As Govt. dues top Rs.3500 crs
Private hospitals across Andhra Pradesh are facing massive operational uncertainties due to the enormous dues that have piled up & are yet to be released to them by the state government.
As per industry stakeholders an estimated Rs. 3500 crores in dues are yet to be paid by the state government for services rendered under the NTR Vaidya Seva scheme.
The NTR Vaidya Seva (previously called the Arogyasri scheme), initiated in 2007, has undergone many changes over the years. The Arogyasri scheme was renamed the Dr. YSR Aarogyasri Scheme in January 2020 to provide financial aid and quality healthcare to low-income families.
Initially designed solely for Below Poverty Line (BPL) beneficiaries, the scheme has since expanded in both the range of treatments covered and the number of beneficiaries included. Speaking to Vizag Industrial Scan Dr. Murali Krishna, Chairman of CII Andhra Pradesh, explained, “Private hospitals require approximately Rs. 300 crores monthly to run the scheme.
Although the current government has allocated Rs. 4000 crores in the state budget, this allocation does not account for the Rs. 2000 crores in dues accumulated during the previous government’s tenure, which continue to increase month after month.”
With unpaid dues and uncertainty surrounding their resolution, private hospitals are facing severe cash flow issues, leading to unpaid staff salaries, compromised quality control, and insufficient funds for regular operations. Similarly, Dr. Vijay Kumar, President of the Andhra Pradesh Specialty Hospitals Association (ASHA), informed that “Currently, the number of treatments covered has increased from 990 to 3300, all at a fixed tariff. As a result, 90% of patients in private hospitals are beneficiaries under the NTR Vaidya Seva scheme, which is hindering revenue flow to the hospitals.”
Hospitals are now seeking acquisitions and funding from foreign and corporate investors in an attempt to break free from the financial constraints.However, newer hospitals are hesitant to establish themselves in Andhra Pradesh due to concerns about the NTR Vaidya Seva scheme and the resulting cash flow issues. Looking ahead, Dr. Murali proposes de-scaling the scheme which he opines would reduce the burden on hospitals.
“Simultaneously a tariff revision is much needed, as the cumulative Consumer Price Index has increased by 15-25%, yet the rates have not changed” noted Dr Murali. He also emphasized that GST incurred in healthcare for capital or investment cannot be transferred to the patient or incentivized by the government.
In a letter to Mr P. Ravi Subash, CEO of NTR Vaidya Seva, the Andhra Pradesh Specialty Hospitals Association (ASHA) has issued an ultimatum: they will suspend cashless services under the scheme from April 7 unless immediate action is taken to resolve the issues faced by hospitals.
The association is pushing for a permanent solution, advocating for a hybrid insurance model where the government sponsors the scheme through taxes on basic luxuries or a payment-sharing framework, similar to the Singapore healthcare model.
