Dr Vishal Arora
Principal Consultant – Healthcare,
PricewaterhouseCoopers Private Limited

PPP: Way Forward To Improve Indian Healthcare

Indian healthcare continues to be an unregulated and potentially untapped sector, growing rapidly at a CAGR of 13 percent. The healthcare space in India is largely dominated by private players and the cost of medical treatment in these private centers is rapidly increasing and getting out of reach for even the middle class. Due to the deficiency in the public health system, the poor in India are forced to seek services from the private sector, often borrowing to make the payment. Currently, in India, 67 percent of the healthcare expenses are largely (one of the highest in the world) out-of-pocket and 55-60 million people end up below the poverty line owing to the healthcare spend. Given respective strengths and weaknesses, neither the public sector nor the private sector alone is in the best interest of the health system.

The government has clearly hinted that it is ready to reorient its dual role as a payor and provider because of its increasing inability to perform on both fronts. There is a larger belief that public sector bureaucracies are highly inefficient and unresponsive and the public healthcare reforms have failed to reach the larger strata of the society. The deficiencies in the public healthcare system can only be curtailed by significant reforms and public-private partnership (PPP) in healthcare is one of them.

A PPP aims to harness the large pool of private sector healthcare resources and draw them into the process of nation building. It has been prevalent in all sort of sectors, including health for decades throughout the world. In the health field, from the pre-Independence era, the government allocated land at subsidized rates to private players to build healthcare facilities in return for providing healthcare services at nominal rates or free to the poor. The primary reason to encourage private participation does not appear to be a lack of funds but a lack of managerial and technical ability. Over the last few years, the focus of the government has shifted to PPP in healthcare to improve the efficiency, effectiveness and equity of healthcare services and this gives the government an opportunity to regulate the healthcare sector of the country.

In India, there have been successful PPPs instrumented by healthcare sector like contract management of PHCs in Karnataka, National Dialysis Program (NDP) across India, telemedicine initiative by Narayana Hrudayalaya in Karnataka, Emergency Ambulance Services scheme in Tamil Nadu, contracting in Sawai Man Singh Hospital, Jaipur, and diagnostic centers in hospitals of Uttaranchal. Services, which can be carved out independently like dialysis, pathology, and radiology have largely succeeded under the PPP banner. Under the NDP, `152 crore has been allocated to 29 states/UT for setting up dialysis centers under the PPP umbrella and 2400 dialysis machines have been installed under this model. This has made dialysis accessible to the poor even in the smaller towns and drastically reduced their travel time and cost incurred.

Although successful, the PPP models have numerous challenges preventing them to dwell in a country like India. The biggest challenge is the budgetary constraints of the government resulting in delayed payments. Non-availability of qualified workforce, lack of a transparent pricing mechanism, trust deficit between the government and the private player, and lack of centralized regulator are the other key inhibitors for the success of PPPs in India.

To conclude, there is an increasing traction between the state and central governments on healthcare PPPs and given India’s unique constraints, this is the only way forward. Government is moving from a provider to a payor and will continue to engage private sector via PPPs, because of which this market is expected to continuously grow aided by favourable government policies and shift in focus on healthcare. Used judiciously and fitted to local circumstances, PPPs clearly have the potential to drastically change the healthcare landscape of India.

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