Tuesday, November 23, 2010

How do we address hospital corruption?

I recently came to know that it is not government offices or police stations that have the widest prevalence of corruption. That distinction surprisingly belongs to government hospitals, the larger referral centers. And unlike corruption in other establishments, this one is deeply entrenched and not easily resolved. Here is why.

The patient is normally greeted at the registration counter itself with attendants offering a swifter route to access the doctor in return for some "speed-money". And the ordeal continues till they approach the medicine issue counter, where a "fee" is demanded for provision of medicines. In between, the patient is forced to pay bribes at every location he/she visits for a diagnostic service - laboratory, X-ray center, dressing center, injection room etc.

For the in-patient, the experience follows an even more elaborate work-flow. Apart from all the aforementioned, "user rents" are extracted from them by the sanitation workers (sweepers and cleaners), nurses, food contractor, and so on. The single biggest payout is reserved for the operation theatre attendants. Their extortionary power gets amplified by the psychological vulnerability of a patient bound for the operation table.

Here are a few features of this hospital rent-seeking network

1. There are multiple rent-seeking interfaces within a hospital. Each bribe-taker serves an independent rent-center within the hospital. It is not possible to offer a one-time bribe and then pass through the entire chain of services unrestricted.

2. The psychological vulnerability of a patient visiting a doctor makes them easy prey to the extortionary impulses of the bribe-takers. The demands are likely to be met without much resistance and there is little likelihood of anyone openly complaining. No where is this more evident than patients being taken to the operation theater. In fact, atleast some of them pay up as an insurance against life-threatening negligence during the operation.

3. Most worryingly, hospital rent-seeking is completely institutionalized. Almost every staff member is partakes of the spoils. In fact, it has become so closely enmeshed into the work culture that at least some of them rationalize it without any remorse and view it as normal. In other words, the intrinsic deterrent against this practice has severely diminished.

4. The bribe transactions are between two individuals, neither with an incentive to make it public, and take place in relative privacy. Further, the odds-stacked against the patient are so formidable that there is little chance of him complaining. Adding to the challenge is the rapid flow of these transactions within the system.

5. There is an important supply-side willingness to pay dimension that makes the task of controlling hospital corruption even harder. For example, it is almost a cultural norm to gift the nurse delivering the new-born baby. Similarly, patients coming out of a successful operation reward their attendants as a token of appreciation and expression of their happiness.

Regulatory strategies, by way of improved supervisory systems while important, are not likely to make much head-way. A near universal and deeply institutionalized phenomenon cannot be satisfactorily tackled with supervisory oversight. How can we punish everyone? When everyone breaks the law, it no longer remains a crime, atleast in the popular psyche!

The deterrent effect of punishments on individuals caught indulging in taking bribes is not likely to remain for too long. Soon the positive feed-back generating (it collectively emboldens everyone) environmental effect arising from everybody taking bribes will prevail and the deterrent fear will fade out.

In view of all the aforementioned, how do we control corrupt practices in our referral hospitals? In general, how do we control a form of corruption which has become so pervasive as to be the norm and not the exception?


Niranjan Boora said...

With the logic of: "if the patient pays high fee, he would expect good service and will not give/encourage bribe."

In pursuit of this, let increase the consultation fee in government run hospitals (eg: half of the consultation fee in private hospitals).

Government should give each citizen or person holding White/Pink Ration Cards smart cards with preloaded balance(rechargeable every year) to be used at the government hospitals.

Patients will use this smart card and will know that they are paying hefty fees and demand good service and discourage bribes.

Sridhar said...

Increased consultation fee is a good one. The fee for various in- and out-patient services should be equal to the prevailing average bribe. If the fee were more than that in private hospitals, people would not flock to govt hospitals. If the bribes were more than willingness to pay then people would not pay them. In effect, we already know the price that can be charged in a govt hospital at a subsidized rate and that is exhaustive of the WTP.

The problem is that the local politicians would be averse to the concept of fee in a govt hospital. Not that they are supportive of bribes but because it would make them unpopular. Th equilibrium solution is where no party will stand to gain/lose in the short term and thus there is no incentive to change the status quo!

PrideOfMatchingham said...

Well, once again a topic close to my heart!

Corruption CANNOT be tackled by any singlepronged strategy. And the corruption in healthcare is so very difficult to tackle that attimes I wonder if itis better left untackled!

Prescription like fee enhancement is simplistic, to say the least. Difficulty in tackling corruption in Hospitals is MOSTLY bacuse of 'psychological vulenerability' of the patient along with the 'perverse sense of optimism of hospital staff in illness of the citizen' so that citizen are more malleable, afterall who doesnt want to live one day more!

There needs to be a paradigm shift in discussing corruption in sofar as it brelates to 'life threatening situations/issues/topics'. For other issues, one can discuss corruption in generalities and broad principles but in case of hospitals, it may have to be discussed as particularities!

Tell you what, in my hospital, the doctors keep waiting with a sense of perverse optimism for a senior officer to fall sick so that they can et a whole lot of things done/agreed when they are in a malleable state of mind.

Now beat that!


Anonymous said...

Pervasive corruption has to be addressed through a combination of measures.

1.Setup anti-corruption bodies (like the lokayukta) that after the wrong doers. Make a public example of such cases. And not just the hospital staff. Look at how the govt. funds are spent ? where are the leaks ? Why do these hospitals suffer from such bad maintenance ? The corrupt hospital staff are just the tip of the iceberg and are probably reacting to the possibility that somebody else makes much more money.

It may also make sense to look at the recruitment practices in these hospitals. I'am told anybody wanting a job may have to quite a bit in bribes, the value of the bribe being pegged to the quantum of "other-income" that can be earned.

I dont think increased fees is going to make a difference, nor will automation of any sort, unless automation means replacing hospital staff with Robots !!!

Sridhar said...

@Prideofmatchinham: why do you think the same kind of susceptibility and dependability is not observed in private/corporate hospitals. Why only in govt hospitals that there is such demand and supply of bribes? The demand comes from the fact that the govt employees know that the patient has the potential to pay and the patient inturn pays to the extent he can pay to get the quality of service he expects at a cost cheaper than in private facility. In private hospitals, both the patient fee and employee wages are market determined and there is no room for bribes.

Why does the same not happen in the emergency rooms (where the care is free irrespective of patient's insurance coverage) in the US - you know it: cultural and law enforcement factors. These changes can only be brought in the long-run by commited governments. Clearly not in India.

KP said...

Dear Gulzar,

I think hospitals are a stark example of how incentive based approaches to tackling corruption can pervert the very basis of what the system was expected to deliver.

The motivation for government hospitals was to reach and deliver services to those sections of the population that cannot afford privatized care / or a subsidized service to government servants to offset the nature of their compensation that cannot be strictly pegged to market.

To attempt to capture the bribe as revenue by increasing the fee / increasing the compensation to government staff - is strictly exploiting the vulnerability of the customer and misusing the asymmetric nature of the power of the state (street level bureaucrat) over the individual.

If the government steps in to provision and deliver a service, it is invariably a question of satisfying un-met demand because of market failure, its logic is not to capture the consumer surplus in entirety. We call sections of our society disadvantaged, because they are, and the supply of medical services to these sections is far outstripped by the demand.

Capturing the surplus / willingness to pay in the private sector when applied to public service delivery is perverse, because it exploits vulnerability. Applying market logic to moral situations needs a dose of Debra Satz.

As always, increased provisioning of services through the private sector and competition can in the long run correct the situation, but in the short run that will leave a lot of people dead ( to invert economics wisdom).

That brings me to compensation - most street level bureaucrats hold disproportionate power over the individual - not as an outcome of expertise, but positional authority. In most cases their bribes outstrip anything like a reasonable compensation for the role they perform. (power over the individual - delaying care / callous about safety are the extreme manifestations of this and is criminal)

Most people understand that safety/security / and predictability in government service is one of its primary draws. Private sector compensation reflects apart from availability and expertise - a compensation for unpredictability of shifts in the job market. The backlash against the bureaucracy in the US these days - for holding relatively secure jobs with good compensation - conveniently overlooks the reality of lower pay the bureaucrats draw when the economy is humming fine . However, to compensate on a mark to market is to conveniently ignore the tradeoff.

I can sense your exasperation where incentive based motivation can never match the rent seeking possibilities - and while in most developed countries corruption is about tackling fringe behavior - in India it is about the predominant nature of the bureaucracy.

Complete transparency in systems / audits and replacing the government by the private sector where possible is the way forward. Government as the regulator and provider of the service is almost always a bad combination.

Government regulating the private sector in most cases holds out the possibility of contesting / correcting egregious behavior through the law or by infusing competition. But, as we know, the government’s ability to prosecute its own is suspect, and even public outcry these days is muted.

A combination of vulnerability and supply gap in a developing country with wide disparities is a perverse situation in which to apply the "willingness to pay" principle.


Sridhar said...

It is perverse to capture consumer supply (/ability to bribe) by charging appropriate fee. But is acceptable and logical to let the patients bribe the poorly paid staff?

The idea of fees is to arrive at an optimal price for the services that will provoke a reluctance to bribe and at the same time make the services less expensive than in private facilities. It isn't intended to be a revenue generating stunt.

PrideOfMatchingham said...

Sridhar: Did you really think, did you really honestly think that there was no corruption in Pvt hospitals or even less corruption?? Well, if you thought that, you can knock me down with a feather,my friend.
Hold your breath:- a pios and closet-to-God institution called medical profession has been prostituted now by almost all. You think corruption is only in the form of cash exchanging hands? Are you not aware that almost all the heart patients when referred to a hospital has a stent or two inserted inside (angioplasty done) because of the immense 'power and patronage and commission' in those stents? Are you not aware of the Internation Conferences held in exotic locales organised by Medical companies where these doctors are invited for a lecture or two? Are you not aware that a bare metal stent which comes (cost price) for 15 K is sold to hospitals at 40 K with commission for doctors and his associates whereas a drug elluding stent which comes for (CP) 60K is soled for 1.2 L to 1.5 L?! Ofcourse I neednot mention the preponderance of Caesarian section birth in Pvt hospitals as you would already be aware of that.

I request you to read the blog 'An Anatomy of Corruption' on www.mrmulliner.sulekha.com which is an abridged version whereas unabridged version is many pages more. I deign to think that you might find that interesting whether you agree or not!


Anonymous said...


Sridhar : I think you miss the point. It can be perverse to apply the willingness to pay principle without treating that as a justification for allowing bribes. Not sure how you made that connection.

And if Sridhar's use of the word stunt triggered POM's example of the use of the stent example, I dread to think of how far this discussion can reveal about our private hospitals.

KP said...

Dear Sridhar,

Your response seems to suggest that one of the causes is a less than optimal salary, and is the problem with economic reasoning where bribes are sometimes viewed as a mitigating / rational response.

If the optimal salary is sufficiently high and is managed through higher fees - it still does not stand to reason that the person will now hand over the additional revenue from higher fees to the hospital.

Now, if it is reasonable that a person accepting bribes is only arriving at his optimal salary albeit less legitimately, it implies revenues that should legitimately accrue to the state are now rightfully the bureaucrats.

We know that prize postings in effect are an indicator of the differential that is available for the asking (or even without).

With this argument - we have already arrived at the perfect state - all we need to do is legitimize the receipts from bribes and treat rent seeking as perfectly legal.

This is not to suggest that bureaucrats at any level need to be paid poorly, however I was only countering the optimal / equilibrium / willingness to pay argument.

All I am doing here is the reductio ad absurdum - the result - slippery slope?

Regards, KP.

Anonymous said...

I think Sridhar is talking about the hospital charging higher rates and hence the patient pays higher and as a result he believes that he is entitled to good treatment without having to bribe. I dont think he is necessarily relying on an economics argument (consumer urplus and all that kind of stuff), sounds more like a attempt to fix the psychology of the individual entering a govt. hospital.

Sridhar said...

Thanks all for the comments. KP: your suggestion of legitimizing rent seeking seems to assume that the rents collected leave no dead weight loss. Which is not true. Rents always equal more than the optimal wages and that is the core of the problem. The differential eats into public good in excess of one's entitlement. Paying bureaucrats well will only address the one dimension: preempting the moral justification to seek bribes. But it would not by itself entirely kill the tendency to utilize rent seeking opportunities as along as the administrative machinery and policing is weak. As you see there are many necessary but not sufficient conditions. POM: I credit private hopsitals only to the point that the case of low prices offsetting the bribes at every step of service does not exist. But you rightly point of cases where the prices are already inherent of market collusion and lack of competition and so are exhorbitant and corrupt. Anon: the problem is that the so called govt hospitals do not operate the way they are supposed to - as is with any other govt institution in India. When there is no sufficient political environment to fix the malaise by enforcement, economic theory can show the way. I can think of atleast two other non-conventional ways: (1) eliminating paper currency and where every transaction is by check/draft or electronic payment. (2) keeping all the wealth ownership in public domain.


gulzar said...

thank you for all the comments and the very interesting debate. am sorry to have not butted in earlier.

will consolidate the comments and post with my take in a day or two

Jayan said...

Hospital is complex system. It has very low level corruption(from attenders, cleaners) to very high level corruption surgery, purchase, infrastructure spending.

a) Kerala govt recently increased salary of doctors by good margin and asked to stop private practice. This resulted in reduction in corruption at specific levels. IMHO, this corruption came down because doctors were asking for reasonable pay than absolute pay on par with private doctors.

b) Corruption in purchase etc can be reduced with more transparent e-purchase systems.

c) More complex one is inflation of expenses depending on patient's capacity. While a solution X costing x is okay with a patient, another one may legitimately wants a better solution Y costing more. Is it really corruption? What about doctor forcing a costly solution when something cheaper is available? Who can decide? Only expert doctors can comment some thing there.

d) Corruption by very low level staff is best controlled by outsourcing to self help groups, NGOs. Stronger management is the pre-requisite here.

e) Corruption in building contracts etc are big ticket ones and not specific to hospitals. It has to be tackled via wider framework like vigilance, revenue intelligence, lokayukta etc

The corruption is deep rooted; really cannot be addressed by single approach. It may be easy to start with item b and d

Anonymous said...

Corruption can be minimised in Government referral/3 tier hospitals by building hospitals with 100 beds instead of 1000.That way the head of the institution can monitor.Even in corporate hospitals,Ward boys and ayas collect money after a patient is shifted out of OT after successful completion or a mother delivers a baby.Hence it is just not limited to Government hospitals.Stringent rules directly proportional to corruption.If u have restricted attendants from seeing their patients,security guard utilises that.If doctor is postponing the case, ward boys use that and convince the doctor that they belong to him.Hence smaller the hospital....more effectively it can be administered.