Doctors Fees In Cash Only – Tax Officials Say “Don’t Know Why”
The Inland Revenue Department says it does not know why doctors insist that their fees from private hospitals are paid in cash.
Private hospitals throughout the country demand that doctors fees must be paid by cash only while the rest of the bill can be paid by credit card. Of a patients bill almost 30 percent comprises doctors’ fees but the tax authorities have no system to collect information on how much doctors earn and depend entirely on their tax declarations.
Deputy Commissioner General of the Inland Revenue Department, D. Abeysinghe, explained that the hospitals maintain records of the doctors’ fees. “If the Inland Revenue Department detects any anomalies in the consultant’s income declaration they can request all the financial information regarding that individual from the hospital,” he said.
However, he admitted that this does not happen often as they are forced to rely on detecting such an anomaly or being alerted to a false declaration. “With such a large number of declarations coming in annually, to effectively identify a false declaration it will need to be blatant,” he said. He could not explain why doctors insist that they are paid in cash. “That is an arrangement between the doctor and the hospital,” he said.
Though it is a well known fact that financial transactions are carried out in cash to avoid paying taxes, officials of the country’s income tax department seem to be the only people who are not aware of this.
A doctor, who practices at several major private hospitals, (on the condition of anonymity) said that senior consultants in the country had rallied together and pressured the hospital Boards to make their payments in cash. The doctor said that, “this could be one way these consultants can avoid declaring their actual earnings to the Income Tax Department”.
He also alleged that backroom deals exist between hospital administrators and consultants. “Hospital administrators have instructed their consultants to order all necessary tests when unsure of a diagnosis. We have been told to follow this procedure to avoid any legal complications in the future. If a patient dies while in hospital, we could be sued for negligence,” the doctor explained
He refused to comment on whether or not hospital administrators were purposely encouraging their consultants to order an unnecessary number of tests, for which the hospital charges the patients.
Rohan Fernando, an employee of the HSBC bank, described his experience at the Nawaloka Hospital in April which saw him forced to pay Rs. 280,000 for what eventually turned out to be a severe stomach flu.
On April 11, Fernando was admitted to the Nawaloka hospital following the consultation with Dr. Sharmila Perera. He explained that Dr. Perera had instructed him to admit himself so that they could continue further tests in order to identify the cause of his illness.
Over the next three days Fernando underwent numerous tests including an ECG (Electrocardiography) which the consultants deemed necessary. “By the third day I realised that these doctors were simply wasting my time, my symptoms had reduced yet they appeared no closer to understanding my illness. I told them that I would be checking out the next day,” Fernando explained.
Despite his insistence, Fernando found it difficult to get discharged with doctors advising him to remain in hospital for further observation. “When I finally got the hospital to prepare my bill I was given a rude surprise. For the three days I was charged Rs. 280,000 of which Rs. 90,000 was for the consultant”, he said. Fernando was told by the hospital administrators that of the total amount owed he could pay Rs. 190,000 by credit card, while the consultant’s fee would have to be paid in cash. The hospital charges included room hire, cost of medication and tests, “the consultant earned Rs. 90,000 from simply visiting me twice a day for no longer than 20 minutes,” he complained.
Fernando explained that despite enquiring from the hospital on numerous occasions as to why he was forced to pay the consultant’s fee in cash, no response had been received.
When presented with the case of Rohan Fernando, the doctor responded that this was a prime example of a consultant looking to increase his or her earnings. “This doctor earned Rs. 90,000 for three days from one patient. During that time she would have had at least 10 other patients who were also in the same hospital,” the doctor said. The doctor went on to explain that while a patient can ask for an explanation for each of the tests carried out on them, patients rarely exercise this right. “The consultants and hospitals are being allowed to charge these ridiculous fees from patients as they are never questioned by the public. Often a patient will complain but pay the bill and forget about it,” the doctor said. Continuous attempts to contact bosses of private hospitals in Colombo failed.