The benchmarking that the Parliamentary Standing Committee of Health and Family Welfare has done for hospital rooms against three-star hotels is inherently problematic. Healthcare and hospitality are poor parallels because the Supreme Court has interpreted Article 21 of the Constitution to include the right to health and while a person who is not happy with the facilities at hotel X can move to hotel Y with minimal inconvenience, not so for a person seeking medical care for whom shopping for medical care may not be an option.

That argument aside, the 176th report of the Standing Committee will make very little difference. The answer lies within the report — the need to raise public health spend to 2.5% of the GDP as envisaged in the 2017 National Health Policy — and yet unfulfilled. Moreover, recommendations of the committee is not binding on the government. India’s government health spend is in the 1.4% range.

The 2.5% number has been India’s healthcare holy grail for the past few decades with the gap closing at less than snail’s pace. Jugglery of Budget numbers has managed to create headlines, but the fact is the need to reduce dependence on the private sector for healthcare is intrinsically tied to its regulation. If the private sector is spending more on health than the government — India’s total health spend stands at 3.2-3.4% of the GDP — it is inevitable that they will extract the maximum profits. The fact is the gaps in public investment in the healthcare space in India are being filled by modern day usurers — private equity funds that give money expecting high returns and extract those returns at grave costs to patients. While the Clinical Establishments Act has been a poor attempt at regulation, the government’s best shot perhaps lies in regulation as a bulk buyer rather than a top-down authority.

Court battle

The real state of healthcare play in India, meanwhile, is being argued in the Supreme Court where a bunch of petitions both for and against greater regulations for the private sector are being fought. Just a couple of days before the report was tabled, the government, while defending the rules of the Clinical Establishments Act, 2010 that were framed in 2012 in the Supreme Court, had once again taken refuge behind its favourite excuse of “health is a State subject”, abdicating any responsibility of implementing the provisions of the Act, which was brought for the express purpose of regulation of the private sector. It also, importantly, told the court that while the States which have adopted the legislation are willing to enforce the provision for display of rates, they have “consistently conveyed their reservations and challenges concerning the determination of a range of rates”. This was the upshot of five State- and Union Territory-level consultations held between March 2024 and March 2026 that happened as per the directions of the top court.

The Standing Committee report, in fact, reiterates many of the concerns that triggered the 2010 enactment of the CE Act. The statement of objects and reasons of the Act says: “The private sector health care delivery system in India has remained largely unregulated and uncontrolled. Problems range from inadequate and inappropriate treatment, excessive use of higher technologies, and wasting of scarce resources to serious problems of medical malpractice and negligence.”

Influx of private equity

The committee report, on the other hand, barely touches upon one of the root causes of healthcare inflation that has not left any part of that ecosystem — from pharmaceutical companies to insurance providers to hospitals and diagnostics chains — untouched. The sector is witnessing an influx of foreign funding like never before; this is not the boon that it sounds like. Because that also means that clinical decisions that were earlier being taken by treating doctors are being taken in boardrooms in London or New York.

Ameerr Shahul’s recently released The Silent Syndicate takes the lid off this sordid story. These are not investors in the strict sense of the word because many do quick exits to capitalise on profits rather than stay for the long term. Terms like EBIDTA (earnings before interest, taxes, depreciation, and amortisation) and ARPOB (average revenue per occupied bed) are brandished freely in hospitals; patient outcomes and disease prevention are almost an afterthought. In many, the original promoters, often doctors inspired by the spirit of service, have been reduced to minority shareholders. The report barely skims the surface of the issue when it says: “The extreme scarcity and high acquisition cost of institutional land in Tier-I and Tier-II cities (ranging from ₹50 crore to ₹250 crore for five acres in the NCR region), coupled with the absence of priority-sector lending, forces healthcare providers into high-cost commercial financing or private equity, ultimately escalating financial burdens on patients.”

While in the SC affidavit, the government listed all the healthcare schemes including the Pradhan Mantri Jan Arogya Yojana and the Jan Ausadhi Yojana, it is an undeniable fact that neither scheme has managed the kind of private participation or spontaneous uptake that can make them game changers in the space. Eight years on, PMJAY still suffers from a lack of public awareness and reluctance of private hospitals to come on board — not surprising given the massive pendency of CGHS bills. On the other hand, excessive price consciousness and an effort to limit health benefit packages to interventions that benefit the most patients has limited its impact to the “well begun” stage. There is poor scrutiny of usage — money spent vs health outcomes achieved. What this means is that PE-fuelled corporates may swiftly exhaust the ₹5 lakh per family limit (another five for senior citizens above 70 years) without delivering any real succour. Lack of oversight can make the public exchequer bleed; but in the government system, another layer for oversight can only mean more non-Plan funds eating into the poor health spend.

Catch 22!

Abantika Ghosh is a journalist, author, and public policy professional. Her recent book Games Hospitals Play examines healthcare inflation in the private sector