Friday, July 06, 2018

SEBI refuses to share Fortis investigation report

Business Line: New Delhi: Friday, July 06, 2018.
The capital market regulator SEBI has declined to share the report of an internal investigation into alleged financial irregularities at Fortis Healthcare.
Responding to an RTI filed by BusinessLine seeking details of the report of the internal investigation conducted by law firm Luthra and Luthra, SEBI said sharing the report with the public could harm the already beleaguered company’s interest.
SEBI’s reply to the RTI stated, “Since the information sought is available to SEBI in fiduciary capacity and includes commercial confidential information, the disclosure of which could harm the competitive position of the entities, the information sought is exempt under Sections 8(1)(d) and 8(1)(e) of RTI Act, 2005.” The investigation was initiated by the audit and risk management committee of the company. It was completed on June 8 and eventually submitted to SEBI and Serious Frauds Investigation Office (SFIO).
A closer look at Section 8(1)(d) and 8(1)(e) of the RTI Act reveal that information sought including commercial confidence, trade secrets or intellectual property, the disclosure of which could harm the competitive position of a third party, is exempt from RTI, unless the competent authority is satisfied that the larger public interest warrants the disclosure of this information.
Surprisingly, SEBI also believes that the disclosure of such information from the investigation report that alleges siphoning ofup to Rs.445.03 crore, is not in the larger public interest. Meanwhile, Fortis has been facing heat over massive over-charging of patients since last year from various quarters, including the National Pharmaceutical Pricing Authority (NPPA), which in its report stated that overcharging of up to 1,737 per cent was visible in patient bills that Fortis had processed when it came to paying for drugs and consumables. A certain part of those bills was also under Price Control laws which Fortis had blatantly flouted by jacking up maximum retail price (MRP) of drugs and consumables.
In spite of strong external headwinds, including highly-publicised patient-related incidents, in one of which the family was charged up to Rs.16 lakh for 15 days of admission, the top 10 hospital facilities such as Fortis Memorial Research Institute (FMRI) in Gurugram, Shalimar Bagh (Delhi), BG Road (Bengaluru), Malar (Chennai) and Amritsar continued to exhibit growth momentum in terms of revenues, contributing 76.5 per cent to the hospital business revenue, Fortis said. In fact, a look at the company’s numbers reveals that even after the NPPA inquiry into FMRI’s repeated overcharging attempts, the company’s flagship facility recorded revenues of Rs.513 crore in FY18, a growth of 6.5 per cent over the previous year.
While the company’s average revenue per occupied bed (ARPOB) increased to Rs.1.49 crore in FY18, from Rs.1.45 crore in FY18, FMRI continues to have the highest ARPOB in the company’s network of multi-specialty hospitals. FMRI’s ARPOB was Rs.2.85 crore in FY18, compared to Rs.2.74 crore in FY17.
“This indicates that the healthcare costs for an average patient have hit the roof. Disclosure of the report that investigates siphoning of funds is absolutely in public interest,” said Leena Menghaney, Head, Access Campaign, Doctors Without Borders.