Unmasking Corruption in Health Care Sector

Dr. A.D.S Manhas

Corruption in the health sector diverts resources, leads to negative health outcomes, threatens people’s lives and undermines citizen trust in public institutions. It also reduces the quality of health services and products, increases their costs, limits access to them, causes waste of financial and non-financial resources, leads to poorer staffing, and human rights violations and aggravates inequities. According to Transparency International, corruption in the health sector causes losses of over 500 billion dollars every year, more than the amount of resources needed for universal health coverage. According to the World Bank in some countries, as much as 80 per cent of non-salary health funds do not reach health facilities because of corruption.

The poorest and most vulnerable populations in society are ultimately the ones to suffer the consequences of corruption in health sector.

In India, out-of-pocket health expenditure (OOP) expenses account for about 62.6% of total health expenditure – one of the highest in the world. High OOP health expenditures push many households into poverty.

Corruption in the health sector can make the difference between life and death. It has severe consequences for access, quality, equity, efficiency, and efficacy of health services and is an obstacle to the long-term goal of achieving universal health coverage.

It’s estimated that 140,000 children die every year as a result of corruption in health systems.

Of the 7.5 trillion dollars spent globally on health each year, 500 dollars billion is lost to corruption.

As with most other sectors, corruption in the health sector can be classified into two categories, petty corruption and grand corruption. In addition, there could be another category, namely, the widespread prevalence of unethical and abusive practices.

Petty corruption refers to relatively small amounts paid in order to get services that are either free, or subsidised. While these amounts might be individually small, they amount to a big burden because they are usually demanded of poor people.

The typical petty corruption related to the health sector that people experience are as follows:

• Bribes to gain access (to wards, to enter restricted areas such as labour wards)
• Bribes to jump queues, (out-patient department, laboratory sampling)
• Bribes to get free services (for X-ray, medicines, diet supplements)
• Bribes to get admission or discharge from the hospital, or to release bodies from the mortuary.
• Bribes to obtain certificates on medical condition, such as fitness certificates, disability certificates etc., which are required for various purposes such as foreign travel, professional recruitments etc.

Such bribes are usually picked up by the staff in medical institutions and doctors might not be directly involved (except in the case of the issue of medical certificates). However, the passing on of cuts to doctors might not be ruled out.

Grand Corruption relates to large volume corruption, often involving a team of officials, doctors, private sector agents and politicians. Instances of grand corruption in the health sector are:

• Procurement corruption (to win tenders for supply of pharmaceuticals, medical equipment and hospital supplies, civil construction or repair contracts). This can result in over-invoicing, supply of substandard equipment, supplies etc., sometimes having shorter life span or shelf life in case of medicines, over-supply of some items in excess of requirements. This might also result in excessive preference shown for one of the other brand of a drug, when cheaper generic (and equally effective) products are available.
• Corruption for postings and transfers of doctors and other staff to ‘lucrative’ positions, (where they have access to better private practice, more openings for diversion of medicines, or cultivation of influence).
• Corruption in certification of facilities and the provision of mandatory recognition of departments and medical colleges, following inspection.
• Corruption in admissions, examination marking and passing students in medical colleges, particularly in respect of specialty and super-specialty post-graduation courses.

An even more serious phenomenon is when grand corruption snowballs into increased petty corruption, because of artificial shortages, or more expensive medicines and other supplies, leading to a more bribes being paid for these at the customer interface level. Grand Corruption can also be integrated with petty corruption. Typically, this happens when profits from bribes taken at lower levels is shared up the ladder, through ‘pre-paid’ arrangements – a lump sum payment to secure a lucrative posting and regular monthly payments, collected from below, channelized upwards with a cut for everybody involved.

Other Unethical and Abusive practices:

Apart from the usually adopted classification of corruption into petty and grand corruption, there is another category of corruption prevalent, which is in the nature of corrupt practices arising from the breach of the very same internal code of ethics that give doctors their credibility and status.

Some of the major corrupt practices are

• Accepting percentages or gifts from other doctors, hospitals, laboratories, imaging centres, pharmacies, pharmaceutical companies and medical equipment companies for referring patients to them or using their products. Known as ‘cut’ practice, this is a widespread phenomenon, with both doctors and those who give them such gifts or percentage, not considering these to be bribery in any form.
• Suggesting unnecessary laboratory tests.
• Undertaking unnecessary treatments, such as Caesarians, when normal deliveries are possible.

Amongst doctors, there is very little understanding of the distinction between unethical and (corrupt) practices. There is a significant prevalence of unethical practices, with most doctors who indulge in these believing that these are not wrong at all. There is a group of doctors (probably a majority) who actually believe that there is nothing wrong with earning from kickbacks and cuts.

Unethical and monopolistic practices in the pharmaceutical business:

The pharmaceutical profession generates a large portion of the grand corruption seen in the health sector, largely because of extortionate and disproportional pricing of medicines beyond the raw material and production cost, in the name of covering Research & Development costs and Intellectual property protection  which includes patents, trademarks and bribes in cash and kind paid to doctors for prescribing medicines.

 It must be emphasised that many of these practices are certainly not considered to be ‘corruption’ within the strict framework of the law. For example, high prices by pharmaceutical companies are perfectly legal, even though one may call it a way to obtain windfall profits, through seductive advertising, cartelisation and ‘persuasion’ of doctors to prescribe such drugs. Furthermore, it is not as if all doctors are corrupt, if the strict definition of corruption to be an unacceptable act performed by a public servant is taken into consideration. Yet, there is a natural and moral understanding of the meaning of the word, ‘corruption’. Plenty of professional acts in the private sector, in the view of a reasonable man or woman, would certainly be considered as corruption.

Corruption in the health sector can take several forms. Transparency International defines six in particular.

1. Informal payments from patients;
2. Embezzlement and theft;
3. Absenteeism;
4. Corrupt service provision activities, such as overcharging and false treatment reimbursement claims;
5. Favouritism;
6. Manipulation of data.

Among the key corruption risks in the sector are weak or non-existent rules and regulations, over-regulation, lack of accountability, low salaries and limited offer of services (i.e., more demand than supply). The large amounts of funds exchanging hands and the multiplicity of stakeholders involved in decision points during each transaction lead to ample opportunity for corruption to thrive.

Fighting corruption in health is essential if the world is to respond effectively to current and future global health threats and to provide quality healthcare for everyone.

Some of the measures which can be adopted to root out corruption in Health care are

• Transparency and accountability: Ensure that procurement processes are transparent and well-regulated, and that there are mechanisms in place to hold people accountable.
• Proper remuneration: Ensure that health care workers are paid fairly. The health workforce is paid properly and hospitals have sufficient financial and human resources to operate without engaging in any form of corruption
• Adequate funding: Ensure that the public health care system has adequate funding and management in this context Government of India increased Health Expenditure from 1.28 per cent of gross domestic product (GDP) in 2018-19 to 1.9 per cent in 2023-24. In the Budget of 2024-2025 announced on July 23 by Finance Minister Nirmala Sitharaman Union Health Ministry has been allocated Rs. 90,958.63crore, a 12.9 per cent increase from Rs. 80,517.62 crore allocated to the Union Health Ministry in 2023-24. The National Health Policy recommends states to spend over 8% of their budgets on health.
• Multi-stakeholder participation: Involve multiple stakeholders in every project, policy, and plan. Actors from public and private sectors working on anti-corruption and health join forces to fight corruption and strengthen health systems
•  Ensure Medical research and development is transparent and puts public interest first
• Healthcare service delivery is not undermined by bribes or any other forms of petty corruption.
• Digitization: Increase the digitization of public health procurement systems for example through e-tenders, GEM portal and creation of single procurement agency like Medical Supplies Corporation’
• Codes of ethics: Enforce codes of ethics to promote a culture of integrity. 
• Strengthening institutions: Strengthen institutions outside of the health care sector like Central Vigilance Commission, Central Bureau of Investigation(CBI) and in the State Anti-Corruption Bureau(ACB) and
• Whistle-blower protection: Protect whistle-blowers who report corruption. The public and healthcare workers have access to whistleblowing mechanisms to report corruption in the health sector
• Everyone is aware of their health rights and obligation.

Government of India has launched some new schemes to provide quality affordable healthcare to general public with the aim to ensure transparency and digitisation which shall ensure that corruption in Health sector is curbed.

Ayushman Bharat Digital Mission will connect the digital health solutions of hospitals across the country with each other. The Mission will not only make the processes of hospitals simplified but also will increase ease of living. The Digital Ecosystem will also enable a host of other facilities like Digital Consultation, Consent of patients in letting medical practitioners access their records, etc. With the implementation of this scheme, old medical records cannot get lost as every record will be stored digitally.

• To provide quality and affordable medicines Government of India has started Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP)’ which is a campaign launched by the Department of Pharmaceuticals in association with Central Pharma Public Sector Undertakings, quality medicines at affordable prices are sold through dedicated outlets called ‘Pradhan Mantri Bhartiya Janaushadhi Kendra under the scheme 13822 Janaushadhi Kendras have been opened across the country. Product basket of PMBJP comprises 2047 drugs and 300 surgical items.
•  Another initiative launched in 2015, AMRIT (Affordable Medicines and Reliable Implants for Treatment) is a flagship scheme of the Ministry of Health and Family Welfare to provide medicines and implants for various diseases including critical illness like cancer and cardiovascular diseases at highly subsidized rates to the public.

  The major initiative of Government of India is Pradhan Mantri Jan Arogya Yojana or PM-JAY a flagship scheme which was conceived on the recommendations of the National Health Policy 2017. This scheme was formally launched on 23rd September, 2018 in Ranchi, Jharkhand by the Hon’ble Prime Minister of India, Shri Narendra Modi to achieve the vision of Universal Health Coverage (UHC). This initiative has been designed to meet Sustainable Development Goals (SDGs) and its underlining commitment, which is to “leave no one behind.”

Ayushman Bharat is an attempt to move from sectoral and segmented approach of health service delivery to a comprehensive need-based health care service. This scheme aims to undertake path breaking interventions to holistically address the healthcare system (covering prevention, promotion and ambulatory care) at the primary, secondary and tertiary level.

 The main objective of this program is to increase access to healthcare for the poorest 50% of the population—approximately 700 million people—who are given biometric government “smart cards” to purchase eligible inpatient healthcare services at both private and public hospitals.

In J&K the scheme is called Ayushman Bharat Sehat Scheme and it covers whole of the population of J&K consisting of 25 lakhs 70 thousand families and government pays premium of Rs1840/- per family

PMJAY is principally designed as a system for subsidizing healthcare for low-income people, it also serves as an anticorruption tool by bringing under government oversight millions of previously unregulated out-of-pocket healthcare transactions, requiring enrolled physicians to acquire digital pre-authorization before administering nonemergency services to PMJAY beneficiaries, and giving the government more power to negotiate with private hospitals participating in the program over healthcare rates. PMJAY’s computerized billing platform also serves a surprising secondary role as an AI-powered “comprehensive fraud analytics solution” for millions of transactions that were previously beyond the government’s reach. The program has already detected over 18,000 fraudulent insurance transactions, leading to penalties against hundreds of healthcare entities so far. The government has even made a list of “corrupt” hospitals available on the PMJAY website. Given PMJAY’s early successes, the government has recently increased the program to cover all senior citizens above 70 years regardless of their income. Not only would this increase healthcare access in general —a worthy aim in its own right— but it would reduce corruption in healthcare system.

About the Author:
Dr. A.D.S. Manhas is one of the senior-most doctors from Jammu & Kashmir. He retired as the Medical Superintendent from the Health and Medical Education Department.