Reforms Needed for Revolutionizing Healthcare in India

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Changes happening in India are reflective of India’s emergence as one of the key centers of power on the global landscape. Compared to economic sector, changes in the social sector are dimmer but still clearly perceptible. India has progressed rapidly in health status as evident from mortality reduction and life expectancy, but the progress at best is uneven and slow when compared other countries. India in spite of its stellar economic performance, does worse than even some of the poorest countries of the world in case of health status. Sri Lanka and Bangladesh have better health status despite lower economic growth. Thus economic growth doesn’t automatically lead to human development, but requires public policies to do so. In fact if growth is not inclusive it can further exacerbate inequality and have adverse effects on human development. The inequity in health outcomes is very prominent; a child born in Madhya Pradesh has five times risk of dying than a child born in Kerala. A large proportion of population is driven into poverty because of ill health and get trapped into a vicious cycle of ill health and poverty.

India’s Health system is believed to be at cross roads. India is presently witnessing five transitions related to health- demographic, nutrition, and epidemiological, health care and social. India has progressed from a country in 1950’s of population characterized by high mortality and high fertility, endemic under nutrition, high infectious disease burden to the present situation, characterised by low mortality, low fertility, and triple burden of disease-combination of infectious disease, chronic disease and new emerging infections. The healthcare system in India has evolved from a indigenous system with lower technology and minimal population expectations to a healthcare system where healthcare facilities in some parts of the country, are providing high tech, first world care and consequent rising expectations of population. The economic and political transition along with transition in family system and values has further complicated healthcare support systems. Also these transitions do not apply equally to all states as different states at present are at different levels of transition.

As is the case elsewhere reforming India’s healthcare system requires a systemic approach with extensive attention to details and sequence. However some broader areas of attention are sketched in the following paragraphs. One of the key areas that can revolutionize healthcare system is health financing. At present India spends nearly 4% of the GDP on healthcare which is sufficient but the way it is happening is inefficient, leading to poor outcomes. India spends much more on curative healthcare than preventive. A large chunk of spending goes to pay for unwanted drugs, investigations and hospitalization reducing health rather than improving it. This is due to mis-alignment of incentives in health financing system which relies heavily on out of pocket expenditure to finance healthcare. Most of the cheating behavior of pharmaceuticals, hospitals, diagnostic centers, and physician could be traced to out of pocket financing of healthcare. To overcome this issue, a number of social Health insurance programs were launched in last two decades but similar incentive mis-alignment continues there. Social health insurance programs can deliver much higher value if their design and implementation is improved.

Second but related reform in healthcare system is payment mechanisms. At present fee for service is the dominant mode of paying to providers which incentivizes provides to increase volume of service without ensuring outcomes. The risk of outcome is completely on patients. In the present payment method there is no incentive to provide preventive services and family medicine as a discipline is virtually nonexistent now. Given the unique nature of healthcare where outcomes are uncertain and dependent on many factors other than healthcare, moving towards outcome based payment method is not technically feasible. However payment systems could be reformed such that they transfer some risk to providers and make them responsible to outcomes to some extent. Methods like Capitation based payment and Global Budgets combined with bonus for quality of care could significantly impact behaviors of providers and hospitals improving efficiency of the healthcare system.

Third, critical area that can revolutionize healthcare in India is improving structure of healthcare system. The planners in post independent India were posed with zeal to emulate National Health Service of Britain. This dream of policy makers remained unfulfilled due to fiscal constraints and number of institutional failures. All this resulted in poor status of public facilities – public facilities housed in pathetic states, healthcare providers absent, drugs supplies and consumables unavailable and most of the time facilities were closed. The NRHM program improved some of these issues but has largely remained focused on maternal and child health, short of creating a system wide impact. Structural issues like – the irrational division of the health in the constitution between center and state; the multiple functional divisions with overlapping of functions and limited coordination among them; and incomplete devolution of authority to local bodies- have given rise to poor governance and dysfunctional role of state. Present structural issues are further complicated by institutional process- Too much focus on cost rather than evidence, poor performance monitoring systems , lack of operational research and lack of strategic vision and realistic goal setting. Unless the organizational reform of public sector are undertaken infusing more resources will be simply a patchwork and will not lead to better outcomes.

A related structural phenomenon is ignoring role of private sector in healthcare system. In a zeal to create a national health system, policy makers failed to steer development of private sector which grew in incongruous ways. Further deficiency of public system paved road for private sector to grow. Statistics suggest that around most of healthcare as well as input markets are in private sector- 70% of hospitals, 35% of hospital beds , 70% of doctors, 80% of outpatient care and 57 % of inpatient care are in private sector. At present public and private sector hardly complement each other, duplicating services, serving in same geography. Though a number of public private partnership has been undertaken in recent years, but what is needed is stewardship of system, so that both public and private sector complement each other and create synergies. Public system has focused on primary healthcare in spite the fact that public system can’t match the responsiveness of private sector, a critical determinant of utilization in primary healthcare services. A significant amount of public resources are devoted to curative care which private sector is also keen to provide. Public hospitals are also located in the urban and in market places where private sector have set up their shops leading to gross underutilization of public facilities. Too much concentration of private sector in cities has resulted in very high competition among providers leading to providers resorting to gimmicks and targets to utilize overcapacity. In order to cut cost and remain competitive, nursing homes and hospitals employ unqualified and underpaid staff. They also collude and get engaged in unethical practices of providing commission on referral of the patients and on investigations. Human resources trained on public money continue to provide cheap labor for private sector.

Fourth critical area that can revolutionize healthcare is reform of regulatory system. In India the health system is under-regulated with very few regulations concerning providers, hospitals and standards of care. Thus regulatory system has failed to correct the information asymmetry that exists between stakeholders – providers and patients, providers and insurance companies and so on. This has stunted development of health insurance sector as in absence of regulation they are unable to control providers who have generally exploited insurance system to mint money. Lack of regulation has also resulted into irrational use of drugs, investigations and referrals. Over prescription and prescription of branded drugs leads to phenomenon of overuse with limited access having serious implications on drug resistance, growth of super bug infections at the same time limited access to drugs those who need it. The population in rural area is mainly served by private unqualified practitioners who deliver around 1\4th of the healthcare services in rural areas.

Fifth area that can significantly impact healthcare system is behavior change of patients’ providers and population in general. Economic and consequent nutritional transitions has triggered life style behaviors that pre-dispose individuals to chronic life style diseases such as Diabetes, Hypertension and Cardiac diseases. Improving behavior related to consumption- fruits vegetables, oil, sugar and salt and exercise can significantly reduce the disease burden due to non-communicable chronic disease. Further improving treatment compliance among patients of non-communicable disease is critical for improving care outcomes. Use of technology –mobile phones, internet and social media can play a significant role in creating nudges that can improve behavior of patients, providers and population in general.

Sixth, poor development of information system that can aid in improving healthcare system. The problem of information is not only at the patient level but also at the policy makers and program management level. There is lack of robust data- disease burden, infrastructure, facilities, services, human resources etc.- at the district level, the basic unit of planning and implementation in decentralized health system in India. This is critical given that there is considerable variation in health status and infrastructure not only among district but also within district, inhibiting any evidence based planning and monitoring.

Reforms that can revolutionize health system, has to be built from multiple building blocks of health system. Effectiveness and impact of these reforms considerably depends upon the sequencing and persistence in implementation as the healthcare systems requires continuous tweaking in order to amplify the desired effect and control undesired one.

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Daya Shankar Maurya
Daya has around 10 years’ experience in academia and healthcare industry. He has expertise in Health Policy, Policy Analysis and Public-Private Partnerships. He has worked with national & international NGOs, UN bodies and national governments in India, Thailand Cambodia and Singapore. He regularly provides consultancy services, to Consulting firms, NGOs and Government bodies. He is trustee for ARMMAN a healthcare non-profit organization with operations in over 20 states in India