Privatisation Threatening India’s Public Health System

Context

India’s public health system is under renewed scrutiny due to rising privatisation.

Recent Trends in Health System in India

• Public health spending is roughly 1.9% to 2.1% of GDP (FY26), still short of the 2.5% target set by the National Health Policy 2017.
• Over 60% of total health expenditure is out-of-pocket, pushing millions into poverty annually.
• While billions flow into private insurance schemes (AB-PMJAY), the frontline public workers (ASHA, Nurses) remain underpaid and overworked.

The “Need” and Rationale for Privatization

• Bridging the Infrastructure Gap: India currently has only 3 to 1.4 beds per 1,000 people, far below the WHO recommendation of 3 per 1,000.
  • To reach this target by 2030, India requires an additional 3 million beds, a feat the government admits it cannot fund alone.
• Technological Superiority: The private sector owns a disproportionate share of high-end medical tech.
  • g., private hospitals house nearly 30,000 ventilators compared to roughly 17,000 in public facilities.
• Handling the NCD Epidemic: Non-communicable diseases (NCDs) now contribute to 63% of all deaths in India.
  • Treating chronic conditions like cancer and heart disease requires specialized tertiary care, which the private sector provides more extensively.
• Economic Driver (Medical Tourism): India’s medical tourism market reached $8.7 billion in 2025 and is projected to hit $16.2 billion by 2030.
  • This brings in foreign exchange and positions India as a global healthcare hub.

Key Issues Associated with Privatization

• Financial Barriers & Out-of-Pocket Expenditure (OOPE): The average per-day cost of hospitalization in a public hospital is ~₹2,800, whereas in a private hospital, it exceeds ₹6,700.
• The “Profit over Patients” Model: Doctors are often pressured to meet revenue targets, leading to unnecessary diagnostic tests, surgeries (like C-sections), and prolonged ICU stays.
  • g., Private entities prioritize lucrative tertiary care (cardiology, oncology) while neglecting low-profit but essential areas like preventive health, mental health, and infectious disease control.
• Fragmentation of Medical Education: Privatization has turned medical seats into a commodity.
  • The Debt Burden: With private MBBS fees often exceeding ₹40–60 lakhs, new doctors graduate with massive debt. This forces them to practice in expensive urban centers to recover costs, further depleting the rural workforce.
  • Skill Quality: Experts have raised alarms about “just solving MCQs” to pass exams like NEET-PG, leading to a generation of doctors with strong theoretical scores but limited hands-on clinical experience.
• Urban-Rural Divide: Private infrastructure is heavily skewed toward Tier-1 cities.
  • g., Over 70% of India’s private hospital beds are located in urban areas, while 70% of the population remains rural.

Way Forward

• Restore public health leadership: Increase public health spending to ≥3% of GDP, prioritising government facilities to reduce out-of-pocket expenditure.
• Strengthen primary healthcare: Enable local treatment of most illnesses; fully staffed Ayushman Arogya Mandirs can handle 80–90% of disease burden.
• Regulate private healthcare: Enforce treatment guidelines, audits, and transparent pricing to curb profit-driven practices.
• Align insurance with public system: Channel PM-JAY funds to upgrade public hospitals instead of passive purchasing from private providers.
• Reform medical education and workforce: Cap fees, mandate rural service, and prioritise skill-based clinical training over rote learning.

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