• The Health Ministry and the NITI Aayog have developed a Public Private Partnership (PPP) framework to let private hospitals run services within district hospitals, on a 30-year lease for three non-communicable diseases i.e. cardiac disease, pulmonary disease, and cancer care.


  • First in the world, the Aayog is all set to push states to privatise well functioning district hospitals in the Tier 2 and 3 cities like Pune, Baroda, Visakhapatnam, Madurai and so on.
  • The proposed model consists of leasing out for 30 years a portion of the hospital to a private company to provide treatment for the three diseases i.e. cardiology, cancer and pulmonology that account for 35 per cent of mortality in India.
  • It is also a fact that three-quarters of the specialists, equipment and beds are in the private sector. Thus, partnership is therefore inevitable.
  • However, States like Tamil Nadu have rejected the scheme stating they have been able to provide quality care through the state health insurance scheme that covers 70% of the population at 10% of the health budget.

Public–private partnership is not new:

  • India has a plethora of public–private partnership (PPPs) in health, starting with handing over free land and extensive custom duty waivers for imported equipment, to “strategic partnerships” under which public hospitals have been handed over to large corporates, outsourcing of diagnostics and dialysis units and so on.
  • The largest PPPs are, however, under the government sponsored insurance schemes where treatment costs for eligible patients are reimbursed by government at agreed package rates.

The objectives:

  • Niti Aayog’s proposal pushes for PPPs focussed on cancers, heart conditions and respiratory tract diseases in non-metros.
  • It would see private healthcare service providers bid for a 30-year contract to upgrade and operate these facilities within district hospitals.
  • The scheme is designed to address the acute shortage of trained personnel and infrastructure in public hospitals, particularly those situated away from large cities and metropolitan centres.
  • The Niti Ayog asserts that the scheme will lead to infusion of resources by the private sector, and will expand access to healthcare services.

The provisions:

  1. The private entity will have its own staff and personnel, laboratories, pharmacy, ambulances and common services like cafeteria and bookshops down to the ATM.
  2. The private sector will also have an assured market, access to all confidential records and information and freedom to charge user fees.
  3. Complicated cases will, however, be referred to bigger hospitals — their own or of government.
  4. A Grievance Redressal mechanism is proposed. Overall accountability is confined to submitting some annual reports to the government. In case of any violation of conditions, the government will need to seek judicial relief.
  5. The State governments will give Viability Gap Funding (VGF), or one-time seed money, to private players to set up infrastructure within district hospitals.
  6. The private parties and State health departments will share ambulance services, blood banks, and mortuary services.
  7. Beneficiaries of the government insurance schemes will be able to get treatment at these hospitals but there will be no reserved beds or quota of beds for free services. General patients will also be allowed to seek treatment.

The major drawbacks:

  1. The challenge in the Niti Aayog hybrid model is its implementation.
  • It brings forward the question that how does public and private managements coexist in the same physical space?
  • Because, a hospital is a living institution that cannot have partitions.
  • Salary streams, motivation levels, working methods, prescription practices, monitoring and accountability systems, work expectations, all vary. Such as:
  • Every day, there are instances of patients being denied treatment in private hospitals till payment is made or preferring paying patients to the government insured ones or levying additional charges in addition to the sum reimbursed.
  • Private hospitals are also known to overcharge devices like stents and drugs that are the key revenue earning centres.
  1. The model does not provide any information on the pricing strategy and its impact on public budgets.
  • Under the Aayog model, several costs are being subsidised, rates charged ought to be half of the CGHS rates.
  1. An implementation of the proposal will further worsen inequity in access to healthcare services.
  • Private providers, following the money trail, will stay away from poor and remote districts, leaving these to the public sector to manage.
  • This will further weaken the ability of public hospitals to attract and retain trained doctors and other health workers, as public services will be restricted to the poorest areas where working conditions are the most difficult.


  • The simple remedy could be to significantly enhance investment in public healthcare services, including in the training of health workers.
  • On a positive note, this initiative certainly provides effective diagnostic facilities at affordable cost for the life threatening diseases.
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