India has one hospital bed for 879 people. This is far below the world average of 30 hospital beds per 10,000 population.

In an action plan to set up new hospitals through public private partnership, the Health Ministry has proposed viability gap funding of up to 40 per cent of the project cost, time-bound clearances with the same deemed given if not received within the stipulated time, and making “soft” loans available. The plan has been circulated to states and various Central government departments for their feedback.

Addressing an audience in London earlier this year, Prime Minister Narendra Modi spoke about how Ayushman Bharat would lead to “more than 1,000” new hospitals in Tier I and Tier II cities. Working on that vision, the ministry wants states to treat health as a priority sector and to classify it as an industry so that soft loans are available. It also envisages a complete makeover of the sector not just through financial incentives but also harnessing of renewable energy and making power available 24/7 at lower than commercial rates.

The fact that hospitals pay for electricity at commercial rates has been a long-standing grievance of the private sector. The hospitals would have to mandatorily get empanelled with the Pradhan Mantri Jan Arogya Yojana (PMJAY) and thus meet all the standards set for the purpose by the National Health Agency.

India has one hospital bed for 879 people. This is far below the world average of 30 hospital beds per 10,000 population. Currently the country has 14,379 hospitals with 6.34 lakh beds. The number of beds has increased in urban India, but at the village level, remains in the range of 1.31 per 1,000 population. With the launch of the PMJAY, covering an estimated 500 million beneficiaries, 0.64 million additional beds would be required over the next 10 years for a hospitalisation rate of 5.5 per cent, average occupancy of 72 per cent, and average length of stay of eight days, the Health Ministry estimates.

The four key elements of the plan to incentivise the private sector in investing in healthcare are facilitation of land allotment (states can be asked to identify and earmark land, information regarding which can be made available on a website and the land made available at commercial/subsidised rates or long-term leases); facilitation of permissions and clearances from different departments, if possible through a single window; a clause in the rules that specifies the time period within which clearances will be given or deemed given if not adhered to; and viability gap funding (a grant to support projects that are economically justified but not financially viable) to cover escalating project costs. Viability gap funding, however, will be provided only for hospitals in tier I and tier II cities.

With both land and health being state subjects, such a plan can go through only if states agree to these conditions, some of which are likely to put much pressure on their existing processes and systems.

The plan also lays down the condition that the incentives should be made available only if a doctor is a promoter or a majority stake holder in the company. If industry status is not granted, an option to look at granting soft loans of the type extended to agriculture has also been proposed.

A senior Health Ministry official said that the plan is a “work in progress” and will be updated with inputs from various states and departments before it is finalised.