Andhra Pradesh’s PPP Push in Medical Education: What Is at Stake?

The Andhra Pradesh government’s plan to expand medical education through public-private partnerships (PPP) has triggered intense debate over the true objectives of public policy, the future of subsidised medical education, and the risks of privatising critical public health assets. At the heart of the controversy lies a fundamental question: does the design of this PPP framework strengthen public health capacity, or does it dilute the State’s control over medical education and district hospitals?

How Andhra Pradesh Expanded Its Medical College Footprint

Over the past three years, the government of Andhra Pradesh undertook a rapid expansion of medical education capacity. Six new government medical colleges were added, taking the total to 17, alongside 19 private colleges. The State then announced plans to establish 10 additional colleges, each attached to a district hospital, bringing total medical seats to over 6,500 when fully operational.

Initiated under the Y.S. Jagan Mohan Reddy government, land acquisition for these colleges—around 835 acres—was completed, and construction began at different sites. Each college was planned with 150 MBBS seats and linked to a 650-bed district hospital upgraded to teaching standards. The estimated cost stood at ₹450 crore per college, with financing expected from NABARD, the State government, and central schemes.

The Original Fee Design and the Promise of Fiscal Sustainability

Traditionally, government medical colleges offer heavily subsidised education. To balance affordability with financial viability, a three-tier fee structure was proposed:

• 50% of seats at ₹15,000 per year
• 35% of seats at ₹12 lakh per year
• 15% NRI quota seats at ₹20 lakh per year

This model was projected to generate around ₹11 crore per batch annually, reaching about ₹55 crore by the fifth year. Additional revenue was expected from postgraduate seats, which are typically priced several times higher. The intent was to recover costs while retaining a substantial share of low-fee seats.

The Shift to a PPP Model and What It Offers Investors

In 2024, the new N. Chandrababu Naidu government commissioned KPMG to prepare feasibility reports for converting 11 of these colleges into PPP projects, in line with a broader push by NITI Aayog. Under this model, private investors would receive the entire campus and district hospital on a 33-year lease, extendable by another 33 years, at a nominal rate of ₹100 per acre.

The State’s commitments include providing 25% viability gap funding, securing statutory approvals, empanelling the hospital under the State health insurance scheme, and ensuring 70% bed occupancy. Investors, in return, must complete construction within two years, offer free outpatient care, and reserve 70% of inpatient beds for government-referred patients treated at Ayushman Bharat package rates.

Why the PPP Design Has Triggered Public Anxiety

The proposed framework has sparked protests and concerns that public assets are being effectively privatised. Critics argue that middle-class and poor students may lose access to affordable education, while employment opportunities in teaching hospitals could shrink as private operators are not bound by public recruitment norms or reservation policies.

There are also fears that patients who currently receive free treatment at district hospitals may be forced to pay out of pocket, despite formal assurances. With 70% of beds reserved at regulated rates and all outpatient care free, sceptics worry that private investors may seek to recover costs through informal charges, compromised staffing, or selective denial of services.

Risk-Sharing, Enforcement Gaps, and the Burden on the State

A key criticism is that risks are unevenly distributed. Delayed reimbursements, strict bed earmarking, and regulated tariffs place financial strain on investors, potentially incentivising gaming of the system. If a private partner fails or underperforms, the State’s primary recourse is lengthy litigation, during which essential health services could be disrupted.

Handing over district hospitals—core components of the public health system—for up to 66 years has also raised questions about long-term policy flexibility, especially as medical technology advances and hospitalisation patterns change.

Systemic Implications for Public Health and Medical Workforce

Evidence suggests that strong primary care can avert up to 30% of hospitalisations, while day-care procedures are steadily reducing the need for long inpatient stays. Uniformly mandating 650-bed hospitals across districts may not align with future disease profiles or demographic trends.

More critically, Andhra Pradesh already faces severe shortages of doctors and specialists, particularly in rural areas. Commercialising medical education risks worsening this gap, as high-fee graduates are more likely to migrate to urban private practice or overseas jobs. Instead of selling half the seats at market rates, critics argue that the State should invest in subsidised education tied to public service obligations.

Why the Debate Goes Beyond Financing Constraints

Supporters of PPPs cite fiscal stress as justification, but detractors note that States have multiple avenues to raise capital without relinquishing control of public hospitals. Privatisation, they argue, demands strong regulatory capacity—something India, and Andhra Pradesh in particular, has struggled to demonstrate, even with relatively modest laws like the Clinical Establishments Act.

Past experiences with fragmented contracts in primary healthcare have already exposed enforcement weaknesses. In such a context, transferring critical health infrastructure to private hands could undermine equity, quality, and accountability.

A Broader Crisis in Medical Education

India’s medical education sector is already under strain, with rapid expansion outpacing the availability of qualified faculty. Observers warn that unchecked growth could mirror the collapse seen in engineering colleges after the IT boom, where quantity overtook quality.

The central concern, therefore, is not merely the number of medical colleges, but whether education remains accessible, standards are upheld, and public health objectives are protected. On these counts, many argue that the proposed PPP model, as currently designed, fails to inspire confidence.