Govt’s Biggest Blunder: Not Exempting Pvt Healthcare From Note Ban

The government’s oversight on not including private healthcare is probably its biggest blunder on demonetisation. 

4 min read
Govt’s Biggest Blunder: Not Exempting Pvt Healthcare From Note Ban

On the night of 8 November 2016, Dr Mathew Varghese who heads the orthopaedic department at Delhi’s St Stephen’s hospital, was in surgery. At 1 am, he came out of the operating room and was told about the government’s decision to demonetise Rs 500 and Rs 1,000 notes. Initially, he didn’t think much of the decision. Until next morning, when the same patient came to him, flustered and worried.

“The hospital won’t accept my money. They’re refusing to take Rs 500 and Rs 1,000 notes and I only brought cash from Dehradun. What should I do?”

It’s a question Dr Varghese and other doctors working in private healthcare sector in India have no answer to.

While the RBI notification allows government hospitals to accept old currency notes till 24 November (after extension), it doesn’t exempt private hospitals, charitable hospitals, diagnostic centres and pathological labs. It’s an oversight which has theoretically disenfranchised millions of Indians from accessible healthcare.

70% of India Depends on Private Healthcare

In a startling revelation, an NSSO survey released in 2015 found that despite the substantially higher cost, 72% of India’s rural population depends on private health care and not government-funded, highly subsidised hospitals.

(Photo: Maanvi/The Quint)

Incidentally, these are the very institutions which are not allowed to accept old currency notes. This implies that in one fell swoop, the government has made healthcare infinitely inaccessible to its population - whether in rural or in urban areas.

Lack of Health Insurance Makes it Worse

Insurance could’ve helped shed some of the burden on patients who are in for long-term or regular treatment. But a government study reveals that 86% of India’s rural and 72% of our urban population are not secured by insurance.

(Photo: Maanvi/The Quint)

Not Enough Good Faith to Go Around

With an impractical rule not allowing better sense to prevail, some hospitals are improvising. There are reports of private hospitals who’ve issued chits in good faith to patients who are unable to pay or tender the exact change in cash. But that didn’t stop a private hospital in Mumbai from leaving a sick, newborn baby to die when his parents didn’t have the new currency. Or in Vizag, where an 18-month-old girl died after her parents didn’t have enough Rs 100 notes to buy her medicines.

How Much Black Money Can Private Hospitals Leak, Anyway?

The argument against not allowing private healthcare institutions to accept old currency notes is that they might become a passage to convert black money into white. But this assumes that a majority of Indians flocking to hospitals, clinics, diagnostic labs, charitable institutions are dishonest. And two, it assumes, without any substantial data or study, that the number of black to white transactions are enough to exclude them from the government’s list.

Also Read: Demonetisation: The 99% is Suffering a Policy Targeted at the 1%

However, anecdotally that doesn’t look like the case. Rahul Verma is the founder of Uday Foundation, an NGO that works to provide affordable healthcare to the needy.

Smaller towns have nursing homes, which refer patients to Delhi. In India, depositing cash in bulk at hospitals is normal. With demonetisation, the patients most affected are the ones in daycare, who are getting treatment for diseases like leukemia and need to make payments everyday. Hospitals have audits where if they have taken money, it will show in their accounts.
Rahul Verma, Founder, Uday Foundation 
(Photo: Maanvi/The Quint)

But even if we assume that allowing private hospitals creates a loophole, there is a simple solution – exempt emergency admissions and put a cap on the amount that can be deposited in old notes.

The Indian Medical Association (IMA) has demanded that the government allow private hospitals to accept old notes. Speaking to The Quint, Dr KK Agarwal, Secretary General from the Indian Medical Association, said

If the government fears dubious transactions, it should not allow routine admissions. But, emergency admissions should be exempted. In any case, the hospital accounts for the money it receives and those accounts can be tracked. 

What Are The Private Hospitals Doing Now?

So how are the private hospitals tackling demonetisation currently? The Quint checked with Apollo hospital, Fortis hospital and Dr. Lal Path Labs in Delhi on whether they’re accepting old currency notes. None of them are.

Also Read: Demonetisation: Mr Modi Can Still Salvage a Terrible Decision

Fortis Healthcare, Paras Healthcare, Bhatia Hospital and Hinduja Hospital have submitted urgent petitions to the government to allow private hospitals to accept old currency notes. Of the several tweaks made by the government to its shoddily implemented demonetisation policy, the government is yet to take a kind view on allowing private health care institutions to accept old currency.

As for Dr. Varghese? He has a new patient; an Afghani young man, whose legs have been blasted off in an explosion. In need of an amputation, he came to Delhi from Kabul for treatment. And now, with no money, he’s clueless about how to exchange old currency.

(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)

Speaking truth to power requires allies like you.
Become a Quint Insider

or more


3 months
12 months
12 months
Check Insider Benefits
Stay Updated

Subscribe To Our Daily Newsletter And Get News Delivered Straight To Your Inbox.

Join over 120,000 subscribers!