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Transforming the Indian Private Sector for Universal Health Coverage

PMCID: PMC12607437

PMID: 41228169

Abstract

Background/Objectives: India’s private healthcare sector remains fragmented, with weak primary care, uneven secondary services, and tertiary care accessible to few. Fee-for-service payments and indemnity-style insurance distort prices and fragment accountability. This paper develops a conceptual, theory-driven framework for integrating financing and delivery so that prices reflect social opportunity costs and competition rewards value rather than volume. Methods: A comparative synthesis of international integration models covering Israel, the United States, Spain, Brazil, and the United Kingdom was undertaken. Each exemplar was analysed for ownership form, market maturity, and regulatory capacity, and interpreted using four strategic management theories: Contingency theory, the Resource-based view, Dynamic capabilities, and Institutional theory. These perspectives were combined to construct a contingency-based typology tailored to India’s mixed health system. Results: Two state-contingent integration pathways emerged. Hospital-first vertical integration suits hospital-dense, high-growth states such as Tamil Nadu and Delhi, where capital and regulatory depth permit managed-care scaling. Primary-care-first reverse integration is preferable in resource-constrained contexts such as Bihar and Chhattisgarh, leveraging community trust and lower capital intensity. Conclusions: Achieving universal health coverage in India requires regulatory conditions, such as ownership flexibility, solvency oversight, risk adjustment, and transparent outcomes reporting, to enable accountable payer–provider organisations to form. The framework extends contingency theory to mixed health systems and offers a transferable blueprint for emerging markets seeking sustainable, integrated managed care.

Full Text

As discussed in the 2019 NITI Aayog report [1], “Building Blocks of a Health System for New India” [1], India’s health system rests primarily on two pillars: the public and private sectors (including non-profits and cooperatives). The public sector has overtones of the Russian Semashko model of the 1920s, characterised by features such as detailed, line-by-line budget-based financing and salaried providers [2,3]. It maintains an active presence across all relevant health system spheres, from One Health to quaternary care [4,5], and is reasonably well funded [6]. However, it requires multiple reforms to be implemented before it can function to its full potential. The private sector is characterised by fragmentation and incoherence. Primary care (first-contact, community-based, and preventive services that manage most common health needs and coordinate referrals) is plentiful [7,8]. It is, however, delivered mainly through solo practitioners and informal providers, with minimal continuity, quality assurance, or gatekeeping [9,10]. Secondary care (specialist outpatient and inpatient services for conditions requiring short-term or general hospital management, including emergency care) is available in urban and peri-urban areas. However, it is often of medium quality and poorly coordinated. Tertiary care (high-specialty, technology-intensive services such as advanced surgeries, oncology, and critical care) is of higher quality but is located in large urban areas and, due to very low insurance penetration, is not accessible to most of the population [11].
Given the range of services provided by the public sector, the most feasible strategy for India would be to expand and completely reorganise it, just as many low- and middle-income countries (LMICs) in Asia, Africa, and Latin America have done, so that it can offer Universal Health Coverage (UHC) to the entire population both as a financier and a provider. This effort needs to be prioritised. The private sector will also need to play a role in India’s UHC journey as a provider of healthcare services. In this paper, the focus is on private healthcare that is privately financed, with the implicit assumption that, in the Indian context, public financing is exclusively reserved for the public healthcare sector. The “perfect-market” [12] structure of the private healthcare sector in India, characterised by myriad providers, unrestricted consumer choice, and the predominance of a fee-for-service payment mechanism, has, however, led to poor health outcomes and low levels of financial protection. This is essentially because healthcare suffers from high information asymmetries and distorted consumer preferences [13], making it difficult for free markets to allocate resources and organise themselves in a manner that results in the best possible healthcare outcomes.
The policy question, therefore, is how to structure the private sector so that prices offer meaningful signals. Integrated managed care is an approach that can move Indian health markets closer to the conditions under which prices approximate social opportunity costs [13,14], i.e., come closer to becoming a “sufficient statistic” [15]. This approach to organising healthcare in a market-based environment strengthens price-based competition. It consolidates fragmented, distortion-prone prices into a single plan premium that internalises prevention and coordination benefits. Within a plan, primary and hospital budgets are unified, so investments in community care that avert admissions lower the plan’s own costs. With risk adjustment and open enrolment, the observed premium more closely reflects social opportunity cost. Information asymmetry is mitigated because purchasers compare plan-level outcomes and access indicators, rather than relying on opaque per-service quality. This reduces the principal violations that block the First Welfare Theorem (the proposition that price-based competition in any market results in the most efficient outcomes) in healthcare. These include externalities, market incompleteness, and asymmetric information [13]. As a result, competition across integrated plans has a better chance of delivering efficient allocations than competition across fragmented providers (see Table A1 in the Appendix A for a listing of the principal academic arguments). The experience of Israel’s health funds [16,17,18,19] and the Netherlands’ post-2006 regime [20] illustrates how regulated, private, managed competition can make the premium a near-sufficient statistic for performance, provided risk selection is constrained and outcomes reporting is credible [14,21]. Interestingly, since integration provides predictable, annuity-type revenue streams (capitation, bundled premiums) compared with episodic fee-for-service, it also has the potential to attract greater investor interest [22]. However, despite its apparent attractiveness to both consumers and investors, Indian private markets have not yet moved in this direction. This is principally because hospitals and insurers are locked into fee-for-service models [1]. Additionally, highly risk-averse, low-ambition incumbent investors, providers, and insurers harbour the mistaken belief that they benefit from the currently high levels of fragmentation [23]. Without an integration strategy that links financing with the organisation of care, India risks remaining in a fragmented equilibrium.
There are clear benefits to hospital-first strategies, as demonstrated by the examples of Geisinger’s Patient-Centered Medical Home (PCMH) model [24,25,26,27]; the Presbyterian Hospital-at-Home model [28]; Clalit in Israel [29]; Alzira in Spain [30,31]; and multiple models in Brazil [32,33]. However, there is a concern that with hospital-first models, prices could rise, and quality gains may be uncertain, driven by steering patients to higher-priced facilities and shifts in facility-fee revenues [34,35,36,37,38,39,40,41].
Evidence from mature managed-care systems consistently indicates that primary-care-led integration produces greater cost savings than hospital-led models. In the United States, physician-group Accountable Care Organizations (ACOs) achieved larger and more durable Medicare savings than hospital-based ACOs [42,43,44,45]. In the United Kingdom, GP-fundholding and commissioning schemes lowered prescribing and referral expenditures relative to centrally managed or hospital-dominated arrangements [46,47,48]. Long-standing delegated-risk models in California likewise demonstrate sustained utilisation control and financial stability within capitated physician organisations [49,50,51]. Across these diverse contexts, primary-care-anchored entities have demonstrated stronger leverage over utilisation, chronic disease management, and downstream spending—supporting the proposition that reverse integration from primary care can yield superior cost efficiency when compared with hospital-first approaches. However, this has primarily been documented in the U.S./U.K. institutional contexts and has not been synthesised as a general strategy blueprint for emerging markets.
Primary-Care-First Reverse Integration: Strong, Starfield-consistent, i.e., comprising the “4Cs” of “coordination, first contact of care, continuity of care and comprehensive care” [52,53], primary networks built first, expanding upstream into secondary/tertiary contracting. The advantages of this approach include lower costs, preservation of trust, and better management of the burden of chronic diseases. The challenges are that such efforts are harder to initiate due to India’s weak primary care baseline and require robust financial support.
While Enthoven’s managed competition model and the WHO’s integrated, people-centred care framework both seek to link financing with service delivery, they approach integration at the macro-system level. Enthoven envisaged competition among health plans operating under a single national purchaser and uniform benefit rules [14,20]. The WHO framework [54] outlines normative principles, namely, coordination, continuity, comprehensiveness, and people-centredness, but does not specify how organisational ownership forms or market structures condition feasibility. This paper seeks to contribute to the existing literature by shifting the unit of analysis from system design to organisational strategy, formalising how hospitals and primary-care networks can pursue context-contingent pathways to integration within diverse state-level environments.
Contingency theory: Strategy must be tailored to the regional conditions of market growth, competition, and institutional capacity [55].
Resource-based view (RBV): Strong primary care networks represent rare and difficult-to-imitate assets that can serve as foundations for reverse integration [56].
Dynamic capabilities: Organisations must reconfigure capabilities as they extend upstream or downstream [57].
Institutional theory: Legitimacy with regulators and funders is critical when providers seek to integrate financing [58].
The strategic question for regional hospitals considering managed care integration is fundamentally one of fit. In strategic management, Contingency theory argues that there is no universal “best way” to organise; rather, effectiveness depends on aligning organisational structures and governance with environmental contingencies [55,59]. Organisations that achieve this alignment demonstrate superior performance, while those that do not, experience instability and inefficiency. In the context of regional hospitals, two critical contingencies emerge: market growth potential and competitive intensity. Hospitals in low-growth, low-competition environments are unlikely to attract investor capital for aggressive expansion and may instead benefit from emphasising stewardship through non-profit or cooperative structures. By contrast, hospitals operating in high-growth, high-competition contexts must pursue capital-intensive strategies and align with investor expectations, making for-profit models more feasible. This leads to a contingency-based typology in which ownership form and strategic orientation are matched to market conditions.
However, contingency fit alone does not explain why some regional hospitals succeed in transitioning toward managed care while others fail. Here, insights from RBV and Institutional theory become critical. RBV emphasises that organisations achieve sustained competitive advantage not merely by aligning with external contingencies but by leveraging unique, valuable, and hard-to-imitate internal resources [56]. For regional hospitals, such resources include deep community trust, embedded local reputation, and long-standing physician relationships. These intangible assets are difficult for corporate chains to replicate. They may give regional hospitals a distinct advantage in launching primary–care–based managed care programmes, especially where patient loyalty and trust are decisive factors. However, RBV also highlights limitations: without access to financial capital or advanced IT systems, these hospitals may find it challenging to raise the necessary resources and develop the core capabilities required for scaling.
Institutional theory complements these perspectives by foregrounding the importance of legitimacy. Organisations survive not only by being efficient but also by conforming to societal and regulatory expectations [58,60,61]. In India and other emerging markets, community hospitals operating as non-profits or cooperatives often enjoy normative legitimacy as custodians of local health, whereas for-profit entrants must establish pragmatic legitimacy with investors and regulators. The choice of ownership form thus becomes not merely a financial decision but a question of how hospitals signal legitimacy to multiple audiences: patients, regulators, payers, and capital markets.
RBV emphasises that sustained competitive advantage arises from resources that are valuable, rare, hard-to-imitate, and non-substitutable [56]. In emerging markets, the scarce capability is not hospital infrastructure but rather trust-based, Starfield-consistent primary care, characterised by first-contact accessibility, comprehensiveness, continuity, and coordination [62]. Corporate hospital chains often fail in this regard, making it a defensible competitive advantage for primary care providers. While RBV highlights what resources matter, Dynamic capabilities theory explains how organisations reconfigure resources in changing environments [57]. Primary-care-first integration requires capabilities to sense opportunities for upstream partnerships and insurance contracting, and to seize them through new organisational arrangements and by transforming delivery models to maintain patient-centredness while scaling regionally. This dynamic reconfiguration is critical to scaling a regional proof-of-concept into a replicable growth model.
Institutional theory underscores the role of legitimacy [58,60,61]. In India, primary care–first providers can more easily secure normative legitimacy (as community stewards) than hospital-first entrants, whose expansion often attracts scepticism over commercial motives. Insurance integration and reverse-bidding for tertiary care contracts could also confer regulatory legitimacy.
Appendix B provides a detailed discussion of the various global typologies of hospital-first models, while Table A2 presents examples of global hospital-first integrated care models and their performance outcomes. Table A3 presents an analysis of the evidence comparing primary-care-first and hospital-first models. Table A4 presents global examples of primary-care-first integrated models, with commentary on their potential relevance to the Indian context. Table A5 presents an analysis of the different dimensions of hospital-first and primary-care-first managed care pathways, along with a comparison between them.
Building on the theoretical foundations discussed above, this paper proposes a contingency-based framework that positions hospitals along two dimensions: market growth potential and competitive intensity, and derives four archetypal strategies. These archetypes are then empirically illustrated through comparative international cases and subsequently applied to the Indian context (Table 1). Applying this matrix to the Indian case suggests the strategies outlined in Table 2.
For India, this model resonates with policy shifts toward primary care [63]. Regional family-owned or cooperative providers may be uniquely positioned to pursue this pathway. The model offers a route to combine social legitimacy with financial sustainability, creating hybrids that serve both community and investor needs. Primary-care-first integration represents a theoretically grounded, practically feasible alternative to hospital-driven managed care in emerging markets. By leveraging rare resources (RBV), dynamically reconfiguring them (Dynamic capabilities), and aligning with institutional legitimacy requirements (Institutional theory), such providers can extend their value proposition while remaining asset-light. The pathway provides both a strategic contribution to management theory and a practical blueprint for strengthening India’s health system.
Implementation feasibility will also vary by state. Tamil Nadu and Delhi can experiment with hospital-first integration because their regulatory and capital ecosystems are relatively mature. In contrast, states such as Chhattisgarh and Bihar will need phased, primary-care-first approaches built on cooperative or trust-based governance. Recognising these state-contingent pathways transforms the framework from a one-size-fits-all blueprint into a realistic strategy portfolio. The examples in Table A6 in the Appendix B illustrate both the barriers and the opportunities for Indian incumbents in a potential shift toward managed competition.
Beyond regulatory design, financial sustainability is a central determinant of long-term viability. From a financial perspective, integrated managed care can stabilise provider revenues and support long-term investment in preventive and chronic care. Traditional fee-for-service hospitals generate volatile, transaction-based income, whereas capitation and membership models produce predictable, annuity-like cashflows that enhance solvency and allow for counter-cyclical investment in community care. Such cashflows command higher valuation multiples and support longer debt tenors, making them attractive for both private equity and long-term institutional capital [22]. From an investor’s perspective, integrated managed care is therefore not only a policy imperative but also a financial opportunity.
The framework advances theory by extending Contingency theory to the domain of mixed health systems and illustrates how internal resources and external legitimacy jointly determine integration success. For policy, it offers a diagnostic tool for regulators and providers to assess state-level readiness. Rather than prescribing a uniform template, it identifies conditional pathways that align financial sustainability with equitable access—providing a structured alternative to ad hoc insurance expansion. In contrast to Enthoven’s system-wide model of managed competition [14,20] and the WHO’s framework on people-centred integrated care [54], which focus on national design principles, this paper locates integration within providers’ strategic choices. It extends managed-competition theory by identifying the contextual variables, such as hospital density, regulatory capacity, ownership form, and market growth, that determine which integration model is viable in mixed health systems. This meso-level focus bridges macro-policy frameworks and the micro-foundations of organisational behaviour.
For integrated payer–provider organisations to take root in India, the regulatory environment will need to undergo fundamental changes. Currently, rules are designed for large, capital-intensive insurers and fragmented fee-for-service hospitals, leaving little room for regional hospitals or physician groups to experiment with managed care. A first step is to allow insurers to own and operate hospitals, and hospitals to own insurers, so that incentives for population health are aligned rather than fragmented. Alongside this, minimum capital requirements should be reduced to enable smaller and cooperative entities, including not-for-profits, to participate in risk-bearing arrangements [64]. Individual risk-based underwriting should remain prohibited, but insurers should be permitted to underwrite geographically and design narrow networks that focus on coordination and quality.

Sections

"[{\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B1-healthcare-13-02802\", \"B1-healthcare-13-02802\", \"B2-healthcare-13-02802\", \"B3-healthcare-13-02802\", \"B4-healthcare-13-02802\", \"B5-healthcare-13-02802\", \"B6-healthcare-13-02802\", \"B7-healthcare-13-02802\", \"B8-healthcare-13-02802\", \"B9-healthcare-13-02802\", \"B10-healthcare-13-02802\", \"B11-healthcare-13-02802\"], \"section\": \"1.1. Current Status of the Indian Healthcare System\", \"text\": \"As discussed in the 2019 NITI Aayog report [1], \\u201cBuilding Blocks of a Health System for New India\\u201d [1], India\\u2019s health system rests primarily on two pillars: the public and private sectors (including non-profits and cooperatives). The public sector has overtones of the Russian Semashko model of the 1920s, characterised by features such as detailed, line-by-line budget-based financing and salaried providers [2,3]. It maintains an active presence across all relevant health system spheres, from One Health to quaternary care [4,5], and is reasonably well funded [6]. However, it requires multiple reforms to be implemented before it can function to its full potential. The private sector is characterised by fragmentation and incoherence. Primary care (first-contact, community-based, and preventive services that manage most common health needs and coordinate referrals) is plentiful [7,8]. It is, however, delivered mainly through solo practitioners and informal providers, with minimal continuity, quality assurance, or gatekeeping [9,10]. Secondary care (specialist outpatient and inpatient services for conditions requiring short-term or general hospital management, including emergency care) is available in urban and peri-urban areas. However, it is often of medium quality and poorly coordinated. Tertiary care (high-specialty, technology-intensive services such as advanced surgeries, oncology, and critical care) is of higher quality but is located in large urban areas and, due to very low insurance penetration, is not accessible to most of the population [11].\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B12-healthcare-13-02802\", \"B13-healthcare-13-02802\"], \"section\": \"1.1. Current Status of the Indian Healthcare System\", \"text\": \"Given the range of services provided by the public sector, the most feasible strategy for India would be to expand and completely reorganise it, just as many low- and middle-income countries (LMICs) in Asia, Africa, and Latin America have done, so that it can offer Universal Health Coverage (UHC) to the entire population both as a financier and a provider. This effort needs to be prioritised. The private sector will also need to play a role in India\\u2019s UHC journey as a provider of healthcare services. In this paper, the focus is on private healthcare that is privately financed, with the implicit assumption that, in the Indian context, public financing is exclusively reserved for the public healthcare sector. The \\u201cperfect-market\\u201d [12] structure of the private healthcare sector in India, characterised by myriad providers, unrestricted consumer choice, and the predominance of a fee-for-service payment mechanism, has, however, led to poor health outcomes and low levels of financial protection. This is essentially because healthcare suffers from high information asymmetries and distorted consumer preferences [13], making it difficult for free markets to allocate resources and organise themselves in a manner that results in the best possible healthcare outcomes.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B13-healthcare-13-02802\", \"B14-healthcare-13-02802\", \"B15-healthcare-13-02802\", \"B13-healthcare-13-02802\", \"healthcare-13-02802-t0A1\", \"app1-healthcare-13-02802\", \"B16-healthcare-13-02802\", \"B17-healthcare-13-02802\", \"B18-healthcare-13-02802\", \"B19-healthcare-13-02802\", \"B20-healthcare-13-02802\", \"B14-healthcare-13-02802\", \"B21-healthcare-13-02802\", \"B22-healthcare-13-02802\", \"B1-healthcare-13-02802\", \"B23-healthcare-13-02802\"], \"section\": \"1.2. The Rationale for Integrated Managed Care\", \"text\": \"The policy question, therefore, is how to structure the private sector so that prices offer meaningful signals. Integrated managed care is an approach that can move Indian health markets closer to the conditions under which prices approximate social opportunity costs [13,14], i.e., come closer to becoming a \\u201csufficient statistic\\u201d [15]. This approach to organising healthcare in a market-based environment strengthens price-based competition. It consolidates fragmented, distortion-prone prices into a single plan premium that internalises prevention and coordination benefits. Within a plan, primary and hospital budgets are unified, so investments in community care that avert admissions lower the plan\\u2019s own costs. With risk adjustment and open enrolment, the observed premium more closely reflects social opportunity cost. Information asymmetry is mitigated because purchasers compare plan-level outcomes and access indicators, rather than relying on opaque per-service quality. This reduces the principal violations that block the First Welfare Theorem (the proposition that price-based competition in any market results in the most efficient outcomes) in healthcare. These include externalities, market incompleteness, and asymmetric information [13]. As a result, competition across integrated plans has a better chance of delivering efficient allocations than competition across fragmented providers (see Table A1 in the Appendix A for a listing of the principal academic arguments). The experience of Israel\\u2019s health funds [16,17,18,19] and the Netherlands\\u2019 post-2006 regime [20] illustrates how regulated, private, managed competition can make the premium a near-sufficient statistic for performance, provided risk selection is constrained and outcomes reporting is credible [14,21]. Interestingly, since integration provides predictable, annuity-type revenue streams (capitation, bundled premiums) compared with episodic fee-for-service, it also has the potential to attract greater investor interest [22]. However, despite its apparent attractiveness to both consumers and investors, Indian private markets have not yet moved in this direction. This is principally because hospitals and insurers are locked into fee-for-service models [1]. Additionally, highly risk-averse, low-ambition incumbent investors, providers, and insurers harbour the mistaken belief that they benefit from the currently high levels of fragmentation [23]. Without an integration strategy that links financing with the organisation of care, India risks remaining in a fragmented equilibrium.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B24-healthcare-13-02802\", \"B25-healthcare-13-02802\", \"B26-healthcare-13-02802\", \"B27-healthcare-13-02802\", \"B28-healthcare-13-02802\", \"B29-healthcare-13-02802\", \"B30-healthcare-13-02802\", \"B31-healthcare-13-02802\", \"B32-healthcare-13-02802\", \"B33-healthcare-13-02802\", \"B34-healthcare-13-02802\", \"B35-healthcare-13-02802\", \"B36-healthcare-13-02802\", \"B37-healthcare-13-02802\", \"B38-healthcare-13-02802\", \"B39-healthcare-13-02802\", \"B40-healthcare-13-02802\", \"B41-healthcare-13-02802\"], \"section\": \"1.3. International Models of Integration\", \"text\": \"There are clear benefits to hospital-first strategies, as demonstrated by the examples of Geisinger\\u2019s Patient-Centered Medical Home (PCMH) model [24,25,26,27]; the Presbyterian Hospital-at-Home model [28]; Clalit in Israel [29]; Alzira in Spain [30,31]; and multiple models in Brazil [32,33]. However, there is a concern that with hospital-first models, prices could rise, and quality gains may be uncertain, driven by steering patients to higher-priced facilities and shifts in facility-fee revenues [34,35,36,37,38,39,40,41].\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B42-healthcare-13-02802\", \"B43-healthcare-13-02802\", \"B44-healthcare-13-02802\", \"B45-healthcare-13-02802\", \"B46-healthcare-13-02802\", \"B47-healthcare-13-02802\", \"B48-healthcare-13-02802\", \"B49-healthcare-13-02802\", \"B50-healthcare-13-02802\", \"B51-healthcare-13-02802\"], \"section\": \"1.3. International Models of Integration\", \"text\": \"Evidence from mature managed-care systems consistently indicates that primary-care-led integration produces greater cost savings than hospital-led models. In the United States, physician-group Accountable Care Organizations (ACOs) achieved larger and more durable Medicare savings than hospital-based ACOs [42,43,44,45]. In the United Kingdom, GP-fundholding and commissioning schemes lowered prescribing and referral expenditures relative to centrally managed or hospital-dominated arrangements [46,47,48]. Long-standing delegated-risk models in California likewise demonstrate sustained utilisation control and financial stability within capitated physician organisations [49,50,51]. Across these diverse contexts, primary-care-anchored entities have demonstrated stronger leverage over utilisation, chronic disease management, and downstream spending\\u2014supporting the proposition that reverse integration from primary care can yield superior cost efficiency when compared with hospital-first approaches. However, this has primarily been documented in the U.S./U.K. institutional contexts and has not been synthesised as a general strategy blueprint for emerging markets.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B52-healthcare-13-02802\", \"B53-healthcare-13-02802\"], \"section\": \"\", \"text\": \"Primary-Care-First Reverse Integration: Strong, Starfield-consistent, i.e., comprising the \\u201c4Cs\\u201d of \\u201ccoordination, first contact of care, continuity of care and comprehensive care\\u201d [52,53], primary networks built first, expanding upstream into secondary/tertiary contracting. The advantages of this approach include lower costs, preservation of trust, and better management of the burden of chronic diseases. The challenges are that such efforts are harder to initiate due to India\\u2019s weak primary care baseline and require robust financial support.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B14-healthcare-13-02802\", \"B20-healthcare-13-02802\", \"B54-healthcare-13-02802\"], \"section\": \"1.5. Research Question\", \"text\": \"While Enthoven\\u2019s managed competition model and the WHO\\u2019s integrated, people-centred care framework both seek to link financing with service delivery, they approach integration at the macro-system level. Enthoven envisaged competition among health plans operating under a single national purchaser and uniform benefit rules [14,20]. The WHO framework [54] outlines normative principles, namely, coordination, continuity, comprehensiveness, and people-centredness, but does not specify how organisational ownership forms or market structures condition feasibility. This paper seeks to contribute to the existing literature by shifting the unit of analysis from system design to organisational strategy, formalising how hospitals and primary-care networks can pursue context-contingent pathways to integration within diverse state-level environments.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B55-healthcare-13-02802\"], \"section\": \"\", \"text\": \"Contingency theory: Strategy must be tailored to the regional conditions of market growth, competition, and institutional capacity [55].\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B56-healthcare-13-02802\"], \"section\": \"\", \"text\": \"Resource-based view (RBV): Strong primary care networks represent rare and difficult-to-imitate assets that can serve as foundations for reverse integration [56].\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B57-healthcare-13-02802\"], \"section\": \"\", \"text\": \"Dynamic capabilities: Organisations must reconfigure capabilities as they extend upstream or downstream [57].\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B58-healthcare-13-02802\"], \"section\": \"\", \"text\": \"Institutional theory: Legitimacy with regulators and funders is critical when providers seek to integrate financing [58].\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B55-healthcare-13-02802\", \"B59-healthcare-13-02802\"], \"section\": \"3.1. Hospital-First Integration Pathway\", \"text\": \"The strategic question for regional hospitals considering managed care integration is fundamentally one of fit. In strategic management, Contingency theory argues that there is no universal \\u201cbest way\\u201d to organise; rather, effectiveness depends on aligning organisational structures and governance with environmental contingencies [55,59]. Organisations that achieve this alignment demonstrate superior performance, while those that do not, experience instability and inefficiency. In the context of regional hospitals, two critical contingencies emerge: market growth potential and competitive intensity. Hospitals in low-growth, low-competition environments are unlikely to attract investor capital for aggressive expansion and may instead benefit from emphasising stewardship through non-profit or cooperative structures. By contrast, hospitals operating in high-growth, high-competition contexts must pursue capital-intensive strategies and align with investor expectations, making for-profit models more feasible. This leads to a contingency-based typology in which ownership form and strategic orientation are matched to market conditions.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B56-healthcare-13-02802\"], \"section\": \"3.1. Hospital-First Integration Pathway\", \"text\": \"However, contingency fit alone does not explain why some regional hospitals succeed in transitioning toward managed care while others fail. Here, insights from RBV and Institutional theory become critical. RBV emphasises that organisations achieve sustained competitive advantage not merely by aligning with external contingencies but by leveraging unique, valuable, and hard-to-imitate internal resources [56]. For regional hospitals, such resources include deep community trust, embedded local reputation, and long-standing physician relationships. These intangible assets are difficult for corporate chains to replicate. They may give regional hospitals a distinct advantage in launching primary\\u2013care\\u2013based managed care programmes, especially where patient loyalty and trust are decisive factors. However, RBV also highlights limitations: without access to financial capital or advanced IT systems, these hospitals may find it challenging to raise the necessary resources and develop the core capabilities required for scaling.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B58-healthcare-13-02802\", \"B60-healthcare-13-02802\", \"B61-healthcare-13-02802\"], \"section\": \"3.1. Hospital-First Integration Pathway\", \"text\": \"Institutional theory complements these perspectives by foregrounding the importance of legitimacy. Organisations survive not only by being efficient but also by conforming to societal and regulatory expectations [58,60,61]. In India and other emerging markets, community hospitals operating as non-profits or cooperatives often enjoy normative legitimacy as custodians of local health, whereas for-profit entrants must establish pragmatic legitimacy with investors and regulators. The choice of ownership form thus becomes not merely a financial decision but a question of how hospitals signal legitimacy to multiple audiences: patients, regulators, payers, and capital markets.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B56-healthcare-13-02802\", \"B62-healthcare-13-02802\", \"B57-healthcare-13-02802\"], \"section\": \"3.2. Primary-Care-First Integration Pathway\", \"text\": \"RBV emphasises that sustained competitive advantage arises from resources that are valuable, rare, hard-to-imitate, and non-substitutable [56]. In emerging markets, the scarce capability is not hospital infrastructure but rather trust-based, Starfield-consistent primary care, characterised by first-contact accessibility, comprehensiveness, continuity, and coordination [62]. Corporate hospital chains often fail in this regard, making it a defensible competitive advantage for primary care providers. While RBV highlights what resources matter, Dynamic capabilities theory explains how organisations reconfigure resources in changing environments [57]. Primary-care-first integration requires capabilities to sense opportunities for upstream partnerships and insurance contracting, and to seize them through new organisational arrangements and by transforming delivery models to maintain patient-centredness while scaling regionally. This dynamic reconfiguration is critical to scaling a regional proof-of-concept into a replicable growth model.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B58-healthcare-13-02802\", \"B60-healthcare-13-02802\", \"B61-healthcare-13-02802\"], \"section\": \"3.2. Primary-Care-First Integration Pathway\", \"text\": \"Institutional theory underscores the role of legitimacy [58,60,61]. In India, primary care\\u2013first providers can more easily secure normative legitimacy (as community stewards) than hospital-first entrants, whose expansion often attracts scepticism over commercial motives. Insurance integration and reverse-bidding for tertiary care contracts could also confer regulatory legitimacy.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"app2-healthcare-13-02802\", \"healthcare-13-02802-t0A2\", \"healthcare-13-02802-t0A3\", \"healthcare-13-02802-t0A4\", \"healthcare-13-02802-t0A5\"], \"section\": \"4. Comparative Analysis of Integration Pathways\", \"text\": \"Appendix B provides a detailed discussion of the various global typologies of hospital-first models, while Table A2 presents examples of global hospital-first integrated care models and their performance outcomes. Table A3 presents an analysis of the evidence comparing primary-care-first and hospital-first models. Table A4 presents global examples of primary-care-first integrated models, with commentary on their potential relevance to the Indian context. Table A5 presents an analysis of the different dimensions of hospital-first and primary-care-first managed care pathways, along with a comparison between them.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"healthcare-13-02802-t001\", \"healthcare-13-02802-t002\"], \"section\": \"4.1. For Hospital-Based Providers\", \"text\": \"Building on the theoretical foundations discussed above, this paper proposes a contingency-based framework that positions hospitals along two dimensions: market growth potential and competitive intensity, and derives four archetypal strategies. These archetypes are then empirically illustrated through comparative international cases and subsequently applied to the Indian context (Table 1). Applying this matrix to the Indian case suggests the strategies outlined in Table 2.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B63-healthcare-13-02802\"], \"section\": \"4.2. For Primary Care Providers\", \"text\": \"For India, this model resonates with policy shifts toward primary care [63]. Regional family-owned or cooperative providers may be uniquely positioned to pursue this pathway. The model offers a route to combine social legitimacy with financial sustainability, creating hybrids that serve both community and investor needs. Primary-care-first integration represents a theoretically grounded, practically feasible alternative to hospital-driven managed care in emerging markets. By leveraging rare resources (RBV), dynamically reconfiguring them (Dynamic capabilities), and aligning with institutional legitimacy requirements (Institutional theory), such providers can extend their value proposition while remaining asset-light. The pathway provides both a strategic contribution to management theory and a practical blueprint for strengthening India\\u2019s health system.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"healthcare-13-02802-t0A6\", \"app2-healthcare-13-02802\"], \"section\": \"5. Discussion: Theoretical and Policy Interpretation\", \"text\": \"Implementation feasibility will also vary by state. Tamil Nadu and Delhi can experiment with hospital-first integration because their regulatory and capital ecosystems are relatively mature. In contrast, states such as Chhattisgarh and Bihar will need phased, primary-care-first approaches built on cooperative or trust-based governance. Recognising these state-contingent pathways transforms the framework from a one-size-fits-all blueprint into a realistic strategy portfolio. The examples in Table A6 in the Appendix B illustrate both the barriers and the opportunities for Indian incumbents in a potential shift toward managed competition.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B22-healthcare-13-02802\"], \"section\": \"5. Discussion: Theoretical and Policy Interpretation\", \"text\": \"Beyond regulatory design, financial sustainability is a central determinant of long-term viability. From a financial perspective, integrated managed care can stabilise provider revenues and support long-term investment in preventive and chronic care. Traditional fee-for-service hospitals generate volatile, transaction-based income, whereas capitation and membership models produce predictable, annuity-like cashflows that enhance solvency and allow for counter-cyclical investment in community care. Such cashflows command higher valuation multiples and support longer debt tenors, making them attractive for both private equity and long-term institutional capital [22]. From an investor\\u2019s perspective, integrated managed care is therefore not only a policy imperative but also a financial opportunity.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B14-healthcare-13-02802\", \"B20-healthcare-13-02802\", \"B54-healthcare-13-02802\"], \"section\": \"6.1. Theoretical and Policy Contributions\", \"text\": \"The framework advances theory by extending Contingency theory to the domain of mixed health systems and illustrates how internal resources and external legitimacy jointly determine integration success. For policy, it offers a diagnostic tool for regulators and providers to assess state-level readiness. Rather than prescribing a uniform template, it identifies conditional pathways that align financial sustainability with equitable access\\u2014providing a structured alternative to ad hoc insurance expansion. In contrast to Enthoven\\u2019s system-wide model of managed competition [14,20] and the WHO\\u2019s framework on people-centred integrated care [54], which focus on national design principles, this paper locates integration within providers\\u2019 strategic choices. It extends managed-competition theory by identifying the contextual variables, such as hospital density, regulatory capacity, ownership form, and market growth, that determine which integration model is viable in mixed health systems. This meso-level focus bridges macro-policy frameworks and the micro-foundations of organisational behaviour.\"}, {\"pmc\": \"PMC12607437\", \"pmid\": \"41228169\", \"reference_ids\": [\"B64-healthcare-13-02802\"], \"section\": \"6.2. Implications for Regulators and Government\", \"text\": \"For integrated payer\\u2013provider organisations to take root in India, the regulatory environment will need to undergo fundamental changes. Currently, rules are designed for large, capital-intensive insurers and fragmented fee-for-service hospitals, leaving little room for regional hospitals or physician groups to experiment with managed care. A first step is to allow insurers to own and operate hospitals, and hospitals to own insurers, so that incentives for population health are aligned rather than fragmented. Alongside this, minimum capital requirements should be reduced to enable smaller and cooperative entities, including not-for-profits, to participate in risk-bearing arrangements [64]. Individual risk-based underwriting should remain prohibited, but insurers should be permitted to underwrite geographically and design narrow networks that focus on coordination and quality.\"}]"

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