Parliamentary Panel Urges Private Hospitals With 100% FDI to Use Profits to Lower Costs for the Poor

Summary:
The Parliamentary Standing Committee on Health and Family Welfare has raised concerns over India’s uneven healthcare access, high private treatment costs and limited public health spending. With private providers serving nearly 70% of the population and 49.9% of people still paying healthcare expenses out of pocket, the panel recommended regulating 100% FDI in private hospitals and encouraging them to allocate part of their revenues toward affordable care for poorer patients. It also called for broader health insurance coverage to include outpatient treatment and indirect costs such as transport and lost wages. 

Healthcare infrastructure remains unevenly spread across India, with private providers serving nearly 70 per cent of the population despite their treatment costs being five to ten times higher than those of government hospitals. The growing inflow of foreign investment into private hospitals has also contributed to higher medical procedure costs across the healthcare system.

Medical tourism has increased revenues for private hospitals, but the benefits have not been adequately reaching the Indian population. In its 176th report, the Parliamentary Standing Committee on Health and Family Welfare recommended regulating 100 per cent foreign direct investment (FDI) in the healthcare sector. The panel also suggested that private hospitals allocate a portion of their revenues towards providing quality healthcare services to Indians who cannot afford private treatment.

The report was presented in the Rajya Sabha and laid on the table of the Lok Sabha on August 7, 2026. The committee noted that inadequate government spending on secondary and tertiary healthcare is pushing more people towards private facilities, resulting in high out-of-pocket expenses.

The National Health Account (NHA) report for 2022-23, released in May 2026, found that 49.9 per cent of the population continues to pay for healthcare expenses out of pocket. A key factor behind this burden is limited public healthcare spending, which stood at only 1.43 per cent of GDP in 2022-23. With insufficient resources, the public healthcare system struggles to meet the needs of all citizens. Shortages of medicines, medical professionals and essential services further encourage patients to seek treatment from private providers, where they often bear the full cost themselves.

The Committee noted that the average inpatient treatment cost for an illness in India is around Rs 37,858, while the average out-of-pocket expenditure stands at approximately Rs 34,064. Hospitalisation costs average Rs 6,631 in government hospitals compared with Rs 50,508 in private hospitals. The difference becomes even more significant in the treatment of serious conditions such as cancer, heart disease and kidney failure.

The panel also expressed concern that existing health insurance coverage remains inadequate, particularly because outpatient treatment and indirect costs such as transportation expenses and lost wages are largely excluded. It recommended expanding the scope of current insurance policies to provide patients with more comprehensive financial protection.