The proposal to develop medical colleges in Andhra Pradesh through a public–private partnership (PPP) model has triggered a deeper debate on the objectives of public policy in health and education. While officially framed as a solution to fiscal constraints and capacity gaps, the design of the policy raises questions about equity, governance capacity, and the long-term direction of India’s public health system.
What the State plans to do
Over the past few years, has expanded its government medical colleges from 11 to 17, alongside 19 private colleges. The earlier expansion, initiated under the government of , envisaged 10 additional colleges attached to upgraded district hospitals. These projects involved large public investments: about 835 acres of land and an estimated ₹4,500 crore, with financing planned through the , State resources, and central schemes.
Each college was designed with 150 MBBS seats and a 650-bed district hospital, following a three-tier fee structure that combined subsidised seats with high-fee and NRI quotas to ensure partial cost recovery.
The shift towards PPP and its design
In 2024, the new government led by commissioned feasibility studies from KPMG for running these colleges under a PPP framework, an approach strongly advocated by .
Under the proposed model:
- Land and district hospitals are leased to private partners for 33 years, extendable to 66.
- The State provides viability gap funding of about 25% of project cost.
- Hospitals are empanelled under State insurance schemes and linked to reimbursement rates.
- The private partner runs the college and hospital, with obligations for free outpatient care and 70% inpatient beds reserved for government-referred patients.
This structure effectively transfers operational control of district hospitals — core public assets — to private entities for decades.
Concerns over equity and access
The proposal has drawn protests from medical professionals and civil society groups, who argue that the arrangement amounts to privatisation of public infrastructure. There are fears that:
- Students from middle- and lower-income backgrounds may lose access to affordable medical education.
- Recruitment and service obligations in public hospitals may weaken, as private operators are not bound by government reservation or service norms.
- Patients may face out-of-pocket expenses for services that are currently free.
Such outcomes would undermine the original public purpose of expanding government medical colleges.
Risk-sharing and governance challenges
A key criticism is the asymmetric sharing of risk. While private investors face constraints like regulated bed allocation and package-based reimbursements, the State bears the larger systemic risk if projects fail. Contract enforcement would rely on lengthy judicial processes, exposing the public health system to prolonged disruption.
India’s experience with health sector regulation, including poor enforcement of the Clinical Establishments Act, raises doubts about the State’s capacity to effectively oversee complex PPP contracts in healthcare.
Questioning the hospital-centric model
The policy assumes uniform demand for large 650-bed hospitals across districts. However, evidence suggests that:
- Up to 30% of hospitalisations can be avoided through strong primary care.
- Technological advances are reducing the need for prolonged inpatient care.
- Fragmented PPP-based hospitals weaken integrated referral systems.
Effective public health systems require vertical integration of primary, secondary, and tertiary care — something difficult to achieve when district hospitals are carved out into long-term private concessions.
Implications for medical education and workforce
Andhra Pradesh already faces acute shortages of doctors and specialists, especially in rural areas. Commercialisation of medical education may worsen this by encouraging graduates burdened with high fees to seek private or overseas employment.
Instead of selling a large proportion of seats at market rates, critics argue that the State should invest in subsidised education linked to service obligations, creating a stable pool of doctors committed to public health delivery.
What to note for Prelims?
- PPP model proposed for medical colleges in Andhra Pradesh.
- Role of NITI Aayog in promoting PPPs in social sectors.
- Viability gap funding and long-term leasing of public assets.
- Linkage of PPP hospitals with Ayushman Bharat reimbursement.
What to note for Mains?
- Critically examine PPPs in health and education in the context of state capacity and equity.
- Discuss risks of privatising district hospitals for long durations.
- Analyse how commercialisation of medical education affects rural health outcomes.
- Evaluate alternative financing and governance models for strengthening public health systems.
