Need to expand outpatient care coverage
OUTPATIENT (ambulatory) care coverage has been a debatable topic in Indian healthcare for quite some time now. The three-tier ‘command and control’ system of government health centres and hospitals has failed in meeting the growing curative care needs and aspirations of the population.
Yet, the government health policy, at least in letter, has continued to side with greater investments in bolstering or expanding public infrastructure for outpatient primary healthcare, mainly primary and urban health centres. This has been witnessed in the renewed emphasis on building health and wellness centres.
Expert opinion on the topic has been mixed. Much of the traditional academia continues to back further investments in the three-tier structure with subtle tweaks in policies, while the emergent right-leaning intelligentsia fervently points to some regulated private models that have worked in the West, particularly the US. Of late and understandably, multiple Union government policy pronouncements have resonated with and enshrined the latter. A NITI Aayog report released in 2019 lamented the ubiquity of small, unregulated private healthcare providers across India and envisioned consolidating them into organised networks of patient care like Health Maintenance Organisations (HMO). The HMOs combine health insurance and healthcare provision (often both outpatient and inpatient) with a focus on cost-effective, coordinated care within their network of providers, and have been one of the flagships of the US healthcare since the 1970s.
A more recent NITI road map document on covering India’s ‘missing middle’ spoke of expanding outpatient care through prepaid subscription-based insurance coverage. Notwithstanding the vivid discourse, however, little headway has yet been made in expanding outpatient care insurance. It becomes crucial during such times to avoid desperate action and unsalutary choices.
Its surface appeal notwithstanding, how effective and feasible a possible large-scale transposition of the HMO model would be in India makes for an interesting case study. It is important to note that HMOs arose in the US not as a matter of conscious governmental policy, but as a felt need of the market, in spite of the strong and conscious governmental push that soon followed their birth. Prepaid group practices, the precursors of HMOs, were a response to the declining ability to pay out-of-pocket.
Modern-day HMOs evolved under a systemic pressure to cut healthcare costs soon after the inflationary ‘insurer-provider pact’ started crumbling in the 1960s and 1970s. In these cases, the market sensed a strong economic pressure to transform, exerted by its beneficiary base composed of the insured population, organised sector industries acting as insurers, and the government. Such a systemic pressure to control costs has been and continues to be hard to manifest in India.
Its typical evolutionary trajectory in India explains why, despite catering to the major chunk of outpatient needs in deprived settings over many decades, the private sector hasn’t responded the US-HMO way. In a nutshell, settings with widespread deprivation and low consumer literacy, coupled with sharp socio-economic inequities and under-regulation, elicit an altogether different kind of response from the private sector — that of opportunistic differentiation. The private healthcare sector serving the urban elite has little incentive to control costs, given its affluent beneficiary base. Much of the scanty third-party private insurance coverage is confined to this section. Its counterparts serving the poorer sections have organisationally differentiated into a gamut of under-regulated private providers, providing rather economical yet often dubious quality care. Yet, even cheaper options for availing outpatient care exist in the form of informal providers and chemists selling medicines without a prescription. It is worthwhile looking at some critical prerequisites for the HMO-type innovation: an organised beneficiary base, insurance literacy, a surplus of healthcare providers, and strong techno-managerial capabilities. No wonder that a natural adoption of the HMO model remains far-fetched for the Indian private sector.
Some important case studies outside the US highlight what the HMO-model’s transposition to disparate settings could entail. For instance, a consistent experience in some South American countries has been that HMOs remained confined to an upper and upper-middle income beneficiary base, with little perfusion into poor regions. In some countries, large startup costs and technical demands have entailed that only big companies with deep pockets took the plunge, with utmost precaution. While the HMOs have indeed helped cut absolute costs of care, evidence indicates that this doesn’t necessarily come from a stronger preventive care orientation, which is the putative objective of the HMO model. Besides, a lack of public health focus and various market distortions such as cartelisation and cream skimming ratify that HMOs are an innovation by the market and for the market, welfare considerations not being the driving motive.
In the absence of adequate private sector initiative, should the government subsidise and aid the development of the HMO model in line with public-private partnerships like the Pradhan Mantri Jan Arogya Yojana, which operates exclusively in the inpatient care space? This is imaginable, at least, for urban areas with their big private players, but this will mainly serve the rich, who don’t need government support anyway. For the vast swathes of the countryside, demand and supply-side challenges would dominate.
Given the lesser-felt need for outpatient care and its high price elasticity, the high indirect costs associated with accessing care from an urban HMO-network provider would be enough to deter a rural denizen, who may rather prefer a local informal provider. Creating HMOs out of healthcare providers in townships and rural areas will entail a significant infusion of funds and technical capabilities, apart from a strong involvement of local governments. Innovations in this area should form a key focus of health policymakers.
We need to understand that any such overarching reform involving the private sector cannot be envisioned in silos, but would require holistic reforms that create a conducive ecosystem for more organised players to emerge, including clinical-professional regulation and accreditation. In their absence, investing in strengthening and expanding the public healthcare infrastructure, particularly for outpatient care, would continue to be the default option. The public sector is in dire need of much-awaited financing and organisational reforms along with value-based care lines.
