Issues in Health Sector Sanjib Pohit December 4, 2006

 A Situation Analysis of the Health System in two Indian States  A good performer (Kerala) & a bad performer (MP) – Selection based on PCA ranking scores  Focus on a)Health Equity b)Comparative Study of Private & Public Service Providers  Accessibility, quality & costs c)Determinants of Service Providers  Source of data  Primary data from large scale health survey undertaken by NSSO during July 1995 – June 1996 Research Question

Backgrounder Since independence, health has been the centre-stage of development strategy PHC came up in India from 1952 Various health programs initiated since 1960s Presently, health care provision is operated through multiple regulations, schemes Multiplicity of authorities in central/state govt. for implementation  Absence of proper monitoring Inefficiency in the system

 Debate on the issue of govt. involvement in the provision of health services  Plethora of studies indicating the prevalence of inefficiencies in govt. health system  Focus on 1.Mis-targeting 2.Deterioration in quality of public health services 3.Bankruptcy of public health care system  (Structural Adjustment) Cut in govt. spending on health services Introduction of cost recovery mechanism in public hospitals Opening up of medical care to private sector Fallout of Economic Reforms

Demand for services from private sector can be highly elastic A well-functioning public health system  Set a ceiling for prices & a norm for quality Absence of initial condition for efficient private participation  1.Regulatory framework 2.Efficient competition policy 3.Effective enforcement mechanism Surprisingly no separate regulatory body for health sector Above all, no judicial reform even after more than 15 years of reform  significant barrier for enforcing any policy Opening of Health Sector: Implications

Enforcement Mechanism: Facts  CEHAT’s study in 1994 at Satara revealed that none of the private hospitals were registered.  CEHAT’s study in Chennai showed that caesarians account for 60% of total deliveries in private hospitals against 10% in public hospitals. But this is not regarded as malpractice.  In 1990s, private hospitals in Delhi were provided land at low rates in lieu of providing free medical care to 25% of patients in form of hospital beds, etc — generally violation of norms.  Vibrant market for spurious & substandard drugs.

Observation on Equity Issues Most of the health inequality is accounted by inequality within groups Gini coefficients indicate that inequality is more pronounced in rural areas than urban areas Inequality coefficients are generally highest for rural MP Inequality in access to healthcare is higher in state where socio-economic conditions (ie public health care facilities) is lower

Health care Use: Public/Private Mix All Aliments Treated in Rural Area (%) State Inpatient Outpatient Priv PubPriv Pub Kerala MP

Health care Use: Public/Private Mix All Aliments Treated in Urban Area (%) State Inpatient Outpatient Priv PubPriv Pub Kerala MP

Accessibility & Quality of Treatment Overview of Survey Observations Main Reasons for Private Treatment in Kerala (MP) (%) Reasons Rural Urban Govt. Doctor/ Facility Too Far 13 (39) 8 (7) Not Satisfied With Treatment 32 (24) 34 (37) Private Doctor Easily Available 31 (24) 25 (27) Medicines not Available 3 (6) 7 (12) Long Waiting 4 ( ) 5 (5) Lack of Personal Attention 5 (2) 6 (4)

Observation on Expenditure : Public / Private Comparison Pub. Inpatient care medial expenditure per spell of ailment is nearly half of private ones Outpatient care medical expenditure is nearly same between public & private service providers (exception urban MP – public more costly) Priv. Medical expenditure in Kerala is significantly lower than that of of MP  Better pub. Facility in Kerala acts as a check

Possible Reasons for preference towards private services 1.Better quality of treatment – Early cure, good supply of drugs, personalised services, good doctor and good nursing care 2.Proximity to the household and convenience of timing 3.Socio-economic parameters- age, gender, caste, education and rural-urban affiliation of the patients and income Choice of Health Care Provider

Formulation of Probit Model P =  1 +  2 G +  3 S +  4 C +  5 I +  6 A + u Where P = 1, if provider is public = 0, if provider is private G = age of the patient S = gender C = caste I = income A = Rural-urban affiliation quantify the cost

Maximum Likelihood Estimates of the Determinants of Choice of Service Provider for Outpatient and Inpatient Care * Significant at 10% level, ** significant at 5% level and *** significant at 1% level  Marginal effects, not coefficients, have been represented in the columns

Results Outpatient  For Kerala, age of the patient  probability of choosing public health care   SC / ST patients  probability  of choosing public health care  For Kerala, income   choice public health care   For MP, the probability of choosing public service provider is lower among the people in the rural areas as compared to those residing in the urban areas  lack of availability and poor infrastructure in rural areas compared to urban areas of MP

Results Inpatient Probability of choosing public health care  if the patient is SC or ST Richer people have the preference for private service provided Rural people of MP have higher probability of selecting private service provider --- Non-availability and/or poor quality of treatment in public places in rural areas compared to urban areas of MP (?)

Summing up Regulatory framework is still weak Initial condition (i.e. status of public facility) matters for determining cost & quality of private service provider

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