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The purpose of this memorandum is to outline the importance of two vital stakeholders in the
execution of the NHPS program – State Governments and the Private sector respectively.
Accordingly, this memorandum emphasises the rationale underlying involvement of state
governments earnestly in the program to achieve optimal outcomes. Further, it makes a
case for the participation and engagement of private sectors to improve implementation of
the program.
Introduction:
The NHPS is a modified form of its predecessor Rashtriya Swasthya Bima Yojana (RSBY),
with a steep raise in beneficiaries impacted from 40 million households to 100 million
households. The NHPS incorporates two major components: 1) Health and Wellness
Centres (HWC) to provide primary healthcare services; 2) Insurance cover up to INR
5,00,000 per family per year for secondary and tertiary care. An initial financial allocation of
INR 3,200 crores has been made towards the said initiatives1.
Health is the dominion of the State in India. Under NHPS, States are required to contribute
financial resources to the extent of 40%, with 60% being borne by the Centre. Similarly, for
HWCs, the states are responsible for training and deputing mid-level healthcare providers in
a prescribed timeframe. Political leadership of States is therefore crucial in ensuring the
availability of trained healthcare providers, to overcome the limitations of setting up HWCs.
Early commitment and engagement of States is pivotal in execution of the program.
The opportunity for the private sector as regards ‘Ayushman Bharat’ is multifaceted. This
includes insurers, hospital associations, health tech startups and IT companies operating in
the private sector. On the hospital front, approximately 80% of all out-patient consultations
and around 60% of all hospitalization occurs in private hospitals. On the same account,
private hospitals account for 60% beds for patients seeking care. Under the incumbent
RSBY program, private insurers were singlehandedly responsible for ensuring coverage of
1
Union Budget 2018-19
Venugopal Rajamani| YIF ’18 Enrolment No: 2020171084
100 million beneficiaries2. Electronic health records (EHR), digital payments, and cyber
security means IT conglomerates can leverage their competencies as part of the program.
Policy Recommendations:
Channelizing efforts to get the private sector involved as part of NHPS is instrumental to its
success. Public-Private-Partnerships (PPP) could be decisive in ensuring desired outcomes.
1. Insurance Model Directive: Under NHPS, States are free to adopt a trust-based model,
a private insurer model, or a combination of both. Further, States are required to
constitute a State Health Agency (SHA) that shall monitor the activities corresponding to
the model it adopts. However, States are also responsible for skilling and training of
frontline health workers and building institutional infrastructure in HWCs. Trust /
Combination Models are preferred by a large number of States. However, opting for these
increase responsibilities of constituent SHAs. Accordingly, it is advisable that private
insurers offer protection against financial risk where States lack necessary primary
healthcare infrastructure, thereby concentrating State efforts and providing impetus to
private insurers.
2. Use of Technology: RSBY, the precursor of NHPS suffered from a fraud rate within the
range of 10% to 40%. Adopting technology to digitally track payments can reduce payout
to fraudulent activities. Further, technology can be adapted to maintain EHR, empanel
hospitals (ROHINI3), and enable “Linkers” who bridge the gap between health care
providers and beneficiaries (such as Practo and Lybrate). This shall provide for abundant
private sector participation within the framework of the program.
3. Private Hospitals & Primary Healthcare: The Union Government has specified price
ceiling across 1,354 packages that can be charged by empanelled hospitals4. Implicit in
the health protection coverage is the need to attract private hospitals to provide primary
healthcare, beyond secondary and tertiary care. Existing and new district hospitals must
be equipped to be on par with corporate tertiary care hospitals. This can be encouraged
by means of tax benefits and subsidies. Moreover, getting private hospitals to invest a
portion of incremental proceeds, specifically attributable to ‘Ayushman Bharat’ towards
building primary healthcare capabilities can prove helpful. This portion can be negotiated
by respective State governments with regional / national private healthcare providers,
allowing room for flexibility and autonomy.
2
Star Health Insurance Annual Reports for FY 2007 to FY 2017
3
Registry of Hospitals in Network of Insurance – a platform developed by insurance regulator for identifying
hospitals that may wish to be empanelled
4
Tender Model Document issued by Union Government to States dated 23rd May 2018
Venugopal Rajamani| YIF ’18 Enrolment No: 2020171084
schemes into NHPS, providing for predetermined or enhanced cover. This will reduce
duplication of efforts.
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