Encouraging private sector participation in NHPM

//Encouraging private sector participation in NHPM

Encouraging private sector participation in NHPM

The government of India has announced a paradigm shifting health scheme i.e. Ayushman Bharat – National Health Protection Mission (AB-NHPM) which is the most extensive financial protection provider scheme to protect all the citizens against humongous healthcare expenditure.


The scheme aims to provide a benefit cover of over ₹5 lakh for more than 1,300 specified and non-specified medical and surgical procedures to more than 100 million families i.e. around 500 million people nationally. The sheer scale and size of the intended beneficiaries makes it the world’s biggest healthcare scheme ever.

Private sector participation 

Few of the private sector healthcare providers have shown reluctance to participate in the initiative due to the concerns raised about the treatment packages being too low.

Highlighting concern 

  • Setting treatment rates at the national level is not an easy task, especially when it is being done for the first time at such a large scale.
  • There is a dearth of national-level comprehensive costing studies to measure the actual costs under the NHPM. But the current rates have been determined following a rigorous process of research.
  • Large similar schemes running in Karnataka, Maharashtra and Tamil Nadu, Maharashtra can be a rich source of information for the mission to succeed.
  • These schemes have private sector participants who are providing healthcare services at the rate envisioned by the respective healthcare schemes.

Solution provided 

  • AB-NHPM recognises the large scale variation in cost structures across the country. It gives the states the flexibility to increase or decrease the rates depending upon the context.
  • We should remember that these are the median rates which will need to be adjusted or customised at the state level.
  • The strategic purchasing feature of AB-NHPM will help to improve quality as well as availability of quality medicine care and services in poor areas.
  • Hospitals accredited by the National Accreditation Board for Hospitals and Healthcare Providers (NABH) and the ones located in the ‘aspirational districts’ will naturally receive higher rates.

Readjusting the solutions 

  • With increased research data available at the disposal, AB-NHPM will customise and refine itself accordingly as it is going to undertake studies and actuarial analysis along with revisiting the costing principles periodically to reflect annual fluctuations in unit costs and productivity.
  • The government has adequately taken the apprehensions of hospitals regarding the rates during the recent costing exercise and the views of hospitals will be accommodated into such formulations from time to time.
  • The pricing model based on contract package is simpler to implement but it has issues such as the inability to handle outliers. But it is assumed that such cases will average out due to the volume of the scheme.
  • AB-NHPM is planning to move to a more sophisticated payment mechanism such as diagnosis-related group (DRG) model which can assuage such outlier concerns.

Why private sector must join AB-NHPM?

  • The hospitals should know that the nationally determined rates are intended to cover the marginal cost and not the cost of capital and infrastructure. These rates seek to utilise excess capacities to ensure greater efficiency in service utilisation of hospitals. Efficiency is being sought in terms of optimum utilisation of professionals, administration of hospitals and easier process flows for the patients in terms of quick turnaround times.
  • Hospitals have a responsibility as they cannot expect to earn huge profits by servicing the bottom 40 percent people of the country. Universal healthcare is based on a social contract where the rich is expected to pay for the poor, healthy for the sick and the young for the elderly. Big hospitals need to learn this lesson first.
  • The mission seeks an enduring partnership with all quality hospitals to benefit the private sector capacity to provide services to a large section of population and provide them an opportunity to shape the most ambitious healthcare scheme in the world.


AB-NHPM aims to disrupt the current non-transparent system which has unacceptable high levels of out-of-pocket expenditure that poor people cannot afford. t is often said that the foot soldiers in a revolution are unaware of their role in historic change, so is the case of the private sector in this mission. It would be a shame if, 10 years on, we were to regret having lost this chance of working together to tangibly transform the lives of 500 million compatriots.


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By | 2018-08-10T15:17:38+00:00 August 10th, 2018|Categories: News|Tags: |0 Comments

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