Broad guidelines for private investments in setting up of hospitals in tier-II and tier-III cities

Government of India launched the Pradhan Mantri Jan Arogya Yojana (PMJAY) with effect from September 23, 2018, a centrally sponsored scheme, for providing hospitalization cover of up to Rs 5 lakhs per family per year to over 10 crore poor and the deprived families (approx. 50 crore people) in the empaneled hospitals throughout the country. 33 states/UTs have signed MoU for implementing PMJAY out of which 29 have already launched the scheme. The objective of the broad guidelines is to improve the supply of healthcare services in the underserved areas to ensure maximum utilization of the benefits under PMJAY and to improve the demand for quality healthcare services at affordable prices to general public. Hospital models under the guidelines include, Model I, doctor owner (30 to 50 beds); Model II, doctor manager partnership-multispecialty (100 beds); and Model III multispecialty (100 beds or more).

Interventions to incentivize private sector are land allotment, facilitation of various clearances with specific timelines, and VGF for improving the financial viability and bankability of the project. Roles and responsibilities of various stake holders were also outlined. Private sector to build, design, finance, manage operate, and maintain with quality standards. Take market risk and provide services at PMJAY rates. And government sector to earmark and provide sufficient unencumbered land on lease or through bidding, facilitate various permissions, and clearances through special window with timelines; compulsory empanelment of the hospitals for PMJAY and other government scheme; ensure timely payments for services; VGF up to 40 percent of the total cost of the project; provide gap funding up to 50 percent of tax on capital cost; restoration of status of hospital as industry for getting benefit of VGF, etc.