Center to Launch PPP Specialty Hospitals in Odisha with Viability Gap Funding

The project will operate under the design, build, finance, operate, and transfer (DBFOT) model, with the private sector responsible for investing and managing hospital operations.

In a first-of-its-kind initiative, the central government is setting up Public-Private Partnership (PPP) specialty hospitals in four underserved districts of Odisha.

These hospitals, supported through Viability Gap Funding (VGF), aim to provide affordable healthcare services in Angul, Barbil, Bhadrak, and Jharsuguda.

The project will operate under the design, build, finance, operate, and transfer (DBFOT) model, with the private sector responsible for investing and managing hospital operations.

The hospitals, expected to become operational by December 2026, will include 200-bed facilities in Angul and Barbil, and 100-bed facilities in Bhadrak and Jharsuguda.

A senior government official emphasized the transformative potential of these projects, stating, “With adequate VGF support, successful PPP healthcare projects at these locations could be demonstrated, serving as a model for other districts in Odisha and across India.”

The total project cost, determined through competitive bidding, amounts to INR 354 Cr. Of this, INR 230.5 Cr will be provided as VGF for capital expenditure, with the Centre contributing INR 116.72 Cr and the Odisha government INR 113.78 Cr. The private concessionaire will cover the remaining cost.

Recognizing the high operational costs in smaller towns, the Center has committed an additional INR 124 Cr in operational expenditure grants for these hospitals, while Odisha will contribute INR 38 Cr for the same.

Under the DBFOT arrangement, the private operator will manage the hospitals for 32 years, with an option to extend the concession period under the “right of first refusal.”

Addressing Healthcare Gaps

India faces significant healthcare challenges, including an acute shortage of hospital beds and medical professionals in rural areas.

A report by real estate consultancy Knight Frank revealed that India needs an additional 2.4 million hospital beds to achieve the recommended ratio of three beds per 1,000 people.

Currently, the ratio stands at 1.3 beds per 1,000 people, including both public and private facilities.

Furthermore, a government report from March 2022 highlighted an 80% shortage of key specialists, including surgeons, physicians, gynecologists, and pediatricians, at community health centers in rural India.

Center's Broader Plans for Healthcare Infrastructure

To bridge these gaps, the central government has plans to construct at least one major hospital in each of India’s 761 districts.

The PPP model being implemented in Odisha could pave the way for similar initiatives nationwide, improving healthcare access in underserved areas.

The initiative is part of a broader effort to strengthen healthcare infrastructure under programs such as the Ayushman Bharat Scheme.

This scheme offers INR 5 lakh annual health coverage to poor families and senior citizens above 70 years, saving beneficiaries approximately INR 1.25 lakh Cr in healthcare expenses so far.

In tandem with infrastructure development, the government is also expanding medical education.

Prime Minister Narendra Modi recently announced that 100,000 new medical seats have been added over the last decade, with plans to increase this number by an additional 75,000 in the next five years.

The PPP hospitals in Odisha, supported by the Department of Economic Affairs and NITI Aayog, represent a critical step in addressing healthcare disparities and improving the quality of life in underserved regions.

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