Referral hospitals may face 10% duty on medical appliances

Infographic: TBS

The government plans to increase duties on imports of more than 200 medical machines and equipment used by referral hospitals in fiscal year 2024-25, potentially placing a cost burden on critically ill patients.

According to finance ministry officials, the fiscal measure will raise the duty to 10% from the current rate of 1% on the import of medical appliances by such hospitals, which are currently exempt from other duties and VAT.

Officials explained that referral hospitals, which are equipped to provide specialised treatment and have specially trained physicians, currently import these items at reduced duty but charge significant amounts for their services.

The government aims to realise more revenue from this sector without causing an increase in treatment costs, the officials added.

However, industry leaders argue that this move may affect healthcare expenditures for patients who prefer services from top local hospitals instead of seeking treatment abroad. Such measures could deter investments in specialised hospitals and expansions.

Speaking to The Business Standard, Dr AM Shamim, managing director of Labaid Group, expressed concern that the decision could strain foreign currency reserves as many patients may opt to seek treatment abroad.

He explained that increased input costs would lead to higher service costs.

Dr AM Shamim said Labaid Hospital currently offers an angiogram test for only $150, whereas the same test costs around $450 in a Singaporean hospital.

Referring to a study, he said Bangladeshi citizens currently spend around $5 billion on treatments abroad, which could rise to $10 billion annually if costs increase due to the high import duty.

The physician entrepreneur said they have plans to expand their capacity by installing some new machines in the neurology and kidney departments, as patients are willing to see the latest facilities here.

They also plan to increase the capacity of the Labaid Cancer Hospital, he added.

Dr AM Shamim suggested imposing higher duties on luxury items rather than essential healthcare services and facilities.

Conditions for referral hospitals

To qualify as a referral hospital, the government has set specific conditions: the hospital must be mono-disciplinary with a minimum of 100 beds or multi-disciplinary with a minimum of 150 beds.

It should provide high-quality medical services meeting international standards, have research facilities, and be capable of conducting research activities.

Additionally, the hospital must utilise sufficient and modern medical machinery and equipment, ensuring proper maintenance.

To avail of reduced duty facilities, these hospitals must obtain prior permission from the National Board of Revenue (NBR) through the Directorate General of Health Services.

The facility began in 2005 with zero duty on the condition of providing free treatment to 5% of their total patients – poor people. However, the government imposed a 1% import duty in FY17 as most hospitals did not comply with the free treatment condition.

Leading private hospitals in the country have enjoyed the "referral hospital" facility for importing medical and hospital equipment.

Major referral hospitals include BIRDEM, the National Heart Foundation, Evercare Hospital Dhaka, Zainul Haque Sikder Women's Medical College and Hospital, Khawaja Yunous Ali Medical College, Ibrahim Iqbal Memorial Hospital, Jalalabad Rajib-Rabeya Medical, United Hospital, Square Hospitals, Salauddin Specialised Hospital, Ad-din Medical College Hospital, Delta Hospital, and Labaid Specialised Hospital.

Green Life Hospital, Enam Medical College Hospital, Bangabandhu Memorial Hospital, Sumona Hospital, Monsur Ali Medical College, Dr. Sirajul Islam Medical College, Care Specialised Hospital, MH Samorita Medical College Hospital, Gazi Medical College Hospital, and Asgar Ali Hospital are also on the list.