Published on Let's Talk Development

Health System Innovation in India Part III

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Taking high-quality affordable primary care to the rural poor with the help of handheld computers, telemedicine, and P4P.

ImageIn our first post in this series, we showed how illness in India causes financial hardship and leaves Indians—especially poor ones—with limited access to affordable good-quality health care that can actually make them better. In our last post, we outlined the Aarogyasri scheme—a novel government-sponsored health insurance program in the state of Andhra Pradesh that has the potential not just to reduce financial impoverishment but also raise quality standards in hospital care. In this post, we discuss an innovative private-sector approach to delivering and financing primary health care in rural Andhra Pradesh.

a) Quality of care in India—from bad to excellent
In our first post, we highlighted the low quality of care among India’s unqualified and qualified providers many of whom work in India’s unregulated and fragmented private sector. But it would be wrong to think that all India’s private providers deliver poor quality care.

India’s private sector is actually home to a pool of health care entrepreneurs who have developed processes for high-quality and low-cost care. They have developed their own cadres of professionals and para-professionals to perform specific tasks after internal training. They have developed new technologies and new ways of existing technologies. These innovations and approaches have brought down cost and increased specialization. Major improvements in health outcomes as a result of these innovative practices have been documented in areas such as maternal and child health, eye care, cardiology and also primary health care.

One example is Ekjut, an organization that piggybacks on the existing networks of self-help groups in India. They work on awareness and demand-creation, and as documented in The Lancet were able – over a period of three years – to achieve a reduction in death rates among newborns of 45 percent.

b) Reddy to (Primary) Care
Dr. Krishna Reddy runs a chain of 12 for-profit hospitals in South India known as CARE Hospitals. The chain is committed to affordability and has worked towards low-cost care by developing indigenous technology such as stents. Reddy is convinced that improved quality of care reduces the cost of care and improves revenues – with reduction in hospital infections and medical errors. The chain has developed internal clinical audits and professional teams across the hospitals.

What caught our attention when we recently caught up with him over dinner, however, was Dr Reddy’s enthusiasm for CARE Hospitals’ sister organization, the CARE Foundation. Schemes like Aarogyasri – the subject of our last post – encourage medical (and indeed surgical) intervention and in India’s most high-tech facilities. They do nothing to encourage prevention and the management of chronic conditions. As a commentator on our first post noted, India – like most countries – badly needs innovation in primary care too.

Dr Reddy’s CARE Foundation is precisely such an initiative – in fact, it comprises multiple initiatives. The Foundation aims to bring affordable high-quality primary care to India’s rural poor. It builds on the human resources that already exist in India’s villages ensuring care is delivered where the patient lives by someone from their community. These “village health champions” are female educated paramedics. Each VHC is equipped with and trained in the use of a mini-computer that performs multiple functions. The computer can perform some basic tests such as an ECG and other tests for monitoring chronic conditions. It also houses software containing algorithms to support the VHC in arriving at an accurate diagnosis and treatment. But the device is also linked to a supervising doctor via a mobile network: the VHC can talk to the doctor; the doctor can monitor and if needs be step in and join the consultation remotely (the CARE Foundation is a champion of telemedicine); and the doctor-sanctioned prescription is printed out on the VHC’s mini-computer. The VHC issues the medicines, and the mini-computer logs the information in the database of the group’s supply chain. The device also issues a smart card for all program members, and records each consultation and transaction.

The idea is to detect disease at an early stage in the village, and then manage disease close to the patient while being backed up by a supervising doctor and with the option of referral to a hospital when needed. VHCs manage 60-70 percent of primary care treatments in the village itself. The VHC receives a base salary and a performance-based supplement, based apparently on a mix of quantity and quality indicators.

After Dr Reddy had walked us through the details of the program, we discussed what was known about its impact. The organization collects lots of data, but he admitted he didn’t know how much better it was doing than the government primary care system. We asked him whether he’d be agreeable to subjecting his program to a rigorous randomized control trial. He said he’d be delighted to.

c) An innovative delivery model. But who pays?
We then talked about the financing of the program. Currently it’s households who finance the program directly. In part they pay through microinsurance premiums: currently around 600 families have signed up at a cost of Rs 300 (just under $ US 7) for a family of 4. This does not cover chronic care, however: individuals with chronic conditions can be treated for Rs 50 per monthly visit with low-cost (but effective) generic drugs.

Whether such a financing model is sustainable, efficient or equitable is debatable. The history of community financing in health is a mixed one, with far fewer success stories than failures – limited resources, adverse selection, and small risk pools all work toward undermining a microinsurance approach to health financing. And it seems a little hard on people who develop chronic conditions to have to shoulder the costs of their care by themselves.

d) Having your cake and eating it
Is there an alternative? Different financing and delivery models can be bolted together in lots of different ways. As one us argued in an earlier post, a model that is proving popular in Asia (and indeed in the OECD) is one where the taxpayer finances an institution that sits at arm’s length from the health ministry and contracts with public and private providers.

So, we put it to Dr Reddy as we were finishing our dinner that there would be nothing to stop his innovative primary care delivery model being financed instead by the AP government on a contractual basis. After all, the Aarogyasri program does precisely that, albeit only for tertiary care – it could also contract with organizations like the CARE Foundation to ensure that the population also has access to affordable high-quality primary care, with a strong focus on prevention and the management of chronic diseases. In fact, the two parts to such an integrated program could reinforce each other. Dr Reddy’s model could improve not only the pre-hospital care but also the follow-up treatment and monitoring. Hospitals under the Aarogyasri scheme have to provide consultations and medicine for one year for many of the treatments. Patients are now traveling across the state to come back to the same hospital; the travel for these visits is not covered, and people are also losing income on trips that can take more than a day.

Dr Reddy liked the idea of his foundation contracting with the AP government to extend Aarogyasri’s reach into primary care. But on recent trends, this seems unlikely to happen. Soon after our last post went live, the AP government announced that 133 of Aarogyasri’s 938 procedures will be treated exclusively in government hospitals in 10 districts across AP. There is talk of it scaling back private-sector involvement in Aarogyasri much further (hat tip to Robert Palacios).

For the moment then Dr Reddy’s innovative primary care delivery model looks set to continue relying on microinsurance – not the first best but probably the best available option right now.


Adam Wagstaff

Research Manager, Development Research Group, World Bank

Sofi Bergkvist

Managing Director, ACCESS Health International

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