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Govt to rejig viability gap funding norm to attract private invest in healthcare
The health ministry has prepared broad guidelines for private investments to set up hospitals in tier 2 and 3 cities and also gave state governments liberty to design their state specific models making the process easier and proposal lucrative.
NEW DELHI: The health ministry has teamed up with the finance ministry to rejig the recently announced 30% viability gap funding rules to attract private investment in the sector to build hospitals in tier 2 and 3 cities to treat covid-19 patients.
The health ministry has prepared broad guidelines for private investments to set up hospitals in tier 2 and 3 cities and also gave state governments liberty to design their state specific models making the process easier and proposal lucrative.
Finance minister Nirmala Sitharaman had in May announced a stimulus package under which the government would spend ₹8100 crores to provide 30% viability gap funding instead of the current 20% to boost private sector investment in social sector infrastructure creation under Public Private Partnership (PPP). Soon after the announcement, health ministry reached out to Department of Economic Affairs indicating that viability gap funding has been an unattractive proposal for the private sector, and that there was a dire need of hospitals in Tier 2 and Tier 3 cities for covid-19 treatment.
The viability gap funding is especially focussed at expanding the Centre’s flagship scheme Ayushman Bharat- Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) that provides hospitalisation cover of up to ₹5 lac per family per year to over 10 crore poor and the deprived people in the empanelled hospitals throughout the country.
“The VGF has been successful for roads, highways and Metro but in healthcare there have been no takers. We are collecting information about shortfall of hospitals in Tier 2 and 3 cities as covid-19 treatment should be widely available there as well,” said Alok Saxena, joint secretary, union health ministry.
“No person should travel more than 50 kilometres for covid or non covid treatment. The VGF model is good but it is very complex as building a hospital doesn’t only mean construction of a building. A fully functional hospital needs quality medical equipment, maintenance, manpower, oxygen beds, nursing stations and much more,” he said. It should also have a profitable aspect with ensured patients who can pay. We have to make the guidelines lucrative for private sector to invest.
“The government has offered VGF only for capital expenditure, while the healthcare sector needs funding support for operational expenditures too. Further, high cost of manpower, poor availability of quality manpower and low paying capabilities are prime reasons that hospitals do not invest in smaller towns and cities,” said Alok Roy, Chair-Federation of Indian Chambers of Commerce and Industry (FICCI) Health Services Committee.
The Association of Healthcare Providers-India (AHPI) also suggested ways to health ministry and NITI Aayog to enable private sector to invest. It suggested a single window clearance for statutory compliances as it takes years to get all the clearances from multiple agencies, facilitate in land procurement as there is no free land for the purpose. The industry body called for soft loans at concessional rates and electricity at industry rate against present commercial rates.
“At 30% rate VGF can invite funding of 27000 crore. If we put entire this money in to health sector, it can create 50000 beds (considering 50-lakh for each bed).We also want to help during the health crisis, if our concerns are addressed,” said Girdhar Gyani, Director General, AHPI.
