Issues in Health Sector

1. Issues in Health Sector Sanjib PohitDecember 4, 2006

2. Research Question • 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 • Health Equity • Comparative Study of Private & Public Service Providers  Accessibility, quality & costs • Determinants of Service Providers • Source of data  Primary data from large scale health survey undertaken by NSSO during July 1995 – June 1996

3. 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

4. Fallout of Economic Reforms • 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 • Mis-targeting • Deterioration in quality of public health services • 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

5. Opening of Health Sector: Implications • 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  • Regulatory framework • Efficient competition policy • 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

6. 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.

7. 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

8. Health care Use: Public/Private Mix All Aliments Treated in Rural Area (%) State Inpatient Outpatient Priv Pub Priv Pub Kerala 63 37 72 28 MP 38 62 80 20

9. Health care Use: Public/Private Mix All Aliments Treated in Urban Area (%) State Inpatient Outpatient Priv Pub Priv Pub Kerala 63 37 74 26 MP 38 62 77 23

10. 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)

11. 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

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

13. Formulation of Probit Model P = 1 + 2 G + 3 S + 4 C + 5 I + 6 A + uWhere 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

14. 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

15. 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

16. 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 (?)

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