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

A parliamentary committee has recommended a review and the rationalisation of Foreign Direct Investment (FDI) limits governing the operation and acquisition of existing private hospitals, warning that aggressive corporatisation and the influx of foreign capital could push up healthcare costs and undermine the affordability of medical care.

The growing presence of foreign capital in private hospital chains was facilitating the acquisition of cost-effective, mid-sized hospitals by larger corporate entities, the committee said, and warned that such “aggressive corporatisation” was transforming healthcare from a public service into a “purely capitalistic enterprise”, with the potential to inflate the cost of medical procedures and trigger price increases across the healthcare ecosystem.

Foreign investment in private hospitals will make treatment unaffordable: RJD

The Department-related Parliamentary Standing Committee on Health and Family Welfare, headed by Samajwadi Party (SP) Rajya Sabha MP Ram Gopal Yadav, presented the 176th report on ‘Affordability and Accessibility of Healthcare Facilities in Public and Private Sector’, which distinguishes between foreign investment in hospital operations and investment in healthcare manufacturing. 

Foreign capital should be encouraged in the manufacture of medical devices, consumables and specialised medicines for rare diseases, the report said, while its application in the direct operation and acquisition of hospitals needed greater scrutiny.

The report recommended that the government strictly review and rationalise FDI limits concerning the operational management and acquisition of existing healthcare facilities, while creating incentives to redirect foreign investment towards domestic manufacturing of medical technologies and pharmaceuticals.

The committee also argued that a strong public healthcare system could act as a market regulator by providing an affordable alternative to private care. Efficiently managed public hospitals, it said, could exert competitive pressure on private providers and help bring down healthcare costs.

It has recommended the establishment of autonomous, efficiently managed public multi-speciality hospitals in every revenue division to reduce patients’ dependence on major cities, and minimise travel for tertiary care.

The panel’s recommendations come against the backdrop of a widening public-private cost gap. Citing the 80th round of the National Sample Survey, the committee said the average cost of hospitalisation was ₹50,508 in private hospitals, compared with ₹6,631 in government hospitals. It has separately called for mechanisms to standardise and cap the cost of essential treatments, diagnostics, and routine procedures in private hospitals.

The committee has simultaneously proposed incentives — including tax holidays, soft loans, subsidised land and concessional electricity — to attract private investment in multi-speciality hospitals in tier-2, tier-3 and rural areas. It has suggested that public-private partnerships be used to extend advanced medical technologies and specialised services to underserved regions.

Private hospitals receiving government incentives should also consider cross-subsidisation, with revenues from higher-paying patients, including international patients, helping subsidise treatment for poorer patients, the committee said.

It has further recommended raising the mandatory reservation of beds for Below Poverty Line (BPL), Economically Weaker Section (EWS), and AB-PMJAY (Ayushman Bharat Pradhan Mantri Jan Arogya Yojana) beneficiaries from 10% to 20%, citing weak enforcement of existing obligations on private hospitals.

The committee has also called for hospital-level ethics committees to examine professional fees and for stronger regulatory oversight of public-private partnerships to ensure that commitments to provide affordable care are honoured.

It has proposed a single-window mechanism to ease regulatory approvals for healthcare facilities in smaller cities and called for greater empanelment of private hospitals in aspirational and remote districts under AB-PMJAY.

The thrust of the recommendations is that private and foreign capital should supplement rather than substitute public investment in healthcare, with incentives linked to affordability, geographical access, and services for vulnerable populations.