Telangana's healthcare system buckles under Rs 2,000 crore in unpaid hospital dues

Telangana's private hospitals are owed over Rs 2,000 crore in pending government dues, a backlog now threatening to derail the state's revamped Employee Health Scheme (EHS) before it can properly launch, according to Telangana Today.

The Telangana Aarogyasri Network Hospitals Association (TANHA) says the dues have built up over nearly 15 months, covering unpaid bills under Aarogyasri, which serves below-poverty-line families, and the previous EHS, which covers government employees and their dependants. TANHA president Dr. Vaddiraju Rakesh said the backlog has left hospitals unable to sustain operations, let alone take on new patients at lower reimbursement rates.

The fallout is already visible. Not one of the state's 360 small and mid-sized private hospitals has agreed to join the new EHS. These hospitals have long formed the backbone of Telangana's public health network. TANHA alleges the government is instead turning to corporate hospital chains, sidelining the smaller hospitals that treat most patients across the districts.

The dispute follows a pattern that has worsened steadily over the past two years. In January 2025, TANHA hospitals suspended services under Aarogyasri, EHS and the Journalists Health Scheme over Rs 1,200 crore in pending bills, according to Telangana Today and Etemaad Daily. By September 2025, that backlog had grown to Rs 1,400 crore, prompting an indefinite suspension of services and warnings that some hospitals faced closure. The same month, private colleges across the state shut down for a day over Rs 8,000 crore in unpaid student fee reimbursements, pointing to a broader pattern of delayed government payments.

By July 2026, the healthcare backlog had swelled further, to around Rs 2,600 crore. Around the same time, the government had already begun deducting salary contributions from employees to fund the new scheme, even before it became operational, a move employee unions criticised as premature.

Medical suppliers have flagged a related crisis. The Twin Cities Hospitals Suppliers Association told Health Minister Damodar Rajanarasimha earlier this year that payments for surgical and diagnostic supplies had been pending since 2022 at several government hospitals, pointing to strain across the state's wider public health infrastructure.

The government has pushed back on the narrative of neglect. Deputy Chief Minister Bhatti Vikramarka said in July that the state was releasing Rs 2,000 crore every month to clear a Rs 10,000 crore backlog he blamed on the previous BRS government. He also cited the doubling of Aarogyasri's coverage limit, from Rs 5 lakh to Rs 10 lakh per family, as proof of the government's commitment.