Dr Vijayashree Yellappa
NITI Aayog

PPP for scaling up medical education in India

India ranks 67th in the list of 133 developing countries with a doctor-population ratio of 0.70:1000 as compared to a world average of 1.72:1000. Further, India has 0.9 beds per 1000 population which is far below the global average of 2.9 beds per 1000 population. These statistics emphasize the critical need for increasing the availability of healthcare infrastructure in the country, at the core of which is scaling up medical education to increase the availability of manpower for healthcare services.

However, as things stand, the availability of medical graduates in India is itself a constraint.  With the population increasing annually at the rate of 1.2 percent, the current annual addition of ~126,770 medical doctors into the system is inadequate and does not match the demands of healthcare needs of the country. Considering the 11.57 lakh doctors registered on the Medical Council of India and assuming around 80 percent of them are in an active profession, the current availability of doctors is around 9.26 lakh. For India’s projected population of around 146.62 crore by the end of 2025, the county needs 14.03 lakh doctors as per the WHO benchmark of doctor: patient ratio (1:1000). 

Lack of medical education infrastructure is often an important bottleneck for the shortage of qualified medical doctors. States/union government find it difficult to bridge this huge medical education infrastructure gap given their limited financial resources and therefore there is an urgent need to attract private capital in this space. While efforts are being made to increase the number of medical colleges in the country, the fructification of efforts is suffering on account of operational roadblocks and regulatory compliance issues. The requirement of extensive land and infrastructure as set by medical regulatory authorities of India, inter alia makes it an expensive proposition to set up and operate a medical school – necessitating large investments. It is practically not possible for the central/state government to bridge the gaps in the medical education with their limited resources and finances. This necessitates formulating a Public Private Partnership (PPP) model by combining the strengths of public and private sectors.

Emphasizing the importance of the above, NITI Aayog has developed the Model Concession Agreement (MCA) guiding principles for setting up medical colleges through PPP. The draft MCA has been developed based on international best practices, and similar PPP arrangements that are operative in the states of Gujarat and Karnataka. Under this envisioned model, the existing district hospitals will be attached to a private medical college. The concessionaire shall design, build, finance, operate, and maintain the medical college and also upgrade, operate, and maintain the associated district hospital as per the Medical Council of India (MCI) norms, with a minimum annual intake of 150 MBBS seats. This PPP arrangement will prove to be a win-win situation, which will not only increase the level of services in district hospitals, but optimally use the clinical material in them for teaching purposes. Further, the number of medical seats can be augmented without any financial burden on government exchequer.  The draft MCA and the model bidding documents can be accessed at the NITI Aayog website (https://www.niti.gov.in/documents/model-agreements).

The selection of concessionaire would be through a transparent competitive bidding process. The bidder may seek appropriate capital grant from the government in order to support their capital investment under the extant viability gap funding scheme, where 30 percent of the capital cost of the project can be funded by the central government and additional 30 percent through the state government for operational expenditure. This would help in bridging the viability gap of the project, thus subsidizing the fees payable by students. Where bidders do not seek any grant, they could offer premium with pre-specified revenue share to the government equal to one percent of the total gross revenue, payable from the 7th year of the concession period. The revenue share shall be increased every year by an additional one percent of the total realizable fee subject to a ceiling of 15 percent. The concession period will be for a period of 35 years, with an option of extending it for another 35 years with mutual consent.

The state government shall shortlist the potential district hospitals that could be upgraded and linked to the medical college. The district hospital will be handed over to the concessionaire on as is where basis. And, as part of the concession, the state government will authorize the concessionaire to utilize the clinical material at the district hospital for teaching purposes. Land for medical college will provide for both the options i.e. to be procured by the concessionaire or to be provided by the authority – to be determined on case to case basis. Where the land will be provided by the government to the concessionaire, it will be on lease basis for a period co-terminus with the concession; with an option for renewal. Lease rent will be calculated at approximately 8 percent of the circle rate.

The district hospital shall have at least 300 beds on or prior to the operation date and it shall be earmarked for free patients and for which the treatment shall be provided free of cost. Concessionaire shall increases number of beds up to 700 as per MCI norms for admission of 150 students. The concessionaire shall be allowed to levy fee on the beds not forming part of the free beds as per the hospital charges. To illustrate, if the total number of beds are 700, then 300 beds plus 20 percent of the remaining 400 beds i.e. 380 beds shall be treated as free beds and the remaining 320 shall be treated as paid beds, which will be at market rates.

To enroll students, concessionaire will follow the admission procedure as governed by the applicable medical education regulations. Officers and staff working at the district hospital will be given a choice to consider other government posting outside the hospital or get absorbed in the concessionaire hospital. Selection of the concessionaire will be based on open competitive bidding carried out by the state government.

India’s health ecosystem allows for the private and the public health sector to complement each other in terms of the availability of infrastructure, faculty and clinical material. The private sector has required infrastructure and faculty, but lack functional hospital having rich clinical material. Whereas, the public sector has a functional hospital, but lacks infrastructure and faculty. The proposed PPP approach will allow maximization of available resources in both in public and private sector hospitals without an additional huge investment and fill a massive shortage of doctors.  Considering the long gestation period of medical education, even if policy changes are made this year, the above-said targets can be reached only by 2025. Hence, the disruption in medical education is so urgent that it cannot be deferred any longer.

This article has been co-authored by



Sonjoy Saha
Adviser, NITI Aayog,

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