May , 2021
Why A Three-Way Public Private Partnership can set a New Paradigm for Healthcare Infrastructure in India
14:11 pm

Radha Roy Biswas

 In recent weeks, the world has watched in horror and grief as a humanitarian tragedyunfolded in India, as the second wave of the Covid-19 pandemic ravaged the country. Justwhen it seemed that India had sprouted wings of recovery after the first wave in 2020, andinternational authorities gave India the highest growth rates for 2021-2022, the secondwave hit with unimaginable ferocity, wreaking devastation on the Indian population andstressing India's healthcare infrastructure to breaking point. More than anything perhaps, this disaster has brought into sharp focus the need for an urgent and significant overhaul and expansion of India's healthcare infrastructure in all its aspects - facilities, equipment and supplies, workforce development, R&D and pharma. Healthcare Infrastructure DeficitsAccording to the United Nations Human Development Report 2020, India ranked very low on basic healthcare infrastructure, with about 5 hospital beds for every 10,000 citizens, and 8 physicians per 10,000 citizens. In rural parts of some states, e.g., in rural Bihar the number of doctors is 0.3 for every 10,000 individuals. Urban hospitals in India have twice the number of beds than rural hospitals, but their numbers are insufficient relative to the demand for beds. Further, the concentration of doctors and hospitals in urban areas has resulted in an acute rural-urban divide in healthcare, serving only 28 per cent of the population.The problems are no less in other aspects of healthcare.According to a Public Health Foundation of India study, approximately 68% of Indians have been found to have limited or negligible access to essential medicines and over the last two decades, the availability of free medicines in public healthcare facilities has declined to less than 10% for both inpatient and outpatient care, in spite of India being one of the largest pharmaceutical producers in the world.Growth in private healthcare, the result of reforms undertaken in the 1990s, has filled some of the gaps in infrastructure and service provision, however it has come with soaring costs that preclude large portions of the population. It is estimated that approximately 60 million Indians fall into poverty annually due to health expenditure. Out of pocket expenses comprises nearly 60% of health care expenditure in India, the highest among the G20 countries with comparable figures for large population countries like China and Indonesia, at 35%.Yet, not all is gloom in India's healthcare system. The country is the world's largestmanufacturer of vaccines. It has successfully vaccinated in the past, having eradicated smallpox and polio. The Unicef relies heavily on India for its global vaccine program. It has the third largest pharmaceutical production capacity globally in terms of volume. There are public and private healthcare institutes of repute, and India also serves as a regional magnet for private medical care and services. And the country has undertaken several rounds of reform to add overall capacity, expand reach to rural areas and most recently, provide universal coverage. Key Issue: Expanding access and delivery of healthcare to keep up with need Although historically low spends, governance and political dynamics, have all contributed to the crisis in healthcare infrastructure, a critical issue that remains is the inability of the system to keep pace with current demand and population growth. While the Indian population grew approximately 13.25% (by 160 million people ), from 2011 to 2020, expenditure on health expenditure grew by 0.39% during the same decade. And, for the fiscal year 2019-2020, government expenditure stood at 1.29% of GDP.The Government of India has taken this into consideration by increasing budgets for healthand wellbeing, in keeping with the 2017 National Health Policy objective ofachieving maximum health and well-being through a preventive health care orientation, andproviding universal access to good quality health care services.In 2018, to address the issue of affordability and access, a national health protection scheme -- Ayushman Bharat Pradhan Mantri Jan Arogya Yojana was launched with an outlay of Rs 6400 Crores. The mission is estimated to have provided some coverage to 500 million people so far, around 40 per cent of the population, but the pandemic has stalled its progress. For Fiscal 2021-2022, the Government increased the healthcare budget by 137% amounting to ₹2,23,846 Cr which brings it more in line to the goal of reaching 2.5 % of GDP by 2025. This budgetary provision includes Rs 35,000 crore for COVID-19 vaccines as well as the launch of Aatmanirbhar Swastha Bharat Yojana with an outlay of Rs 64,180 crore, for developing primary, secondary, and tertiary healthcare over a period of six years. While the recent increase to approximately 2.5% of the GDP is a leap forward, a more ideal spending level would be 4-5% of GDP to address immediate and long term needs.Few countries have to contend with the scale of healthcare infrastructure and services needed as in India. It is a mammoth undertaking for any government. Keeping pace with current demand and population growth is a key challenge. More so, for a country with a population of 1.37 billion and growing, with finances already stretched from the pandemic.Thus, in spite of progress in ramping up infrastructure in recent years, and the new budgetary provisions, the pressure of unmet need continues to pose a huge strain on both healthcare financing and delivery.Although private participation is key, the experience in the first healthcare reform wave in the 1990s was that while private healthcare can deliver quality and increase capacity, it also ends up exacerbating the inequities of access. Profits and ROI considerations drive the corporate ethos and operations of private healthcare providers, and therefore do not serve the purpose of maximum public health and well being.In effect, neither the private nor the public sector alone can deliver on the needs in India, inhealthcare infrastructure financing, execution, or, delivery. Paradigm shift: Three-Way Public Private Partnership with CSRA possible solution lies in Public Private Partnerships (PPPs) in healthcare. In other areassuch as infrastructure, energy, education and tourism, India has seen many successful PPPs.As in other sectors, healthcare infra PPPs can combine the funds and expertise of the private sector, with the reach and resources of the public sector to achieve the end goal of making quality healthcare accessible, affordable, and sustainable. India already has some examples of successful PPPs in healthcare. The last year showed many innovative examples of collaborative healthcare delivery. However, in order to scale up public private partnerships and augment the financing of healthcare infrastructure to meet the needs of the country, a paradigm shift is needed.         Three-Way PPPs involving the public, private sector, along with Corporate SocialResponsibility funding and expertise may be the answer.  The basic rationale for CSR sector as a third partner in healthcare PPPs, is that while someprivate sector participants will be involved directly in creating healthcare infrastructure, a robust healthcare system is a public good whose benefits accrue to all sectors and participants in the economy. Therefore, all private sector businesses which meet CSR thresholds under the nation's CSR law, or are able to contribute, can have a role in the development of the nation's healthcare infrastructure. For this, India's unique CSR law can be brought to the service of this healthcare infrastructure crisis. As per the CSR law, companies with a net worth of ₹500 crore or more, and other qualifying thresholds, must spend 2% of the average net profits of the immediately preceding three years on CSR activities. The spirit of the law is to increase private participation in the common good, in keeping with a growing global concept that a business must focus not only on its bottom line, but also its impact on society and the environment. As of 2019, the top four areas for CSR spend were education, health, rural development andenvironment. A CSR and sustainability study in India shows that roughly 27% of the totalspend on CSR in 2019 was focused on healthcare and sanitation. However, there isconsiderable ad hoc-ism, and much of the spend tends to be directed towards health campsand other short term programs, and poorly targeted donations for hospitals. Further, many companies indicate facing considerable difficulties in execution and reporting due to the many cumbersome and punitive compliance requirements.Including CSR as the third component in PPP may not only help expand financing and delivery options. but also increase CSR participation and impact, especially at a time of great national exigency. Exploring the Modalities of PPP in Healthcare with CSR How can tripartite partnerships be deployed to increase and improve infrastructure in healthcare? To that end, we have the following recommendations to make:1. A National Healthcare Infrastructure Scheme may be established, where companies can allocate some portion or all of their CSR budget directly into a Fund, in compliance with CSR Law requirements, without these contributions impinging on any existing projects. 2. The Government may consider transferring a portion of the PM Cares Fund proceedings received as CSR contributions, to create an initial corpus for this Scheme's Fund. Currently the PM Cares Fund does accept CSR contributions, but the end-use can be more focused and address the need of the hour, if resources are moved into this fund with a clear sectoral objective. 3. The Scheme must have clear goals to meet immediate needs, as well enhance or create healthcare infrastructure, and the Fund may be managed and disbursed independently by an expert committee with adequate transparency and accountability measures clearly outlining allowable projects and activities. 4. There can be pre-determined limits to the extent the Scheme can support a project, ideally up to a third, or a scaled role based on the size of projects. 5. Private sector corporations and non-profits, or private consortiums with adequate resources and expertise, may apply to avail of the Fund for PPP healthcare infrastructure projects. 6. State governments may also apply with a private partner, provided they make contributions up to a third of a project. In fact, this may help alleviate some of the state- centre tensions around healthcare infrastructure, as well as the states' rights to avail of CSR collections. 7. To encourage contributions, under special dispensation, the Government may consider CSR allocations on a pre-tax / gross profit basis instead of the current net profit basis, to give private sector firms impetus to participate, and help increase contributions and compliance. 8. While this Scheme can be applied to all aspects of healthcare infra, it could give a special boost to R&D. The Fund may be used to augment projects funded through the National Research Foundation, which has received a significant boost in funding for FY 21-22. The contributions of private sector firms will help stretch NRF funding further. 9. The Scheme may be explored down the line, for its role in augmenting universal healthcare coverage under the 2018 Ayushman Bharat Pradhan Mantri Jan Arogya Yojana to increase healthcare access. The CSR route would be an indirect route for businesses to collectively contribute to universal healthcare, rather than any direct tax provision for the same on employers. 10. A portion of the Fund may be allocated for restructuring the debt of struggling hospitals and other medical facilities for a short term period, to help them function more efficiently in this current exigent situation and contribute to capacity enhancement. 11. Finally, the twin-balance sheet ethos of CSR - people and profit - can be used as a guiding norm for these PPP projects under the Scheme, so as to strike a balance between profits and social good, and ensure sustainability, quality, as well as inclusion. The above recommendations lay out the possibilities that can be explored through Healthcare PPPs with CSR. Resources must be used expeditiously to address areas of most urgent need. But this approach can also create a more inclusive, sustainable healthcare ecosystem for the long term. Private players get an indirect subsidy without additional cost to the exchequer, CSR compliance gets a shot in the arm. Public healthcare costs are lowered. The Government is able to extend its budgetary commitments further. By distributing costs among all stakeholders, the model can ultimately benefit the people, and help the country achieve its goal of maximum care and wellbeing of all its citizens. 

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