To promote expansion of the not-for-profit hospital sector to provide quality healthcare to the masses, the Union government should consider doubling the exemption to 100% for donations (Section 80G) and income tax exemption for membership fees paid at Cooperative Trust Hospitals, a Niti Aayog report has suggested.
“This (exemption to donations) could be a catalyst in channelizing the much-needed funds to deserving hospitals,” the report noted.
To enable higher membership at Cooperative Trust Hospitals, enabling them to achieve their goal of self-sufficiency in healthcare through self-participation, income-tax exemption can be given for membership fees paid at Cooperative Trust Hospitals, it said.
According to the study by the government think-tank, the cumulative cost of care at not-for-profit hospitals is lesser than for-profit hospitals by about one-fourth in the in-patient department. This is reckoned by the package component of cost, which is approximately 20% lower, the doctor’s or surgeon’s charges, which are approximately 36% lower and the major aspect being the bed charges, which are approximately 44% lower than the for-profit hospitals.
Similarly, the cumulative cost of OPD care in not-for-profit hospitals is about one-third lesser than private for-profit hospitals. The NSS 75th round data revealed that the not-for-profit hospitals provide medicines to patients at about 26% lesser than the for-profit hospitals, while the doctors’ fees are approximately 18% lower in not-for-profit hospitals.
However, most of the not-for-profit hospitals reported long-pending reimbursements for the treatments of government scheme beneficiaries such as the Central Government Health Scheme (CGHS), which remain uncleared despite persistent follow-ups. “The timely release of these funds can be a substantial boost to their working capital for operations,” it said.
The government can consider the provision of working capital loans with lower interest rates, which would be more financially viable for the not-for-profit hospitals and would assist in adequate cash flows during times of need, it suggested.
The Union government’s announcement on Monday to provide Rs 50,000 crore credit guarantee could be of immense help for the not-for-profit hospitals. Under the scheme, interest rate on the loans to be provided by financial institutions will be capped at 7.95% compared with market rate of 10-11%/annum.