Issues in Health Sector
Sanjib Pohit
December 4, 2006
Research Question

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 Equity
b) 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
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
Fallout of Economic Reforms



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-targeting
2. Deterioration in quality of public health services
3. 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
Opening of Health Sector: Implications
•
•
•
•
•
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
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
Govt. Doctor/ Facility Too Far
Not Satisfied With Treatment
Private Doctor Easily Available
Medicines not Available
Long Waiting
Lack of Personal Attention
13 (39)
32 (24)
31 (24)
3 (6)
4()
5 (2)
Urban
8 (7)
34 (37)
25 (27)
7 (12)
5 (5)
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
Choice of Health Care Provider
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
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
0.09338***
0.14438***
0.06822***
0.07933***
-0.00020***
-0.00012***
-0.000003
-0.00036***
0.00067
-0.01013
-0.04872**
-0.07883***
43.46
40.14
13.11
65.90
0.0000
0.0000
0.0224
0.0000
2096
1804
1729
1502
= 0)
MPCE (in Rs)
Rural-urban affiliation
(Rural =1, Urban = 0)
Log-likelihood
Prob>Chi2
No. of Observations
* 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