PPPs in healthcare: Need of the hour

Vivek Tiwari, Founder and CEO, Medikabazar, elaborates on how collaboration between the public and private sectors of the healthcare industry would foster PPPs and encourage investment in India’s healthcare sector

Health of the nation is the lifeline for its well being. It is the aggregation of the health conditions of its citizens.

The Indian healthcare sector is one of India’s largest sectors, in terms of revenue and employment, and the sector is expanding rapidly. It has emerged as one of the most challenging sectors in India and is expected to reach $280 billion by 2020 with an annual growth of 17 per cent.

The Indian healthcare delivery environment is facing distinctive challenges. Inadequate infrastructure and inefficient healthcare delivery process further intensifies the complexity. It is estimated that almost 15 per cent of India’s population, has absolutely no access to healthcare services, either due to unavailability or economic reasons. Around 75 per cent of doctors practice in urban areas and 23 per cent in towns, while only 2 per cent practice in rural areas leading to very low availability of healthcare in rural areas.

The Indian healthcare system consists of players from public sector, private sector and other informal networks. The very size, scale, and spread of India are a huge challenge. The industry is largely fragmented with independent and privately run hospitals and health centres. It operates in a largely unregulated environment, with minimal controls on the type of services to be provided. This is further complicated by the usual Indian tendency to lack of standardisation and minimal compliance though there are norms and guidelines.

These challenges can be addressed efficiently through combined efforts of both public and private sectors by forming suitable public policies especially for healthcare delivery and incentivising financing and provision of healthcare, and thereby increase healthcare access to the people. The collaboration between the public and private sectors of the healthcare industry, would foster Public Private Partnerships (PPPs) and encourage investment in healthcare sector to shape the future of Indian healthcare Industry.

There are five major indicative areas where PPP could be introduced as a synergistic model to achieve the objectives of Indian healthcare sector and the business objective of running a beneficial healthcare facility.

The five areas where PPP contribution can prove very valuable are:

• Infrastructural development – Development and improvement of healthcare infrastructure to ensure that services are evenly distributed geographically and at all levels of healthcare (primary, secondary and tertiary healthcare)
• IT Infrastructure of the industry – Establishing IT as the backbone of healthcare in the industry for easy data management and easy and uninterrupted access to healthcare.
• Systematic operations and management – Involvement of PPP in operations will ensure efficient services and quality operations and management of healthcare facilities.
• Education and training – Education for formal education and continuing education of professional, paraprofessional and ancillary staff engaged in the delivery of healthcare
• Financing mechanism – Creation of voluntary as well as mandated third-party financing mechanisms. The private sector investments in healthcare have been driven by free market economy, and the pricing of healthcare services has been largely influenced by investment cost. Consequently, these services have remained out-of-reach of a large majority of our population due to cost consideration. In order to make PPP as a sustainable common ground for both public and private sectors and to evolve successful PPP models, it is essential to have clarity of the public and private sector positions and develop unambiguous criteria for assessing PPP models.