SHAPE OF THE PRIVATE SECTOR IN MEDICINE

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The key features of the private sector in medical practice and health care are well known. Two questions are relevant. What role should be assigned to it? How far and how closely should it be regulated? Over the last several decades, independent private medical practice has become widespread but has remained stubbornly urban with polyclinics, nursing homes and hospitals proliferating often through doctor entrepreneurs. At our level tertiary hospitals in major cities are in may cases run by business houses and use corporate business strategies and hi-tech specialization to create demand and attract those with effective demand or the critically vulnerable at increasing costs. Standards in some of them are truly world class and some who work there are outstanding leaders in their areas. But given the commodification of medical care as part of a business plan it has not been possible to regulate the quality, accountability and fairness in care through criteria for accreditation, transparency in fees, medical audit, accountable record keeping, credible grievance procedures etc. such accreditation, standard setting and licensure systems are best done under self regulation, but self regulation systems in India medical practice have been deficient in many respects creating problem in credibility.  Acute care has become the key priority and continues to attract manpower and investment into related specialty education and facilities for technological improvement. Common treatments, inexpensive diagnostic procedures and family medicine are replaced and priced out of the reach of most citizens in urban areas.

Public health spending accounts for 25% of aggregate expenditure the balance being out of pocket expenditure incurred by patients to private practitioners of various hues. Public spending on health in India has itself declined after liberalization from 1.3% of GDP in 1990 to 0.9% in 1999. Central budget allocations for health have stagnated at 1.3% to total Central budget. In the States it has declined from 7.0% to 5.5.% of State health budget.  Consider the contrast with the Bhore Committee recommendation of 15% committed to health from the revenue expenditure budget, Indeed WHO had recommended 55 of GDP for health. The current annual per capita public health expenditure is no more than Rs. 160 and a recent World Bank review showed that over all primary health services account for 58% of public expenditure mostly but on salaries, and the secondary/tertiary sector for about 38%, perhaps the greater part going to tertiary sector, including government funded medical education. Out of the total primary care spending, as much as 85% was spent on or curative services and only 15% for preventive service. <World Bank 1995> about 47% of total Central and State budget is spent on curative care and health facilities. This may seem excessive at first sight but in face the figure is over 60% in comparable countries, with the bulk of the expenditure devoted publicly funded care or on mandated or voluntary risk pooling methods, in India close to 75% of all household expenditure on health is spend from private funds and the consequent regressive effects on the poor is not surprising. In this connection. Ehe proposals in the draft NHP 2000 are welcome seeking to restore the key balance towards primary care, and bring it to internationally accepted proportions in the course of this decade.

Private expenditure trends

Many surveys confirm that when services are provided by private sector it is largely for ambulatory care and less for inpatient carte. There are variations in levels of cost, pricing, transactional conveniences and quality of services.  There is evidence to suggest that disparities in income as such do not make a difference in meeting health care costs, except for catastrophic or life threatening situations Finally it has been established that between 2/3rds to 3/4ths of all medical expenditure is spend on privately provided care every household on the average spends up to 10% of annual household consumption in meeting health care needs. This regressive burden shows up vividly in the cycle of incomplete cure followed by recurrence of illness and drug resistance that the poor face in diseases like TB or Kalazar or Malaria especially for daily wage earners who cannot afford to be out of work.

Privatization has to be distinguished from private medical practice which has always been substantial within our mixed economy. What is critical however is the rapid commercialization of private medical practice in particular uneven quality of care. There are complex reasons for this trend. First is the high scarcity cost of good medical education, and second the reward differential between public and corporate tertiary hospitals leading to the reluctance of the young professional to be lured away from the market to public service in rural areas and finally there is the compulsion of returns on investment whenever expensive equipment in installed as part of practice. Increasingly, this has shifted the balance from individual practice to institutionalizes practice, in hospitals, polyclinics,- Etc.   this conjunction explodes into unbearable cost escalation when backed by a third party payer system/- This in turn induces increases in insurance premiums making such cover beyond the capacity to pay. There is a distinct possibility of such cycles of cost escalation periodically occurring in the future, promoted further by global transfer of knowledge and software, tele-medicine etc. especially after the advent of predictive medicine and gene manipulation.

Doctors practicing in the private sector are sometimes accused of prescribing excessive, expensive and nsky medicines and with using rampant and less than justified use of technology for diagnosis and treatment. Some method of accreditation of hospitals and facilities and better licensure systems of doctors is likely within a decade. This will enables some moderation in levels of charges in using new technology. High cost of care is sometimes sought to be justified as necessary due to defensive medicine practiced in order to meet risks under the Consumer Protection Act. There is little evidence from decisions of Consumer Courts to justify such fears. While the line between mistaken diagnosis and negligent behaviour will always remain thin, case law has already begun to settle around the doctor's ability to apply reasonable skills and not the highest degree of skill. What has lieen established is the right of the patient to question the treatment and procedures if there is failure to treat according to standard medical practice or if less than adequate care was taken. As health insurance gets established it may impost more stringent criteria and restrictions on physician performance which may tempt them into defensive medicine. There may also be attempt to collusive capture and (indirect ownership) of insurance companies by corporate hospitals as in other countries. Advances in medical technology are rapid and dominant and easily travel world wide and often seen as good investment and brand equity in the private sector. Private independent practices - and to smaller extent hospitals, dispensaries, nursing homes tele- are seen as markets for medical services with each segment seeking to maximize gains and build mutually supporting links with other segments. More than one study on the quality of care indicates that sometimes more services are performed to maximize revenue, and services/ medicines are prescribed which ffl-e not always necessary. Allegations are also widely made of collusive deals between doctors and hospitals with commissions and cuts exchanged to promote needless referral, drugs or procedures        <World Bank A 1995> Appropriate regulation is likely in the next decade for minimum standards and accountability and that should consist of a balanced mix of self regulation external regulation by standard setting and accreditation agencies including private voluntary health insurance.

How far can health insurance help?

What constitutes a fair distribution of the costs of care among different social groups will always be a normative decision emerging out of political debate.  It includes risk pooling initiatives for sharing costs among the healthy and the sick leading to insurance schemes as a substitute for or as supplementary to State provision for minimum uniform services. It also covers risk sharing initiatives across wealth and income involving public policy decisions on progressive taxation, merit subsidy and cross subsidization by dual pricing. Both will continue to be necessary in our conditions with more emphasis on risk sharing as growth picks up. Risk pooling within private voluntary and mandated insurance schemes has become inevitable in all countries because of the double burden of sickness and to ensure that financial costs of treatment do not become an excessive burden relative to incomes. It is difficult but necessary to embed these notions of fair financing into legislation, regulations and schemes and programs equity is aimed at in health care.

With the recent opening up of the general Insurance sector to foreign companies, there is the prospect of two trends. New insurance product will be putout so expand business more be deepening than widening risk covered. The second trend would be to concentrate on urban middle and upper classes and settled iobholders with capacity to pay and with a perceived interest in good health of the family. Both trends make sound business sense in a vast growth market and would increase extensive hospital use and protection against huge hospitalization expenses, and promoted by urban private hospitals since their clientele will increase.

Insurance is a welcome necessary step and must doubtless expand to help in facilitating equitable health care to shift to sections for which government is responsible. Indeed for those not able to access insurance it is government that will have to continue to provide the minimum services, and intervene against market failures including denial through adverse selection or moral hazard. Indeed in the long run the degree of inequity in health care after insurance systems are set up will depend ironically on the strength and delivery of the public system as a counterpoise in holding costs and relevance in technology.

The insurable population in India has been assessed at 250 million and at an average of Rs 1000/- per person the premium amount per year would be Rs 25,000/- crores and is expected to treble in ten years- While the insurance product will dutifully reflect the demands of this colossal market and related technological developments in medicine, it should be required to extend beyond hospitalization and cover domiciliary treatment too in a big way; for instance, extending cover to ambulatory maternal and selected chronic conditions like Asthma more prevalent among the poor. The insurance regulatory authority has announced priority in licensing to companies set up with health insurance as key business and has emphasized the need for developing new products on fair terms to those at risk among the poor and in rural areas.   Much will turn on what progress takes place through sound regulation covering aspects indicated below. In order to be socially relevant and cominercially viable the scheme must aim at a proper mix of health hazards and cover many broad social classes and income groups. This is possible in poor locations or communities only if a group view is taken and on chat basis a population- based nsk is assessed and community rated premiums determined covering families for all common illnesses and based on epidemiological determined risk. In order that exclusions co-payments deductibles etc. remain minimum and relevant to our social situation, some well judged government merit subsidy can be incorporated into anti poverty family welfare or primary education or welfare pension schemes meant for old age. Innovative community based new products can be developed by using the scattered experience of such products for instance in SEWA, so that a minimum core cover can be developed as a model for innovative insurance by panchayats with reinsurance backup by companies and government bearing part of promotional costs. The bulk of the formal sector maybe covered by an expanded mandatory insurance with affordable cover and convenient modes of premium payment. Outside the formal manufacturing sector innovate schemes can be designed around specific occupation groups in the informal sector which are steadily becoming a base for old age pension entitlements, as in Kerala and Tamil Nadu - and brought under common risk rating. Finally, as in the West health insurance should develop influence and capacity as bulk purchaser or medical and hospital services to impact on quality and cost and provide greater understanding about Indian health and illness behaviours, patterns of utilization of care and intra family priorities for accessing medical care. Health insurance should be welcomed as a force for a fairer healthcare system. But its success should be judged on how well new products are developed with a cover beyond hospitalization, how fairly and inclusively the cover is offered and how far community rated premiums are established. The IRDA has an immense responsibility and with its leadership one can optimistically expect about 30% coverage by 2015 relieving the burden on the public systems.