#Notebandi May Worsen the Crisis in the Public Health Sector

Not allowing private hospitals to accept old notes will restrict access to healthcare for a number of Indians.

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A spate of deaths due to hospitals refusing to accept invalid currency notes has come to attention after Prime Minister Narendra Modi’s announcement invalidating 86% of India’s currency on 8 November.

Unlike government-run hospitals, private hospitals have not been allowed to use defunct Rs 500 and Rs 1,000 notes, potentially affecting 58% of Indians in rural areas who opt for private healthcare (68% in urban areas), according to National Sample Survey Office (NSSO) data.

Deaths Due to Demonitisation

In Noida, an infant died after Union Minister Mahesh Sharma’s Kailash Hospital reportedly asked for an advance of Rs 10,000 and then refused to take old currency notes.


An 18-month old baby died in Visakhapatnam as the parents didn’t have money to buy medicines, and a year-old infant in Mainpuri, Uttar Pradesh, died after reportedly being denied treatment by a local private doctor as his parents didn’t have money to pay for his treatment.

Despite multiple requests, Finance Minister Arun Jaitley said on 17 November that private hospitals will not accept old notes because that would encourage misuse of old currency.

Patients who had travelled away from their home states were particularly caught unaware by the move and faced a serious shortage of cash.

On a Mumbai Footpath, a Cancer Patient From Jharkhand Struggles

IndiaSpend met 52-year-old Mahavir Malhar and his wife from Jharia, Jharkhand, staying on the footpath outside Mumbai’s Tata Memorial Hospital, a leading referral hospital for cancer patients nationwide. A labourer who earned Rs 200 every day before coming to Mumbai to treat his wife’s ear cancer, Malhar had no usable notes.


“We do not have cash to buy meals or even tea,” said Malhar. Although treatment at Tata Memorial Hospital is free and the hospital accepts old notes, staying in Mumbai is expensive for the couple. Since the note ban, their sons, also labourers, have not been able to send them money because of long lines at local banks.

“They are also daily wage earners and standing in a line for the whole day means loss of income,” said Malhar. The couple now depend on the free meals provided by the hospital and charitable trusts.

Indians Spend Eight Times More in a Private Hospital Than in a Government One

Not allowing private hospitals to accept old notes will restrict access to healthcare for a number of Indians.
Half of India’s population depends on private healthcare despite it being a costly alternative. Image for representational purpose. (Photo: iStock)

As we said, more than half of India’s population depends on private healthcare, despite the fact that private healthcare cost the poorest 20% of Indians more than 15 times their average monthly expenditure, according to the 2014 NSSO survey.


Other markers of India’s dependence on private healthcare:

  • Up to 86% of the rural population (717 million people) and 82% of the urban population (309 million people) are without health expenditure support, IndiaSpend reported in July 2015.
  • Indians spend eight times more in a private hospital than a government hospital, according to an analysis of National Health Accounts (NHA) 2013-14 data by The Hindu. The report estimated that households spent Rs 8,193 crore in government hospitals, an eighth of the Rs 62,628 crore spent in private hospitals.
  • As much as 69% of health expenditure in India is private (out-of-pocket) – the highest proportion in the world – according to NHA data. Out-of-pocket expenditure is the share of expenses that patients pay to the healthcare provider without third-party insurance or government-subsidised treatment.
  • Of 930,000 doctors in the country, only 106,000 work for the government. This means there is one government doctor for every 11,528 people, according to the National Health Profile 2015 report, IndiaSpend reported in November 2016.
  • About 81% sanctioned posts of specialist medical professionals in community health centres were lying vacant, according to this 2015 rural health statistics report.

Therefore, the government’s decision to not allow private hospitals to accept old notes will restrict access to healthcare for a significant section of Indians, Scroll reported on 21 November 2016.

Post demonetisation, the Maharashtra government’s toll-free 108 helpline–the 24×7 emergency ambulance services number–is also reporting complaints against private hospitals refusing to accept cheques. The Scroll report talked about angry callers unable to buy medicines or seek treatment due to private hospitals not accepting Rs 500/1,000 notes.

Private Hospitals Report a Fall in Patients

Lack of cash is making patients prioritise their cash needs, and health issues tend to be pushed back on family priority lists, reported private practitioners from urban centres.

“There has a been a drop of 25-30 percent in patients coming to our private out-patient (OPD) department,” said Manish Motwani, bariatric surgeon at Aastha Healthcare, Mumbai. He attributed the drop to a fall in non-emergency cases.


“There was a 40 percent drop in my patients in the OPD the day after demonetisation; now, the drop is of 10-15 percent, but some of my other colleagues are seeing a drop of 50 percent in the number of hospitalisations,” said Pradeep Gadge, a Mumbai diabetologist. Many doctors said they were allowing patients known to them to pay later.

There has also been an increase in the number of patients in government hospitals, where treatment is largely free or at nominal charges.

“We have seen an increase in the number of patients in our primary healthcare centre since the currency ban,” said Amol Bhusare, medical officer at Pallam, a small town in Maharashtra’s Marathwada region, east of Mumbai. Bhusare said two of his patients who had gone to a private diagnostic centre for a CT scan in nearby Nanded city were turned back for bringing old notes.


Akhilesh Yadav, Chief Minister of Uttar Pradesh, requested Prime Minister Narendra Modi and Finance Minister Arun Jaitley on 17 November to allow Rs 500 and Rs 1,000 notes at private hospitals and medicine shops till 30 November.

As Rs 500 and Rs 1,000 were banned in haste, those undergoing treatment at hospitals and nursing homes are facing a lot of problems. I, therefore, request you to intervene and allow private hospitals, nursing homes and medicine shops to accept these notes till at least 30 November.
Akhilesh Yadav, Uttar Pradesh CM

A few hospitals have pleaded that they be allowed to accept older currency. Mumbai’s Bhatia Hospital wrote to the Prime Minister the day after his initial note-ban announcement. “We are one of the oldest charitable hospitals in Mumbai and requested (that) at least charitable hospitals be allowed to accept older notes,” said Rajeev Boudhankar, CEO of Bhatia Hospital.

He said no patient has been turned away. They are accepting payments through other means, including cheques, although three cheques have bounced.


(The article was originally published in IndiaSpend. Devanik Saha is an MA (Gender and Development) student at Institute of Development Studies, University of Sussex. Swagata Yadavar is principal correspondent with IndiaSpend.)

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