Niti Aayog and health ministry prepare model contract for privatising urban health care -Nitin Sethi & Menaka Rao

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published Published on Jul 19, 2017   modified Modified on Jul 19, 2017

Terms of agreement give private players 30-year lease over parts of government district hospitals.

Niti Aayog and the Union ministry for health and family welfare have proposed a model contract to increase the role of private hospitals in treating non-communicable diseases in urban India. The agreement, which has been been shared with states for their comments, allows private hospitals to bid for 30-year leases over parts of district hospital buildings and land to set up 50- or 100-bed hospitals in towns other than India’s eight largest metropolises.

According to the model contact, the district hospitals will need to share their back-end services such as blood banks and ambulance services with the private players. The state government could also provide part of the funds needed by these private players to set up the new hospitals. The district health administration will ensure referrals for treatment from primary health centres, community health centres, disease screening centres and other government health programmes and ventures are made to these private hospitals.

To ensure that adequate numbers of patients are available for the private hospitals to treat, Niti Aayog and Union health ministry has suggested only district hospitals that have at least a two-year record of treating more than 1,000 cases in the outpatient department every day should be privatised. reviewed a copy of the proposal by Niti Aayog and the health ministry along with the note on it sent to the states. The World Bank was engaged as “technical partner” to prepare the document. The Niti Aayog in its note said it had set up working groups comprising industry, ministry of health and representatives of few states to come up with the document. It claimed that consultations with states, industry and other stakeholders took place across the country to prepare the draft.

The details

Under the model contract, these private hospitals will provide secondary and tertiary medical treatment for cancer, heart diseases and respiratory tract ailments at prices that are not higher than those prescribed under government health insurance schemes. For non-communicable diseases needing these three kinds of specialised treatments, the hospitals will need to have out-patient departments, in-patient beds, beds for intensive care, operation theatres, centre for angioplasty and angiography, laboratories and radiology services.

The district government hospital will be expected to share its ambulance services, blood blank, physiotherapy services, bio-medical waste disposal system, mortuary services, parking facilities, electricity load, in-patient payment counters and hospital security with the private enterprise running out of its campus, the contract says.

Beneficiaries of the government insurance schemes will be able to get treatment at these hospitals but there will be no reserved beds or quota of beds for free services. General patients will also be allowed to seek treatment. Patients not covered by the state insurance and health schemes would be required to pay the full cost.

The private hospitals operating from these public hospital campuses will be able to refer complicated cases either to other government hospitals or other empanelled private hospitals. However, sending patients further to other private hospitals would require the permission of the medical superintendent of the district hospital.

Two-stage bidding process

The infrastructure of district hospitals would be provided to the private sector players through a two-stage bidding carried out based on technical and financial parameters. The amount of money the private healthcare company seeks as a viability gap fund (a one-time grant for setting up the hospital) would be one of the criteria to identify the private player. The bidders would be able to apply as a single entity or as a consortium of private companies.

The winner of these bids besides running the hospital services could also be allowed to run other non-medical commercial activities such as an out-patient pharmacy, cafeterias and other concessions.

Going by this draft contract, the district hospitals would be required to lease out 30,000 square feet for a 50-bed private hospital or 60,000 square feet for a 100-bed operation. If the state government agrees initially to a 50-bed private hospital, the district administration will have to provide 75% of this space within the already-built part of the government hospital. For the 100-bed private hospital, the government hospital will have to provide 30,000 square feet of built-up area.

The government plans to firm up this model of private participation in the health sector by trying out such as an arrangement in select district hospitals in one or two states on a pilot basis.

Health as a subject falls under the purview of the state governments. Consequently, the Centre will produce this model agreement as a template for willing state governments to adopt. The states have the powers to adopt the model in entirety or modify it. Government officials said that as in several other areas of governance that fall under the purview of state governments, it is likely that the model agreement would be adopted at first by states where the Bharatiya Janata Party or its allies are at the helm. Though they pointed out that several states, regardless of which party is governing, have already privatised parts of their public health system.

Please click here to read more., 19 July, 2017,

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