Moving to private care

Across all economic segments, private health providers have been growing rapidly for the last one-and-a-half decades.

Historical data and latest indications point out that Indians are increasingly depending more and more on private sector healthcare providers. Rural-urban differences do not matter and are just not significant enough. Why might this be the case?

The answer as most of us already intuitively know is the poor quality of services offered by public hospitals. But that is not the only one "" pricing of public facilities is also a factor.

Healthcare services like other commodities are purchased on the basis of price-quality combinations. Given the extremely poor quality of public health services, any increase in charges only serves to further alienate the potential consumer.

But that by itself is not a bad outcome if the private sector providers were doing a great job. All indications suggest that they do not. For life expectancy and other measures of health indicators have not really shown any great improvements in the past two decades.

So while the socialists/leftists and the World Bank-types debate the need for user charges, the consumers have already voted with their feet towards private providers. As the markets work, those who can pay little obtain services that are poor. The poor, of course, suffer the most.

There are broadly two category of healthcare provision "" out- and in-patient services. Both the rich and poor are increasingly shifting to non-government facilities for treatment for both services.

As of the mid-1990s, the National Sample Survey Organisation estimates are that more than three quarters of the poorest 20 per cent in both rural and urban areas were availing outpatient treatment by non-government sources; my estimates are that this has now gone up to about 90 per cent for urban areas.

The trends are quite similar across rural areas and also for hospitalised treatments. The message is quite clear; there is a continuing downward trend in the use of public healthcare facilities.

Indeed, both the rich and the poor are using public facilities less and less, but for different reasons. The rich due to their paying ability as well as access to insurance will be able to afford the better quality health services offered by the private sector.

The poor on the other hand are forced towards the lower quality private sector providers. The net result of poor quality public services is, therefore, much worse than charging minimal amounts as user charges.

The solution is quite clear. Good quality public service provision is the first step to an equitable healthcare delivery mechanism. Issues of access, user charges, lack of infrastructure and so on are all secondary.

Moreover, charging of greater user fees would also only be possible provided better services are available. Greater reliance on NGOs, organised private sector and public-private partnerships are also all mere band-aids to a serious problem.

There have been many success stories within India and in our vicinity where improvements in health indicators have been achieved on the back of public delivery. Not only is it essential, it is also possible.

The author heads Indicus Analytics and can be contacted at laveesh@indicus.net.