|
MARCH, 2002 |
| |
|
|||
|
||||
|
LEGAL SIDE |
|
Ills of Health Industry
- By Mahesh Kumar Thapa Health service business is still in infancy in Nepal. Despite the mushrooming of nursing homes and laboratories in the capital city, there are only a few of them operating truly as hospitals. Established business houses are rarely involved in health service business. When they are involved in this sector, it is presented as charity, not business. Foreign collaboration in terms of equity or technology is still negligible in this sector. There is no public participation in the share ownership of the hospital companies. This is so even after a decade or more of opening health services for the private sector investment. It is now time to assess the overall government policy, the mechanism of the implementation, the legal base of the private hospitals and the problems and prospects associated with them. Industrial Enterprises Act, 2049 (IE Act) has recognized hospital and nursing home service as a profit making business and it has offered facilities and benefits for such a business comparable with other industries. Foreign Investment and Technology Transfer Act, 2049 has provisions allowing for foreign investment and technology transfer in health service industry. Further, this industry is categorized under the list of national priority industries offering some more benefits if established outside the Kathmandu Valley. Five years tax holiday facility given to some industries was available also for health service industry before the first amendment came into effect on the IE Act in 2054 B.S., which withdrew the facility from all sectors. The ninth five years plan has documented a promise that the government would follow a long-term policy to encourage open, liberal and competitive health services. Unfortunately the entrepreneurs do not seem to be much interested to invest in this sector. Though there are a few exceptional examples as well, they are exceptions. In most of the cases, small groups of doctors are running what they call to be nursing homes and diagnostic centers. Some of these are also given the name of ‘hospital’. Because these medical practitioners have less knowledge in management and lack financial backup and experience needed to run a large scale hospital, the health service firms have remained small ventures. Foreign equity being present in a hospital project has not come to the notice of this scribe except in the teaching hospitals. Though some hospitals are using foreign trade names, it cannot be called a technology transfer or foreign investment in its true sense. Some of the reasons why the entrepreneurs are reluctant to invest in health sector and why foreign investment is not coming into hospitals in Nepal are of legal nature while some others relate to overall government policy and its execution. National Health Policy, 2048 B.S. provides for the private sector to run health services through a hospital, a health unit or a nursing home. It also states that such units have to be of a specified standard, and should not cause any financial burden to the government. However, no such standards are prescribed and made public as yet. In case a nursing home or hospital approaches the Department of Health Services, the department renews the permit every year upon submission of statistical report of the services rendered by the hospital. Neither is there any law nor any policy available or notified to the health service entrepreneurs to be applicable for the issuance of a permit and for its subsequent renewal. The permit that the Department has been issuing is temporary in nature and no private nursing home or hospital has been given the recognition of a permanent establishment. No doubt it always sounds good that the private services that are likely to have a wide public impact, such as health, have to be under the government supervision and scrutiny. However, any of such supervision or scrutiny and its subsequent results should be based on and regulated by the law. There is no law to regulate the private health service sector and this makes the entrepreneurs highly uncertain of their investment. Without a proper legal mechanism providing for the criteria to obtain a permit, its renewal and the permanent status, no entrepreneur is interested in this business. It is said that a law in this respect has been drafted but it has not been floated for public discussion. Such law should remove the sword hanging above the entrepreneur’s head of not renewing the permit, and it also should be made public for the comments and advice so as to make it complete. Without any such public debate, the law may need amendment immediately after it comes into effect as it has frequently happened with many other legislations in Nepal. Foreign equity investment does not come alone - it also brings technical support along with it. The term ‘technical support’ varies in its meaning from industry to industry. For the manufacturing unit, it could be the formulae, patent, trademark, know-how, technical expertise etc., but in hospitals it is mainly the doctors and then the hospital management. Doctors play the key role in the success of any hospital unit. If foreign doctors are discouraged, the foreign investment in health sector is virtually denied. It is apparent to all of us that most of the Nepali local doctors do not stay long in any hospital, thus making the foreign investors suspicious of the loyalty and integrity of all the Nepali doctors. Nepal Medical Council (NMC) and local doctors are somehow discouraging the senior and well-experienced foreign doctors from providing their services under technical support. The Nepal Medical Council Act (NMC Act) and Rules under it require every individual doctor to register with the NMC in order to be eligible for medical practice in the territory of Nepal. The registration of foreign doctors is only for a year and the renewal is at NMC’s discretion. Though it is said that NMC takes only a simple interview to decide about the licence, the senior foreign doctors take it as an insult. If there is no straightforward rule to regulate the registration of foreign doctors ensuring the longevity of their practice in Nepal as long as they observe and comply with the prevailing laws, the foreign investors are not expected to take the risk to invest in Nepal. By an amendment in the NMC Act and Rules, NMC has been empowered to formulate the regulation regarding the registration of foreign doctors. Using this right, NMC has prescribed the examination or pre-test requirement. However, the by-laws or the decision of NMC to take such an examination is ultra vires to the Act. NMC Act categorically prescribes for the basic qualification of doctors for registration and it authorizes NMC to make by-laws about other procedural details only. It seems the local doctors are afraid of losing in competition to the senior foreign doctors. The amendment in the Act and Rules empowering NMC regarding the procedural part was introduced after it was debated among the doctors themselves. The major argument raised in favour of putting restrictions on foreign doctors is that the profession is very sensitive and it is feared that the foreigners may not behave with full responsibility towards Nepali people. It is nothing different than the press people making hue and cry against the foreign investment in print media. Every one should understand that the competition with people who come from a place where they have a highly developed medical education system sharpens the local skill further. An absence of quality control system in health service market is the other reason for entrepreneurs lacking interest in this sector. There is no specific monitoring system with the government to check and control the standard of hospitals and nursing homes. The doctors are making lot of money setting up a small venture which has a very few of the required facilities. Since the market is dotted by small ventures, there is no reliable data available to study the market situation. Hence entrepreneurs feel high risk and are naturally hesitant to make investments. Another feature of this sector of business is that it has received ineligible investment from the banks. In order to set up a large hospital, the banking support is an important requirement. Nepali bankers are not interested to invest in this sector because the small-scale venture seems to be more lucrative than the larger one. It would be better if Nepal Rastra Bank keeps the hospital business in priority sector list for the loan financing. Due to the absence of hospitals with sophisticated equipment and state of the art technology, the skilled manpower is reluctant to come back from abroad where they go for study. Secondly, the people who can afford good hospital services are still not sure about the quality of those small-scale hospitals and prefer to go abroad for their medical needs resulting in a drain out of the foreign currency. Foreign equity and technology transfer for establishment and operation of large-scale hospitals with the relatively latest facilities available in the world market could improve the situation. On the other side, it could also be of help to the government’s commitment in providing adequate and better health service to the general public. It may further develop Nepal as a health tourism destination as well with initial target of large papulation of north part of India.. To cure the problems discussed, a comprehensive legislation covering all the experienced and expected difficulties is urgently required. (Thapa is a practising advocate specialising in corporate law.) |
|
Cover Story
| Editorial | World
Trends | Business News | Marketing | ICT
& Development | Economy & Policy | |
|
Send your feedback to the editor: bizline@mos.com.np |
