House panel on health recommends cross-subsidisation policy for corporate hospitals

The Parliamentary Standing Committee on Health and Family Welfare has called for the formulation of a structured cross-subsidisation policy to make private corporate hospitals offer advanced tertiary care for economically weaker domestic patients at affordable rates.

Attributing the robust financial performance of corporate hospital chains to high-value treatments and an expanding medical tourism market, the Committee wanted the cross-subsidisation policy to ensure that the large corporate hospitals benefiting from government concessions utilise a portion of revenues generated from international and high-net-worth patients to provide cross-subsidised advanced tertiary care for economically weaker domestic patients.

Additionally, these institutions must be mandated to allocate a defined quota of beds for empanelment under national health insurance schemes at standardized, regulated package rates, the Committee said.

The Standing Committee’s report on ‘Affordability and Accessibility of Healthcare Facilities in Private and Public Sector stated that the current private healthcare landscape is disproportionately concentrated in urban tertiary markets and wanted the government to restructure its healthcare incentive frameworks, making tax benefits, land subsidies, and FDI facilitations strictly conditional upon private sector investment in underserved geographical regions. “By heavily incentivising Public-Private Partnerships (PPPs) in non-urban areas, the government can ensure that the infrastructure, technological advancements, and high quality of care characteristic of the corporate private sector are made accessible and affordable to the broader rural and peri-urban population,” the report said.

The Committee also wanted the government to restructure its healthcare incentive frameworks to explicitly protect and upgrade smaller healthcare providers. “Alongside incentivising corporate PPPs to expand into non-urban areas, the government must launch targeted financial assistance, technology-upgrade grants, and subsidised equipment procurement programmes specifically for small and medium-sized rural and semi-urban hospitals. Levelling such a technological playing field will ensure that high-quality, modern care is not exclusively confined to corporate urban centres but is made accessible and affordable throughout the rural, semi-urban, hilly and tribal landscape,” the report said.

The panel also wanted implementation of mandatory quality-assurance and price-transparency framework for all private clinical establishments across the country as such measures will result in standardised treatment protocols and protect patients from monetary exploitation.

According to the Committee, the unbridled growth of clinics, nursing homes and diagnostic centres and uneven implementation of the Clinical Establishments (Registration and Regulation) Act, 2010, across states have created glaring disparities in both the quality and cost of care in private sector, leaving patients vulnerable to arbitrary pricing and substandard practices.

Stating that the private sector accommodates over 60% of inpatient and 70% of outpatient care, the Committee wanted the Union Health Ministry to coordinate with State Governments to mandate the uniform adoption and strict enforcement of the Clinical Establishments Act nationwide.

Meanwhile, the industry body NATHEALTH- Healthcare Federation of India stated that it was encouraging to see the current discussion acknowledge the complementary and indispensable role of both public and private healthcare in expanding access to quality care while reducing the financial burden on patients.

“As ideas such as standardised treatment packages and room-rent benchmarks are evaluated, it will be important to undertake a comprehensive costing exercise across different categories of hospitals, geographies, and care settings. As we understand, pricing and costing are not the same, particularly when subsidies and differing operational efficiencies influence the risk-reward equation of various care delivery models,” Siddhartha Bhattacharya, Secretary General, NATHEALTH said.

Bhattacharya also pointed out that while healthcare requires over $ 300 billion in immediate investment capital, the sector is grappling with the twin pressures of ensuring affordability and sustainable pricing on the revenue side, while also attracting capital despite having one of the lowest returns on investment among the top 20 sectors of the economy.

“Whether public or private, healthcare delivery, unlike the hospitality sector, involves significant costs related to infection control, specialised infrastructure, regulatory compliance, medical technology, and round-the-clock clinical support. These realities, including more than 25,000 healthcare-related compliance requirements, need to be reflected in any pricing framework to ensure that quality of care is upheld in line with the highest clinical standards,” he said.