Over the past month, the Chhattisgarh health department has issued advertisements inviting bids by private players to operate some of the state’s hospitals and diagnostic laboratories under a public-private partnership. Private agencies have been invited to build and manage six 100-bed hospitals and to run pathology, X-ray and CT scan services in government hospitals.

The government says it wants the private sector to provide these services because the lack of trained personnel and other factors have constrained the state from effectively doing so itself.

However, data and evidence belie this claim. In fact, the proposals threaten to dismantle existing government services and replace them with privatised services that may be more expensive.

Outsourcing hospitals

According to the Chhattisgarh government’s proposal, the six 100-bed hospitals will provide secondary care – that is, patients will be referred there for ailments that cannot be treated at a primary care centre and require more specialised attention.

The hospitals will be built according to the “Build Own Operate and Transfer”, or BOOT, model. The bidder must have a minimum net worth of Rs 20 crore and an annual turnover of Rs 50 crore to be eligible. This means only big corporate hospitals can make bids. The state government plans to lease land to the selected private agencies for 30 years at Re 1. It will allot public plots ranging in size from 0.81 hectares to 3.70 hectares to them. The government is also willing to provide Viability Gap Funding – or a one-time grant to help set up an infrastructure project that may be financially unviable – of up to Rs 4 crore per hospital. The private agencies will have to build the hospitals as per Indian Public Health Standards and run them for the next three decades.

The government says in its proposal document that it decided on the public-private partnership model after trying and failing to provide adequate health facilities for underserved sections of the state’s population because of infrastructure and human resource constraints, including procuring the services of specialists.

However, while such constraints may be found in the state’s remote regions and areas inhabited by indigenous communities, it is definitely not the case in urban centres. According to the government’s proposal, five of the six hospitals are to be located in or near Chhattisgarh’s three biggest cities – Raipur, Bilaspur and Durg – which already have the largest concentration of hospitals in the state. Such rationale leads to the question of whether the state needs such a public-private partnership.

Patient expenses

Will patients get free or subsidised treatment in these hospitals or will the outsourcing increase costs?

The government’s proposal says a hospital will have to provide free services to 20% of patients in the out-patient department and 40% of admitted patients. But it does not clarify whether free services pertain only to registration fees (which are a small part of the cost of treatment) or also to diagnostics, doctors’ fees, medicines and the range of other expenses that patients incur in private hospitals.

For the 40% of admitted patients who are to be given free services, the hospital can claim reimbursements through Central government health insurance schemes such as the Rashtriya Swasthya Bima Yojana or the new Pradhan Mantri Jan Arogya Abhiyan under Ayushman Bharat. Therefore, these are not really free services provided by the hospitals but services funded by public money.

Lessons not learnt

The proposal document states that once these new hospitals are set up, the private agencies that run them can charge fees according to existing market rates. This allows them to charge any amount they want without any regulation of price. Across the country, there are numerous instances of private agencies being given land at concessional rates in lieu of providing free treatment to a certain proportion of poor patients but where the promised benefits have never materialised. The courts have had to intervene several times to enforce these agreements. Government reports have highlighted overcharging and profiteering by private hospitals. Despite all this, the Chhattisgarh government is setting up a health system that exposes people to more unregulated and high-cost treatment.

The experience of handing government hospitals over to private parties has been largely unsuccessful in Chhattisgarh and other parts of India. Some instances of public-private partnerships in healthcare that failed include the Rajiv Gandhi Super-Speciality Hospital in Karnataka’s Raichur district, primary health centres in the same state, community health centres in Uttarakhand, Seven Hills Hospital in Mumbai, and two super speciality hospitals in Delhi. In Chhattisgarh this year, a public-private partnership in which free land was given to Vedanta Cancer Hospital failed as the hospital did not adhere to the contract. Similarly, the state government ended its partnership with the Escorts Fortis Heart Centre last year. Other failed public-private partnerships, such as the one for Rural Mobile Medical Units, caused losses to the public exchequer.

On the other hand, there are instances where Chhattisgarh has strengthened its public hospitals. For example, in Bijapur – identified by the Centre as one of India’s 115 least developed districts and targeted for transformation by 2022 under its Ayushman Bharat programme – the government has managed to plug human resource gaps in the district hospital and greatly improve its functioning. If the government can post doctors in Bijapur, why can’t it do the same in its main cities? Why can’t the government replicate the Bijapur model in other parts of the state?

The state government’s decision to outsource hospitals to the private sector does not seem to be based on evidence, which points to the lack of success of public-private partnerships in running hospitals. The state’s latest move may become an addition to this string of failures, proving costly to the government and the people of Chhattisgarh.

Sulakshana Nandi and Deepika Joshi are public health researchers working in Chhattisgarh.

This is the first in a two-part series that dissects Chhattisgarh’s rationale for its newly planned public-private partnerships and their implications for the state’s health system. The second part focuses on the statewide outsourcing plan for diagnostics.