State-funded healthcare is on notice

Dinesh C Sharma

Journalist and author

In recent months, Niti Aayog has initiated deliberations on health sector reforms. In November 2019, it had released a report which advocated the consolidation of health service providers through integration and risk-pooling for health insurance, and making citizens ‘better purchasers’ of health services. The approach advances an insurance-based health system on the lines of the PM Jan Arogya Yojana, taking it beyond its current mandate. The experts hired by the think tank believe that the scheme can serve as a ‘powerful catalyst’ for transformation of the health system.

In January 2020, the Aayog unveiled a draft that makes it clear that the government has decided to move in the direction of a private sector and insurance-led model. The draft — ‘Concession Agreement Guiding Principles for Setting up Medical Colleges through PPP’ — opens the gates for privatisation of district hospitals under the guise of public-private partnership to upgrade them and improve their functioning. These hospitals can then serve as teaching hospitals for medical colleges to be established in districts.

This way, the Aayog believes, two objectives can be met in one go — improving the functioning of the district hospitals and overcoming the shortage of doctors in rural areas. Under this model, private companies will be allowed to “design, build, finance, operate and maintain” medical colleges and also “upgrade, operate and maintain” the associated district hospital with a minimum annual student intake of 150 MBBS seats.

A close examination of the document reveals that this plan, in effect, is a death blow for the state-funded health system in India. By attacking at the middle of the three-tier health system that India has followed since Independence, the government is trying to cripple the whole health system. In the present healthcare service delivery system, a district hospital performs the role of a secondary-level referral centre that caters to the entire population of a district. On the one hand, it is connected to the primary care system consisting of sub-centres, primary health centres and community health centres. On the other hand, district hospitals are linked with the third tier — tertiary care hospitals in state capitals and other centres.

District hospitals are a vital link in the chain for providing free and subsidised care covering the entire spectrum of services. These hospitals also serve as the main centre for delivering a range of services under national programmes, such as malaria eradication and control of tuberculosis, non-communicable diseases etc. District hospitals are, therefore, not standalone entities that can be leased to the private sector, but are vital for the very functioning of the entire state-funded health system. Privatising them would amount to privatising the whole health system.

It is not as if the Ministry of Health and Family Welfare does not know the importance of district hospitals. A plan to improve and upgrade district hospitals had been initiated under the UPA government. Even the present NDA government was in favour of this line of thinking as part of the National Health Policy that was announced in 2017. In a report on improving the functioning of district hospitals, the Health Ministry had acknowledged the role of district hospitals as “the backbone of our district health system, providing accessible and affordable curative services at the district level.”

The Health Ministry wanted district hospitals to be capable of providing not only curative services but also leadership to district health system, including preventive and promotive aspects of health. The ministry was also in favour of strengthening district hospitals for multi-specialty care and as sites for medical and paramedical training. This was in line with the recommendations of earlier expert committees, including the one on Universal Health Coverage (UHC) headed by Dr K Srinath Reddy. In order to overcome the shortage of doctors in some states, it was proposed that government should open medical colleges attached to district hospitals in identified regions facing doctor crunch.

The Niti Aayog proposal negates all this expert wisdom and the experience of the Ministry of Health and Family Welfare and, in fact, its own previous efforts to examine quality of care in district hospitals. Not just this, it has chosen to ignore the PPP experience in tertiary care.

Private corporate hospitals were given subsidised land and other concessions to operate in lieu of a certain number of subsidised beds for the poor. Has this system worked anywhere? Has the government done any audit? Corporate hospitals are also handling a number of patients under government schemes. There is no evidence how efficiently this system has worked. On the other hand, there is enough evidence of how this system has been misused.

Such evidence from private tertiary hospitals is critical since it is envisaged that private companies running district hospitals will be allowed to create patient categories like ‘paying’ and ‘state-funded’ and also fix charges for services. The Aayog has cited a PPP example of a hospital in Gujarat, which is actually a hospital established under corporate social responsibility (CSR) rules. There is no evidence at all of how a private entity will run a large district hospital. Despite this, the Aayog wants these hospitals to be handed over to corporates for a lease of 60 years, with the government still paying salaries doctors, nurses and all the staff.

At present, both the Central and state governments together spend 1.13 per cent of GDP on health, which is abysmal, resulting in high out-of-pocket spending by people. The private expenditure on health as a percentage of the total expenditure on health in India is about 70 per cent. The comparative figures in other countries range from 22 per cent in Thailand to 44 per cent in China. Insurance-based model is no substitute for the tax-funded health system with inbuilt access and equity.

Handing over a vital part of the system will exacerbate the existing problems. The solution is two-folds — improving the quality of the state-funded system, making it more responsive and transparent; and regulating the private health system so that it can complement the state-funded system. The proposal of the Niti Aayog goes against the spirit of the UHC, as alluded to in the National Health Policy of 2017.