Troubled partnerships in healthcare sector

Laura Keenan

Markets and partnerships can be effective only when there are strong and enforceable regulations, meaningful competition, and an informed consumer base. These are rare in rural India.

With less than one per cent of the Gross Domestic Product (GDP) invested in public healthcare provision, India is currently one of the world’s most privatised health economies. It is a country which is home to one-fifth of the world’s diseases, where the regular level of malnourished children is higher than that of sub-Saharan Africa, and with higher rates of anaemia and maternal under-nourishment. The buzzwords inscribed into current government policy, including the Eleventh Five Year Plan, are Public Private Partnerships (PPPs) — contracting out, franchising, voucher schemes, subsidies. However, even proponents of PPPs in more developed states are suspicious of their application in emerging economies where there are high proportions of people living on or below the poverty line who have never experienced healthcare as a contractual, democratic right. Solid investment, motivated and well-paid staff, established and integrated audit and regulatory systems, excellent political communications, citizens who expect well-performing public services — without these as a starting point, can marketisation realistically be expected to create equitable and sustainable delivery of essential services like healthcare?

Government policy — including the National Rural Health Mission (NRHM) — does not presently make clear whether PPPs may be developed along the lines of further privatisation of resident public health services or, alternatively, public funding for the existing private health sector. Experience has shown that both of these routes frequently translate into demands for payment from service users, and in particular from those in the poorest districts.

It is of real concern, therefore, that the supposedly “pro-poor” NRHM places an emphasis on user fees as a potential generator of income. Time and time again, research has demonstrated that charging for essential services decreases usage and disproportionately affects the poorest sections of society — with or without compensatory “accountability measures” such as subsidies, exemption cards, and voucher schemes. INSAAF International brought out a report in 2002 which cited cases of patients in Punjab being ejected from public hospitals when they lacked the resources to cover the costs; exemption cards were repeatedly not issued to those entitled to them, and only one out of 150 women in the slums of Bhatinda, a city of 2,70,000 people, had even heard about the cards. Reports suggested a 20-40 per cent reduction in outpatient cases. The alternative — and it is the only alternative for those without access to any form of direct cash — is not seeking treatment or medicines, a decision which has ramifications for India’s disappointing performance in curbing the spread of communicable diseases.

Access denied

According to the Universal Declaration of Human Rights (UDHR), every citizen has the right to social security (Article 22). Access to such provisions, however, proves to be difficult for those in the rural or unorganised sectors — who currently account for around 90 per cent of India’s population. More often than not, it is those who live closest to subsistence level who dig into their pockets to make direct payments for essential healthcare services. Private expenditure forms more than 80 per cent of the total outgoings on health in the country; the vast majority of this is out-of-pocket, and the second most common cause of debt in rural India is healthcare provision. Nearly half of the households that are in debt or have been forced to sell off assets have done so to finance hospital expenditure. This is a vicious cycle, where expenditure on healthcare creates poverty, which contributes to malnourishment, decreases economic productivity and perpetuates further ill-health.

As a point of contrast, public financing of health in China, Malaysia, and Sri Lanka is between 30 per cent and 60 per cent. In lower income Sri Lanka, almost everyone now lives less than 1.5 km from the nearest health centre. In Europe, average levels of public sector investment are near 75 per cent; they are 85 per cent in Britain. Of all the developed nations, the United States channels the least public resources into healthcare. Here, one in three citizens living below the poverty line is without health insurance; according to the Institute of Medicine, 18, 000 Americans die prematurely each year because of this deficiency, whilst the country has a higher Infant Mortality Rate than many other industrialised nations. And the system is also incredibly inefficient: the U.S. spends more on health both on a per capita basis and as a proportion of GDP than any other country. When China moved from public to private investment in health, household health costs rose 40-fold; at present, health insurance covers only one in five of those living in rural China.

Markets and partnerships can be effective when there are strong and enforceable regulations (and somebody to enforce them), meaningful competition, and an informed consumer base. It is rare that these exist in rural India. Even in the cities, lack of regulation in the private sector impacts upon the wealthy as well as the poor: in some private hospitals in Mumbai it has been estimated that 65 per cent of births are delivered by caesarean, an operation which demands more costly surgical procedures and substantive aftercare. Deliveries by caesarean are only around nine per cent in the public hospitals. Without effective oversight mechanisms, it is easy to mislead patients into buying unnecessary or more expensive services and medicines — especially when, as in many rural areas, patients do not have a choice of provider.

In the ideal situation, collaboration between providers allows sharing and redistribution of resources. This is incompatible with a competitive health economy, where providers must market themselves to attract the most profitable patients or, alternatively, government investment.

Different needs

Seventy per cent of India’s population is rural; 300 million live below or on the poverty line. Their needs are for cheap, scientific alternatives, and not the latest, most financially lucrative medical technologies. Up to one in three doctors’ posts remains vacant in rural India; of those filled, around two thirds may be absent at any given time. There is one bed for 6,000 people, Public Health Centres (PHCs) often are closed, and, according to the Indian Institute for Population Sciences, just 20 per cent have a phone and only 12 per cent undergo “regular maintenance.” In some States, the majority has no electricity. The government promised to increase allocations to health by 30 per cent between 2006 and 2007. Reports suggest that this target has not been met, and that increases have only been channelled into particular projects, selective interventions, and targeting of diseases — not into strengthening infrastructure and widening access.

Proponents of PPPs would argue that partnership can resolve these issues: the government works to instil a public sector ethos, the private sector focuses on efficient service delivery and meeting targets. According to the Working Group on Public Private Partnership for the Eleventh Five Year Plan, “partnership is not meant to be a substitution for lesser provisioning of government resources nor an abdication of government responsibility, but a tool for augmenting the public health system.”

Generally, however, initiatives to form PPPs around the world have been implemented at a time of crisis when state funding for the healthcare sector needed to be reduced, not when the starting point is a 0.9 per cent level of investment. In India, it is difficult to see what “public health system” or ethos can be harnessed.

Strategic state investment in health systems can enable a holistic approach to healthcare, providing access without barriers to a multi-sectoral range of services that incorporate health promotion, disease prevention, diagnoses and rehabilitation. PPPs can be effective in “augmenting” such a system when there is an equal-footed public partner, mutual trust and extremely well-functioning regulatory and audit systems. At present, there is not even an operational accreditation body for medical providers.

Ultimately, private partnerships cannot be an alternative to adequate government investment, and it must remain the obligation of the state to ensure access to treatment for every citizen; this is not something that the market can be relied upon to provide. In the interim, there are preliminary measures that the national government needs to take before wider implementation of any partnership initiatives — and particularly in the poorest States where commercial schemes will struggle to generate profits. There must be a set of guidelines, parameters and standards with clearly defined roles for different agencies; the framework provided by the Indian Public Health Standards should be extended to the private sector, and there must also be effective audit, review and accreditation procedures.

Until this basic infrastructure is in place, the cure could well be worse than the disease.

(The author is a Researcher at the Centre for Legislative Research and Advocacy, New Delhi. The views expressed in the article are the author’s own.)

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