The absence of a well thought out policy framework for strengthening the health system is the most important issue facing the health sector in India. In the government, there is no clarity on what the nation’s health system should be 10 years hence. Should it be a public sector dominated system like Brazil or China; or a regulated private-led like the U.S.; or one where both sectors function but have only one payer as in the U.K.? In Japan, delivery is private but the government sets the prices. Each option has its costs, benefits, tradeoffs and systems to ensure control on costs and quality.
Unregulated
India is a unique laissez faire model with a private sector-led health system that is unregulated and has no rules of the game spelt out, not even as minimal as those laid down for opening a liquor shop. And so, one can set up a nursing home in a residential colony; throw infectious waste anywhere, charge any amount that the market allows and have no systems of oversight to assure quality. The private sector is further incentivised by excise duty waivers, subsidised loans for establishing hospitals, tax breaks and a liberalised health insurance market with tax exemptions for the premium.
More recently, a new innovation has emerged known as government sponsored insurance schemes (Rashtriya Swasthya Bima Yojana, Arogyashri, Kalaignar, etc.) under which governments buy the insurance on behalf of the people/target group for providing cashless services for inpatient care, mainly surgeries. Under this scheme, the providers charge on a DRG basis, the insurance companies have assured incomes and the entire risk is borne by the government. While such schemes have widened access by making private sector facilities available, their impact on addressing the three critical issues of the health sector — equity, quality, and efficiency — has not been addressed. Instead, pricing structures are distorted and new dimensions of fraudulent and corrupt practices have entered the health sector that continues to register inflation at 30 per cent, with negligible impact on reducing catastrophic expenditures, impoverishing millions in the process.
Privatisation of the health sector started in late 1980s, accelerated in the 1990s with the further withdrawal of the state under the punishing conditionality of the IMF structural adjustment, and got further emboldened with the extensive incentives provided. In 2005, the state bounced back with a three-fold increase in the budget to revitalise the rural health delivery systems under the National Rural Health Mission, running as a parallel track to the private eco system. It is this duality and dysfunctional policymaking that is haemorrhaging the sector and requires to be stopped without delay. The worn down public health infrastructure cannot be revitalised without changing the rules of the game, bringing in legal provisions to regulate further growth of the private sector, make it efficient and accountable and provide a level-playing field.
Bihar experiment
It is time to recognise the market failures inherent to this sector and the role of the political economy that is sustaining it, making it increasingly impossible to regulate and establish institutional mechanisms with the requisite capabilities to effectively manage the mess. Bihar’s recent experiment of outsourcing diagnostics to the private sector is telling — unqualified persons were employed at some centres, but no action was taken due to political pressure. It is scary to think that a number of innocent people might have been given the wrong diagnosis and put on needless medication. This is just a small example to illustrate the kind of mess we are in.
The policy confusion is worsened by the push for greater decentralisation without ensuring the availability of capacities at those levels to manage such complex systems. It is against this scenario that Chhattisgarh’s recent policy initiative needs to be viewed. The policy of contracting out diagnostic services to private sector networks in 379 public facilities for 10 years, guaranteeing a minimum patient load and permitting paying patients in addition and prices pegged to those paid for under the Central Government Health Scheme (CGHS), monitored and managed by a third party, is fraught with adverse implications for the strengthening of the public sector and huge costs for the government, should it choose to pay for them.
Absence of strategy
It is not the outsourcing that is wrong. It is the absence of a strategy to draw on the strengths of the public and private sectors. If the government is unable to recruit staff to establish laboratories in, say, an area like Bastar, it is unclear how the private sector can be lured to set up, for instance, a radiology unit, there unless huge amounts are paid to it to cover the sustainability risks involved. Likewise, outsourcing is being attempted in areas that already have laboratory facilities. While the value addition is not clear, it will undoubtedly result in the closure of the public sector services and also entail paying three times more to the private sector. And it will be three times as the CGHS prices that are being taken as a benchmark, based on the average of prices quoted on a tender basis. There is no scientific basis for CGHS rate-fixing and such a system will only result in overpaying the private sector in Chhattisgarh where the prices of inputs vary from those in Mumbai or Delhi and between Raipur and Bastar. More worrying are the qualifying criteria that only large private sector networks like corporate hospitals can meet. Small but excellent not-for-profit hospitals like the Shahid hospital in Dalli Raja in Durg or the Jan Swasthya Sahayog at Giniari in Bilaspur will both be disqualified.
What needs to be done
Knee-jerk solutions and unintelligent tinkering have had a disastrous effect on the health sector in India. The government needs to look at health system development and put in place requisite conditions, such as an institutional capacity to control provider behaviour through well laid down national protocols and standard operating procedures, penalties and incentive structures. It should explore cost-effective options such as the intensive use of technology that enables electronic transmission of samples for diagnosis at centralised laboratories, pricing of services, develop IT systems to closely monitor not quantitative but qualitative outcomes as well, put in place grievance redress systems, tightening and insulating the enforcement systems at all levels from political pressures to make individuals from the ANM to the specialist, the ward boy to the laboratory technician — public or private — accountable to outcomes and patients, before opening up partnerships with the private sector on such a large scale.
What needs to be done is known, but sadly how to do it is not. Governments, at the Centre and in the States, need to allow people with field experience and practical knowledge of the health system to contribute their expertise. What is also needed today more than ever is the need to listen to the ground — as patients, women in villages, front line workers, the hapless doctor in the PHC, all have a different story to tell. We cannot afford any more blundering!
(K. Sujatha Rao is former Secretary, Ministry of Health and Family Welfare, Government of India)
