by Hannah Joy on  January 18, 2019 at 6:10 PM Health Watch
Highlights
  • Hospitals would be made into an ‘industry’ under Ayushman Bharat health insurance scheme
  • This scheme provides private hospitals land and funds.
  • Broad guidelines have been issued by the government for private investments into setting up hospitals in Tier 2 and Tier 3 cities

Hospitals to Become an ‘Industry’ Under Ayushman Bharat
Under the Ayushman Bharat health insurance scheme, the present Narendra Modi government has announced plans to make hospitals into an 'industry' and also to help private hospitals by giving land and funds.

Broad guidelines have been issued by the government for private investments into setting up hospitals in Tier 2 and Tier 3 cities. Under these guidelines, three categories of hospitals have been defined. They are as follows:
  • Model I - Doctor owner (30-50 beds)
  • Model II - Doctor manager partnership-Multispecialty (100 beds)
  • Model III - Multispecialty (100 or more beds)
The Union health ministry said that the government will intervene in setting up private hospitals to 'incentivise it', where:
  • private hospitals will be allotted unencumbered land for lease or through bidding,
  • funding for projects will be provided, which are deemed unviable by the private sector
  • clearances will be speeded through special windows with specific timelines
  • compulsory empanelment of the hospitals for Pradhan Mantri Jan Arogya Yojana (PMJAY) and other Government schemes, and
  • ensures timely payments for services provided
In order to provide this funding to private hospitals under 'viability gap funding' (VGF), the hospitals need to be classified as an 'industry'. The government will provide VGF for private hospitals up to 40 percent of the total cost of the project, and also, provides gap funding of up to 50 percent of tax on capital cost.


The private sector has the responsibility to 'build, design, finance, manage, operate and maintain with quality standards' these hospitals.

Viability Gap Funding (VGF) is a capital subsidy that the government provides to project bidders. Usually, the bidder who asks for the lowest gap funding may clinch the project.

The government will provide VGF for private hospitals up to 40 percent of the total cost of the project, and also, provides gap funding of up to 50 percent of tax on capital cost.

The private sector has the responsibility to 'build, design, finance, manage, operate and maintain with quality standards' these hospitals.

In November 2018, the Centre sent a note to all states asking them:
  • to sanction loans at agricultural rates of interest; and
  • to provide electricity at residential rates to these private hospitals
The government wants private hospitals to come up in Tier 2 and Tier 3 cities.

In July 2018, the National Institution for Transforming India (NITI) Aayog had proposed a model to all the states of India to privatize urban health care, and the private players were being offered the possibility to capture beds and patients who come to government district hospitals for the treatment of noncommunicable diseases (NCDs).

Private players were being offered this access for a 30-year lease.

The NITI Aayog has also framed guidelines for this PPP model in district hospitals. So far, private hospitals and medical colleges have mainly worked on a 'Trust model', wherein a trust owns the hospital, or a company manages the hospital through the trust.



Source: Medindia

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