The System Of Healthcare Provision Health Essay

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Public health has often been defined as a science dealing with the determinants and defense of health at the population level, while clinical medicine deals with multiple maladies and their remedies at the level of an individual patient. Public health aims to understand and influence the social, cultural and economic determinants of health as well as to study and structure health systems as efficient channels for health services delivery.(divide into smaller sentences) Public health is thus, a discipline built on the academic tradition of inquiry involving research, teaching and professional practice to prevent disease and promote health in populations (The Public Health Foundation of India and Indian Institutes of Public Health, 2011).

Public health is the science and the art of preventing disease, prolonging life, and organizing community efforts to do the following: keep the environment clean, control communicable infections, educate individuals in personal hygiene (like hand washing for example), organize medical and nursing services for the early diagnosis and treatment of disease, and develop the social machinery to ensure everyone a healthy standard of living." The mission of public health is to "fulfill society's interest in assuring conditions in which people can be healthy." (The Future of Public Health, 1988). Public health carries out its mission through organized, interdisciplinary efforts that address the physical, mental and environmental health concerns of communities and populations at risk for disease and injury. Its mission is achieved through the application of health promotion and disease prevention technologies and interventions designed to improve and enhance quality of life. Health promotion and disease prevention technologies encompass a broad array of functions and expertise, including the three core public health functions.

Assessment and monitoring of the health of communities and populations at risk to identify health problems and priorities;

Formulating public policies, in collaboration with community and government leaders, designed to solve identified local and national health problems and priorities;

Assuring that all populations have access to appropriate and cost-effective care, including health promotion and disease prevention services, and evaluation of the effectiveness of that care. (Ibid)

From, the above discussion it is clear that public health calls for public action. However, according to classical economists like Adam Smith the invisible hand of the market would lead to optimal economic outcomes as markets are assumed to be 'Pareto-efficient'. Pareto efficiency criterion allocates scarce resources in a way that no reallocation can make any individual better-off without making at least one other individual worse-off (Sen, 1970). This is the idealized picture of a private market economy. This according to Smith would help to allocate scare resources efficiently for the health sector. But, in reality various difficulties arise due to market failure or market inadequacies (Wolf, 1979). A market inadequacy implies that a market may fail to produce economically optimal or socially desirable outcome as noted in the earlier chapter and therefore state intervention is needed.

3.2 Rationale for State Intervention in Healthcare

Health care is a part of social infrastructure. Availability and accessibility to health facilities is inevitable for the acceleration of the economic development of a country. There is a case for government intervention in infrastructure, as it is believed that a temporary surge in public spending for infrastructure causes a multiple expansion of output (Crain and Oakley, 1995).

The ultimate objective of a health care delivery service, to quote the famous words of Aneurin Bevan, is that the 'rich and the poor are treated alike, that poverty is not a disability, and wealth is not advantaged.' It is the duty of the state to provide access to universal health care, because of inability to pay, by providing some risk protection to the poor against the costs of serious illness. The most efficient way of providing this protection is to pool the risk between rich and poor, young and old, and employed and unemployed, to enable cross subsidization. The main instrument for achieving this objective is health insurance, because illness cannot be predicted, hospitalization costs are lumpy and cannot be planned, and the proportion of the sick requiring hospitalization in any large population is small, permitting risk pooling.

The access to health services should, thus depend upon individual need, and not on financial status. The financing strategy has to be country-specific, depending on per capita income, size of the formal sector, poverty levels, and administrative capacity. On account of its diverse socio-economic conditions and health outcomes, India's health financing strategy needs to be state - specific, even while following the broad framework of the national strategy.

Although the market mechanism is supposedly an admirable way of producing and allocating goods, many a time, market failures lead to deficiencies in the economic outcomes. Government steps in to correct these failures (Samuelson, 1954). Samuelson recognizes the two main functions of the government, namely provision of public goods and transfer payments for the purpose of redistribution of income (Colm, 1954).

World Development Report (1993) examined the rationale of government role in health, identifying three economic rationales for government action.

The poor cannot always afford health care that promotes productivity and well-being. Publicly financed investment in health can play a pivotal role in the alleviation of poverty and its consequences.

Some health promoting actions are pure public goods or create large positive externalities. The example are vaccination, immunization etc. Private markets would either not produce them at all, or produce too little in such cases.

Government intervention can improve the functioning of these markets in health and health insurance, thus raising welfare.

World Health Report (2000) describes government role as stewardship, listing its stewardship functions:

Formulating health policy-defining vision and direction

Exerting influence-approaches to regulation and

Collecting and using intelligence.

In this context, it is essential that the government intervenes in health through policies, regulations, record-keeping and surveillance so as to work out maximum benefits to the people.

3.3 Growth of public health in developing countries like India

What was the 'colonial legacy'?

It was as a response to crisis and emergency that the colonial state in India began to develop what we might recognize as a concerted public health policy. Probably the first document of 'public health policy' in British India was the 1863 report of the Royal Commission on the sanitary state of the British army in India (Harrison, 1994). Concern about threats to the health of the Indian Army, particularly after the rebellion of 1857, motivated a wide-ranging inquiry into health conditions in the country. Only gradually did this interest in the health of the troops lead to a more general interest in the health of the population, and then too only as a response to immediate crises.

The great famines of the 1870s and 1890s caused both mass mortality and mass migration; it was fear of unrest and social disruption that caused the colonial state, belatedly, to take some interest in famine relief and public health (Dreze, 1988; Hodges, 2004). It was for a long time a commonplace that one of the 'benefits' of colonial rule in Asia and Africa was the advent of modern medicine. Institutions of public health-hospitals, health centre's, medical research laboratories, pharmaceutical production facilities-were amongst the new colonial institutions that appeared in South Asia, along with the railways, the telegraph and new forms of land tenure and law. The broad set of policy shifts that began in the later 19th century, around the time of the late-Victorian famines, had lasting and important consequences for the future of public health. Colonial public health policy was inherently limited and self-limiting; it focused on keeping epidemics at bay, responding to crises and not much more. A crucial institutional innovation came in the 1880s (Jeffery, 1988), when much of the responsibility for local health and sanitation was devolved to partly elected local government bodies, a responsibility shared by the 1920s with provincial governments. This is a division of responsibility that lasts into the present day, and puts significant limits on the capacity to enact public health policies: then, as now, the ability of local and even provincial governments to raise resources is very limited.

The ambivalent nature of the colonial state's engagement with questions of public health had two notable consequences. The first is that Indian elites began to take up the ideas of the colonial state in order to hold it to account. Health, that is to say, was politicized. By the 1920s, this had evolved into the argument that only a representative national government could truly care for the health of the Indian people. As India's modernizing nationalists set their sights on power, in the 1930s, they committed themselves to precisely this kind of 'deep' intervention by the state in society. The health of the population became part of a much broader agenda of transformation. The All India Institute of Hygiene and Public Health (AIIH and PH), was established in Kolkata, in December 1932, making it the oldest school of public health in Southeast Asia. A healthy, productive and useful population would be put in service of an industrializing state that promised to provide welfare for the citizens of the new nation. In this way, Indian nationalists could argue not only that the colonial state had failed in its duty to care for the welfare of the population, but that they, as genuine representatives of 'the people', could and would do so, using the latest technologies of government (National Planning Committee [NPC], 1948). The second consequence of the colonial state's unwillingness to spend much money on public health was that in late-colonial India, there was much scope for 'civil society' or voluntary initiatives in health. Devolving responsibility to charities and voluntary bodies suited the colonial state, which was imbued with the ideals of Victorian liberalism, and its belief in the power of civil society to solve social problems; relying on philanthropy was cheaper, too (Amrith, 2009).

Thus, at the moment of India's independence, the value of public health was deeply contested.

Within the thinking of the Congress Planning Committee, health was, at once, a basic human right, a tool for the improvement of the 'Indian race', making it more efficient and more governable, and health was an instrument for economic development. The need for public health stemmed from an egalitarian commitment to welfare, and from a far from- egalitarian fear of the rising numbers of the lower classes.

After Independence-

The growth of Public health in independent India can be discussed during the different time frames as under:

The growth of public health services 1950-65: a period of growth at all level public health emerged as an independent sphere of activity in India. Research institutions were set up in first three decades of 20th century. Municipalities provided some health services in urban areas with dispensaries and hospitals growing sporadically. In post independence period of 1950s and 60s medical colleges with tertiary hospitals and public health services were set.

1966-1980: A period of growth of village level services: The Alma-Ata resolution of Primary Health Center (PHC) in 1978 came to be internationally accepted as the approach for health service development after 1961and 65 droughts and 1970s oil crises. The pace of infrastructure development picked up markedly at the sub center level.

1980-1990: A Boom in health care Institutions: over 1980s health care institutions proliferated especially at primary level in both public and private sectors. Research institutions primarily followed the advanced countries. But by the end of 1980s the public health system was in crisis. 'People's participation' was viewed to tackle this crisis situation.

Since the 1990s: growth at secondary and tertiary levels with commercialization and corporatization.

After 1990s: Though there was development in public health infrastructure by 1990-91, it was slow. It is in the gap between expectations of health and the availability of health facilities that we can look for an explanation of why, despite the centrality of the state to public health policy in India since independence, India has developed one of the most extensive, and least regulated private markets in health in the world. The medical technologies that circulated as a result of the public health campaigns of the 1950s 'were not supposed to become common commodities', but the effort to control them was 'doomed to failure'(Whyte et al, 2002). Measures for 'health sector reforms' were put forth by international agencies with the World Bank overtaking World Health Organization and UNICEF. The central and state governments are working out diverse measures to improve public health affairs while the private sector experienced a boom especially after 1990s. There was a drastic cut in public health care expenditure for public sector health services in early 90s. Hence, government since all these years has made serious efforts through its planning frame work and health policy to improve the public health infrastructure and funding.

3.3.1 Role of Government in Public Healthcare

As noted through the above understanding there is no denying to the fact that government's role is very crucial in providing public health facilities to the people. This role can be briefly discussed as follows-

Health system strengthening

Important issues that the health systems must confront are lack of financial and material resources, health workforce issues and the stewardship challenge of implementing pro-equity health policies in a pluralistic environment (Park, 2007). The National Rural Health Mission (NRHM) launched by the Government of India is a leap forward in establishing effective integration and convergence of health services and affecting architectural correction in the health care delivery system in India.

Health information system

The Integrated Disease Surveillance Project was set up to establish a dedicated highway of information relating to disease occurrence required for prevention and containment at the community level, but the slow pace of implementation is due to poor efforts in involving critical actors outside the public sector. Health profiles published by the government should be used to help communities prioritize their health problems and to inform local decision making. Public health laboratories have a good capacity to support the government's diagnostic and research activities on health risks and threats, but are not being utilized efficiently. Mechanisms to monitor epidemiological challenges like mental health, occupational health and other environment risks are yet to be put in place.

Health research system

There is a need for strengthening research infrastructure in the departments of community medicine in various institutes and to foster their partnerships with state health services.

Regulation and enforcement in public health

A good system of regulation is fundamental to successful public health outcomes. It reduces exposure to disease through enforcement of sanitary codes, e.g., water quality monitoring, slaughterhouse hygiene and food safety. Wide gaps exist in the enforcement, monitoring and evaluation, resulting in a weak public health system. This is partly due to poor financing for public health, lack of leadership and commitment of public health functionaries and lack of community involvement. Revival of public health regulation through concerted efforts by the government is possible through updating and implementation of public health laws, consulting stakeholders and increasing public awareness of existing laws and their enforcement procedures.

Health promotion

Development of community-wide education programs and other health promotion activities need to be strengthened. Stopping the spread of STDs and HIV/AIDS, helping youth recognize the dangers of tobacco smoking and promoting physical activity. These are a few examples of behavior change communication that focus on ways that encourage people to make healthy choices. Much can be done to improve the effectiveness of health promotion by extending it to rural areas as well; observing days like "Diabetes day" and "Heart day" even in villages will help create awareness at the grass root level.

Human resource development and capacity building

There are several shortfalls that need to be addressed in the development of human resources for public health services. There is a dire need to establish training facilities for public health specialists along with identifying the scope for their contribution in the field. The Public Health Foundation of India is a positive step to redress the limited institutional capacity in India by strengthening training, research and policy development in public health. The Public Health Foundation of India was setup in 2006 with the mandate of establishing new institutes of public health, assist the growth of existing public health training institutions, establish a strong national research network, generate policy recommendations, and develop a vigorous advocacy platform. Pre-service training is essential to train the medical workforce in public health leadership and to impart skills required for the practice of public health. Changes in the undergraduate curriculum are vital for capacity building in emerging issues like geriatric care, adolescent health and mental health. In-service training for medical officers is essential for imparting management skills and leadership qualities. Equally important is the need to increase the number of paramedical workers and training institutes in India (Lakshminarayanan, 2011).

3.3.2 Public Health Expenditure in India

It is well known that health expenditure in India is dominated by private spending. To a large extent this is a reflection of the inadequate public spending that has been a constant if unfortunate feature of Indian development in the past half century. There is a consensus among social scientists that health care is different from other goods and services, because of greater likelihood of "market failure". The two main characteristics of health care which lead to market failure and thus necessitate state intervention are the presence of externalities and information asymmetries. An externality results when an action of an agent has an effect not only upon the agent but also upon others. If a good or service not only benefits those who purchase these but others as well, then there is said to be a positive externality in its consumption. Conversely, a particular action of a producer may generate a negative externality, such as pollution. In the case of positive externalities, the operation of market forces alone would lead to sub-optimal consumption and production of the relevant good or service. This necessitates state intervention in order to ensure that sufficient resources are directed to the production of such goods or services, which in turn would result in an increase in the society's welfare.

It has been argued that such externalities are less evident for general health care services such as physician and hospital care and greater in the area broadly known as "public health". The latter relate to interventions targeted at overall conditions of nutrition and sanitation that determine health, as well as communicable diseases which are passed either directly among humans or indirectly through the physical environment. An action taken by one person (e.g. ensuring clean, safe water, immunizing oneself against, or seeking treatment for, a communicable disease) generates direct health benefits for other individuals, through reduced rates of disease. Clearly, purely market oriented or individually based activities would ignore the wider positive external effects, and therefore yield less than socially optimal levels of such activity. However, even general health care services that apparently affect only individuals have positive externalities, not only because of the social costs of morbidity, but because inequalities in health care create other social concerns. These positive externalities make government intervention essential. Such intervention can take the form of price subsidies to encourage or spread the consumption of health care services, or direct public provision of such services.

Asymmetric information reflects any situation in which one party to any contractor exchange has access to some information that is not known to the other party. Such information asymmetries, primarily between the service provider and patient, pervade the health sector and cause market failure in both health care and health care insurance markets. For example, in any society, patients know best how improvements in the health affects their own well-being, while providers have better information regarding both the causes of ill-health and the effectiveness of alternative health care services in restoring health or preventing the further deterioration of health. There are also problems of "incentive incompatibility", in which the interests of the patient and the health care provider need not coincide. Thus it points to the need for government intervention in the form of regulation. Such regulation can take the form of licensing of health care providers, limits on advertising, insistence on some professional norms that prohibit low quality, etc. Such regulation has to ensure balance between the need to increase welfare by improving or ensuring quality, and the welfare reducing effects of inadvertently granting monopoly powers to providers. Therefore, from both the efficiency and equity grounds there, is no alternative to the public provision of health care. Even for the success of an insurance system based on private provision, increased public health spending and reforming of public health facilities are necessary.

3.3.3 Public Health Expenditure Trends in India

Total healthcare expenditure in India was around5% of GDP in 2008. However, this figure only tells part of the story. The mid-term appraisal of the 11th FYP recognized that, "while total expenditure on health in India as a percentage of GDP was broadly in line with the level achieved in other countries at similar per capita income levels, it was skewed too much in favour of private expenditure. Public expenditure on health in India was less than 1 per cent of GDP." Public health expenditure consists of recurrent and capital spending from government (central and local) budgets, external borrowings and grants (including donations from international agencies and nongovernmental organizations), and social (or compulsory) health insurance funds.

Table: Public expenditure on health as a percent of GDP


National level spending

(% of GDP)

State level spending

(% of GDP)


(% of GDP)





















Source: Mid-term appraisal of the 11th Five-Year Plan, Planning commission

3.3.4 Review of Public health policy in India

The first formal health care policy for India was laid out by the Bhore committee report (1946). This committee prepared a detailed planned of a National Health Service for the country, which would provide a universal coverage to the entire population free of charge through a comprehensive state run salaried health service. Despite the fact that it was adopted by the GOI, but its recommendations could not be implemented fully due to the financial stringency of the central Government. The importance of the development of health services and health infrastructure has been duly recognized in the various five years plan drafted by the planning commission.

During the first two five year plans the basic structural framework of the public health care delivery system remains unchanged. Urban areas continued to get over three fourth of the medical care resources where as rural areas received 'special attention' under the Community Development Programme (CDP). To evaluate the progress made in the first two plans, the Mudaliar committee was setup in 1959. The Mudaliar committee admitted that basic health facilities had not reached at least half the nation and the rural areas had no access to them. Even the Primary Health Care (PHC) programme was not given due importance (Gangolli etal, 2005).

The third five years plan launched in 1961 discussed the problems affecting the provision of the PHC, and directed attention to the shortage of health personnel, delays in the construction of PHC buildings and staff quarters and inadequate training facilities for the different categories of staff required in the rural areas. The Jain committee report (1967) suggested integration of medical and health services at district level and for the first time reported on strengthening curative services in rural areas.

The fourth plan that began in 1969 with a three year plan holiday continued on the same lines as the third plan without a major change in the policy approach towards the health care services.

It was in the fifth plan that the government acknowledged that the urban health structure had expanded at the cost of rural sectors. Despite advances in terms of IMR (infant mortality rate) going down and life expectancy going up the number of medical institution, functionaries, beds, health facilities etc were still inadequate in rural areas. The Kartar Singh committee in 1973 recommended the conversion of a single purpose workers including Auxiliary Nurse Midwives, into multipurpose male and female workers and integration of various vertical progresses into primary health care package for rural areas.

The Shrivastava committee came up in 1975 to look into medical education and man power support. The committee proposed to rectify the dearth of trained manpower in rural areas. The committee pointed out that the over-emphasis on provision of health services through professional staff under state control has been counterproductive. On the one hand it is devaluing and destroying the old traditions of part-time semi-professional workers, which the community used to train and throw up and proposed that with certain modifications can continue to provide the foundation for the development of a national programme of health services in our country. On the other hand the new professional services provided under state control are inadequate in quantity and unsatisfactory in quality'. This very direct statement from the committee that was set up to review medical education and its related components assumes significance because it showed that the investment on health care had not been going to the people. The main recommendation of the committee was to have part-time health personnel selected by the community from within the community. They would act as a link between the Multi-purpose Worker (MPW) at the sub-centers and the community.

A new policy Health for All by 2000 AD (1977) announced a long term objective of population stabilization by bringing down net reproduction rate to one by 1995.

The sixth plan was to a great extent influenced by the Alma Ata declaration of 'Health for All' by 2000 AD and the Indian Council of Social Science Research (ICSSR) - Indian Council of Medical Research (ICMR) report. The plan emphasized the development of a committee based health system. The sixth and the seventh plan too recommended the progressive measures with focus on privatization.

It was the first time in year 1983 that India adopted a formal or official National Health Policy (NHP). The NHP in light of the Directive Principles of the constitution of India recommends 'universal, comprehensive primary health care services which are relevant to the actual needs and priorities of the committee at a cost which people can afford '. It had many salient features like emphasis on preventive, promotive and rehabilitative primary health care approach, decentralized system of health care etc. However, the NHP 1983 did not reflect the ground realities adequately.

The eighth plan emphasized on health for the under privileged keeping with the selective health care approach. The Bajaj committee report of 1987 recommended bringing all health sciences together provide for continuing medical education and improve medical and health education through such integration. During the eighth plan period a committee to review public health was setup. It was called the Expert committee on public health systems. This committee made a thorough appraisal of public health programmes and showed that there was need to drastically improve disease surveillance in the country.

Ninth five year plan has a number of innovative ideas. The Bhore committee report reference was made once again and recommendations are made to suit it to today's scenario. It suggests the consolidation of PHCs and SCs and positions it is an important goal under the basic Minimum services programme. State specific strategies and urban health care is also another focus of the plan.

On the Eve of the tenth plan the Draft national health policy 2001 was announced and for the first time feedback was invited from the general public. The tenth plan also acknowledged that public health system is grossly short of defined requirements, showed the need for reorganization and restructuring of health infrastructure and maintained its commitment to PHC, emergency and life saving services and national programmes free of cost but puts user charges for those above poverty line. Presently the National Health Policy 2002 has the objective to achieve an acceptable standard of good health amongst the general population of the country. The NHP 2002 needs to the lauded for its concern for regulating private health sector through statutory licensing and minimum standards by creating a regulatory mechanism. The National Health Policy-2002 aims at reviving and emerging the ailing health system and increasing the primary health sector outlay to ensure a more equitable access to health services across the social and geographical expanse of the country. The approach of the policy is to increase access to the decentralized public health system by establishing new infrastructure in deficient areas and by upgrading the infrastructure in the existing institutions. The contribution of the private sector in providing health services is also to be enhanced, particularly for the population group which can afford to pay for services. Rashtriya Swasthaya Bima Yojna (RSBY) is a Central Government new health insurance scheme for the Below Poverty Line (BPL) families in the unorganized sector. It was formally launched on October 1, 2007.The objective of RSBY is to provide the insurance cover to below poverty line (BPL) households from major health shocks that involve hospitalization. Besides, the National Rural Health Mission (NRHM), a National effort at ensuring effective healthcare, especially to the poor and vulnerable sections of the society was launched (on 12th April, 2005 for a period of seven years (2005-2012)) throughout the Country with special focus on 18 states viz. Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Jammu and Kashmir, Manipur, Mizoram, Meghalaya, Madhya Pradesh, Nagaland, Orissa, Rajasthan, Sikkim, Tripura, Uttarakhand and Uttar Pradesh. The NRHM covers all the villages through village-based "Accredited Social Health Activists" (ASHA) who would act as a link between the health centers and the villagers. One ASHA will be raised from every village or cluster of villages. The ASHA would be trained to advise villagers about Sanitation, Hygiene, Contraception, and Immunization to provide Primary Medical Care for Diarrhea, Minor Injuries, and Fevers; and to escort patients to Medical Centers. They would also deliver Directly Observed Treatment Short (DOTS) course for tuberculosis and oral rehydration; distribute folic acid tablets to patients and alert authorities to unusual outbreaks. NHRM also mandates improvements in health infrastructure, human resources for health, and availability of drugs. It is a flexible, decentralized program comprising

i. a mission flexible pool

ii. a reproductive-health flexible pool

iii. pulse polio immunization

iv. infrastructure maintenance, and

v. a national disease control program.

For allocating funds, the states are divided into high-focus states and non-focus states. The states with poor health status are categorized into focus states.

The Eleventh Five Year Plan will provide an opportunity to restructure policies to achieve a New

Vision based on faster, broad-based, and inclusive growth. One objective of the Eleventh Five Year Plan is to achieve good health for people, especially the poor and the underprivileged. In order to do this, a comprehensive approach is needed.

In the 11th plan, a Working Group on Clinical Establishments, Professional Services Regulation and Accreditation of Health Care Infrastructure was established under the Department of Health & Family Welfare, Government of India to-

1.To review the existing system of Clinical Establishments, Professional Services Regulation and Accreditation of Health Care Infrastructure (Public, Private, NGO) in urban and rural areas with a view to provide universal access to equitable, affordable and quality health care which is accountable at the same time responsive to the needs of the people, reduction of child and maternal deaths as well as population stabilization, and also achieve goals set under the National Health Policy and the Millennium Development Goals.

2.To identify the potential areas/infrastructure/ institutions involved in providing accreditation with a view to ensure cost effective and standardized delivery of health services to people in rural & urban areas and

3.To suggest a practical and cost efficient system of Accreditation of Health Care Infrastructure.

Similarly, another working group on health care financing including health insurance was established under the Department of Health & Family Welfare, to review the present position of health financing at state, centre and individual levels; to suggest management strategies for community based health insurance; to assess disease burden and cost of ill health in the country; to give cost estimates of healthcare-public, NGO and private-current and for the 11th plan period and to suggest alternative strategies for health financing. Besides, The Planning Commission constituted a Working Group on Public Private Partnership to improve health care delivery for the Eleventh Five-Year Plan (2007-2012)-

(i) To review existing scenario of Public Private Partnership in health care (Public, Private, NGO) in urban and rural areas with a view to provide universal access to equitable, affordable and quality health care which is accountable at the same time responsive to the needs of the people, reduction of child and maternal deaths as well as population stabilization and also achieve goals set under the National Health Policy and the Millennium Development Goals.

(ii)  To identify the potential areas in the health care delivery system where an effective, viable, outcome oriented public private partnership is possible and

(iii)  To suggest a practical and cost effective system of public private partnership to improve health care delivery system so as to achieve the goals set in National Rural Health Mission (NRHM), National Health Policy and the Millennium Development Goals and makes quantitative and qualitative difference in implementation of major health & family welfare programmes, functioning of health & family welfare infrastructure and manpower in rural and urban areas.

Besides, a steering committee on Primary healthcare was also established to assess the situation of primary healthcare in rural and urban areas provided by government, as well as voluntary and private sectors after the launch of National Rural Health Mission. Also, a steering committee on secondary and tertiary healthcare was established to assess the situation of secondary and tertiary healthcare in rural and urban areas provided by government, as well as voluntary and private sectors and suggest appropriate mechanism for restructuring and rationalization of secondary and tertiary healthcare services.

The Eleventh Five Year Plan aims for inclusive growth by introducing National Urban Health Mission (NUHM), which along with NRHM, will form Sarva Swasthya Abhiyan.

NRHM has been launched for meeting health needs of all age groups and to reduce disease burden across rural India.

NUHM will be launched to meet the unmet needs of the urban population (28.6 crore in 2001 and 35.7 crore in 2011). As per the 2001 Census, 4.26 crore lived in urban slums spread over 640 towns and cities. The number is growing.

NUHM based on health insurance and PPP will provide integrated health service delivery to the urban poor. Initially, the focus will be on urban slums. NUHM will be aligned with NRHM and existing urban schemes.

Overall, Sarva Swasthya Abhiyan will aim for inclusive growth by finding solutions for strengthening health services and focusing on neglected areas and groups.

3.3.5 Critical Evaluation of Public Healthcare in India

After independence in 1947, India decided to expand and improve the health services of the country as one of a comprehensive package program to raise the standard of living of the people.

In the Indian Constitution the fundamental right of protection of right of life and liberty (Article 21) include right to health, implying state obligation to protect citizens from medical negligence. The state is required to concentrate on the development of health infrastructure because of its welfare oriented goals, market failures, to promote rural health facilities and the recommendations of Bhore Committee. The Constitution places 'public health and sanitation, hospitals, and dispensaries' in the state list.

But the Centre has played a dominant role in all aspects of health, mainly because of its financial clout in centrally planned economy. There is no doubt that India has achieved a good deal during the last 60 years.

The policies of economic reforms, emphasizing liberalization, privatization and globalization have their implications for all the sectors of the economies of these countries. Health sector also has been experiencing changes, which are worthy of consideration. A significantly large literature has developed around several related themes. For example, international experience shows that in the developing countries like India that have adopted LPG policies drug prices have found to be rising, access and utilization of health care services by the poor has been adversely affected, inequalities in access and utilization have been found to be widening, secondary and tertiary care is being encouraged at the cost of primary care, urban care facilities are growing at the cost of rural care facilities, etc.

Before independence, number of solemn pledges were made by the planners to the people of India viz., that we shall abolish poverty, ignorance, and ill health and raise substantially the standard of living of the masses. But over the years these promises were not fulfilled. This is understandable (but not excusable) because a ruling class rules for its own benefit optimistic empathy for the health needs of the people, particularly the poor and under-privileged, had hoped to provide health care services through the universal provision of comprehensive primary health care services. In retrospect, it is observed that the financial resources and public health administrative capacity which it was possible to marshal, was far short of that necessary to achieve such an ambitious and holistic goal.

Secondly, in India, the present health care system provides health care services mostly to the urban. The distribution of health services are skewed across rural-urban areas and accessibility to health services in India. For example, in rural India there are 0.2 hospital beds per thousand population as against 3.0 in urban areas (table).

Table: Rural-Urban Divide in Health Services in India

Sr. No


Rural (per 1000 population)

Urban(per 1000 population)


Hospital Beds








Public Expenditures




Out of Pocket




Infant Mortality Rate (IMR)

74/1000 live births

44/1000 live births


Under Five Mortality Rate (U5MR)

133/1000 live births

87/1000 live births


Births Attended




Full Immunization



Source: Jhilam Rudra De (2008)

Similarly, in rural areas there are only 0.6 doctors per 1000 population, which is as high as 3.4 in urban areas. Rural-urban disparities are equally pronounced on account of outcome of health services. For instance Infant Mortality Rate (IMR) in rural areas in 74 per one thousand live births which is about 44 per thousand live births in urban areas. Similarly Under-Five Mortality Rate (U5MR) is 137 per thousand live births in rural areas and 87 per thousand live births in urban areas (De, 2008).

Thirdly, the health care system is still over-weighted in favor of curative programs in spite of the clear conviction that, in the present situation, it is the preventive, socioeconomic, and educational aspects of the health care systems that are most significant.

Fourthly, access to, and benefits from, the public health system have been very uneven between the better-endowed and the more vulnerable sections of society. This is particularly true for women, children and the socially disadvantaged sections of society.

Fifthly, in India, the present day most of the doctors are commercial physicians, motivated by profits. They are no more social physicians, but motivated by profits. They are not the ones who generally attract the people and guide them for healthier and happier life.

Sixthly, the multiple systems of health care services in India - allopathy, ayurveda, homoeopathy, unani, siddha; various types of ownership patterns - public (central and state governments, municipal and panchayat local government), private (for-profit and not for profit); and different kinds of delivery structures - teaching hospitals, secondary level hospitals, first level referral hospitals (CHC's or rural hospitals), dispensaries, PHCs, sub centers, health posts, occupational groups such as, ESIS, defense, CGHS, posts and telegraphs, railways, and mines; have resulted a complex plurality that makes the development of an organized system difficult.

Seventhly, inappropriate policies, poor governance structure and inadequate financial arrangement in the supply side and high incidence of poverty, ignorance and traditional practices and cultural factors operating at the demand side influence the health outcomes of India.

Eighthly, as per the United Nations Development Program's (UNDP) Human development Reports, the value of the Human development Index (HDI) - composite indicator based on income, education and health - has increased consistently over the years. However, India's relative global ranking on this index has remained at a low of 134 among 182 countries. (Human Development Report, 2011) This indicates that public health system has failed to provide services to the poor in terms of accessibility, equity and quality. Besides over the past few years imposition of user charges have further reduced the use of public health facilities. To summarize, one can say that the various health policies and programmes have hardly benefited the poor lot.

From the above analysis, one forced to say that in mixed economies like India the government has failed in health sector in meeting the requirements of people. Hence, there has been an increasing importance attached to the growth of the private health sector which is supposed to be more efficient. Health as one of the Fundamental human right has been accepted in the Indian Constitution. Although, article 21 of the Constitution requires the state to ensure the health and nutritional wellbeing of all people, the federal government has a substantial technical and financial role in the sector. Due to growing importance of health care industry it has been conferred with the Infrastructure status under section 10(234) of the Income Tax act. Public health services produce "public goods" of incalculable benefit for facilitating economic growth and poverty reduction.

It is true that a lot has been achieved in the past: The milestones in the history of public health that have had a telling effect on millions of lives - launch of Expanded Program of Immunization in 1974, Primary Health Care enunciated at Alma Ata in 1978, eradication of Smallpox in 1979, launch of polio eradication in 1988, FCTC ratification in 2004 and COTPA Act of 2005, NRHM in 2005 to name a few.

This is an evidence of past events in the health sector, however, the future of a healthy India lies in mainstreaming the public health agenda in the framework of sustainable development. The ultimate goal of great nation would be one where the rural and urban divide has reduced to a thin line, with adequate access to clean energy and safe water, where the best of health care is available to all, where the governance is responsive, transparent and corruption free, where poverty and illiteracy have been eradicated and crimes against women and children are removed - a healthy nation that is one of the best places to live in.

However, the diminishing role of the government as provider of health care infrastructure is much beyond India's commitment at General agreement on trade in services (GATS). India has autonomously liberalized its health sector to a greater extent than required; New Delhi based policy think tank Centre for Trade and Development (CENTAD Paper, Health services liberalization in India, 2007) has observed. Interestingly, The National Commission on Macro Economics and Health in its report in 1995 had indicated this evolution of India's health system. The Commission had pointed out that India's health policy is shifting towards privatization of services.

To summarize,

In this changing world, with unique challenges that threaten the health and well-being of the population, it is imperative that the government and community collectively rise to the occasion and face these challenges simultaneously, inclusively and sustainably. Social determinants of health and economic issues must be dealt with a consensus on ethical principles - universalism, justice, dignity, security and human rights. This approach will be of valuable service to humanity in realizing the dream of Right to Health.

"The health of people is the foundation upon which all their happiness and all their powers as a state depend."- Benjamin Disraeli, British Prime Minister.

The ultimate yardstick for success would be if every Indian, from a remote hamlet in Bihar to the city of Mumbai, experiences the change.

In this context, it was thought that it is essential to study the private health care sector which is growing by leaps and bounds in recent times. Also, though state intervention in private health sector is crucial, the fact cannot be denied that in spite of increasing demands for health care; state expenditures on public health are not increasing due to resource crunch and as a result there is an obvious unchecked growth of the private health facilities which is promoted by the state through various incentives to meet the unmet demands of the increasing population for health care.


3.4 Introduction

Privatization of welfare services in the industrialized countries had ramifications for the developing ones as well. In the case of India and several other developing countries one finds that the growth of private hospitals took place during the late seventies and early eighties, which was linked to developments in the international as well as the national scene. The seventies was a period of recession in the industrialized world and in India too the investments in health care were declining. During the late 70s and early 80s there were concerted efforts to woo private investments to the health sector. Several concessions were offered by the government which further helped the expansion of the private sector. These policy shifts had an impact on the structure of the private sector in medical care.

The last four decades have seen the expansion of the private sector's role in health care in India. A lot of public debate and research has focused on the private sector in the provisioning of medical care. Macroeconomic policies and Structural Adjustment Program influenced health sector reforms in a major way. The nature and the trend of health services experienced tremendous change due to liberalization and privatization policies practiced in different countries especially the developing ones like India. The crucial transition in the orientation of the health care has been from 'service delivery mode' to 'profit making mode' due to immense development in technology and decline of the public sector vis -a -vis growth and boom of the private sector (Vibhuti Patel, 2006). The commodification of the health care has serious implications for people in developing countries particularly in the context of increasing poverty levels and growing unemployment rates (Duggal, 1999).

3.5 The Need for Private Healthcare

Economic reforms towards liberalization began in the early eighties. The declining share of public hospitals and dispensaries in public health expenditures since the 1980s (Duggal et al 1995b) coincided with growing state support for private hospitals and privatization. In 1990s, a number of corporate hospitals sprung up on land allotted to them by the government in prime urban locations, in exchange for their providing a proportion of their services free to the poor. (Baru,2000). Due to inadequate public health facilities, the private healthcare sector grew by leaps and bounds in India. It is said, "The Indian health sector is among the most privatized in the world" points out K.N. Nagaraj of the Madras institute of development studies. (P.Sainath, the health of nations: seeking a way forward, 2000).

The 1990s also saw the privatization of public health institutions and specific involvement of private providers in public health system. In some places privatization meant contracting the services of private bodies for non-medical essential services (like laundry, equipment maintenance, catering, media campaigns) in government hospitals (Bhatia and Mills1997; Bennett and Murleedharan, 2000). In others, it led to contracting the services of private specialists and hospitals for first referral services (Purohit and Mohan 1996). Private sector is becoming a major provider of services in almost all states in India. It is observed that 2/3 rd of doctors are from private healthcare and even from financial point of view, contribution of private sector is larger i.e. only 1/5th of public financing, the rest 4/5 of the share in health expenditure is contributed by private healthcare (Duggal, 2005). The healthcare market in India, as elsewhere in the world, is based on a supply-induced demand and keeps growing geometrically, especially in the context of new technologies. Example-the pharmaceutical companies today are creating demand for drugs and medicines through advertisements. This is exerting pressure on cost and prices which escalate tremendously. A study was done in Satara district of Maharashtra for drug supply and use. This study lends credence to increasing irrational drug prescription and use. For instance the study reveals that wastage of resources due to irrationality in 1993 was Rs. 4.76 per prescription per day in the private sector and Rs 2.08 in the public sector and this amounted to a whooping of 695 and 55%, respectively of expenditure on drug by patients. (Phadke, etal, 1995). In spite of this wastage of resources and increasing out of pocket expenditure private services are preferred and are needed to take care of the health needs of the teeming population in lieu of the declining public investment in this sector and rising demand for health care.

Besides, the above reasons the need for and the growth of the private sector in recent times is justified on the following grounds:

Competition among private providers will bring out efficiency in health care and decrease the welfare loss: If there is competition amongst the various health care players it will definitely help to provide maximum health benefits to the majority people at affordable prices.

Expanding services to the areas and the groups where public system is not able to cover: Private participation in healthcare will improve the accessibility to the underserved areas especially the rural segment.

It will bring more resources in health care sector: The public sector faces the resource crunch. In such a situation private players in healthcare market will support the existing resources and also build up new ones especially by the big private corporate.

Encourage rich and well off people to use private health care: This will decrease burden on the public sector so that resources can be directed to the poor and under privileged section of the society.

New Public Management argues decreasing role of government: The introduction of new economic policies paves greater role for the private sector and reduces the role of the state from provider to the facilitator of services.

3.6 Structure of Private Health Sector in India

In India provision of health care services is complex. At one level it is bifurcated into public and private providers and at another level there are a multiplicity of systems-allopathic, ayurvedic, homeopathy, and unani etc. The private health sector consists of the not for profit and for profit health sector. The not for profit health sector which is very small includes various health services provided by nongovernmental organizations, charitable institutions, missions, trusts etc. Health care in the for profit health sector is provided by various types of practitioners and institutions. These practitioners range from general practitioners to the super specialists, various types of consultants, nurses, licentiates, registered /rural medical practitioners (RMPs) and a variety of unqualified persons. Then, there is an informal sector which consists of practitioners not having any formal qualifications like the hakims, vaidyas, tantriks who also provide health care.

The institutions falling within the ambit of the private health sector are hospitals ranging from small nursing homes with fewer than five beds to large corporate hospitals and medical centers as well as medical colleges, training centers, dispensaries, clinics, polyclinics, physiotherapy and diagnostic centers, blood banks and the like. In addition, the private health sector includes the pharmaceutical and medical equipment industries that are predominantly multinational.

In the private sector, some hospitals have been functioning from pre-independent times. These are mostly 'mission' hospitals run by charitable institutions under Religious authority. Some hospitals, mostly small urban hospitals are under private proprietary ownership, Often of doctors' themselves. But a recent phenomenon is the explosive growth of large, multi specialty, urban hospitals in the corporate sector: here the money for investment is generated from the sale of equity shares of the hospitals in the share market. The investor expects a competitive rate of return for their money. Though these hospitals are for the most part confined to metropolitan cities and account for only a small number of beds, their influence on policy is enormous because of their access to those in power. These hospitals pride themselves in bringing to India the 'latest' in medical technology, and partly because of the high investments and expectation of returns, the cost of care in such institutions is so prohibitively high as to make them irrelevant for the large majority of the population. Because of the 'demonstration' effect of such hospitals, even the 'charitable' hospitals are imitating them in their style of care, with the result that for the client there is hardly anything to distinguish but between the 'charitable' and the ''profit making'' hospitals. These problems are compounded by the fact that there is very little legislative and other control by the government over the hospital industry in India.

Thus, in India on the basis of ownership / control hospitals can be divided into four categories:

Public hospitals: These hospitals are run by the central or state governments or local bodies on non commercial lines. These may be general hospitals or specialized hospitals or both.

Voluntary hospitals: These hospitals are established and incorporated under the societies registration act 1860 or public trust act 1882 or any other appropriate act of central or state governments. They are run with public or private funds on a noncommercial basis.

Private nursing homes / hospitals: These are generally owned by an individual doctor or a group of doctors. They run the hospital or nursing home on a commercial basis. They accept patient suffering from infirmity, advanced age, illness, injury, disability etc. But, do not admit patient suffering from communicable disease, alcoholism, drug addiction or mental illness.

Recently the growth of corporate hospitals built with huge investments and modern technology is being observed. They are normally run on commercial lines. They can be either general or specialized or both (Basavanthappa, 2003).

3.6.1 Role of the Private Sector in Healthcare in India

The role of private sector in health care in India is significant. The involvement of private sector is explored by a number of states in India to mitigate the problems of adequate resources in curative and tertiary care. The role of private sector to augment the supply of necessary services in remote areas is also one of the policy initiatives being implemented in number of areas. At present though the government has vast infrastructure in health care in rural India in the form of primary health care centers, but the common man still to a large extent depends on the private sector. (Arun Bal, 2003).Private general practice is the most commonly used health care service by patients in both rural and urban areas.

Studies by National Sample Survey and NCAER provided the necessary evidence to show the overwhelming dominance of the private health sector in India. The developed countries government can have a say in controlling the expansion and nature of private health care as public financing is still a major source. But in developing countries especially India, government has limited role in terms of exercising control over private health care because of dwindling public financing in health sector. The involvement of the private sector is based on the argument that it helps to improve the efficiency of existing limited resources and also it ensures the availability of services, which is important to improve access to health care. The role of private sector in health is assumed to provide opportunities in strengthening the health systems since India has already a high presence of private providers. The private sector accounts for more than 80% of total health care spending in India. Private firms are now thought to provide about 60% of all outpatient care in India and as much as 40% of all inpatient care. The private sector has experienced significant presence in providing curative primary and high-tech secondary care (Emerging Market Report, 2007).

Also, in India, privatization of health care is taking all forms from divesture ( hospitals are being handed over on outright purchase and/ or long term leases) to lease contracts (Built, Operate and transfer), to contracting out of services (laundry, diet, diagnostic services, pharmaceutical supplies, private consulting facilities and others).It is also done through introduction of user fees (user charges for various services in dispensaries and hospitals) and by plain default through neglect of public provision (Duggal, 2004).

3.6.2 Role of the State in Growth of the Private Healthcare

The private sector has grown and diversified over the last three decades and has emerged as an important practitioner in the provision of medical care in both rural and urban areas albeit the variations it presents across states. It is a heterogeneous entity offering service of variable sizes and patterns of ownership (Bhat 1993; Baru 1998). The private health sector in India, as indicated earlier, is very large, perhaps the largest in the world. The private sector in India has managed to permeate through primary, secondary and tertiary levels of health care, in the urban and rural areas, in all system of medicine. Private health services, especially the general practitioners are the single largest category of health care services utilized by the people. The private health sector, especially the allopathic constitutes a very strong lobby in India. The not-for- profit private sector (NGOs and charitable organizations) has made a significant contribution to public health programs such as family planning, HIV/AIDS, leprosy, blindness and mother child health program.

Privatization is not only limited to healthcare delivery but also penetrated the medical equipment and pharmaceutical industry, with multinational and national corporate companies dominating. The private pharmaceutical industry (largely multinational) is a very powerful lobby in India. The private sector is presently in the process of making another transition in its rapid growth. This is the increased participation of the organized corporate sector. New medical technologies have opened new avenues of corporate investment that is going to bring about far reaching changes in the structure of health care delivery.

Besides, it is important to reemphasize the role of the state in contributing to the growth of the private health sector. Direct and indirect support to the private health sector by the state is the main form in which privatization takes place in India. Some instances highlighting this point are as under:

1. Medical education is overwhelmingly state financed and its major beneficiary is the doctor who sets up private practice after his/her training; three fourths of the medical college graduates from public medical schools work in the private sector. Though they are trained at public expense their contribution to society is negligible beca