NITI Aayog has said that the proposed plan is to bring private capital to setup medical colleges and privatise operations, and management of the associated district hospital is to address shortage of qualified doctors
Government policy think tank NITI Aayog’s proposed draft scheme to link new or existing private medical colleges with district public hospital under public private partnership (PPP), to address the shortage of doctors is out.
The think tank will be conducting a stakeholders' meet on January 21 for further consultations.
"The said Concession Agreement has been developed based on the international best practices, and similar PPP arrangements that are operative in the States of Gujarat and Karnataka. Under this envisioned model, the Concessionaire shall design, build, finance, operate and maintain the medical college and also upgrade, operate and maintain the associated District Hospital with a minimum annual student intake of 150 MBBS seats," NITI Aayog said in the draft posted on its website.
The Aayog has said that the proposed plan is to bring private capital to setup medical colleges and privatise operations, and management of the associated district hospital is to address shortage of qualified doctors.
India has around 9.2 lakh doctors in active service, with one doctor for every 1,457 people as per the country's current population estimate of 1.35 billion. The World Health Organisation (WHO) recommends one doctors for every 1,000 people.
"It is practically not possible for the Central or state the government to bridge the gaps in the medical education with their limited resources and finances. This necessitates formulating a PPP model by combining the strengths of public and private sectors. Accordingly, a scheme to link new and/or existing Private Medical Colleges with functional District Hospitals through PPP would augment medical seats and also rationalise the costs of medical education," NITI Aayog said.
The scheme can be extended to 734 district hospitals across India.
The draft concessionaire agreement suggests that a private entity registered under the Companies Act, 2013, would get the contract and implements the scheme.
The concession period is for 60 years. The proposed concessionaire agreement hands over land and all assets of the district hospital to the concessionaire for the period. There is a provision for an extension at the end of 60 years.
The draft suggests that an existing district hospital selected for the PPP-treatment should have at least 750 beds or the number of beds prescribed by the Medical Council of India (MCI).
Further, all in-patient beds are to be categorised into “regulated beds” and “market beds”. Out of 750 beds, at least 20 percent of the beds shall be for free patients and for which the treatment shall be provided free of cost. Currently, all beds in general wards of district hospitals are free. The remaining are highly subsidised.
The private partner will have to pay the government a share of it gross revenue. The concessionaire has to pay from seven years after the Commercial Operations Date, a share in the Gross Revenue (Revenue Share) as 1 percent for the Gross Revenue in the relevant year. This will increase by 1 percent for every one-year period thereafter, during the concession period, subject to a limit of 20 percent of the gross revenue of such year.
To be sure, this proposal is part of government’s gradual shift from healthcare provider to buyer of healthcare services -- especially tertiary care, where healthcare will be provided by the private sector. However, there are some exceptions like All India Institute of Medical Sciences (AIIMS) and other public hospitals.
Viability of PPP
Jan Swasthya Abhiyan (JSA), a healthcare NGO, did a deep dive into the draft Concessionaire Agreement and found several inconsistencies. JSA suggests that the experiments with PPPs have failed in most instances."In India, we are unable to locate any experience in Karnataka that it could be based on. The closest one - in Raichur - was a dismal failure on which internal government assessments are available. This proposal is very similar to the “Gujarat Adani Institute of Medical Sciences” model in Bhuj, Gujarat. This model had a high government investment and the Adanis also brought in a Rs 100-crore investment- but after 10 years, it still has a cumulative deficit - which the
government may or may not be covering,” JSA said.
“And this is after it has been charging Rs 3 lakh per medical student and Rs 8 lakhs for an NRI student. Moreover, for Adani, which has a Rs 24,000 crore investment in that district of Gujarat, this was well within its CSR obligations. Even when within Gujarat the scheme was sought to be expanded to six districts (Tapi, Dahod, Panchamahals, Banaskantha, Bharuch and Amreli) there have been no takers for this," JSA added.
It also cites examples of world’s biggest experiment in health PPPs in England (Private Finance Initiative) is brought to an abrupt end by the government there due to mounting negative impacts on the public purse and wide scale failure to deliver value for money.
"The cost of Sweden’s PPP hospital has doubled in cost to the government and is now known as the most expensive hospital in the world and the PPP hospital in Lesotho was estimated to have cost half the nation’s health budget in 2014 and in 2017, the cost doubled the affordability threshold agreed by the government and World Bank," JSA adds.
Along with the viability of PPPs and converting public healthcare to profit private entities, there are concerns about what is going to happen to government's reservation policy in admissions and jobs, if these hospitals are privatised.Also, district hospitals are the nodal centre of primary healthcare delivery. There was no mention about what will happen to this status once district hospital is privatised. These are all valid concerns that the government has to clear.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.