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Seize the Moment: Now’s the time to reform rural health care in India

Rajeev Ahuja's picture

The blog I have posted reflects my personal views and not those of the World Bank or its affiliates. It is unfortunate that some parties have sought to interpret what I written as the official views of the World Bank. The blog platform is intended to generate a healthy discussion. The comments that the blog attracted shows differing opinions on the subject of public and private roles in health care.

The private sector is the dominant player in the Indian health sector and most financing is out-of-pocket which in turn places a huge financial burden on the poor. However, the qualified private sector is mostly absent in distant rural and tribal areas where most Indians rely on unqualified and unregulated private providers. My statement about public delivery in India refers to these areas where residents have a limited choice - between “quacks” and often nothing at all. NRHM is the main GOI program to improve access to health care in these areas. I noted in the blog that if well-documented accountability failures of public delivery in India are not addressed, the program’s impact will be compromised and rural Indians will continue to rely on fee-for-service, unqualified providers. Recently launched government-sponsored health insurance schemes, such as RSBY, target poor Indians, offering cashless cover while allowing beneficiaries to choose among empanelled public and private providers. These schemes represent a first attempt at making both public and private providers accountable for their performance.

For more information on health in India, visit World Bank India: Health, Nutrition, and Population to learn more.


Submitted by Lant Pritchett on
The public versus private debate is irrelevant because it has to be public because private cannot work in rural areas (first paragraphs) and now is the time to reform public because if it doesn't reform it will wither away because private will take market share and public will wither away (last paragraphs). Huh? Public private partnerships cannot be the main option because they only work in very specific conditions which don't exist all across India (first paragraphs), so we should reform the public sector all across India just like they did in the very specific conditions of Tamil Nadu (later paragraphs). Huh? It would seem when the path to success is uncertain (and you would think after 60 years of attempts and reforms, success at public sector production of clinic care has to be rated as at least "uncertain") trying multiple options is a good idea, so perhaps pursuing both a variety of public sector reforms and a variety of public-private partnerships aggressively is a good idea, as there are many overlaps in what one needs for public sector reform and public-private partnership--in fact a "single payer" insurance scheme can be provider neutral. That way when (or "if" if you prefer) public sector reforms fail there is an existing alternative to "business as usual."

Submitted by Lant Pritchett on
This blog post does a very good job at describing the very poor condition of publicly produced Indian health services. The note also does a good job at identifying the issue of provision versus production. But then asserts, with no particularly justification, that the public sectors (the many states of India) have a superior technology for producing health care services in rural areas. The main issue in producing health care services is getting suitably qualified and appropriately motivated human beings into place. There are in general three ways of getting human beings to do things: extrinsic motivation, compulsion, or intrinsic motivation. Everyone agrees the private sector is better at extrinsic motivation, so that cannot be the author's argument. The author presumably isn't arguing for compulsion (which in fact the public sector does have a comparative advantage in). So the argument must be that the public sector has a comparative advantage over the private sector in generating intrinsic motivation of health care providers: in creating an organizational structure in which these agents will be motivated by the mission and mandate of the organization and, in spite of not having access to higher powered extrinsic incentives, this organization be able to motivate agents to do things that a private (neither private nor not-for-profit) organization cannot. This is a common "intuition" and not always false. I think most people would choose a public sector army over a private sector army on the grounds that soldiering is the kind of activity for which intrinsic motivation is essential and high powered extrinsic incentives are difficult to generate in the business of soldiering. But lets think about a typical state of India and the doctors and nurses in the health services. The point that the author seems to miss is that the opportunity to create higher organizational intrinsic motivation has long since been lost. That is, all of the existing problems are directly traceable to the low morale and motivation of these services--and, by the way, in spite of more than adequate compensation of all but the highest levels. That is, we are not talking about some abstract theory of whether a "public sector" or "private sector" organization would, if built from scratch, be able to provide better services. The question is whether, the existing services in India could, with feasible reforms, turn themselves around from their existing state and produce greater commitment among its employees to a vision and mission of high quality health care in rural India that would generate intrinsic motivation that would lead to better services than the range of feasible alternatives in which the government financed non-state providers. I don't know personally, but have been told that the hardest military operation is to pull one unit out of the line of battle and replace it with a fresh unit during a retreat. This involves the fresh troops moving forward and crossing past the defeated and demoralized troops into a battle. The danger is that the defeating, despair and, shall we way, cynicism, of the existing troops infects the new troops and, rather than reinforcing a position both units turn and run and a retreat turns into a rout. The author seems to advocate the classic strategical blunder of pouring the last reinforcements (time, money, material, reform effect and political capital) into a ongoing rout when these will not be enough to carry the day. In fact the real opportunity in India is that, outside of perhaps TN and few other states, the rout has been so complete that nearly everyone perceives that the field is open to try genuinely new and innovative approaches (like RBSY) rather than throwing good money after bad. Precisely the reason to do so is that the best hope for creating organizations with powerful intrinsic motivation to address the health challenges of India in the current conditions in most states of India lies outside, not inside, the mainstream public sector ministries.

I liked all your comments, Lant. But let’s try to dig deeper into the reality. First of all, there is no assertion, or even presumption, that the public sector has a superior technology for producing health care services. The point being made was that there is no good (feasible) alternative to public provision in much of rural/remote/tribal areas of the country as the conditions are not ripe yet. Even if one were to disagree with this, the fact remains that the health policy makers in the country have made a conscious decision to go down the path of strengthening public health facilities in the rural areas. One needs to treat this as a ‘given’ or something that’s non-negotiable. The NRHM -- by investing in public health facilities -- has succeeded in making some difference on the ground: a typical primary health centre in Bihar where daily OPD visits were in single digits has seen visits climbing to over 200, post-NRHM. I am not advocating any “classical strategical blunder” of pouring more resources into an “ongoing rout.” All I am saying is that since the government is pouring greater resources into the sector -- at a time when so little of public funds (a little over 1% of GDP) have been going into it -- and there is so a great need need for it, it must also think of better ways of translating these resources into results. The question then is: how does one improve the efficiency and quality of public health service delivery? In other words, how do we get public health facilities managed professionally? Broadly, there are two approaches: having well-defined and better enforced systems of authority and accountability (the way TN has done) or taking the route where funding is done on the basis of results/performance. Making either of these approaches work will of course require supporting institutional and other reforms. One of the possible paths could be to create a quasi-government entity at state, or even at district, level that runs the provision of health services professionally. In this kind of scenario, your main issue of “getting suitably qualified and appropriately motivated human being into place” could be handled by providing any combination of extrinsic and intrinsic motivation that works. Such a scenario is not totally far-fetched but does require some innovative moves. Regard this as one of the “genuinely new and innovative approaches” that you suggest states should try, just as they are trying RSBY.

Submitted by Mathew george on
Proabably a good opportunity (NRHM) in the midst of counters (Pvt sector) I strongly agree with Rajeev on the scope of NRHM in strenghtening public sector. The context in which the current health service system is that which is dominated by the private sector in terms of utilisation not necessary among the poor but among others. In other words, the "baggage" of private sector which has changed the nature and characteristics of health service system is obvious even in the NRHM strategy of identifying PPP as an option which has its inherent presumption that public sector hospital cannot deliver. This bias is also obvious in the initial results of RSBY implementation wherein empanellment of hospitals has been in favour of the pvt sector which you mention as the "competition of markets" and the options of either perfrom or wither away. The comment from Lant also can be read from the influecne of the philsophy of new public management where efficiency becomes the keyword. But I like the metaphor of military troops but I feel that it is true of public sector. In every initiative of public sector strengthening there is some component of private sector getting into which I feel will 'rout' the public sector and can be traced back to the policies of the govt and in the reasons for the growth of private sector. It becomes difficult to coexist both public and private sector at least in the delivery of basic health services wherein the environment in which both function in terms of the problems faced, type of regulatory services differ and therefore can't have fair competition from a market point of view. Rather there should be clear demaraction of the kind of services that are of the monopoly of the public which should be basic and even if pirvate sector need to be brought in then with specific regulations and only specific services at the secondary and tertiary level. It is time to refine NRHM in its conceptualisation and identify those favouring private sector as well as joining hands with RSBY as something innovative need to be closely scrutinized in terms of accountability at various levels. Here when we talk of accountability and performance based financing, one should be cautious in setting the performance indicators like 'institutional delvery' in JSY. Where safe deliveries, the real indicator are far from those being institutional....

Submitted by Shankar Prinja on
I would tend to agree with Dr Ahuja’s statement that the Governments should be responsible for provision of health care to its citizens. Not so long back ago, Kenneth Arrow proposed his classical theoretical justification for Government action in provision of health care citing reasons such as information asymmetry leading to failure of markets in health care provision. More recently in an analysis of OECD countries and US, Wagstaff et al (2009) has shown that countries which finance health through tax money perform best in terms of health of its people followed by social insurance, and privately funded health care systems. Even the proponents of egalitarian systems propose the same order of health care financing on grounds of social justice (Wagstaff et al, 2001). All extreme examples from African countries and elsewhere, where attempts have been made to completely sideline government from financing/ provision have led to disastrous results, not only for health care of people, but also on overall economy of countries (Creese et al, 1997). Success of public private partnerships have largely hinged around strong leadership within the bureaucracy and political front, besides support from the health-care providers. Limited examples of public-private partnership on a focal scale such as the Chiranjeevi scheme in Gujarat have documented success. Similar attempts at provision of MCH services in urban slums in Haryana through VIKALP scheme could not take off the ground. Even if we consider that such successful schemes can be up-scaled, it is difficult to model such service provision for a whole gamut of health care services. The need of the hour is to address the real determinants of poor access and utilization of services for health care services in public sector institutions in rural India. These determinants of utilization, which we have known since long include: 1. Infrastructure: Poor service availability, lack of supplies and consumables 2. Manpower: Lack of health care providers round the clock 3. Funds: Lack of funds availability at institution level for undertaking minor repairs, maintaining supplies etc. 4. Poor quality and non-responsive services at public health care facilities. 5. Cost of OOP expenditure: Mainly on part of purchase of drugs in OPD care. NRHM is trying to address the first four determinants of service utilization at the public sector institutions. There are provisions for flexi-funds to upgrade infrastructure, recruit additional contractual staff as per need, and improve quality of care which is responsive to needs of community. The initiatives under National Rural Health Mission for rural India are in the right direction. Speaking from my personal experience, there is visible improvement in the health infrastructure i.e. building, supplies, manpower and funds availability, at health centres in Haryana and Punjab. However, there is little done for the last determinant of poor utilization at public sector facilities. Most studies from India, which show regressive effects of OOP spending in public health care facilities, reveal that the major component of OOP expenditure is on drugs (Vaishnavi et al 2010, Prinja et al unpublished). Despite this the number of drugs on essential drug list has shrunk from 170 in 1970 to mere 10 in 2005. A major reason for inaction on this front appears to be the major stakeholder power of pharmaceutical firms which do not let the agenda of essential drugs to appear in the policy discussions. I am short of exact figures, but considering that Governments spend so much on infrastructure and staff salaries, a relatively much lesser investment on availability of drugs at the health centres is found wanting. There is a need for greater devolution of powers at health centre SKS level to purchase the required essential drugs. Currently, powers are limited to purchase of emergency drugs only. In this light, the RSBY scheme is a step in right direction. There are two mechanisms of building competition and accountability: voice and choice. By ‘Voice’ we mean the act of beneficiaries to register their satisfaction or dissatisfaction with services. By ‘Choice’ we mean the option to beneficiaries to choose from a range of health care providers, which include both public and private. Currently the public and private providers do not compete for services and hence there is no role of choice in building accountability/ competition; and mechanisms to build voice are beginning to evolve. Evolving systems of performance-based funding is certainly an earnest attempt at building accountability. NRHM has developed measures like Rogi Kalyan Samitis and Charter of Services. However, these will still take time to evolve by the time capacity of community and community representatives at large to raise voice is built. There is a need to build incentive structures at local public health care facility level for health care providers so that they compete with the private health care providers. It is only then that such measures of building accountability actually translate into provision of quality health care services at public facilities. There is one major danger in any such attempt; crowding-in of services which are included in performance measurement matrix and vice-versa crowding-out of services which are not monitored for performance. Hence it can adversely affect the overall system and thus requires extensive detail in determining performance. The latter however puts too much demand on the routine management information system which is not geared towards providing such measures. Hence as a first step towards meaningful performance-based funding, there is an imperative need to strengthen the MIS system towards such holistic performance measurement.

I think there is need for much more innovation on the ground to truly get to a desirable end-state. The government can clearly do a lot more under the framework of the NRHM and the RSBY but so can the private sector. At Rs. 3000 per annum per household expenditure, a group of 2000 dwellings (about 5 villages on average) ends up spending Rs. 60 lacs ($150,000) per year on health care. For this much money, there is a lot more value that can be delivered by the private sector than is being done right now particularly if it collaborates with the government and complements it services and competes with the unqualified "medical" community currently operating there. In we are spending a lot of time researching various components of what is needed at the village and where it may best be provided. We have for example developed a Rs. 5 (13 cents) Population Level Screening Protocol adminstered by well trained lay health workers which we feel is an essential component of any long-term strategy. We are experimenting with a new (and hopefully improved) sub-centre design "manned" by a Graduate Nurse and a full time lay health worker (we are calling it a Rural Micro Health Centre -- RMHC), which may need the private sector and the government to collaborate since it aspires to bring many-more services and diagnostics facilities far closer to the ground. Eventually we are hoping that we will be able to evolve a design for a rural HMO which combines RSBY style hospitalisation insurance (which much larger upper limits and much larger deductibles) with a high quality RMHC and a referral chain that goes up to the PHC and the GH. Not yet sure what the end state will be but the direction feels right and we are trying hard to fall into the trap of government versus private - we feel that a new hybrid would need to emerge -- perhaps closer to the UK model where the GP is a private practioner (our Nurse + our lay health worker both paid for directly by the community could substitute for the GP) and the rest of the system is government owned.

I would have to agree with Nachiket Mor that there IS an important role for the private sector to play in providing health care in rural areas. In many areas of India, studies have shown that the private sector is significantly larger than the public sector. For example, a study in Madhya Pradesh (which has a population of about 67 million with about 75% of the population living in rural areas) suggested that more than 75% of all health care providers in that state operate in the private sector. This seems to be fairly representative for India as a whole. In fact, of the 160 programs in the Center for Health Market Innovations' (CHMI) database [], 71 focus exclusively in rural areas while another 64 work in rural areas along with urban and peri-urban areas. Almost all of these program are private or public-private partnerships. So in my opinion, rather than wasting time, energy and money trying to "bully" the private sector out of rural areas, we should take advantage of the fact that they are already so pervasive and create more public-private partnerships. This would then provide opportunities for the government to further regulate the private sector and create more opportunities for unique innovation. Don't underestimate the private sector.

Submitted by K Bhatia on
Nachiket Mor and Trevor Lewis may care to consider that effective innovations in PPP or the broad coverage (75%) of health care by the private sector is not necessarily proof of the inevitability of private involvement in rural health care. Given the extent of poverty among Indian rural population, it is affordability of paid health care by those in most need that must be of primary consideration. The NRHM stands for the nation-state's owning up its responsibility towards the health care for all.Granted that accountability of the public health services is questionable at times but we tend to overlook the potential of the 'consumers' of public health care to oversee the care that they are provided. The NRHM has provided for this by way of the involvement of the panchayati bodies.This initiative must be strengthened.In sum, I agree, let seize the moment indeed.

Submitted by Anil Swarup on
I am compelled to join this well informed debate on public vs private role in providing health care. In my limited understanding, both public and private institutions have a role to play in providing health care in India. In fact, the RSBY rides on the premises of public private partnership yet attempting to empower the beneficiary with not only an entitlement but, more importantly, a choice (empowerment to choose from 7000 odd public and private hospitals). It does not mean that it would militate against public investment in health care ( the insurance model for OPD care is yet to be evolved). Hence, there is no contradiction between what is happening under NRHM ( where the focus is on strenghtening public health infrastructure) and RSBY (where, as mentioned earlier, there is an attempt to provide a choice). RSBY is an unusual experiment on a large scale. The initial independent evaluations have revealed a consumer satisfaction of 90%. However, this is just a begining. Only time will reveal whether this can sustained in the long run.

Submitted by K Bouchane on
Dear Rajeev, It sounds as if you did kick off a healthy debate - since that was the objective please include the original blog on this page so that others can continue to respond and discuss. For my part, I can say that there are aspects of private health care that are incredibly worrying from a public health perspective in India - not least in tuberculosis treatment and care. For tuberculosis, most Indians, will first seek treatment in the private sector. A colleague who attended the first diagnostic meeting of its kind in India a couple of works ago noted that of those treated in public clinics, four out of five first sought care in the private sector. The problem is that India's private health system barely regulated, and research shows few of its private practitioners treat TB correctly - a recent study asking practitioners to describe treatment for TB produced 63 different courses of treatment - less then 10% of which met the basic standards of care. TB drugs are also unregulated - available over the counter and relatively affordable - however the WHO estimates many are counterfeit -- containing uneven amounts of active ingredients. Unregulated care and unregulated drugs lead to multi drug-resistant TB strains -- meaning that at least in TB - not treating at all could be better than some of the shenanigans that go on in private treatment. There are more than 100,000 cases of multidrug-resistant cases of TB each year according to the World Health Organization. In short, I think we do well to questions both the public and private sector -- particularly where health outcomes are involved -- and I think we do well not to quash this debate - but get more serious about out value assumption of private over public goods in development and health.

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