M-RCBG Associate Working Paper No. 253
Transforming Access to Secondary-Tertiary Healthcare in India
Pranay Ramesh Patil
2025 Policy Analysis Exercise prepared for Evernile Capital
Executive Summary
Context
1. India has higher hospital density (4.5 for India vs 3.5 for rest of world) but lower bed density (1 bed per 1K population for India vs. 2.7 for world). Further 70-80% of the beds in India are concentrated in metro/tier 1 areas alone limiting the access of care at the last mile. Hence, patients in tier 2-4 areas travel large distances for even basic care.
2. Further COVID-19 has exposed the additional vulnerabilities in the current healthcare infrastructure calling for urgent upgrade of existing facilities.
3. Considering the above circumstances, now is the right time to truly focus on improving the healthcare setup in tier 2-4 facilities.
Key findings from the study:
1. Focus needs to be on Brownfield facilities, given current supply fragmentation, and given the higher capital requirements and timelines for building greenfield facilities.
2. An analysis has been conducted on what kinds of brownfield facilities are required. Two facility models are needed – one for acute care/high volume secondary care (e.g. trauma, dialysis) to save lives with 50-100 beds (model 1) and one for multi-specialty care with 100-200 beds (model 2).
3. There are three brownfield options to select from, leveraging existing government or private facilities for each state/district:
a. PPP with District Hospital (DH): Private player upgrading the facility, running it, and ultimately handing it over to the government once the concession period is over. State governments have however expressed concern around privatization of DH and this option alone can’t solve for all the access gaps.
b. PPP with select PSUs (e.g., ESI): Private player upgrading the facility, running it, and ultimately handing it over to the Government once the concession period is over. While such facilities are in good locations and already well equipped, coordination challenges with the PSU will need to be solved for.
c. PPPP with private players: Bidding out a catchment area exclusively to a consortium of a local player (which brings existing nursing home facilities and the local brand) plus a larger player (which brings technical expertise, capital). This option seems to be the most promising one given it leverages the existing private facilities and can scale up across India with minimal support from the state government.
4. A detailed Model Concession Framework (MCF) has been developed and added in the overall project report capturing the role sharing between authority & concessionaire, revenue model, concession duration, eligibility, and selection criteria, etc.
5. Further quality of care needs to be ensured requiring focus on output or outcome metrics (e.g. patient re-admission rate) with appropriate incentives and penalties for the private players.
6. The financial support from the government can be provided either in the form of Viability Gap Funding (VGF) or a capital subsidy. However, the PPPP option will require a form of capital subsidy given there is no public asset under consideration and hence VGF not being applicable.
7. To ensure that the above bold agenda is delivered in a concerted and timely manner, a critical next step will be the appointment of a nodal agency (like NHAI or SECI) to roll-out and implement such PPP projects across the country.
Way Forward:
1. Discuss the possibility of Government of India potentially institutionalizing a nodal agency to coordinate and drive the implementation of the program.
2. Identify potential sources of financial support, including alternative sources of financing.
3. Identify and initiate pilots to evaluate efficacy of recommendations.
4. Enable talks with multilateral institutions for financing the project implementation plan.