Specialty hospital since then, the hospital continues to pay reel from the effects of the partnership. Recently the district and session court in Raichur ordered seizure of computer systems, photocopy machine, printers, standing fans, chairs and other materials for defaulting on payment of Rs 36.93 lakhs to a private company for laboratory equipments purchased in 2010 when the hospital was still under Apollo Hospital Enterprise Limited.

Fixing what isn’t broken

Despite evidence of the detrimental effects of this healthcare model the Karnataka government seems determined to pursue public-private partnerships. Further, the proposed handing over of the Udupi government hospital does not fit the government’s prescription for such an arrangement. It is not located in a “backward”, “remote” or “difficult to access” region of the state nor is it part of a poorly performing public health system.

Udupi district tops the state on maternal health indicators. In 2015-2016 the district reported only two maternal deaths. Two-thirds of its facilities are in the “good” and “above average” categories by the government’s own assessment. The fact that the government is keen to sell out a well-functioning, efficient government facility is an ominous sign. It is too naïve to believe that the potential of a government hospital on a 7-acre of prime land in a well-developed coastal town valued at around Rs 300 crores would not have attracted the attention of various business interests including medical tourism.

Predatory private and corporate business interests have captured policy making at the central and state level through unconstitutional parastatal bodies that function beyond democratic control of citizens and have compromised health sovereignty.

Local citizens groups in Udupi and progressive social movements across Karnataka have begun mobilizing and a steady political pressure is being built across the state against the proposed handover. The call to save the Udupi government maternal and children’s hospital should also be a call for all citizens to return to seeking care in government facilities, stake their democratic claim as legitimate owners of the public health system and foster its strengthening.

The authors are activists with the Karnataka Janaarogya Chaluvali, a people’s struggle for health rights in Karnataka.

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This article was produced on behalf of Abbott by the marketing team and not by the editorial staff.