Chocolate and Gold Coins

Wednesday, August 31, 2005

Maternity Hospital Bribes

Yesterday, everywhere I turned, I found this same story. I read it first on Vikram’s blog, then at Sepia Mutiny, then India Uncut, and even Marginal Revolution. The story comes from the New York Times:

Just as the painful ordeal of childbirth finally ended and Nesam Velankanni waited for a nurse to lay her squalling newborn on her chest, the maternity hospital's ritual of extortion began.

Before she even glimpsed her baby, she said, a nurse whisked the infant away and an attendant demanded a bribe. If you want to see your child, families are told, the price is $12 for a boy and $7 for a girl, a lot of money for slum dwellers scraping by on a dollar a day. The practice is common here in the city, surveys confirm.

This practice seems so shocking; it seems incredible. I wondered how such a practice could start? Were these public hospitals or private hospitals? Were the doctors and nurse there adequately paid? As an economist, I was naturally curious to see how such petty corruption comes about.

The problem with the New York Times article is that it doesn’t adequately explain the context of this corruption. The real story is between the lines.

Although the article casually claims that, “the practice is common here [Bangalore]” a careful reading of the article indicates that the only hospital that the reporter writes about is Austin Town Maternity Home and their clientele is entirely poor. Nesam and the other women who give birth at that hospital don’t pay any formal payments to Austin Town Maternity Home. Presumably, Austin Town is not a private hospital because the article ends with this quote:

Margaret, a 50-year-old grandmother who uses only one name, said she paid to see her 19-year-old daughter's baby the day he was born, Feb. 16. She earns only $10 a month as a maid and said that she was determined to pay no more than $7 - and that she did not.

"Though I felt bad and a little angry, a private hospital would have cost at least 2,500 rupees," or about $60, she said. The bribe was still costly but, by the calculus of poverty, a relative bargain.

My educated guess is that the workers at Austin Home are severely underpaid relative to the private hospitals. This has two effects: it drives away competent workers and it attracts not very nice ones. These not very nice nurses and doctors are probably a touch bitter that they missed out on the better salary, and feel they deserve more. So the bribes are a way for these workers to supplement their earnings and Austin Home looks the other way because it is an effective (but extremely callous) way of extracting some partial payment from the families who use their facility.

Likewise, the city of Bangalore looks the other way because they know what the problem is. If you provide a free hospital with very nice services, then even the middle class will use the service. They don’t want to put the private hospitals out of business, so they look the other way.

The callous treatment that the woman receive from Austin Town is, in effect, designed to drive them away. They don’t pay much for the service, so they get what they pay for. It is incentive compatibility: a mechanism to prevent everyone from using a “free service”. Basically it is reason number 5,145,874 why poverty stinks.

I would be willing to bet that if you pay $60 to give birth at a nice private hospital, you don’t need to pay any bribes. The article should have mentioned this, though.


  • Michael, I agree but the core point NYT was trying to make it is irrephensible that these things even have to occur. I strongly believe that irrespective of how you are paid, u should have some common human dignity, especially when life of a newborn and death is involved. Making money off someone's death/birth is not nice.. My 2 cents :)

    By Blogger The Greatest Hokie Ever !!, at 12:11 PM  

  • Here is a link to the pdf file of Bangalore's report has some very interesting revelations (especially improvements over the past few years).....

    And while dealing with corruption what choices can people make? It's something i'm very interested in (here's an older post of mine which raises these questions). I hope there's a good discussion on this topic.

    By Blogger Sunil, at 1:24 PM  

  • Michael,

    It is not bitterness but extreme greed and insensitivity that makes them to collect such bribes. Being an ethical physician, I was appalled at such things. Many physicians in government hospitals too take bribes, especially for surgeries.

    The assumption that they are poorly paid is wrong. In fact, the salaries of nurses and other class IV employees are about three times that paid by private hospitals.

    By Blogger SR, at 3:56 PM  

  • Hi Greatest Hokie, Sunil, and Sub
    Hokie: I agree that taking bribes in this way is reprehensible. But I assume that there are some underlying motivations that should be addressed.

    Sunil: There is an interesting discussion of corruption on the Becker Posner Blog and at Atanu Dey. Maybe I will talk some more about corruption. I tend to agree with Posner that corruption is partly the result of poor salaries. But Atanu's point that corruption starts at the top rang true also.

    Sub: I am surprised by what you say. Why would doctors and nurses bother with small change like $7 if they are being paid much more than in private hospitals? Common sense would say that it isn't worth losing a good job over petty theft. This would be like that.

    It might be that there just isn't enough enforcement of corruption laws. A few jail sentences and things might change.

    By Blogger Michael Higgins, at 5:41 PM  

  • here again Michael- having had experience with both Indian hospitals as well as American ones: the exhortations from the insurance companies here r legitimised hence not called bribes. but believe me, when it comes to paying an ample monthly premium and then having to pay a hefty bill after a simple doc's visit, I consider it highway roberry! Over the years, we have been to both governemnt run hospitals as well as private clinics in India. Yes, while there r some unscrupulous docs/nurses wish for some "tips" or "extras", most of them truly serve the poor or anyone who comes thru the door. Of course the sad part is when they see an "educated" person, they dare not wag their tail as they know they can get chargesheeted! All in all it is about resurrecting human values across the world.

    By Blogger blokes, at 5:51 PM  

  • Michael - i may be late on this post and I think you and Sunil have another one on a similar topic,,,but I will pen my thoughts on this one anyway.

    I agree with you on the count that this detterent policy is tolerated if not encouraged in order to keep things moving.... but sometimes I wonder if less money is a cause of Corruption or is it lack of fear?

    By Blogger @mit, at 12:22 PM  

  • My grandfather used to give the people in the hospitals in Brooklyn $20 and then he'd get my grandmother a better hospital room.

    By Anonymous Half Sigma, at 6:39 PM  

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