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Power Of Private-Public Partnerships In Healthcare

There is a need to start a national dialogue to find the optimal private-public model for the Indian context. This model will need to create and align incentives for private hospitals and entrepreneurs to invest in medical education and research while delivering high-value care.

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In India, Union and state governments have traditionally operated medium and large-sized hospitals, while small hospitals (often referred to as ‘nursing homes’) are privately operated by entrepreneurial physicians. From the 1980s, for-profit chains consisting of medium-sized secondary hospitals began to form and spread through the country’s large cities.  

The number of private health enterprises rose sharply after 1990 during the liberalization of the Indian economy, and particularly after 2000 following the rollout of liberalization policies in the country’s healthcare sector. At present, private healthcare accounts for anywhere from 60 per cent to 74 per cent of India’s total healthcare expenditure. 

Privatisation of hospitals 

The expansion of the private hospital sector in India has brought in more investments in technology, infrastructure, and patient experience. And the wide public perception is that quality of care is better in private hospitals compared to the public sector. At the same time, privatization has come at a cost. With its natural focus on optimizing value for shareholders, privatization has led to an increase in costs. Second, corporates have failed to significantly increase investments in academic research and developing centres of excellence for lack of incentives alignment.  

The path forward 

India can take inspiration from leading global academic medical centres (e.g., Mayo Clinic), that provide high-value care while being at the cutting-edge of medical research and education. The two goals are complementary and do not conflict with each other.  

As we speak, the Indian government is spending significant sums of money to set up 21 AIIMS around the country. This is welcome! But it is challenging for any government to provide uniform tertiary care across a country as big as India with in-house expertise, know-how, and funds. They need to find a way to incentivize private hospitals to invest in cutting-edge research and education and bring world-class expertise and talent to develop the next generation of academic medical centres or centres of excellence.  

Developing world-class academic medical institutions 

There is no easy answer here. First and foremost, there is a need to start a national dialogue to find the optimal private-public model for the Indian context. This model will need to create and align incentives for private hospitals and entrepreneurs to invest in medical education and research while delivering high-value care. As we draft this blueprint, experts and policymakers can take inspiration from other industries like education and manufacturing. For example, can we have a new education policy or PLI linked scheme for the private hospital sector? Can we create healthcare innovation hubs by encouraging private investments and competition in select geographies by proactively removing barriers to success? 

These are only some thought-starter ideas. In the aftermath of the pandemic, it is critical to have an open, national dialogue on how to build these hospitals of the future. Medical research from these top organizations can help propel India’s economy forward while helping find better answers to India-specific health problems and to train and retain the next generation of Indian doctors.    

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Dr Ajay Kumar

Chairman and HOD BLK -MAX Institute of Digestive & Liver Diseases

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