PPP is the way forward to improve healthcare in India: McKinsey

Union health minister, Ghulam Nabi Azad, endorses affordable healthcare through private sector

By Ratnika Sharma
Published: Wednesday 19 December 2012

Global management consulting firm McKinsey & Company has recommended the public-private partnership route for improving healthcare delivery in India by 2022. Releasing its report at the 9th India Health Summit, held from December 18 to 19, the consultant suggested a possible road map to achieving healthcare objectives under the 12th Five Year Plan.

The report was released by Union health minister Ghulam Nabi Azad. He said that while public health systems must be strengthened at all levels, healthcare needs to be supplemented through private sector participation.

'Private sector ought to be provider'

The report stipulates guidelines to be adopted by both the government and the private sector, along with opportunities and imperatives for both, in the larger backdrop of private public collaboration. To begin with, the government has to make a choice between its role as a provider or a payer—whether it wants to contribute in building infrastructure and managing operations of hospitals and diagnostics or it wants to be the principal payer for healthcare with services provided by the private sector. Adopting the provider role would slow down social insurance growth and private provision in the absence of any government incentivisation. Adopting the payer role would slow down growth of public beds but that can be resolved by adopting PPP models because private provision is predicted to show strong growth, according to the report.

With regard to healthcare infrastructure, at current rates, India will end up with a total bed density of 1.84 per 1,000 people against the global average of 2.9 and WHO guideline of 3.5 in 2022. If these figures have to improve, the private sector has to play the provider and industry and insurers will have to come up with innovative business models on investments, project planning and optimum deployment of capital at all income levels, especially the rural and urban poor sectors. The industry would specifically need to find ways to provide healthcare to rural India which now accounts for nearly half of the prevalence of heart diseases and diabetes and nearly 70 per cent of cancer cases.

“We did not delve deeper into specifically focussing on the PPP model because there are steps before implementation of the model. First, the framework has to be set up with clarity in choices, opportunities and imperatives, both for the government and the private sector and only then can the PPP model work,” says Mandar Vaidya, partner, McKinsey & Company, while presenting the report. To meet the targets of 2022 healthcare vision along with the 12th Five Year Plan objectives, effective private-public collaboration is the key.

Health minister Azad said that out that private hospitals are concentrated only in urban centres and a vast majority of the population, living in remote rural areas, have no access to such facilities and cannot afford them. He suggested that efficient and affordable healthcare can be provided through the PPP model.

For the collaboration to work, S C L Das, health secretary with the Delhi government, defined five areas where effective partnership with the private sector can be achieved. They are: good governance in areas where goods and services are delivered; in framing streamlined statutes that move things forward and remove ambiguities and misconceptions from the existing obsolete ones; scaling up diagnostics and dialysis services because they need optimum quality that can be rendered by the private sector; enhancing services like health management improvement systems and OPD registration by putting them on IT-enabled platform; and training of nurses, anaesthetics to add to the larger pool of skilled manpower.


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