Budget 2020: Hospital chains give thumbs up to viability gap fund

MUMBAI: Analysts are upbeat that the proposed viability gap funding window for setting up hospitals in underserved areas will encourage hospital chains to offer services in tier 2 and 3 towns.Finance minister Nirmala Sitharaman on Saturday proposed viability gap funding of hospitals under the government’s Ayushman Bharat insurance scheme in districts that do not have enough healthcare facilities. The initiative accompanied an allocation of Rs 69,000 crore for the healthcare sector in 2020-21--this is up from the Rs 63,000 crore allocated for 2019-20 but less than the Rs 1 lakh crore that the sector was seeking. “We need more in tier-2 and tier-3 cities for poorer people under Ayushman Bharat scheme. It is proposed to set up viability gap funding window for setting up hospitals in the PPP mode,” Sitharaman said in her Budget speech, adding that in the first phase, “aspirational districts will be covered, where presently there are no Ayushman empanelled hospitals”.This move will also provide employment opportunities to the youth, she said.Ayushman Bharat scheme, launched in 2018, promises to offer health cover up to Rs 5 lakh to 500 million Indians. As per the recent data put up by the office of Ayushman Bharat, nearly 21,000 hospitals have been empanelled under this scheme. However, since the launch of the scheme, several corporate hospital chains did not offer their services to these patients, claiming that the procedure costs offered by the government were too low for them to be sustainable.The incentive may attract investment by hospital chains in smaller cities, analysts said.Sunita Reddy, CEO Apollo Hospitals said the group is "enthused" by the move, but added that for this funding to be meaningful , the government must make sure that it is coupled with the SPV being financially viable by right pricing, creating access through a wider insurance cover and timely reimbursement of claims.”Azad Moopen, CEO of BSE-listed Aster DM, a hospital chain with operations in south India, said viability funding is a good way to encourage corporate hospitals to look at small towns. “Many times, we thought it was not viable to set up hospitals in tier 2- 3 towns. But now, with funding available, there is a slightly different perspective, and this is a step forward for us and others who want to do this,” Moopen told ET. Vispi Jokhi, CEO of Masina Hospital, Mumbai. said charitable hospitals like theirs can benefit from this fund. “Areas like burns care and mental health care units, which are deficient areas, even in a metro city like Mumbai would benefit hugely from this initiative.” Healthcare sector analysts are however waiting for details . “Hospital PPPs in the past have not always made the desirable impact, as the terms would make such projects economically unviable and unattractive for private operators. The key here would be to work out a model that is win-win for all parties involved,” said Kaustav Ganguly, who heads the healthcare practice at Alvarez and Marsel, a consulting firm.On the allocation of Rs 69,000 crore for the healthcare sector, Moopen said “the funds increase is paltry”.Shubham Jain, group head, corporate ratings at ICRA, said, “With a nominal estimated GDP growth of 10%, this also translates into a fall in the public healthcare expenditure as a percentage of GDP. The increase in healthcare spend was a healthy 15% in the previous budget and the current allocation is much below expectation.”With an aim to increase the number of trained medical professionals in the country, Sitharaman also proposed to attach a medical college to an existing district hospital in private public partnership mode. States that fully allow the facilities of the hospital to the medical college and wish to provide land at a concession, would receive viability gap funding, she said.

from Economic Times https://ift.tt/2ROeqW0