Public health, private players?

July 28, 2017 12:18 am | Updated August 20, 2017 11:45 am IST

Health symbols, including electronic medical records, heart rate, temperature, prescription medicine, family health and lab results. EPS 10 file. Transparency effects used on highlight elements.

Health symbols, including electronic medical records, heart rate, temperature, prescription medicine, family health and lab results. EPS 10 file. Transparency effects used on highlight elements.

LEFT | Amit Sengupta


Private providers will be able to cherry-pick the most lucrative districts where patients have a higher paying capacity

The NITI Aayog has recently unveiled a grand plan to effectively privatise district hospitals in Tier-I and Tier-II towns. It has developed what it calls a “model concessionaire agreement” for provision of healthcare services for cardiac and pulmonary (lung) diseases and cancers. It is proposed that public facilities in district hospitals would be outsourced to private providers. They would be free to charge full treatment costs from patients not covered by government schemes (such as the Rashtriya Swasthya Bima Yojana) and the providers would be reimbursed by the government for treating patients referred by the government

Red-carpet treatment

Private providers will be able to cherry-pick the most lucrative districts where patients have a higher paying capacity. The scheme also provides for an escrow account that would offset the risk to private providers posed by possible delays in reimbursement by the government. Providers would also secure access to public facilities such as ambulance services, blood banks and mortuaries. Clearly no effort has been spared to roll out the red carpet and ensure that private companies are able to freeload on public assets.

What are the implications for accessible healthcare services? First, the proposal implies that most patients would have to pay for care even in public facilities. The promise that patients covered by government health insurance schemes would access care free of cost needs to be seen in the context of recent surveys which show that just 12-13% of people are covered by public-funded insurance.

Second, the proposal is designed to further worsen inequity in access to healthcare services. Private providers will concentrate on better-off districts, leaving the poor and remote districts for the public sector to manage. This will further weaken the ability of public hospitals to attract and retain trained doctors and other health workers.

Third, the scheme will expose thousands of patients to unethical practices by private providers, compromises in quality and rationality of services and additional ‘top-up services’. A specific section in the document on ‘risk management’ is primarily concerned about risks of private providers, with very little about robust mechanisms to protect patients from unethical practices.

Abdication by the state

Fourth, outsourcing of hospital care to private providers inevitably becomes increasingly unsustainable over time as they ratchet up demands on reimbursements and fees. The proposal to hive off hospital care to the private sector is justified by the argument that public services are not financed adequately and face an acute shortage of trained human resources. The simple remedy could be to significantly enhance investment in public healthcare services, including in the training of health workers. The government’s singular resistance to follow such a path is linked to its ideological moorings, which find virtue in private enterprise and view public services as inherently inefficient. This scepticism regarding public services needs to be tempered by the experience that success stories of public health, in diverse settings such as the U.K., France, Cuba, Thailand and Sri Lanka, are all related to public systems.

The NITI Aayog’s proposal involves the handing over of public assets to for-profit companies, and represents a clear abdication of duty by the government. The NITI Aayog describes itself as a ‘think tank’, unlike the Planning Commission of yore. It is understood that the scheme will be piloted in a couple of districts, presumably in Bharatiya Janata Party-governed States. Health care is primarily a State subject and State governments must first question the legitimacy of a supposed think tank to pronounce public policy.

Amit Sengupta is a trained physician and Associate Global Coordinator, in the India chapter of People’s Health Movement.

RIGHT | Manoj Jhalani




The government cannot remain oblivious to present needs even while building the capacity of the public health system

The issue of public-private partnerships (PPPs) in health has been highlighted by the recent draft NITI Aayog document about a PPP arrangement for certain non-communicable diseases (NCD). To infer from this that the government is forfeiting its role in public health care is totally misplaced. The National Health Policy (NHP) 2017 clearly prioritises strengthening of public health systems as a key approach. However, it also recognises a critical gap-filling through strategic purchasing to be directed “towards those areas and those services for which currently there are no providers or few providers”. It further envisages that “the order of preference for strategic purchasing would be public sector hospitals followed by not-for-profit private sector and then commercial private sector in underserved areas”.

Recent policy decisions and funding support to States to undertake universal screening and management for common NCDs, provide comprehensive primary health care through health and wellness centres, strengthen district hospitals (DH) to provide multi-speciality care, upgrade DHs to medical colleges, and ensure access to free essential drugs and diagnostics in government health facilities indicate purposive actions to strengthen public health systems. For instance, this year there is a jump from ₹445 crore to ₹3,300 crore in Central allocation for upgradation of DHs to medical colleges in districts without any medical college.

Reality check

However, we do need to acknowledge a few facts. Despite recent efforts, current capacities in public facilities to manage disease conditions in cardiology, pulmonology and oncology are practically non-existent in Tier-II and Tier-III towns in most States, even in the private sector. It leads to overcrowding in tertiary-level facilities in big cities, compromising quality of care and leading to high out-of-pocket expenditures.

The waiting time in premier public institutions like AIIMS, Delhi for certain procedures can range from several months to a few years. The disease burden on account of NCDs is increasing rapidly. A 2014 study by Harvard University for the World Economic Forum shows that India stands to incur a cost of $2.17 trillion between 2012 and 2030 due to cardiovascular diseases alone. The government cannot remain oblivious to the present need, even while building capacity of the public health system.

A vector icon of a hospital.

A vector icon of a hospital.


Expanding access

If successful, the NITI Aayog proposal, developed in broad consultation with the Ministry of Health and Family Welfare, will expand access to care for key NCDs to such populations that have not hitherto had access. While the proposal envisages that care will be provided free for BPL families and those covered by government insurance schemes, the rates will be negotiated at Central government health scheme/State government insurance rates for others so that even the non-poor will receive care at a rate much lower than market rates. This is a significant improvement over the status quo.

The success of the initiative would, however, depend upon the PPP contract design and institutional capacity to monitor and manage such contracts so that public interest is safeguarded, there is value for public money and there is a reasonable return for private player.

The PPP document is still at a draft stage, to be finalised in consultation with all stakeholders including State governments. Further, States have the liberty to adopt the PPP or modify the document based on their needs and context. It is too early to speculate on whether such an arrangement will work or not. However, in the absence of viable alternatives in the existing environment, we need to be open to the potential of such partnerships to expand access.

Manoj Jhalani is Additional Secretary and Director, National Health Mission.

CENTRE |K. Srinath Reddy



The proposed PPP model in district hospitals will improve access but may not deliver appropriate and equitable care

The proposal to invite private sector investment in district hospitals is based on five premises: district hospitals need upgrading to provide good-quality secondary care and some elements of tertiary care to reduce dependence on and overcrowding of medical college hospitals and corporate hospitals; NCDs are affecting increasing numbers of people; most government-run district hospitals are presently unable to provide this care; incentivised private sector investment and participation in care delivery in such hospitals can fill this gap; and the proposed PPP model can function smoothly with shared facilities and a dual payment system.

The first three premises are uncontested. The fourth premise is open to debate on whether higher levels of private investment should be the preferred approach to strengthen district hospitals. PPP proponents argue that it will take time, resources and management skills to reach an acceptable level of public sector capacity and the rising tide of NCDs can brook no delay.

Medical Workplace. Doctor working at the table in clinic. Flat Design, Vector Illustration Icons

Medical Workplace. Doctor working at the table in clinic. Flat Design, Vector Illustration Icons


Is the government seeing the PPP as temporary gap-filling during the phase of public sector capacity build-up? However, if this model of ‘one hospital, two systems’ is envisaged as a permanent feature, the risks and returns of such cohabitation require serious scrutiny. Cannot the financial support provided to the private sector be directed to create public sector capacity?

In a mixed health system, it could be efficient to engage the services of the private sector to supplement the capacity of the public sector. However, cost and quality must be controlled for delivering appropriate and affordable care with accountability.

Gaps in the proposal

Listing of angioplasty as the only treatment in the cardiology segment is an open invitation to unnecessary procedures. Coupled with the conveyor belt of referrals from mass screening in primary health care, this can be a bonanza for the private sector but can deliver inappropriate care. Surprisingly, even the less expensive thrombolytic treatment for heart attacks is not listed.

It is proposed that the nested private facility will provide NCD care to two categories of patients — those referred and paid for by government schemes and self-referred patients who will pay from pocket. In the absence of a minimum number of beds reserved for the former, how can we prevent predominant capture by the latter? How will financial protection be provided to the near-poor who have to self-pay? Even if package costs for the latter are transparently displayed, who will negotiate those costs and prevent add-ons during hospitalisation?

If private sector participation were to be via empanelment of independent private facilities, the contract can be time-bound, with provision for early termination or non- renewal for poor performance. When the private sector unit is embedded within the district hospital through investment in infrastructure and equipment, and is initially contracted for 30 years, it would be difficult to dislodge a poorly performing private partner. The scope for litigation will be high in this arrangement.

Sharing of services, such as the blood bank, is efficient in concept but can be contentious in practice. Apart from complexities of administrative coordination, how will competing demands be handled?

Given the large presence of the sector, a well-defined role in the provision of NCD care is welcome but has to be accommodated within a well-designed framework of Universal Health Coverage that integrates pre-paid primary, secondary and tertiary care through a combination of tax funding and social insurance. The proposed PPP model will improve access but may not deliver appropriate and equitable care.

K. Srinath Reddy is President, Public Health Foundation of India (PHFI)

The views expressed are personal.

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