PPP solutions for healthcare in India

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Key healthcare challenges

Access to specialty healthcare, advanced diagnosticsShifting disease burden to NCDs – heart diseases now leading cause of death, 35% of total disease burden requires specialty care

0.86 hospital beds / 1000 population – heavily skewed, eight metro areas (6% of pop) account for 25% of hospital beds, travel upwards of 90 km to access specialty care; strong private sector - 64% of all hospital beds, 80% of outpatients and 57% of inpatients receive treatment from private hospitals

Affordability and equity One of the world’s highest levels of private out-of-pocket financing of medical

expenses, at about 85 percent, with debilitating effects on the poor - 35% of hospitalized patients fall below the poverty line because of hospital expenses

Public spending on health has remained stagnant at around one percent of GDP (0.9%) - does not automatically benefit the poor. The poorest quintile of the population uses only one-tenth of the public (state) subsidies on health care while the richest quintile accesses 34 percent of these subsidies

Critical workforce shortages India is short of 600,000 Doctors; 1,000,000 nurses and 200,000 dental

surgeons, only 0.9 doctors and 1.2 nurses for every 1,000 Indians; critical constraints in # of medical colleges, projections to triple # of colleges/ admission capacity from 300 to 900 over next 15-20 years

Ambiguous regulatory/ accreditation framework, compliance issues at both public and private medical colleges

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PPP solutions – selected case studies

Aarogyasri Community Health Insurance Scheme, Andra PradeshUnique health insurance PPP, to address catastrophic health expenditure among the poor (below poverty line) families, in Andhra Pradesh State

Andhra Pradesh Radiology PPP PPP to strengthen clinical capabilities of government medical colleges, to ensure

compliance with health insurance programs and national college accreditation

Meghalaya, Medical College PPP (ongoing) PPP to expand opportunities for medical under graduate and graduate education

Aarogyasri Community Health Insurance Scheme

Healthcare services challenges• Lack of access for BPL families to advanced tertiary care, non-utilization of

extensive private infrastructure and advanced clinical capabilities for the poor• High catastrophic expenditures, delayed care seeking behavior by the poor• Fee for service charging in the private sector – little informed choice by patients;

little consensus around treatment protocols, quality• Lack of electronic medical records, facility utilization information, disabling

planning efforts at state level

Solution• Unique community health insurance PPP – Public Aarogyasri Health Care Trust

• defines premium package, treatment protocols, empanelment criteria• Monitors pre-authorizations, claim process, (social) auditing

• Private insurance company/TPA, selected through competitive bid process , to• administer patient enrolment, hospital empanelment, • claims management, risk coverage (compensation through premium paid for

by state – about US$7/family per annum, bid parameter• Network hospitals, both public and private (about 90% of procedures in

private hospitals, efforts by public hospitals to improve!) – strong response by private hospitals to invest/move to district and subdistricts

Aarogyasri Community Health Insurance Scheme (2)

Solution (contd)• Extensive coverage achieved, since 2007 pilot, 20.4 million families; enrolment

translates into strong effective patient demand, replication across India• About 15,000 patients/ day screened in free health camps, about 7,000 hospital

registered (4,000 OP, 2,000 IP)• 4.1 million people screened (health camps/ primary care); about 900,000 IP/OP

procedures/therapies to date, effective patient choice, money follows patient • Electronic medical records - innovative real-time online workflow solutions,

integration with biometric BPL cards (poverty targeting), real time online updates• Reduced catastrophic expenditures (floater coverage of US$3.500 per family plus

special allowances)

Andhra Pradesh Radiology (1)

Healthcare services challenges• On-site diagnostic not available, need for external referrals; external services are

(generally) low standard, informal payments to referring doctors, high cost• Age and poor condition of public medical colleges and teaching hospitals – complex

upgrading needs in the imaging and laboratory environments , facilities, equipment, power supplies

• Non-compliance with MCI accreditation, inability to offer related graduate courses • Non-compliance with social health insurance empanelment criteria, inability to

generate insurance revenues for services rendered to poor families• Government equipment purchase recognized as problematic, difficulty to retain

staff, sustain maintenance

Transaction related challenges• Consultative and decision making process - multiple stakeholders involved – state

government administration, four multiple medical college administrations, deans of radiology departments

• Ensure appropriate use and contain fiscal exposure• Expectation of speedy implementation tied to local political realities• Bidder universe – sector fragmented, few (large) bidders• Changes in government – ability to commit; lack of health sector specific

PPP policy (addtl. IFC support)

Andhra Pradesh Radiology (2)

Solution• Novel PPP model – modified co-location model, for upgrading radiology services at

four teaching hospitals attached to public medical colleges in Kakinada, Kurnool, Vishakhapatnam, and Warangal

• Government to make available land on hospital premises, fixed viability gap funding for part of the civil works associated with upgrading

• Strong competition, winning bidder global/local consortium, 7-year contract• Bid parameter was the cost of services – winning bid is half of prior local rates

(based on basket of scans)• Availability of advanced services to around 100,000 patients per annum, after

ramp-up

Selected structuring features• No minimum volume guarantee – bidders may often require for government to

guarantee a certain payment or patient volume; this model avoids such guarantee but all public patients are being referred to the PPP

• Private public patient mix – the PPP is entitled to utilize idle imaging capacity to provide services to external patients, but at same tariffs, priority for referral patients in defined windows, to reduce distortions

• Explicit obligations towards enabling medical education , student access to equipment and software infrastructure

Closing observations..

Government commitment is key!

• Being fully informed about the implications of a PPP vs public solutions• Quick wins, starting with relatively easier projects, generate support • Knowing where the government wants the private sector to help…useful

to flesh out a PPP strategy in parallel to undertaking initial PPPs, to generate a sense of direction among stakeholders

• Having the skills and comfort level to manage PPPs is crucial for buy in by administrative officials, capacity building, learning is most real hands-on, on specific PPPs, should be accompanied by broader training

• Reality of changes in government – broad stakeholder involvement and steering committee helpful to build institutional memory

• Thank you very much for your attention, feel free to ask questions!