PPPs in India: Expansion without Evidence

This is the second post in our series, “Raising the Bar for Indian Healthcare”, which highlights the challenges and opportunities facing India’s healthcare delivery system. In this post, we discuss the state of PPPs in the health sector, and the need for greater evidence on performance and enablers.

Since Government’s endorsement almost 15 years ago as a potential solution to deficient health service delivery, healthcare public-private partnerships (PPPs) have proliferated across India. They represent a rare form of public-private collaboration in a system dominated by private provision, but inhibited by considerable distrust between the two sectors. In effect, public-private engagement for service delivery in India’s health system hardly moves beyond the micro-level realm of PPP transactions. More recently, however, government-sponsored insurance schemes such as PM-JAY are purchasing insurance-related services from private third-party administrators and health services from private hospitals, and represent a bold step forward in public-private engagement. In this post, we focus on PPP models oriented toward expanding service delivery in which state health agencies contract private entities to build and operate facilities or manage services heretofore delivered through the public delivery system. Despite the proliferation of these transactions, little is known about their scope and impacts.

We began analyzing the state of healthcare PPPs in India about a year ago, and quickly found that the evidence-base is thin. In India, states are constitutionally responsible for publicly-financed health service delivery. Our analysis of multiple tender documents, newspaper articles, reports and websites of state PPP cells reveals that over the past decade, state governments across India have primarily focused on infrastructure PPPs. A growing number of states are experimenting with service delivery PPPs . Many of these involve the contracting out of select clinical and non-clinical services, such as diagnostic services (ex: Bihar, Himachal Pradesh) and dialysis services (ex: Delhi, Andhra Pradesh). Some states, such as Karnataka, Meghalaya and Arunachal Pradesh, have outsourced management of some primary care clinics to NGOs. To a lesser extent, states have or are experimenting with contracting out hospital management and service delivery (see examples here and here). Data on the actual number of ongoing PPPs is difficult to obtain or validate.

PPPs Image.png

The impact of these PPPs in terms of quality of care, costs and alignment with public priorities is largely unknown. Some diagnostic and dialysis PPPs have reported positive performance (see here and here), possibly because their narrow scope makes them relatively easier to design, tender, manage and monitor. One model that has widely been panned as a failure is the “land for beds model”, in which land is leased to a private partner to build and operate a hospital at little or no cost, in exchange for meeting specific conditions, usually including designating a share of beds to the poor. A troubled joint venture between the Delhi Government and Apollo Group exemplifies the challenges of this approach. Amazingly, this form of PPP remains under consideration in other states.

Anecdotal evidence suggests that some private operators faced insolvency in part due to late payments from government agencies. Further, while PPPs are often employed to fill gaps in access and quality that the public sector cannot address through its own resources, contracts often lack critical details: performance indicators, accountability frameworks and standard operating procedures are generally missing. As elsewhere, the public sector’s low capacity for contract management in India may be the Achilles heel of PPPs.

The lack of good quality information and data on specific healthcare PPPs in India is concerning. States across India are moving forward with this agenda (see here and here), and many interesting engagements are underway; yet there is little to no rigorous evaluation or even monitoring of these initiatives. Much of the evidence to date is drawn from “light touch” case studies that often appear promotional in nature. Little is known about impacts, lessons learned, and how starting conditions and government and contractor capacities contributed to performance.

As a result, states are left largely to operate in the dark, with limited knowledge of what has worked elsewhere in India, and why. The often ad hoc nature of PPP transactions leaves them vulnerable to repeat past failures, and unable to systematically learn from successes. More and better information and analysis are needed to inform state and national PPP policies so that governments can move this agenda forward in a more informed way. Until then, we can’t be sure why some PPPs succeed while others fail.

Check out other posts in this series below:

Let Managers Manage: Raising Indian Public Hospital Performance

Let Managers Manage: Raising Indian Public Hospital Performance

This is the first post in our series, “Raising the Bar for Indian Healthcare”, which highlights the challenges and opportunities facing India’s healthcare delivery system. In this post, we discuss considerations for raising public hospital performance through greater autonomy.

The recent rollout of PM-JAY – a government-subsidized health insurance scheme that aims to provide inpatient coverage up to 500,000 INR per year for India’s poorest families – signals the trajectory of India’s healthcare system. Building on the experiences of earlier state and centrally-sponsored insurance schemes, it solidifies the government’s expanded role as a purchaser of healthcare services. For India’s public sector hospitals, which are accustomed to mainly supply-side financing through line item budgets, this expansion of insurance revenue, together with the separation of healthcare financing from provision, will bring new opportunities, as well as challenges. Specifically, public hospitals will need greater financial and managerial autonomy if they are to respond to the incentives embedded in payment systems set by purchasers to control costs and provide high-quality services (see Chapter 12 of this useful resource for more information). The government’s 2018 New Strategy for India @75 calls for granting some autonomy to public facilities to enable effective use of claims money generated under PM-JAY to improve the care they provide. How India will guide and implement greater autonomy in public hospitals remains an open question.

Indian public hospitals have much to gain from new forms of governance and management. Most are directly operated by state health departments, and as a result, hospital managers have little decision-making authority over inputs or day-to-day operations, and political interference in human resource management is rife. Emerging evidence suggests that Indian hospitals are poorly managed, especially publicly-run facilities. Under these conditions, it is difficult to implement changes in support of quality and efficiency improvements. For both purchasers and patients, the result is often low-value care.  

Most successful autonomy-oriented efforts in India to date appear to have occurred in other sectors (e.g., Delhi Metro Rail Corporation, DMRC). Yet, recent evaluations have shed light on some highly successful healthcare examples such as GVK Emergency Management Research Institute (EMRI), which operates emergency transport services, and the Tamil Nadu Medical Services Corporation (TNMSC), which manages the ordering, testing and distribution of drugs and  medical supplies throughout the state of Tamil Nadu. India also has a long history of experimenting with autonomous hospitals. These have taken different legal forms, including legislated “autonomous” facilities at the central and state levels (e.g., All India Institute of Medical Sciences (AIIMS), Indira Gandhi Institute of Medical Sciences in Patna), and more recently, public-private partnerships (e.g., Mumbai Municipal Hospital).

Given these experiences, reforms that increase the autonomy of public hospitals have considerable potential in India – assuming accountability mechanisms are ratcheted up simultaneously to keep autonomous hospitals aligned with public priorities. Recognizing this, government has initiated steps in this direction. For example, under PM-JAY and some state-sponsored insurance schemes, public hospitals are allowed to retain payments received through insurance claims according to formulas set by the schemes.

Yet, there is a need for caution. Our extensive review of hospital autonomy experiences in India and globally revealed numerous possible pitfalls, as well as factors for success. What came through most clearly, however, was the need to ground any autonomy-oriented reform in the local (e.g., state) context, with strong understanding of enabling (and disabling) factors in the broader financial, institutional and political environment. This is a challenge in India, as past and ongoing hospital autonomy initiatives have not been assessed. Even for existing legally “autonomous” hospitals, little is known about effective decision-making authority, managerial capacity, performance or lessons learned.

 With limited data or information, it will be difficult for government to develop truly evidence-based policies or programs. There is a need to focus efforts on gathering critical evidence on existing autonomy initiatives before launching new ones, to support learning and continual improvement over time. 

Parallel Systems and Human Resource Management in India's Public Health Services

Increasingly, evidence in India suggests that the delivery of health services suffers from not only a shortfall in trained health professionals, but also from unsatisfactory performance of existing service providers working in the public and private sectors. This study focuses on the public sector and examines de facto institutional and governance arrangements that may give rise to well-documented provider behaviors such as absenteeism, which can adversely affect service delivery processes and outcomes.

The paper considers four human resource management subsystems: postings, transfers, promotions, and disciplinary practices. The four subsystems are analyzed from the perspective of frontline workers, that is, physicians working in rural healthcare facilities operated by two state governments. Physicians were sampled in one state that has instituted human resource management reforms and one state that has not.

The findings are based on quantitative and qualitative measurements. The results show that formal rules are undermined by a parallel modus operandi in which desirable posts are often obtained through political connections and side payments rather than merit. The evidence suggests an institutional environment in which formal rules of accountability are trumped by a parallel set of accountabilities. These systems appear so entrenched that reforms have borne no significant effect.


This working paper was co-authored by Gerard La Forgia, Shomikho Raha, Shabbeer Shaik, Sunil Kumar Maheshwari, and Rabia Ali. 




Case Studies: White Paper on Hospital Autonomy Potential in India

These case studies supplement Aceso Global’s White Paper on Hospital Autonomy Potential in India and assess hospital autonomy reforms in Brazil (Sao Paulo), Hong Kong, Vietnam, Portugal, Spain, the UK, and the US (NYC). Each case study introduces the country- or city-specific context leading to reforms, then details how the governance model functions in terms of operational and organizational autonomy, financial management, and accountability. Finally, each case study concludes with an analysis of the model’s strengths and weaknesses, and lessons learned. 



White Paper: Hospital Autonomy Potential in India

Public hospital autonomy reforms emerged out of frustration over poor hospital performance, citizen distrust of public care and evidence from other sectors of the benefits of delivery models that incorporate or build on private sector incentives. Hierarchical bureaucracy, limited managerial decision-making authority and nonexistent accountability have resulted in poorly performing hospitals, and driven the search for alternative models of health care delivery.

This paper takes up three major organizational forms of hospital autonomy reforms – autonomization, corporatization, and public-private partnerships – and the underlying components necessary for their successful implementation. International examples of hospital autonomy reforms in both OECD and emerging market countries serve as a foundation for analyzing potential opportunities, as well as pitfalls, of autonomy reforms in different contexts.

The paper concludes with an evaluation of the possible application of public hospital autonomy reforms in India. A brief overview of existing autonomy reforms in non-hospital settings is followed by recommendations for the Indian government on the applicability of specific models to the Indian public health sector.

Please contact us for access to this product. 

Government-Sponsored Health Insurance in India: Building Blocks for Achieving UHC or Trojan Horse

This presentation explores the role of state and central government health insurance schemes in achieving universal health coverage in India. It provides an overview of the main features and impacts thus far of multiple new state-sponsored insurance programs, as well as challenges. Finally, it takes a forward-looking approach and considers the role of these health insurance schemes in the broader public and private health care landscape in India. 

Please contact us for access to this product. 

Government-Sponsored Health Insurance in India: Are You Covered?

Since independence, India has struggled to provide its people with universal health coverage. Whether defined in terms of financial protection or access to and effective use of healthcare, the majority of Indians remain irregularly and incompletely covered. Finally, and most recently, a new generation of Government-Sponsored Health Insurance Schemes (GSHISs) has emerged to provide the poor with financial coverage. Briefly, the main objective of these new GSHISs was to offer financial protection against catastrophic health shocks, defined in terms of an inpatient stay. Between 2007 and 2010, six major schemes have emerged, including one sponsored by the Government of India (GOI) and five state-sponsored schemes. This new wave of schemes provides fully subsidized coverage for a limited package of secondary or tertiary inpatient care, targeting below-poverty populations. Similar to the private voluntary insurance products in the country, ambulatory services including drugs are not covered except as part of an episode of illness requiring an inpatient stay. The schemes have organized hospital networks consisting of public and private facilities, and most care funded by these schemes is provided in private hospitals. Ostensibly, the objective of any health insurance scheme is to increase access, utilization, and financial protection, and ultimately improve health status. Due to lack of evaluations and analyses of household data, the authors of this book do not examine the impact of health insurance in terms of these objectives. This book is not meant to highlight problems of the GSHISs, but rather to raise potential challenges and emerging issues that should be addressed to ensure the long-term viability of these schemes and to secure their place within the health finance and delivery system.


La Forgia, G. and S. Nagpal. 2012. Government-Sponsored Health Insurance in India: Are you Covered? Washington, DC: World Bank.