The Emperor’s New Clothes are Tainted

 A PUBLIC document of the National Rural Health Mission (NRHM) of Rajasthan, still available on its website, pays glowing tributes to a gentleman by the name of Ramalinga Raju. It says: “Ramalinga Raju is founder & chairman of Satyam Computer Services Ltd. Satyam is one of India’s premier IT companies with a global presence, providing solutions to over 300 multinationals of which over 100 are Fortune 500 companies. An MBA from Ohio University and a participant in the Owner/President program at Harvard. EMRI, Satyam Foundation and the Byrraju Foundation are a manifestation of his strong sense of commitment to society. Mr. Ramalinga Raju strongly believes emergency management in India can achieve global standards only through the judicious application of Knowledge and Technology and a strong leadership”.

Not surprising, given that the former CEO’s most prominent “charity”, known as the Emergency Management Research Institute (EMRI), was the much flaunted poster boy for the National Rural Health Mission (NRHM). From the mandarins in the corridors of Nirman Bhawan to state NRHM officials, everybody was eager to hold up EMRI as an example of the Brave New Path that the health sector in India was being primed to travel on. A path that was paved with “Public Private Partnership” (PPPs) – the new clothes that the government had  ordered to cover the frail and decaying body of the public health infrastructure in India.

EMRI: ALL THAT IS WRONG WITH PPPs: EMRI is a classic example of all that is wrong with PPPs in the health sector. Given that it was projected as one of the principal success stories by the health ministry, a closer look at its modus operandi is clearly indicated.

Emergency Management Response Institute (EMRI), is one of the four ‘non-profit’ organisations run by the Rajus. When the storm broke, EMRI thought it could weather the crisis by cleaning up its website and deleting nearly all references to the former chairman of Satyam Computer Services. It hasn’t been enough to insulate EMRI from allegations of a Rs 7,000-crore scam.

The emergency ambulance service, is modeled on the 911 service provided in the US during medical emergencies. EMRI’s story began on August 15, 2005, with 30 ambulances deployed to cover 50 towns in Andhra Pradesh. Today EMRI owns 1500 ambulances and employs 12,000 people. The AP government chipped in with 95 per cent of the cost of running the service, or a whopping Rs 1,12,000 an ambulance per month, while EMRI bore only 5 per cent, funded mostly by the Rajus.

Also, as EMRI grew, it began to cost the public exchequer a lot more than earlier services. In AP, the cost per ambulance per month rose from Rs 14,000 to Rs  1,12,000 in less than two years. TN already had an ambulance service at Rs 10,000 an ambulance per month using World Bank funds under the national rural health scheme. This was scrapped by a government order and EMRI’s lakh plus per month services ushered in. EMRI claims that it operates in eight states — Assam, Gujarat, Karnataka, Andhra Pradesh, Tamilnadu, Goa, Maharashtra and Orissa; though the Maharashtra government is believed to have put its contract on hold after the filing of a Public Interest Litigation on the way EMRI contracts were awarded.

PIL AGAINST CONTRACTS TO EMRI: The PIL was filed by two NGOs – Ambulance Access Foundation India (AAFI) and Transparency in Contracts (TIC) – in 2008, a few months before the Satyam scam came to light. The PIL argues that contracts were awarded by state governments to EMRI without proper tendering, while in some cases the tender documents were tailored to favour EMRI.

The PIL claims that EMRI, which was registered in 2005, became the nodal agency for the Andhra Pradesh government for ambulance services, without having had any prior experience of running an ambulance service. The Rajasthan government, it is claimed in the PIL, issued a tender which set the eligibility criteria for potential bidders as follows: a turnover of Rs 5 crore, a fleet of 200 ambulances, and a contract from one Indian state. It meant that only EMRI was eligible to bid. After EMRI was awarded the contract in Rajasthan, Tamilnadu followed with tender specifications that asked for: a turnover Rs 25 crore, a minimum of 400 ambulances and two contracts from Indian states. Again, only EMRI was eligible to bid!

Counsel for the petitioners, Rajeev Dhavan, has also alleged that “EMRI is all set to withdraw an estimated amount of Rs 3,800 crore from public funds and get control and possession of approximately 500 acres of prime government land in state capitals and leading cities valued at Rs 1,800 crore”.

The Supreme Court, in a recent order has said that it will give its final opinion on the PIL in February, 2010. A bench headed by Chief Justice of India, K G Balakrishnan, on Monday had earlier sought replies from the Centre, 12 states and EMRI.

While the matter regarding the existence of mala fide procedures in awarding contracts to EMRI will be opined on by the Supreme Court, some very serious issues need to be taken note of. The EMRI “model” has been one of the most discussed examples of “success” stories of Public Private Partnerships. In fact, the first common review mission of the National Rural Health Mission had noted this as one of the two successful public private partnerships worth replicating.

PUBLIC MONEY TO CREATE PRIVATE INFRASTRUCTURE: Let us first examine what is “public” and what is “private” in the EMRI “model”. From all accounts, 95 per cent of funds for the EMRI scheme are being provided by the state government, with EMRI bearing just five per cent of the cost. Thus while EMRI functions with the help of massive budgetary support from state governments, the top management of this “non-profit” organisation, it is understood, draw huge remuneration packages, with some individuals drawing annual pay and perks worth a crore! It is understood that Satyam created the software that is bundled with EMRI’s services, as part of its Corporate Social Responsibility. At the same time this is “sold” to states at a reported cost of Rs 10 crore.

Thus, clearly, public money is spent to create a privately managed infrastructure. This is the new model of “public private partnerships” that are being promoted. The argument in favour is seductive. It is argued that since the state does not have money to build new infrastructure, it is a “win-win” situation for everybody if through such partnerships, private infrastructure is utilised to provide public services. Such an argument, by an ingenious sleight of hand, inverts the real debate.

The real debate is two-fold. First, is there any long term saving of public money when such partnerships are promoted. Second, is it a given fact that the state cannot find resources to build infrastructure that is publicly owned and managed.

As we have seen earlier, an overwhelming portion of EMRI’s finances come from public coffers. What, then, prevents the government from creating infrastructure that it not only finances but also owns. The way we examine schemes such as the EMRI is inherently flawed. After decades of neglect, health care infrastructure lies in shambles in most parts of the country. We then turn around and say that the EMRI scheme is actually able to deliver services, unlike the situation that existed earlier. It is true that the EMRI, in many places, is an improvement over existing facilities for emergency medical care and ambulance services. But the right question to ask is: if the same amount of public money was spent in strengthening the public system, would there have been larger long term benefits. Such a question will not even be posed today because those at the helm have lost all faith in the ability of public systems to deliver (not just in the case of health care — we see this happening in all fields of public utilities such as water, electricity, and even in the education sector).

INFRASTRUCTURE BY THE STATE: Let us now turn to the issue of the State’s ability to fund infrastructure creation in the health sector. This goes beyond ambulance services, and extends to in-patient and out-patient care, including hospital services. The argument used is that a bulk of infrastructure in the health sector is today privately managed and a majority of people access health services from the private sector. Thus, make a virtue out of necessity by not spending money to create public infrastructure, and by utilising privately owned and managed infrastructure for provision of public services. This is the model that is being promoted through the recently announced Rajiv Gandhi Swasthya Bima Yojana (RSBY) and in several state level schemes. To buttress the arguments in favour of such models, examples are used of other countries such as UK, Brazil, Germany, etc. where the government reimburses for care provided through private providers. So the role of provisioning is sought to be separated from that of financing.

The argument is flawed at two levels. Brazil, UK, Germany, etc. are examples of countries with clustering of population in urban centres — thus creating a situation where private facilities exist in large numbers in areas where the bulk of the population resides. What are the private facilities we are talking about in India in large parts of rural India except for what are euphemistically known as RMPs (Registered Medical Practioners), and which are really untrained quacks. Public Private Partnerships in health service delivery in India, thus would translate into strengthening of the private sector by the utilisation of public funds. We have already seen this happening with the liberalisation of norms for reimbursement for the Central Government Health Scheme (CGHS). On one hand the public infrastructure of hospitals and dispensaries have been dismantled, and on the other, CGHS beneficiaries are encouraged to seek treatment in private institutions, for which the latter are reimbursed with public funds. This is the logic of neo-liberal economics – public subsidy to strengthen the private sector.

The argument is also flawed if we look at examples of many countries around us – and not just at some selected examples, as the votaries of neo-liberal reforms would want us to. In Sri Lanka, for example, even while neo-liberal policies are diluting the public thrust of Sri Lanka’s health system, 90 per cent of in-patient care is provided by public facilities (and 50 per cent of out-patient care). Sri Lanka spends about 2.0 per cent of GDP on public health — similar to the 2 per cent  which even this government accepts is to be aspired for (including in the Eleventh Five Year Plan). Malaysia is again a similar example. Their system is under even more severe strain from neo-liberal votaries, but public provisioning is still the norm and not the exception (with 2.2 per cent of GDP spent on Public Health). Thailand has received accolades for extending coverage to almost its entire population in a relatively short span of less than a decade. In Thailand approximately 75 per cent of hospital beds are in the public sector. There are several other examples of predominantly public provisioning – Cuba, Iran, Chile, Costa Rica, etc. Unfortunately, these examples are never talked of when health administrators in India talk about the merits of the private sector provisioning of health care.

SHORT TERM SOLUTIONS NOT A PANACEA: In the short term, it may be necessary to create arrangements where private facilities are utilised to provide public health services. This, however, can never be a long term solution or a panacea. In the long term, there is no alternative to creating public infrastructure in a country like India. But for that to happen, it is necessary that health administrators are not completely seduced by the perceived virtues of public private partnerships. It needs to be understood that a for-profit private sector – increasingly corporate managed and controlled as in India – cannot be relied upon as the solution to provisioning of public goods such as health care.