Reform health financing for value-based care
Apatient walks into a private dispensary with a chronic, hitherto neglected, albeit elective health condition. He waits at the reception for his turn, only for the doctor to emerge from the cabin and cursorily enquire about the patient’s complaints. A request by the patient to be examined thoroughly for his illness is quelled with ease. He departs after paying Rs 300 in consultation charges and Rs 1,000 for physician-dispensed medicines, without a case paper, and with a nagging scepticism about the doctor’s diagnosis. The medicines do little to alleviate his suffering, vindicating his mistrust. The patient drops the follow-up visit that would have cost him another Rs 150 for consultation. Similar are the poignant tales of many healthcare encounters in India.
The past decade saw an explicit acknowledgement by the government that India’s primary healthcare system is anything but comprehensive, and that emphasis on chronic, non-communicable diseases remains deficient. Ever since Independence, reproductive health and allied areas have captured the lion’s share of the limited funding for the health sector, while changing several denominations starting from the erstwhile ‘family planning’ programme to the recent and more agreeable ‘Reproductive, Maternal, Neonatal, Child, and Adolescent Health’. Further to the Task Force for Comprehensive Primary Health Care’s (2014) recommendations, 1.5 lakh sub-health centres (SC) and rural/urban primary health centres (PHC) were planned to be refurbished into Health and Wellness Centres (HWC), which would provide comprehensive primary care with a keen emphasis on chronic diseases. HWC is India’s model for multidisciplinary primary healthcare, a celebrated concept in global health, featuring enhanced use of data systems, listing of catchment population, assured basic drugs and diagnostics, and an emphasis on wellness and health promotion. However, one distinguishing trait of archetypal multi-
disciplinary primary healthcare teams — that of dynamic, value-based incentives for healthcare providers — remains under-expressed.
While reforms in health financing have been slow and scarce in India, a number of macro-level health financing reforms have been envisaged over the years. Following the health sector reforms of the 90s, the traditional ‘command and control’ administrative organs of health programmes and hospitals were attempted to be supplanted with societies having greater managerial autonomy. Performance-based incentives and grants for states, and a spate of public-private partnership models have also materialised. However, micro-level, provider-payment reforms have had very little systemic penetration, more so in the primary care space. With few exceptions, archaic modalities of provider payment, such as salaries and line-item budgets in the public sector and fee-for-service in the private sector, still remain predominant. Reforms entailed in this direction by publicly financed health insurance in the past couple of decades remain circumscribed in scope due to their low uptake.
In 2019, performance-linked incentives were announced for SC-HWC staff, primarily based on certain service coverage indicators. A commendable step nonetheless, they obviously remain too limited in their quantum and scope to engender a significant systemic impact. The world over, value-based reimbursement is gaining increasing popularity in primary care systems, while prospective payment models are increasingly being seen as antiquated. Value-based systems base provider incentives on the value they deliver, chiefly on achieving certain clinical, economic or public health outcomes. While macro-level financing reforms have their own significance, the more downstream, ground-level incentive structures have a more intimate relationship with all the three intrinsic goals of health systems, viz., improvements in health, responsiveness and fairness in financing. In addition, efficiency concerns in healthcare are becoming increasingly paramount as the balance tips more and more towards chronic illnesses in the population. As we envision a more effective, responsive and accountable health system for the country, sticking big time to archaic incentive structures becomes absurd, especially as generations of reforms in other areas of healthcare keep passing us by.
The current payment and reimbursement structures create incentives that are not only perverse but also disparate across the landscape. Refer to the aforementioned clinical encounter. The larger private sector fuelled by diabolical out-of-pocket payments has little or no incentive to control costs or deliver value, complemented perfectly by an unregulated industry landscape that fosters supplier-induced demand, arbitrary rate-setting, and opacity in dealings, and leaves fewer avenues to uphold the patient’s autonomy and rights. On the other hand, the public sector has strong incentives to underperform, again compromising on value in healthcare. While the impact of this on hard health outcomes is debatable, it invariably chips away at patient satisfaction and trust in the public health system.
Operationalising value-based approaches can be challenging, especially where health outcome indicators are concerned which are often elusive to measurement. For sure, the current under-regulated healthcare landscape militates against it, and sustainable financing reforms will need to be accompanied, rather preceded, by a series of broader systemic reforms in the health sector. The immediate prescription is to resolutely introduce and scale them up in the public sector first and foremost. This, apart from improving care and productivity in the public sector, can have significant positive spill-over to the private sector. In this regard, the role of expanding the digital health infrastructure, which has recently received a lot of government attention, becomes crucial. India’s National Digital Health Mission has mainly been hailed for the clinical convenience it would accrue to patients and providers. Widespread recognition of its potentially far-reaching systemic benefits can impart far greater impetus to the mission.
Health systems are known to follow path-dependent trajectories, wherein change becomes progressively more difficult after a certain pattern sets in. Entrenched incentive structures will present considerable resistance to reform unless it is an unlikely ‘win-win’ for all stakeholders concerned. And the wait for the elusive ‘perfect moment’ to act can only be counter-productive.
