ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Healthcare before Profits


On 8 January 2019, the Ministry of Health and Family Welfare (MoHFW), Government of India (GoI) issued a press statement titled, “Broad Guidelines for Private Investments in Setting Up of ­Hospitals in Tier 2 and Tier 3 Cities Sub­sequent to Pradhan Mantri Jan Arogya Yojana (PMJAY).” As per the statement, the objective of the guidelines is “to improve the supply of healthcare services in the underserved areas to ensure maximum utilis­ation of the benefits under the PMJAY and to improve the demand for quality healthcare services at affordable prices to ­general public.” The title erroneously states that these are guidelines for “Private Investments in setting up of Hospitals,” whereas in reality, they are for “public investments in setting up of private ­hospitals”!

According to the guidelines, the govern­ment will incentivise the private sector in these cities to set up private hospitals by providing them with land and funds, and facilitating clearances in Tier II and Tier III cities. The funding in the form of viability gap funding (VGF) will be up to 40% and in addition to VGF, the government will provide gap funding up to 50% of tax on capital cost. The only requirement of the hospital in lieu of such liberal support is that they would have to empanel under the PMJAY. Further, it states that the government will work ­towards the “restoration of the status of hospital as industry for getting benefit
of VGF.” This industry status not only brings along with it tax concessions, it also exempts them of any accountability in providing free healthcare to the poor, in lieu of the public funding, incentives and/or subsidies.

The private health sector has been provided incentives (public land, funds and gap funding) previously, although in return for commitments of providing services to the poor and underserved populations. However, evidence has repeatedly indicated the failure of the private health sector to adhere to such obligations and the resulting disastrous outcomes and great loss to the public exchequer. It is absurd that the government is actively investing in more such private hospitals, which it dithers from regulating.

The current proposal not only ignores this evidence of violations by the private health sector, it additionally mandates empanelling and paying the hospital under the PMJAY. This too, in total dis­regard for the emerging evidence from the implementation of publicly funded health insurance schemes that private hospitals seldom, if ever, honour their commitments to provide cashless services, and choose to provide only those services where their profit margins are sound.

Since Tier II and Tier III cities invariably have a number of private clinics, the government’s current proposal will fund some of the elements in the healthcare industry to build private geographical healthcare monopolies, drawing patients away from public hospitals, and exclude affordable healthcare providers, like not-for-profit providers. This also is likely to facilitate and incentivise the ­ongoing process of takeover of smaller entities by larger corporations, with ­resultant escalation in healthcare costs for the government, as well as for the vast number of people who are not covered by the government-funded health insurance schemes or other social insurance schemes.

Moreover, the government’s claim that these guidelines are meant to incentivise the private healthcare sector to “improve the supply of healthcare services in the underserved areas” cannot be further from the truth. Cities like Chandigarh, Dehradun, Lucknow, Mangaluru and Raipur are classified as Tier II cities and already have a strong presence of the private sector that is providing services under state-funded health insurance, but does not provide affordable healthcare. For instance, Chandigarh has one of the highest density of private hospital beds and doctors in the private ­sector. The Tier III list includes cities such as Bathinda and Bilaspur that have a large private hospital presence. Within states like Chhattisgarh, most of the insurance claims under state-funded health insurance are already concentrated in these cities, where the insurance-empanelled private hospitals have been caught taking illegal payments from the patients, and engaging in unethical and irrational care. Therefore, saying that setting up of even more private hospitals in these cities will provide healthcare to the underserved communities through the PMJAY is dishonest, ignores all existing evidence and mocks the state of healthcare access in India.

Announcing this handout to private healthcare industry just months before India goes to polls indicates the gov­ernment’s inclination to appease the strong private health sector lobby. The Jan Swasthya Abhiyan (JSA) also notes that the PMJAY is emerging as a supra-constitutional body, having been declared as a National Health Authority without an act of Parliament and without consultation of the states. This is a serious threat to the democratic institutions and is the ­harbinger of fast-track privatisation of healthcare, where private profits of ­industry are prioritised over people’s health outcomes.

The JSA’s apprehensions are confirmed by these guidelines that the PMJAY, as with its predecessor the Rashtriya Swasthya Bima Yojana (RSBY), is nothing but a mechanism to transfer the already scarce public resources to the private corporate health sector. The JSA demands that these guidelines as well as the PMJAY be withdrawn immediately.

The JSA urges the government to focus on ensuring accountability of private and corporate hospitals through appropriate regulation, including the Clinical Establishments (Registration and Regulation) Act to fulfil patients’ rights; to regulate the rates and quality of various services; and to eliminate kickbacks for prescriptions, diagnostics and referrals.

The JSA demands that the government should invest adequate budget in the public healthcare system and initiate urgent efforts towards expansion of public healthcare infrastructure and facilities, human resources, and creation of permanent public assets in these towns and cities, as well as in the whole country.

Jan Swasthya Abhiyan

New Delhi

Updated On : 29th Mar, 2019


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