Niti Aayog’s Proposed Model Contract for the problems plaguing the healthcare sector


The NITI Aayog proposed a solution to the issues plaguing India’s health sector.

The solution is to incentivize the private sector via public private partnerships (PPPs), wherein the government provides land, infrastructure, capital for viability gap funding, and patients via referrals from public screening programmes. In return, the government fixes the price of basic services to ensure a reasonable rate of return. The delivery, quality and governance of the PPPs is monitored by the project steering committee, contracts management cell and project coordination committee, etc.

Problems of the healthcare sector in India

1.Corruption in MCI

2.Shortage of medical doctors due to the emigration of physicians and the fact that the current MCI rules and guidelines prohibit qualified MBBS doctors without a PG degree from performing procedures such as ultrasound and interpreting chest X-rays

3.The challenges in Availability and maintenance of equipment and supply of drugs in the  local public health infrastructure

4.The capacity of district level public health institutions

5.A weak primary healthcare sector with a Lack of intensive care units and issues like sanitation and drainage.

6.Unequally distributed skilled human resources

a)There aren’t enough skilled healthcare professionals in India despite recent increases in MBBS programmes and nursing courses

b)Shortage is compounded by inequitable distribution of these resources.

7.India does not have an overarching national policy for human resources for health.

8.Large unregulated  private sector

a)The National Sample Survey Office (NSSO) numbers show a decrease in the use of public hospitals over the past two decades

b)A significant portion of these private practitioners may not be qualified or are under-qualified

c)many new institutions set up in the past decade encouraged by commercial incentives, have often fuelled corrupt practices and failed to offer quality education

9.Low public spending on health

a)Economically weaker states are particularly susceptible to low public health investments.

b)Many state governments also fail to use allocated funds

10.Fragmented health information systems

11.Irrational use and spiralling cost of drugs

a) Costs of medical treatment have increased so much that they are one of the primary reasons driving people into poverty

b) Jan Aushadhi campaign to provide generic drugs at affordable prices, but their implementation has been patchy and varied in different states

12.Weak governance and accountability

a) many of the new laws have not been widely implemented

b) missing trust and engagement between various healthcare sectors

c) poor coordination between state and central governments as the main constraints why universal healthcare is not assured in India

d) unwillingness on the part of the state to prioritize health as a fundamental public good, central to India’s developmental aspirations, on par with education

13.India continues to lag several health indicators such as mortality rates and malnutrition

Niti aayog’s Proposed  Model contract

  • Niti Aayog and the Union ministry for health and family welfare have proposed a model contract to increase the role of private hospitals in treating non-communicable diseases in urban India.
  • The agreement, which has been been shared with states for their comments, allows private hospitals to bid for 30-year leases over parts of district hospital buildings and land to set up 50- or 100-bed hospitals in towns other than India’s eight largest metropolises.
  • According to the model contact, the district hospitals will need to share their back-end services such as blood banks and ambulance services with the private players. The state government could also provide part of the funds needed by these private players to set up the new hospitals. The district health administration will ensure referrals for treatment from primary health centres, community health centres, disease screening centres and other government health programmes and ventures are made to these private hospitals
  • Under the model contract, these private hospitals will provide secondary and tertiary medical treatment for cancer, heart diseases and respiratory tract ailments at prices that are not higher than those prescribed under government health insurance schemes. For non-communicable diseases needing these three kinds of specialised treatments, the hospitals will need to have out-patient departments, in-patient beds, beds for intensive care, operation theatres, centre for angioplasty and angiography, laboratories and radiology services.
  • The district government hospital will be expected to share its ambulance services, blood blank, physiotherapy services, bio-medical waste disposal system, mortuary services, parking facilities, electricity load, in-patient payment counters and hospital security with the private enterprise running out of its campus, the contract says.
  • Beneficiaries of the government insurance schemes will be able to get treatment at these hospitals but there will be no reserved beds or quota of beds for free services. General patients will also be allowed to seek treatment. Patients not covered by the state insurance and health schemes would be required to pay the full cost.
  • The private hospitals operating from these public hospital campuses will be able to refer complicated cases either to other government hospitals or other empanelled private hospitals. However, sending patients further to other private hospitals would require the permission of the medical superintendent of the district hospital..


What is NMC?

Experts at NITI Aayog have proposed replacing the compromised MCI with a new National Medical Commission (NMC), outlined in a draft Bill known as the National Medical Commission Bill of 2016. Structural differences between the proposed NMC and MCI are enormous. The NMC would split the selection, advising, and actual accreditation process into three separate boards. By dividing power, the hope is to create a system of checks and balances.


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