Providing empirical evidence, this research challenges the skepticism about payment rates of India’s national health insurance scheme and demonstrates that private hospitals can operate profitably under Ayushman Bharat Pradhan Mantri-Jan Arogya Yojana (AB PM-JAY) model while enhancing healthcare accessibility and affordability in India. The study demonstrates that the private healthcare sector in India should consider the AB PM-JAY scheme as a financially viable payer.

The establishment of private hospitals operating under AB PM-JAY model at the district level in tier 2 and tier 3 cities is a strategic investment opportunity, especially when the demand for health services is rising in these locations at a greater pace across the country.

Government subsidies such as providing free land for hospital construction can significantly improve the financial viability of private healthcare, accelerating breakeven and attracting investment. A sustainable model can be developed where the government supports private hospitals while requiring them to offer care at AB PM-JAY rates, ensuring both profitability and affordable healthcare access.