The scare of a bigger wage bill

Hospital managements in Kerala are not amused by the demand to implement the new wage structure for the nurses. The industry representative — the Kerala chapter of Association of Healthcare Providers (India) — indicated that most of its members may not be financially capable of raising wages.

“Wage costs amounts to 50-55 per cent of the total cost in most medium to large hospitals, and in older facilities, it may be up to 50 per cent,” says Harish Pillai, President, AHPI.

“Nurses account for 35-40 per cent of the total work force of any hospital,” he adds.

Hospitals accredited by the NABH need to have a higher ratio of nurses, as against public hospitals where on an average there is just one nurse for every 50 patients. Pillai also points out that while a public hospital gets several financial incentives from the Government, including zero capital cost, that’s not the case with a private one. Quoting a recent study at a Delhi public hospital, he said the cost per bed, per patient per day is estimated at ₹13,000, which is fully paid by the tax-payer.

According to Pillai, the smaller hospitals will take the most of the brunt.

Out of 1,282 private hospitals in Kerala, 33 have more than 250 beds. The remaining hospitals have less than 100 beds, and will face serious economic hardship if they are forced to implement the new pay scale for nurses, he says. Most of these hospitals’ patients depend on government-backed schemes to pay their bills.

While the rates decided on medicines or operations do not match the present costs, even getting the bills reimbursed takes up to five months, squeezing these hospitals’ funds for operating expenditure.

Moreover, private healthcare providers do not get any tax breaks and have to pay utility bills at commercial rates.

The Centre had set up a committee headed by senior bureaucrat Jagdish Prasad, as instructed by the Supreme Court in January 2016, to look into the pay structure of the nurses.

The committeerecommended that minimum salary of nurses working in private hospitals with less than 50 beds should not be less than ₹20,000 a month.

In hospitals with 50-100 beds, the nurses should get not less than 25 per cent of the salary of their counterparts in government sector; and those with more than 100 beds, should pay nurses not less than 10 per cent of similar scales in the public sector.

“It is indeed unusual for the committee appointed to recommend the scales for higher bed categories to have prescribed a one-size fits-all wage formula for the unaided private sector in a specific job category across the country,” says Pillai.

“One is not sure if the local economic conditions such as inflation and state GDP, and prevalent minimum wages have been factored in”, he said. The smaller hospitals will be relieved after the recent clarification from the Government that the minimum wages across sectors hasn’t been fixed at ₹18,000 a month.

Industry watchers say that these hospitals, mostly located in semi-urban areas, will be unable to bear the additional burden unless central and state-funded health schemes revise the tariff structures.

The July strikes were a mirror image of the 2010-11 struggle, forcing the Government to set up the Balaraman Committee, which made several landmark recommendations . Consequent to this, revised minimum wages for private health sector nurses were fixed by May 2013. As per the schedule, the next revision of new minimum wages is due in January 2018.

“It is no longer a question of wage hike but the sheer survival of a much needed sector,” says Pillai.

“Based on the quantum of investments, the typical project break-even period is beyond eight years. Now, due to increased regulatory pressures, this time period may be stretched further making this sector unattractive,” he adds.

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