After reading this article, you can solve the UPSC Mains practice question given below
Critically analyse the potential challenges and risks of implementing PPP models in healthcare and medical education, and suggest necessary measures to ensure equitable, quality, and sustainable outcomes. (GS II, Subject- Social Justice)
Why in News?
- Recently, concerns have been raised over the public-private partnership (PPP) model in medical education and healthcare in Andhra Pradesh.
- Experts and public health professionals have highlighted the risks of privatising public health assets, particularly in district hospitals and medical colleges, without strong institutional mechanisms to enforce contracts.
Background and Context
- Scale of Expansion: In Andhra Pradesh, the number of government medical colleges was expanded to 17 recently. Plans are underway to add 10 new colleges via the PPP route, with 835 acres already acquired.
- Economic Blueprint: Each college, linked to a 650-bed district hospital, is estimated to cost ₹450 crore. Funding is to be mobilised from NABARD, Central Government schemes, and state resources.
- Revenue Strategy: A three-tier fee structure (₹15,000 to ₹20 lakh per year)has been proposed to ensure fiscal sustainability, aiming for a recovery of ₹55 crore by the fifth year of operation.
Proposed Policy Framework and Fee Structure
To ensure fiscal sustainability, a three-tier fee structure has been designed for these institutions:
- Subsidised Category: 50% of total seats are priced at ₹15,000 per year.
- Intermediate Category: 35% of seats are priced at ₹12 lakh.
- NRI Category: 15% of seats are earmarked for Non-Resident Indians at ₹20 lakh.
- Revenue Projection: Total revenue from fees is estimated at ₹11 crore per batch annually, aiming for a recovery of ₹55 crore by the fifth year.
Implementation Mechanics under NITI Aayog Guidelines
The feasibility reports for these 11 colleges, prepared by KPMG, follow the NITI Aayog push for PPPs. Key contractual terms include:
- Land Lease: The entire land is proposed for a 33-year lease, extendable for another 33 years at a nominal rate of ₹100 per acre.
- Infrastructure Transfer: Existing district hospitals are to be handed over to private investors for upgrading.
- Viability Gap Funding (VGF): Funding of 25% of the estimated project cost is to be provided by the government.
- Operational Guarantees: The government must ensure 70% bed occupancy and provide free space (500 sq. ft. rooms) for Jan Aushadhi pharmacies and medico-legal work.
- Investor Obligations: Civil works must be completed within two years, and 70% of beds must be earmarked for free inpatient treatment for government-referred patients at Ayushman Bharat rates.
Critical Challenges and Inefficiencies
The transition to a PPP model faces several structural and systemic apprehensions:
- Fragmentation of Public Health Systems: PPP arrangements at the district level are argued to fragment the public health system. This hinders the vertical integration of primary, secondary, and tertiary care, which is vital for a strong referral system and continuum of care.
- Imbalance in Risk Sharing: Contracts are often perceived as faulty, as risks are not evenly shared. The government bears the risk of delayed payments and the obligation to ensure 70% bed occupancy, while the private investor may focus on profit maximisation.
- Impact on Equity and Access: Poor and middle-class students may lose access to affordable education. Furthermore, private investors are under no obligation to adhere to reservation quotas for recruitment, leading to a loss of job opportunities for marginalised groups.
- Institutional Capacity Deficit: The state is often seen as “soft,” lacking the institutional capacity to enforce complex contracts or monitor clinical standards. This is evidenced by the poor enforcement of the Clinical Establishments Act.
- Commercialisation and Brain Drain: High fees incentivise graduates to work in the private sector, move to urban areas, or go abroad. This exacerbates the specialist vacuum in rural areas and public facilities.
- Gaming the System: Private players may resort to under-the-table fees, compromises in faculty appointments, or denial of care to divert earmarked “free” beds toward higher-paying commercial patients.
- Loss of Public Control: Handing over district hospitals and land on a 66-year lease effectively transfers control of critical public infrastructure to private hands, with little assurance of long-term public benefit.
- Judicial Delays: In case of investor failure, the only remedy for the government is the judiciary, which could take several years to adjudicate, leaving public health in limbo.
Way Forward
To ensure that medical education remains a public good and does not compromise the “Right to Health,” the following multidimensional strategies are essential:
- Evidence-Based Assessment and Need-Gap Analysis: A thorough evaluation of disease burden, demographic shifts, and technological disruptions must be conducted before standardizing a 650-bed hospital model across all districts.
- Customized healthcare planning should replace the “one-size-fits-all” approach to ensure infrastructure aligns with local requirements.
- Strengthening Institutional and Regulatory Capacity: The state must transition from being a “soft state” to a robust regulator by building the institutional capacity to enforce complex contracts and monitor clinical standards.
- Strict enforcement of the Clinical Establishments (Registration and Regulation) Act is necessary to ensure that private partners do not prioritize revenue over service delivery.
- A dedicated Grievance Redressal Mechanism and a Whistleblower Policy should be established to prevent “gaming the system” by private investors.
- Investment in Human Capital and Rural Retention: Rather than relying on high-fee commercial models, the government should invest in subsidized medical education to create a pool of doctors committed to serving in rural and public hospitals.
- Policies like service bonds and the creation of a Public Health Management Cadre (similar to the Tamil Nadu model) can help retain specialists in the public sector.
- Holistic Integration and Continuum of Care: The organic development of the health system must be preserved by maintaining the vertical integration of primary, secondary, and tertiary care.
- District hospitals should remain the pivot of the referral system, ensuring patient pathways are smooth and not fragmented by siloed private management.
- Balanced Risk Allocation and Financial Transparency: Risk-sharing frameworks must be redesigned so that the financial burden and operational risks do not fall solely on the government.
- Dynamic pricing models and transparent fee structures are required to prevent out-of-pocket expenditure (OOPE) from pushing families into poverty.
- Leveraging Technology and Innovation: The use of telemedicine and digital health tools (like eSanjeevani) can help take urban expertise to rural settings without the massive capital expenditure of new physical buildings.
- Corporate Social Responsibility (CSR) funds and Viability Gap Funding (VGF) should be utilized judiciously to support infrastructure in underserved regions rather than profit-rich urban centers.
- Alternative Capital Mobilization: Instead of privatization, the government should explore raising health spending to 2.5% of GDP and mobilizing capital through low-interest loans from institutions like NABARD to keep assets under public control.
Conclusion
The push for PPP in medical education, while framed as a solution to financial stringency, risks turning a public welfare service into a revenue-generating business. Without robust institutional safeguards and a focus on equitable access, the model may lead to the closure of colleges—much like the earlier IT-led engineering boom—leaving the poor at the mercy of market forces. Quality of education and universal access must remain the primary policy objectives over mere infrastructure expansion.
