Issues in Health Sector

Sanjib Pohit

December 4, 2006

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 a) Health Equityb) Comparative Study of Private & Public Service Providers

Accessibility, quality & costs

c) Determinants of Service Providers

Source of data Primary data from large scale health survey undertaken by NSSO during July 1995 – June 1996

Research Question

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

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 1. Mis-targeting2. Deterioration in quality of public health services3. 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

Fallout of Economic Reforms

• 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 1. Regulatory framework

2. Efficient competition policy

3. 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

Opening of Health Sector: Implications

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.

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

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

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

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)

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

Possible Reasons for preference towards private services

1. Better quality of treatment – Early cure, good supply of drugs, personalised

services, good doctor and good nursing care

2. Proximity to the household and convenience of timing

3. Socio-economic parameters- age, gender, caste, education and rural-urban affiliation of the patients and income

Choice of Health Care Provider

Formulation of Probit Model

P = 1 + 2 G + 3 S + 4 C + 5 I + 6 A + u

Where

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

Maximum Likelihood Estimates of the Determinants of Choice of Service Provider for Outpatient and Inpatient Care

Kerala Madhya Pradesh

Outpatient # Inpatient # Outpatient # Inpatient #

age (in years) 0.00067* 0.00074 0.00025 0.00122**

Sex (Male=1, Female = 0) -0.01195 -0.02903 0.02558 0.02620

Caste (SC/ST = 1, Others

= 0)

0.09338*** 0.14438*** 0.06822*** 0.07933***

MPCE (in Rs) -0.00020*** -0.00012*** -0.000003 -0.00036***

Rural-urban affiliation

(Rural =1, Urban = 0)

0.00067 -0.01013 -0.04872** -0.07883***

Log-likelihood 43.46 40.14 13.11 65.90

Prob>Chi2 0.0000 0.0000 0.0224 0.0000

No. of Observations 2096 1804 1729 1502

* Significant at 10% level, ** significant at 5% level and *** significant at 1% level Marginal effects, not coefficients, have been represented in the columns

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

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 (?)

Summing up

• Regulatory framework is still weak

• Initial condition (i.e. status of public facility) matters for determining cost & quality of private service provider