Panel seeks review of FDI in private hospitals, warns of aggressive corporatisation, rising healthcare costs

The parliamentary committee report highlights a classic governance dilemma: balancing private sector investment with public welfare. The recommendation to review FDI limits (the maximum percentage of foreign ownership allowed in a sector) in private hospitals points to concerns about the corporatisation of healthcare. The committee argues that while private investment is needed, it shouldn't transform a crucial public service into a 'purely capitalistic enterprise'. To address this, the committee suggests a robust public healthcare system to act as a market regulator, exerting competitive pressure to lower costs. They also recommend establishing autonomous public multi-speciality hospitals in every revenue division and increasing the mandatory reservation of beds for marginalized groups, such as those covered by the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), from 10% to 20%.

The economic implications of FDI in healthcare are significant. Currently, India allows 100% FDI under the automatic route for greenfield (new) healthcare projects and 100% under the government route for brownfield (existing) projects. The committee's concern is that foreign capital is driving the acquisition of mid-sized hospitals, leading to market consolidation and potentially higher prices. They propose a strategic shift: redirecting foreign investment towards domestic manufacturing of medical devices and pharmaceuticals rather than hospital operations. To encourage private investment in underserved areas (tier-2, tier-3 cities, and rural areas), the committee suggests fiscal incentives like tax holidays, soft loans, and subsidized land. They also advocate for cross-subsidisation, where revenue from higher-paying patients subsidizes care for poorer patients, ensuring equitable access.

The social aspect of this issue centers on the affordability and accessibility of healthcare, a critical component of the Right to Health implicitly recognized under Article 21 of the Constitution. The committee's data reveals a stark disparity: the average cost of hospitalization in private hospitals is ₹50,508, compared to ₹6,631 in government hospitals, according to the National Sample Survey. This widening public-private cost gap disproportionately affects vulnerable populations. The call for mechanisms to standardize and cap costs for essential treatments, diagnostics, and routine procedures aims to protect patients from exorbitant out-of-pocket expenditure. Furthermore, the recommendation for hospital-level ethics committees to examine professional fees underscores the need for greater accountability and transparency in private healthcare delivery.