{"id":89558,"date":"2020-02-06T09:50:00","date_gmt":"2020-02-06T04:20:00","guid":{"rendered":"https:\/\/thepubliceconomist.com\/?p=89558"},"modified":"2020-02-06T10:57:41","modified_gmt":"2020-02-06T05:27:41","slug":"perspective-of-a-health-activist-on-the-niti-aayogs-ppp-model-based-healthcare","status":"publish","type":"post","link":"https:\/\/thepubliceconomist.com\/?p=89558","title":{"rendered":"Perspective of a Health Activist on the Niti Aayog\u2019s PPP model based Healthcare"},"content":{"rendered":"\n

Summary<\/strong><\/p>\n\n\n\n

The proposal, as\ndetailed out in the document on Niti Aayog\u2019s website, entails providing\n\u201cexclusive right, license and authority to augment, operate and maintain the\nDistrict Hospital and provide Healthcare Services and design, finance, procure,\nconstruct, operate and maintain the Medical College (the \u201cConcession\u201d)\u201d for a\nminimum of sixty years as per terms and conditions set in the model agreement.<\/p>\n\n\n\n

There is only a very\nbrief justification provided for introducing this scheme: \u201cIndia has a dire\nshortage of qualified doctors. It is practically not possible for the\nCentral\/State Government to bridge the gaps in the medical education with their\nlimited resources and finances. This necessitates formulating a Public Private\nPartnership (\u201cPPP\u201d) model by combining the strengths of public and private\nsectors. Accordingly, a Scheme to link new and\/or existing Private Medical\nColleges with functional District Hospitals through PPP would augment medical\nseats and also rationalise the costs of medical education.\u201d<\/p>\n\n\n\n

Both these premises are questionable (detailed below), and further there is no reason to believe that the proposed scheme will address these issues. On the other hand the situation could be worsened by this scheme. JSA\u2019s contention, based on a close reading of the scheme, and the draft concession agreement, is that this scheme is drawn up as an avenue for corporate investment and profits in health care and this includes investment by global capital. There is also a further implicit aim to re-shape the health sector as a sector that runs along the lines of corporate industry, with profit maximization rather than health outcomes as its goal. The whole proposal is violative of the spirit of universal health care. It also violates the government\u2019s own National Health Policy of 2017-<\/strong> which promises free drugs and diagnostics and free care for all in the public hospitals, and prioritizes building up of public hospitals and engagement, and secondarily with not for profits for fulfilling all secondary and tertiary health care needs. <\/p>\n\n\n\n

It does seem that\npressed by financial crisis due to huge additional expenditures on defense and\nnational security on one hand and the economic slowdown on the other, the\ngovernment is looking at public hospitals and public health services as a\nsource of revenue rather than as the fulfillment of commitments of a welfare\nstate. And further in a period of economic slow-down it is re-creating\nthe public hospital as a site for capital investment for both Indian and\nforeign capital. In doing so it is removing the district hospital from the\nambit of the primary healthcare approach and making it part of a corporate\nmonopoly industry. <\/p>\n\n\n\n

Comments:<\/strong><\/p>\n\n\n\n

1.  The first premise in the introductory note is\nthat there is a dire shortage of doctors, which is itself not true. Moreover,\nno differentiation is made in this rationale on the availability of general\nphysicians, specialists or super-specialists. There is no doubt a dire shortage\nof doctors in many states, but there is also a surplus in many other states.\nSome states should in fact be calling for a freeze in expansion of private\nmedical colleges. At no point is there any indication of prioritization of states\nand regions such PPPs must come into being. <\/p>\n\n\n\n

2. The second premise\nis that the gap cannot be closed by central and state financing alone. Yet\nthere is no reason to believe that what government spends by way of grants, and\nbank loans would necessarily be less. There are serious doubts whether bank\nloans to corporate agencies to set up such institutions would \u201cperform\u201d or add\nto non-performing assets. The proposal clearly anticipates that it could do\nthe latter and has made provisions for both debt re-financing and insolvency\nmanagement. Here it is pertinent to point to the failures of similar PPPs in\nmany parts of the world including in England[1]<\/a>, Sweden[2]<\/a> and Lesotho[3]<\/a>. It is ironic that as the\nworld\u2019s biggest experiment in health PPPs in England (Private Finance\nInitiative) is brought to an abrupt end by the government there due to mounting\nnegative impacts on the public purse and wide scale failure to deliver value\nfor money[4]<\/a>, Niti Aayog is proposing\nan even riskier model at an even larger scale with no reference to an evidence\nbase on how this would work for the public good or the public exchequer. The\ncost of Sweden\u2019s PPP hospital has doubled in cost to the government and is now\nknown as the \u2018most expensive hospital in the world\u2019[5]<\/a>. The PPP hospital in Lesotho\nwas estimated to have cost half the nation\u2019s health budget in 2014 and in 2017\ncost double the affordability threshold agreed by the government and World Bank[6]<\/a>.  <\/p>\n\n\n\n

3. The introductory\nnote also states that the proposal is based on \u201cinternational best practices,\nand similar PPP arrangements that are operative in the States of Gujarat and\nKarnataka\u201d. The basis of \u201cinternational best practices\u201d is without any\nevidence, as most of the evidence is of failures of such PPPs globally, as\nseen in the examples given in the above point. Moreover, in India we are unable\nto locate any experience in Karnataka that it could be based on. The closest\none- in Raichur was a dismal failure on which internal government assessments\nare available. This proposal is very similar to the \u201cGujarat Adani\nInstitute of Medical Sciences\u201d model in Bhuj, Gujarat. This model had a high\ngovernment investment and the Adani\u2019s also brought in a Rs 100 crore\ninvestment- but after 10 years it still has a cumulative deficit- which the\ngovernment may or may not be covering. And this is after it has been charging\nRs 3 lakh per medical student and Rs 8 lakhs for an NRI student. Moreover, for\nAdani which has a Rs. 24,000 crore investment in that district of Gujarat, this\nwas well within its CSR obligations. Even when within Gujarat the scheme was\nsought to be expanded to six districts (Tapi, Dahod, Panchamahals, Banaskantha,\nBharuch and Amreli) there have been no takers for this.  The scheme is therefore likely to be\nattractive only to the largest corporate powers and that too with high\ngovernment investment. It could also be for attracting foreign investors.  <\/p>\n\n\n\n

4. One of the clauses\nof concern is Article 43.3 that states that in case of disputes, agreement\nit would be referred it to arbitration along the lines of International\nArbitration Processes. This is of concern as the usual provision in such\nagreements is to state which High Court would be the scene of regulation. We\nare therefore concerned as to a) whether foreign investment is being actively sought\nand b) whether it will get aligned now or later with multi-lateral treaties like\nthe RCEP which would make it obligatory for government to push this approach\nacross all districts. <\/p>\n\n\n\n

5. We are extremely\nconcerned that this PPP re-invents the public hospital and the medical college\nas a corporate activity measured by its revenue generation. The agreement\nsays that the \u201cconcessionaire\u201d or agency awarded the contract would be given a\ngrant in the form of equity support (Article 27). At many places the agreement\nis clear that it is dealing only with entities that are of corporate character-\nhaving shareholders that raise equity and that has a board of directors. Since\nit is such a corporate agency, the shares can be traded on the market and even\nownership can change, subject to government being informed and\/or approvals for\nmajor changes. After a period of some years the Private partner would be\nsharing the profits\/dividends that accrue from the revenue generated by the\nhospital. The exact formula of computing the proportion of revenue to be shared\nis complex and its implications are of great concern. <\/p>\n\n\n\n

6. The government proposes\nto handover the hospitals at an extremely low fee with additional grant in the\nform of equity. The \u201cconcessionaire\u201d has to pay rupees one crore (though in\nsection 28.1 it erroneously mentions rupees one) with an annual increase of\nonly 5% for the first seven years and subject to a gross ceiling of 50% of\nGross Revenue. For the subsequent years one 1% of the revenue would be shared\nwith the authority. These rates are extremely low and allows\n\u201cconcessionaire\u201d to show lower revenue earnings in its balance sheet and pay\neven less. There is no mention at any point of health outcomes that can\nbe expected in the revenue sharing agreement. It is clear that no such\nperformance indicators are expected. The agreement (Article 5.1; xvii)\nindicates that the services made available should be as per Schedule P. But\nSchedule P is currently blank. The proposed payment mechanism also allows the agencies\nto maximize earnings by rejecting the most difficult cases which are costlier\nto treat and also deny treatment to free patients or regulated patients and\nonly cater to low cost, secured cases for people who are willing to pay higher\nfees. Thus payment system would accentuate some of the typical problems of\ncr\u00e8me skimming that the private sector is so typically characterised by. It\nalso creates possibilities of exclusion of most needy and deprived section\nof patients for whom the last resort is to seek treatment at the district\nhospital.<\/p>\n\n\n\n

7. One of the most problematic\nclauses in the model agreement is that the patients shall be categorized into \u2018Free\nPatients\u2019 and all others (22.1.2). The division of patients into two\ncategories based on the ability to pay goes against both national policy as\nwell as international commitment of the country towards universal health care.\nTo be a \u2018free patient\u2019 one would need a specific authorization certificate from\na district health authority (22.2). Such \u201cmeans testing\u201d before the provision\nof free services (as proposed in this agreement) has been shown in the\nliterature from all over the world to reduce access to deserving persons.<\/p>\n\n\n\n

As per the agreement\nthe \u2018Free patients\u2019 can be provided free consultation, free drugs and\ndiagnostics, but even they would have a Rs 10 registration charge (29.1.2). All\nother patients would be charged at \u201cmarket competitive rates\u201d and in fact the hospital\n\u201cshall be entitled to demand, charge collect, retain, appropriate Hospital\nCharges, based on market competitive rates\u201d (29.3). However there is some\nobfuscation around the charges for OPD, since in some paras it states that\nhospital charges will be as per Schedule S (29.1.1 and 29.3), while in another it\nstates that out-patient care is free (23.4.1). Clearly as many clauses show,\nthe model has user fees, and that too at \u2018competitive market rates\u2019 as the core\nand further hopes to generate substantial revenue from such user fees.  <\/p>\n\n\n\n

8. Further all\nin-patient beds are to be categorized into \u201cRegulated Beds\u201d and \u201cMarket\nBeds\u201d (23.7.1).  If there are 900\nbeds, 480 would be market beds and 420 would be regulated beds. These market\nbeds would be provided on market competitive rates. The \u2018regulated beds\u2019 are\nimplicitly for patients who are covered by PM-JAY or other insurance. So though\nit is stated as \u2018free\u2019 care, the payment for these patients would mostly come\nfrom government itself. Therefore any impression given in this model\nagreement that the private entity would be providing completely free services\nto a proportion of patients in lieu of the concessional treatment is\nfalse.  Further there is a clear emphasis\nthat these free beds will allow patients required for teaching\/training\npurposes to be admitted. <\/p>\n\n\n\n

9. The agreement hands\nover the land and all assets of the district hospital to the concessionaire for\nsixty years (3.2). At the end of 60 years there is a provision for extension.\nOn the medical college even this return to government after 60 years is not\nstated and clearly the intention seems to be that the medical college can\nkeep the land and assets in perpetuity. The lease agreement for the site of\nthe medical college would be for 99 years at a highly subsidized lease rent of\n\u201c8% of the circle rate of the land\u201d (10.1). Further, if it wants, it can buy\nland and build its own medical college hospital and keep that too. It is\npossible that there may already be an existing medical college hospital which\nwill be linked to a district hospital. Indication of the possibility for an\nexisting private medical college to be part of this scheme has been made in the\nintroductory note on stakeholder consultation. This model agreement also makes\nprovision for affiliation with private Nursing Institutions for which the\nprivate entity will be entitled to collect revenue (26.3). It is\nincomprehensible how the proposal to hand over public facilities and public\nland to private entities for sixty years, i.e. for a whole generation is being\nmade. This means that for the whole generation, people will be at mercy of this\n\u2018revenue generating\u2019 model. <\/p>\n\n\n\n

10. The government\ndoctors can be given on deputation to the private management to serve in the\ndistrict hospital as well as in some teaching functions (5.16.2). The private\nentity will reimburse the staff costs to government, other than medical\nexpenses (5.16.3). But, as per clause 5.16.5, if they join the medical college\nas its regular staff, they can be relieved from government services. The\nlack of faculty is a crisis that most private medical colleges face and\ntherefore this seems to be a rather convenient approach for private medical\ncolleges to attract, test and retain the best of public hospital staff, at\nterms that suit them best. This is a win-win situation for the private\nmedical college and a loss for the public sector.<\/p>\n\n\n\n

11. There is some\nprovision for three of the many public health functions of the district\nhospital. But none of these are convincing. They are as follows:<\/p>\n\n\n\n

1) Forensic and\nmedico-legal functions (5.18): The agreement just states that this would be the\nresponsibility of the concessionaire. But most of these would be private owners\nand it remains to be seen whether their opinion has legal standing, and whether\nthey have the required lack of conflict of interests that the public officer is\nexpected to have. <\/p>\n\n\n\n

2) Medical Emergency\nResponse (18.8 and 18.9): There is just a contention that they should be\nrequired to help during disasters and other emergencies. There is an added\nclause that the government can appoint an officer to command the hospital in\nsuch an eventuality- but these are completely untested statements. <\/p>\n\n\n\n

3) National Healthcare\nProgrammes (23.10): There is another bland statement that they would play a\nrole in all national health programs. But there are many programs that require\nconstant interaction and guidance between district hospital staff and primary\ncare providers, and many functions which require substantial time of district\nhospital doctors and specialists. How is the \u2018revenue generating\u2019 entity expected\nto provide such support?  <\/p>\n\n\n\n

12. Article 29.1\nstates that the agency will be \u201centitled to determine and recover charges from\nthe use of any Ancillary Facilities, which the Concessionaire can provide to\nthird parties on commercial, sub-license basis\u201d for the following services\n(listed in 3.1.3):<\/p>\n\n\n\n

(a) vehicle parking;<\/p>\n\n\n\n

(b) cafeteria;<\/p>\n\n\n\n

(c) boarding and\nlodging facilities for the Free Patients, Patients and their attendants;<\/p>\n\n\n\n

(d) [pharmacy];<\/p>\n\n\n\n

(e) [any other\ncommercial facilities]; and<\/p>\n\n\n\n

(e) other facilities\nthat may be approved and\/or notified, in writing, by the Authority from time to\ntime during the Concession Period.<\/p>\n\n\n\n

These facilities are\ncritical support for patients and their families. But the private entity will\nbe able to determine and charge costs for use of these Ancilliary services\n(29.5). Therefore even a \u2018Free patient\u2019 would be at the mercy of commercial\nenterprises for their accommodation etc. and this model agreement gives\ncomplete freedom for \u201cany commercial facilities\u201d to be introduced within the\ncampus. The provision of free or subsidized drugs has also been kept vague\n(23.5) and upto the discretion of the Concessionaire, with a similar vagueness\nin the provision of free diagnostic services (23.6). These provisions will\nresult in high out of pocket expenditure to the patients and increase incidences\nof catastrophic health expenditure. The Niti Aayog seems to be unaware\nof the government\u2019s claims towards ensuring financial protection to patients\nand instead it finds acceptable to promote the charging of \u201cmarket competitive\nrates\u201d to patients coming to a district hospital!<\/p>\n\n\n\n

13. It is concerning\nthat in the section on \u2018use of information\u2019 (5.14) there is no mention of\nownership and privacy of patient data, the protocol for the use of such\ndata in research, the protection of such data from being sold to commercial\nentities or even used by the Concessionaire for its own commercial interests.<\/p>\n\n\n\n

14. With regards to\ninfrastructure and facilities to be provided (23.1.2) and doctors to be ensured\n(23.4.2) for provision of healthcare services by the concessionaire, the use\nof the word \u2018adequate\u2019 is too vague a concept in medicine and health care. This\nkind of vagueness prevents pinning any accountability on the Concessionaire. <\/p>\n\n\n\n

15. The management\nboard has no public representatives and is clearly reflective only of\nequity\/shareholder interests- with government itself being a minority\nshare-holder. There is no attempt at community engagement of any sort. <\/p>\n\n\n\n

The really big problem\nis the Niti Aayog’s complete failure to understand that the district hospital\nis the apex of primary health care approach- and not a surrogate of the medical\ncollege.\nIt is charged with the health of the population of the district- not only of\nthose who seek care in the hospital (like sick newborns who die at home). The\nentire system of revenue generation would be loaded against such relationships.\nThe more the in-patients, the more the district hospital and medical college\n\u201csucceeds\u201d. But in the approach that is required, what is known as the primary\nhealth care approach, the actual incidence of patients requiring secondary and\ntertiary care procedures should go down. Clearly no one has explained to the\nNiti Aayog the difference between primary level care (which may or may not\ninvolve the district hospital) and primary health care approach- where the\ndistrict hospital has a central role. <\/p>\n\n\n\n

The private medical\ncolleges are also not geared towards providing the right kind of doctors- for\nmedical seats are also seen as revenue generating and sharing activities. Student fees are seen\nas one of the main sources of revenue- and other than the inadequate safeguards\navailable under the existing acts, there is nothing to ensure that we would be\nproducing the sort of human resource that is required, and where it is\nrequired. <\/p>\n\n\n\n

The Niti Aayog has\ncompletely failed to recognize the reasons why user fees are not seen as a\ndesirable and why market based mechanisms of service delivery is rejected\nacross the world.\nThe only exception is the USA, and even there it is contested. But it is only\nto this discredited model that we are being pushed. The proposal is all about\nensuring the right of the agency to charge \u201cmarket competitive rates\u201d than\nabout financial protection. <\/p>\n\n\n\n

Tax based public\nfinancing of healthcare as a goal of health policy is for all practical\npurposes abandoned with this proposal. Instead we are entering an era of the\ntransfer of public assets to private hands for private profits, with government\nearning a share of such profits. This is a dangerous and ideologically\ndriven proposal with no rationale or evidence base to support it. This proposal\nis against the recommendation of every national expert committee or policy\nstatement or policy committee that has ever been constituted, though it\nis in line with a few international consultancy\/expert proposals and\nrecommendations. This in itself is a matter of great concern.
<\/p>\n\n\n\n

\n\n\n\n

[1]<\/a>\nhttps:\/\/lowdownnhs.info\/explainers\/50-failures-in-nhs-outsourcing-2013-2019\/<\/p>\n\n\n\n

[2]<\/a>\nhttps:\/\/phmovement.org\/wp-content\/uploads\/2018\/07\/B5.pdf<\/p>\n\n\n\n

[3]<\/a> https:\/\/www-cdn.oxfam.org\/s3fs-public\/file_attachments\/bn-dangerous-diversion-lesotho-health-ppp-070414-en_0.pdf<\/a><\/p>\n\n\n\n

[4]<\/a> https:\/\/www.theguardian.com\/uk-news\/2018\/oct\/29\/hammond-abolishes-pfi-contracts-for-new-infrastructure-projects<\/a><\/p>\n\n\n\n

[5]<\/a> https:\/\/eurodad.org\/files\/pdf\/1546956-history-repppeated-how-public-private-partnerships-are-failing-.pdf<\/a><\/p>\n\n\n\n

[6]<\/a> https:\/\/eurodad.org\/files\/pdf\/1546956-history-repppeated-how-public-private-partnerships-are-failing-.pdf<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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