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Not-for-Profit Hospital

  • Category
    Polity & Governance
  • Published
    6th Jul, 2021

NITI Aayog recently released a comprehensive study on the not-for-profit hospital model in the country, in a step towards closing the information gap on such institutions and facilitating robust policymaking in this area. 


NITI Aayog recently released a comprehensive study on the not-for-profit hospital model in the country, in a step towards closing the information gap on such institutions and facilitating robust policymaking in this area. 


  • India’s policies and programmes are aimed at achieving Universal Health Coverage by 2030.
  • NITI Aayog has been extensively studying the private-sector healthcare-delivery landscape in the country.
  • While there exists adequate information on for-profit healthcare providers and institutions, there is a dearth of reliable and structured information on their not-for-profit counterparts.
  • The not-for-profit hospitals currently account for only a miniscule share of hospitalization cases.


What are different types of Not-for-profit hospitals?

  • Faith-based Hospitals
    • These hospitals work on the premise that selfless service to the society is done as service to God.
    • A noteworthy feature of all major faiths has been their emphasis on charity and sharing wealth with others, especially the poor.
    • Throughout the ancient and medieval periods, voluntary activity found its natural expression through religions institutions.
  • Community-based Hospitals
    • These hospitals are not necessarily influenced by any faith but operate on the premise that selfless service to the underprivileged will result in all-round social reform.
    • Highly motivated doctors, or a team of likeminded doctors, desiring to give back to society, have founded many such hospitals, often in the same community where they were born/raised.
  • Cooperative Hospitals
    • These hospitals are set up on the premise of self-sufficiency in healthcare by self-participation.
    • They believe that quality healthcare at an affordable cost (commensurate to the locality of the hospital) is a right of all citizens and can result in the overall benefit of both the hospital and its patients.
    • Individual doctors or a likeminded team of doctors convinced of the same philosophy, have founded many such hospitals.
  • Private Trust Hospitals
    • These hospitals operate with the premise of no profit and no loss and are primarily located in Tier 1/ Tier 2 cities.
    • Famous businessmen/ philanthropists/ politicians, have founded many such hospitals in response to social causes based on individually observed needs.

Challenges faced by the Not-for-profit Hospitals

  • Recruitment and retention of doctors & staff
    • The lower salaries offered than the for-profit hospitals form a hindrance, especially, for recruiting specialist and super-specialist consultants.
    • They lack many basic facilities for living in rural areas, not many doctors and staff would join them or continue for a long time.
  • Reimbursements for treatment of Government health scheme beneficiaries
    • Perennially delayed reimbursements and long-pending amounts, causing strain in their cash flows, and in turn, burdening their operations.
    • There are added procedures due to perioperative complications, and there are no set codes, thus, the hospitals must absorb the additional cost
  • Infrastructure and equipment expansions
    • instances of delay in expansion project approvals from regulatory bodies
    • One Faith-based Hospital reported an overall time frame of five years for the regulatory permission to operationalize a newly constructed additional wing.
  • Regulatory challenges
    • high compliance burden of staffing requirements of the Regulations for running a blood bank, Clinical Establishments Act, PNDT Act, and Quality standards
    • High burden of paperwork and record keeping in addition to the challenges with periodic online submission of reports for certain regulatory compliances.

Proposed Policy Interventions to Promote the Not-for-Profit Hospital Sector


Identification and Promotion

Leveraging expertise

Human Resources


Short term

  • Develop criteria to identify these Hospitals 
  • Develop Mechanisms to rank these Hospitals on a performance Index 
  •  Create a national level portal/ directory of these Hospitals

Representatives of high-performing not-for-profit Hospitals across different geographical locations can be invited to share experiences in relevant policy making committees

Posting of Government Medical College students for their mandatory internships in these hospitals (To be explored in accordance with Medical Education laws)

  • 100% exemption for donations (Section 80G) (Currently 50%) 
  • Extension of a lowcost credit line (Esp. Working Capital Loans) 
  • Income Tax exemption for membership fees paid at Cooperative Trust Hospitals
  • Single window clearance for Govt. reimbursements

Long term

Promote the top hospitals for facilitating philanthropy, investments and patient flows

Involving high performing Hospitals in PPP models for managing PHCs, operations of Government Facilities, PSU Hospitals

  • Develop a mechanism to incentivize super specialists to work in remote areas. 
  • Revisiting of the compliance requirements of regulations like CEA, PNDT, Blood Bank
  • Grant in Aid scheme (Similar to Gujarat Model) 
  • Timely allocation of unencumbered land


    These hospitals have managed to create a perception of goodwill in the country not only through selfless healthcare services with a social cause, but also through various community engagement programs for education, vocational training, hygiene, sanitation, women’s empowerment and employment. Hence, the government should focus on development of this sector to reduce the out of pocket expenditure of the country and provide Universal Healthcare.


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