Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

[op-ed snap] Why private hospitals should join AB-NHPMop-ed snapPriority 1


Mains Paper 2: Governance | Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

From UPSC perspective, the following things are important:

Prelims level: Not Much

Mains level:  Under AB-NHPM, concerns raised by Private Hospitals over Pricing of healthcare services are obvious. But they can be sorted out. The newscard gives a brief over the solutions to this problem.


NHPM scheme

  1. AB-NHPM aims to provide a benefit cover of ₹5 lakh for more than 1,300 specified and other unspecified medical and surgical procedures to more than 100 million families.
  2. It intends that within the next decade, the unacceptably high levels of out-of-pocket expenditures that poor households across the country currently incur in seeking healthcare especially secondary and tertiary-level care—will fade away.

Issue over Pricing-Model

  1. Some healthcare provider networks have raised concerns about the viability of the pricing model.
  2. Some private sector healthcare providers have shown reluctance in seeking empanelment under the initiative, saying the rates for treatment packages are too cheaper.

Treatment Rates- NOT the elephant in the room

  1. Setting treatment rates at the national level is not an easy task, especially when it is being done for the first time in the world.
  2. There is, admittedly, a dearth of national-level comprehensive costing studies; that will be one of the core research areas AB-NHPM will be looking into continuously.
  3. Nonetheless, the current rates have been determined following a rigorous process.

States examples are promising

  1. There are large schemes running successfully in states such as Tamil Nadu, Maharashtra and Karnataka which can be a rich source of information for the mission.
  2. These schemes have no dearth of empanelled hospitals which are providing healthcare services at the rates so provisioned.
  3. Recognizing the large variations in cost structures across the country, AB-NHPM gives states the flexibility to increase or decrease rates, depending on their contexts.
  4. By definition, these rates are median rates, and will need to be adjusted at the state level.

AB-NHPM mandates to timely  refine its approach

  1. The mission will continue to undertake costing studies and actuarial analysis besides periodically revisiting costing principles to reflect annual fluctuations in productivity and unit costs.
  2. The viewpoints of hospitals about the rates have been taken into consideration during the current costing exercise. Hospitals’ views will continue to be sought as the scheme evolves.
  3. AB-NHPM plans to move on to more sophisticated provider payment mechanisms, including variants of diagnosis-related group (DRG) models, which can assuage such concerns.
  4. It seeks to provide quality health services to all beneficiaries and, therefore, would urge all quality hospitals to participate in the process.

Hospitals should carefully consider the following issues

(A)The hospitals should understand that the nationally prescribed rates are not intended to cover the cost of capital and infrastructure in the short run but the marginal cost.

  • They seek to ensure that excess capacities are utilized, leading to greater efficiency in service utilization of hospitals.
  • This efficiency is not just in terms of empty beds but also more efficient hospital administration, optimum utilization of professionals and easier process flows for the patients with quicker turnaround times.

(B) Hospitals, especially the big ones, have a responsibility.

  • They should not expect to strengthen their balance-sheets based on services to the bottom 40% people of the country.
  • Universal health coverage is based on a social contract, where the rich need to pay for the poor, the healthy for the sick and the young for the elderly. Large and expensive hospitals need to do their bit as well.

(C) AB-NHPM wants a partnership with all quality hospitals so that the evolution of the scheme benefits from diverse inputs.

  • This partnership will be a win-win situation. The mission will benefit from the private sector capacity to provide services to large numbers.
  • At the same time, this provides the private sector an opportunity for shaping the most ambitious healthcare scheme in the world.

Way Forward

  1. Healthcare is a matter of utmost concern of time. AB-NHPM seeks to address this concern in a stipulated time.
  2. Private Hospitals can play a leading role and their reluctances over pricing are essentially considered by the government.
  3. It is often said that the foot soldiers in a revolution are unaware of their role in historic change. Same implies to the participation of these private players here.
  4. The evolutionary nature of the scheme provides ground for its immediate implementation so that the beneficiaries get affordable healthcare at their earliest.

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