A policy prescription for states’ O2 health

By Sanjeev Nayyar

“The Supreme Court ordered formation of a National Task Force to streamline oxygen allocation. Earlier it observed that the Centre should consider revisiting its formula which computes the liquid medical oxygen requirement of the states/UTs based on the number of ICU/Non-ICU beds.”

Actually, in the normal course, medical-grade liquid oxygen is freely sold. The Centre has got powers under the Disaster Management Act relating to Covid19, and hence, has assumed power to direct O2 supply from all producers.

At the outset it must be made mandatory for all hospitals having more than a pre-determined number of beds (a pan-India threshold) to have in-house oxygen plants and within the next six months. Plant size is to be decided by local body. The Centre has, under the PM Cares fund, asked for 551 O2 plants to be made in every government hospital in district headquarters. The progress must be monitored by the Centre. These should subsequently be run and maintained by the states. Note that oxygen is a dangerous gas. So, the emphasis has to be on safety.

Here are the contours of a proposed policy that is rational and user-friendly:

a. The quantum of O2 required by a hospital should be based on the number of beds, including ICU beds. It is difficult to estimate demand for oxygen cylinders required at home. So, a percentage of local demand, say 5%, may be added to a city’s requirement.
The in-house manufacturing capacity of O2 should take care of emergencies. Also, PSA technology vendors should offer Annual Maintenance Contracts to address breakdowns and plant maintenance.
PSA plants have to be self-funded. Note that loans to hospitals have become cheaper. Reserve Bank of India recently announced “a Rs 50,000 crore emergency health services loans, which can be given by banks till March 31, 2022”. This shall reduce the cost of borrowing for hospitals because such lending, being a part of priority sector lending, means lower interest cost.
b. Lay down rules on oxygen stock at the local level and have regular audits to ensure norms are followed.
c. The stock levels of O2, in terms of ‘number of days of consumption’ should be a function of the lead time. The higher the lead time, the more the stock required. Lead time needs to be decided at the local level, based on the time it takes between placing of an order and to delivery at the hospital.
d. Total O2 demand should be collated at the town- and district-levels by the state governments.
e. From the quantum of oxygen determined, reduce 50% of the production capacity of plants set up by hospitals at district level and ones by DRDO amongst others. The balance 50% is a buffer.
f. State-wise O2 requirement for the top-15 consuming states has to be annually audited.
g. If a local body increases the number of beds, it must immediately inform the state government and its demand must get reflected in the state/UT oxygen demand.
This is important because of what Mumbai’s Municipal Commissioner I.S. Chahal told the Indian Express: “I told the Delhi government that no hospital should be forced to add beds. The SOS calls from hospitals are because they are forced to increase oxygenated beds overnight, which is not supplemented with oxygen storage.”
h. District- and state-wise data of oxygen demand should be uploaded on a site, say, www.oxygensupplyindia.com, that is maintained by the Centre.
i. States must also upload O2 quantity produced within their jurisdictions.
j. Data should be updated every quarter, say, 15-20 days before a new quarter starts.
k. The Union health ministry must review state-wise demand and production. Allocation within states is to be decided locally. We need macro-control by the Centre and decentralisation at state level. Logistical optimisation based on linear programming, etc, would complicate matters.
Areas of potential shortage are to be highlighted to states that would have to import from other states/abroad, increase supplies through the PSA route or incentivise O2 producers to set up plants.
At all times, the Centre has to facilitate meeting the shortage even though primary responsibility lies with the states.
l. State-wise supply should be mapped against tankers, owned by or made available to states. Where there is shortage, states will have to arrange.
m. State governments must maintain strategic reserves of O2. Location and quantum of reserve plus all costs therein are to be borne by state governments.

Industry sources indicate that one cannot store large quantity of liquid oxygen near cities. It will vaporise in a few days and is hazardous too.

So, it is best to store at steel plants that have 4,000-5,000 tons of storage capacity. If tankers are kept on stand-by, they could be transported by train as is being done currently. States that want to have strategic reserves must be willing to bear the costs.

Let domain experts decide optimal option for reserves.

n. One way to reduce the logistics problems is to lay gas pipelines from existing Air Separation Plants (which produces cryogenic and gaseous O2) near cities to hospitals. Industry sources state that 40-50 km of gas pipeline is possible. Piped gas might be cheaper too.

Note that towns that are regional healthcare centres, i.e., attract patients from other states or districts—for instance, Delhi, Chandigarh, Varanasi, Vellore, Manipal, Mangalore, Hyderabad, Madurai, Guwahati, etc—should keep additional stocks of O2.

Some policy changes might result in additional cost, but this needs to be borne if we have to save lives.

The author is a Chartered Accountant and founder www.esamskriti.com

Twitter: @NayyarSanjeev