Introduction

In recent years, several Indian States have increasingly turned towards Public–Private Partnership (PPP) models in health care delivery and medical education. Fiscal constraints, rising demand for hospital beds, and the need to rapidly expand medical colleges have been cited as key justifications for this shift. States such as Andhra Pradesh have emerged as prominent examples where PPP has been promoted as a pathway to faster infrastructure creation and reduced public expenditure. However, a closer examination of health systems reveals that the logic of PPP, which may work in physical infrastructure sectors, is fundamentally misaligned with the objectives of public health. The growing reliance on PPP in health care raises serious concerns regarding equity, efficiency, governance, and long-term system sustainability.

Rationale Behind the Push for PPP in Health Care

• Governments are under pressure to rapidly expand medical colleges, teaching hospitals, and district-level health infrastructure.

• PPP is projected as a means to mobilise private capital and technical expertise while reducing the need for large upfront public investment.

• Policymakers often argue that private participation can:

  • Accelerate project execution

  • Improve operational efficiency

  • Ensure fiscal sustainability

• In medical education, PPP is presented as a shortcut to address doctor shortages by quickly increasing the number of seats.

While these arguments appear persuasive on paper, they overlook the distinctive nature of health care as a public good rather than a commercial service.

Fundamental Concerns with PPP in Health Care

• Health care operates on principles of equity, universal access, and public welfare, whereas private entities are driven primarily by profit maximisation.

• This inherent conflict of objectives creates structural tensions within PPP arrangements.

• Risk-sharing, a core principle of PPP, is often distorted in health contracts:

  • Financial and operational risks are disproportionately shifted to the government

  • Private partners are protected through guaranteed revenue streams

• Common contractual features include:

  • Guaranteed bed occupancy

  • Mandatory provision of free outpatient services

  • Fixed reimbursements under schemes such as Ayushman Bharat

• These arrangements expose the public exchequer to high liabilities while limiting the state’s ability to enforce accountability.

Rent-Seeking and Operational Distortions

• PPP hospitals often create opportunities for rent-seeking and regulatory evasion.

• Common practices reported include:

  • Charging patients under the table despite contractual obligations of free or subsidised care

  • Denial of free services to eligible beneficiaries

  • Diverting beds earmarked for public patients by citing low demand or operational constraints

• Monitoring and enforcing compliance becomes difficult due to information asymmetry between public authorities and private operators.

• Over time, these distortions erode public trust in the health system.

Impact on Equity and Access

• PPP-driven medical education risks accelerating the commercialisation of medical training.

• High tuition fees and capitation structures:

  • Exclude students from poor and middle-income backgrounds

  • Reinforce socio-economic inequality in access to medical education

• Graduates from expensive private or PPP institutions are more likely to:

  • Seek employment in urban private hospitals

  • Migrate abroad to recover educational investments

• This weakens rural and public health systems by:

  • Aggravating specialist shortages

  • Undermining service delivery in underserved areas

Systemic Inefficiencies in Public Health Delivery

• District-level PPP hospitals fragment the public health system.

• They disrupt the vertical integration of:

  • Primary care

  • Secondary care

  • Tertiary referral services

• Effective referral systems are essential for:

  • Managing chronic diseases

  • Continuity of care

  • Cost-effective health outcomes

• PPP-led fragmentation weakens coordination between levels of care and reduces the efficiency of the overall health system.

Governance and State Capacity Deficit

• Successful PPP implementation requires:

  • Strong regulatory frameworks

  • Skilled contract management

  • Continuous monitoring and enforcement

• Many Indian States lack this institutional capacity.

• As a result:

  • Contracts are poorly designed and inadequately enforced

  • Regulatory oversight remains weak

  • Multiple fragmented PPP contracts create administrative chaos

• Even existing health regulations, including clinical establishment norms and service quality standards, are often poorly implemented, further compounding the problem.

Preferred Alternative: Strengthening Public Health Systems

• Instead of relying on PPP, States should focus on strengthening publicly funded and publicly managed health systems.

• Priority areas include:

  • Investment in robust primary health care, which can prevent a large proportion of avoidable hospitalisation

  • Expansion of subsidised medical education with clear service-linked obligations

  • Building a committed cadre of doctors and specialists for rural and public service through better incentives and working conditions

• Public investment should be guided by:

  • Evidence-based health planning

  • Population health needs

  • Long-term system resilience rather than short-term asset creation

Conclusion

Health care, especially core public health infrastructure and medical education, is ill-suited to the PPP model in the Indian context. The profit-oriented logic of private participation conflicts with the foundational goals of equity, universality, and public accountability. In the absence of strong regulatory institutions and enforcement capacity, PPP arrangements risk deepening inequalities, fragmenting health systems, and eroding public health outcomes. A sustainable and equitable health system requires renewed commitment to public financing, public provision, and institutional strengthening rather than the privatisation of critical health assets.