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  Opinion   Oped  07 Nov 2019  Need value for money in healthcare

Need value for money in healthcare

The writer is a development economist, formerly with the Bill & Melinda Gates Foundation and the World Bank. Email:
Published : Nov 7, 2019, 2:30 am IST
Updated : Nov 7, 2019, 2:37 am IST

It is a known fact that private providers are a dominant source of OP care both in urban and rural areas.

Abhijit Banerjee
 Abhijit Banerjee

Abhijit Banerjee, the winner of the 2019 Nobel Prize in Economics, is reported to have praised the Narendra Modi government for its healthcare program, Ayushman Bharat. He is also reported to have said that though India has one of the highest private healthcare expenditures in the world, people are not getting value for money. Indeed. Over 60 per cent of total healthcare spending in India is done directly by households from their own pockets, which is burdensome. The Narendra Modi government together with states and municipalities have quite some distance to cover in ensuring that people get value for money for their healthcare spendings.

It is good to see healthcare becoming a political priority in India. Ayushman Bharat (AB) — one of the successful social initiatives of the Narendra Modi government — is being rolled out by states with the support of the Central government.

However, both the pillars of AB are for the benefit of the weaker sections of society. The PMJAY pillar that entitles free hospital care of up to `5 lakhs every year is specifically targeted at the nearly 110 million poor and vulnerable households. The other pillar of health and wellness centres is aimed at providing basic primary and preventive care to all in rural and semi-urban areas, though the poor are likely to benefit more from it.

For the non-poor, especially in towns and cities, nobody seems to be doing anything about the healthcare options available to them. They too face the risk of getting impoverished due to healthcare expenses. The issue of value for money is most applicable to them.

Nearly 300 million people, or about 65 per cent of India’s urban population, live in about 500 cities having a population of 100,000 and above. The majority of this population comprises the non-poor who derive their income by working in the informal sector. They have limited health expenditure support. For hospital care, they have the option of buying one of the unfriendly, expensive annual health insurance plans from an insurance company or pay hospital bills out of their own pocket. For out-patient (OP) care, almost all of them turn to private providers — by visiting either the OP department of private hospitals or private clinics and paying out of their own pocket.

It is a known fact that private providers are a dominant source of OP care both in urban and rural areas. However, unlike rural semi-urban areas, the OP care in bigger towns and cities is all provided by qualified doctors having private practices. A good part is that there are multiple, qualified providers of care in towns and cities. However, a bad part of it is that the system is highly non-standardised. Some doctors charge significantly higher consultation fees than others. Some doctors charge a consultation fee every time you visit while others allow you a repeat consultation without having to pay again. Some doctors prescribe “minimal” medicine while others heal you with stronger medicines. Some doctors routinely issue payment receipts while others do so only upon request. Some doctors require a prior appointment while others don’t. Some doctors maintain patient records while others don’t. Indeed, out-patient care even by qualified medical doctors is highly variable in India.

Often, patients face several issues in seeking OP care. Besides having to pay a high fee that can run as high as `2,000 in a metro city for specialist consultation which may last no more than two minutes, patients may have to wait for long even with prior appointments. Also, doctors often don’t spend sufficient time to answer patients’ queries. To be fair, there are some doctors that run their practice with a sense of social responsibility. But many doctors are highly commercial-minded. Stories abound of doctors resorting to different strategies to maximise their revenue/profits. The OP care market in India needs standardisation.

The thriving private practices of doctors in towns and cities are no indication that it’s an optimal arrangement. The market mechanism doesn’t work well in healthcare. Governments need to intervene in this market for some good reasons: One, healthcare is different from other services as the physical and mental well-being of a person gets affected when s/he is sick, and two, treatment of the sick is not to be governed solely by commercial considerations. Thus, governments have a special role to play in ensuring basic healthcare to all of its citizens at a nominal charge, if not free.

The government could, for example, incentivise private practitioners to get into a network that will enable them to introduce some standardisation of service, fee structure, processes and reporting. Likewise, government could encourage people to buy OP care only from the network providers. Of course, people will be paying for those services as they do now but will be paying only “reasonable” amounts in exchange for services whose “quality” aspect is well-defined.

Healthcare being a state subject, each state government will need to act on this, with or without any support from the Central government. Except for some partial initiatives such as mohalla clinics of the Delhi government, states seem to have adopted the policy of laissez faire for OP care, when there is a strong case for them to intervene. Any effective solution for OP care in large towns and cities has to take account of the preponderance of private practitioners and involve them.

To conclude, value for money in healthcare is an important issue for a majority of the non-poor households living in towns and cities. Central and state governments need to do something about it. OP care in towns and cities, which at present is totally untouched by governments, is too important to be left completely to market forces. Private practitioners may continue providing care but a government-mediated system is urgently needed to introduce standardisation. Let the hands that heal not become the hands that exploit — for want of a better system!

Tags: ayushman bharat, abhijit banerjee