Indian Healthcare: A Rising Enterprise

Spring 2009
Considering Another Side Essays

Article 5 of 12

Like many other developing countries, India has poor health care delivery.  This problem can be attributed to the underdevelopment of historical institutions, corruption within the system, and many other factors.  It is a mistake, however, to lose faith in the government’s capacity to remedy health care.  Recently introduced public-private partnerships pose hope for the system, but are not as beneficial to reform as has been suggested.   The Indian government is fully capable of improving health care without the help of private enterprise. 

India currently relies very heavily on the private sector for health services.  According to Nirvikar Singh, Professor of Economics at University of California, Santa Cruz, five percent of the country’s GDP is spent on health care, roughly in line with developing countries at similar income levels.  The proportion of health spending in the public sector, however, is well below most other countries (Singh, 2008).  India’s heavy reliance on private hospital care reflects the divided nature of its society.  Those with money and status go to private hospitals, which generally have superior facilities and overall patient care, while the poor endure long lines for short appointments in government hospitals.  Government hospitals are thereby relieved of pressure from people of influence; pressure that might otherwise give incentive to improve the system.  Clearly, there is serious need to address government health care.  

In an increasingly global world, the Indian government must be able to adapt to new situations for the strength of the nation as a whole.  Globalization is increasing inequities as multinational corporations reduce developing nation states’ influence over policy (Islam et al., 2001).  The rising burden of debt makes it difficult for these countries to allocate sufficient resources for the health sector, and the private sector is consequently providing over 80% of health services (Das, 2007).  The government must have the flexibility and drive to improve its own health care, if only to compete in the global market. 

The World Health Organization defines public-private partnerships as a system that varies with regard to “participants, legal status, governance, management, policy-setting prerogatives, contributions and operational roles.”  It is a general term that does not specify what specific operations the private sector is responsible for, but the private sector is involved.  If implemented well, partnerships can combine the different skills and resources of various organizations to help the disadvantaged in innovative ways.  Since public-private partnerships have not been around for long, there is not much data on long term benefits or drawbacks. 

Many public-private partnership advocates cite corruption in the government and general instability as reasons to integrate health care with the private sector.  In this view, health care is too important to be an unfortunate consequence of bad government.  The truth is, however, that the private sector is not much better in this regard.  The private sector may have better facilities, but it too is under very little regulation by the government (Sheikh, 2006).  Both the public and private sectors are plagued with problems of accountability. 

Skepticism also exists regarding the motives of private firms that engage in partnerships.  Private firms may operate only to seek future profits, tax deductions, new products that are subsidized by public funds, or even control over international organizations (Reich, 2000).  Many forms of public-private partnerships act as temporary relief for the poor.  Programs may offer free treatment right now, but dependency on the private health sector will raise the cost of health care in the long term.  Using the voucher system as a starting point, the cost of healthcare should be “regulated just as other consumer products are, through a system of maximum prices” (Das, 2007).  The government should focus on lessening the cost of the government health care system.  While the quality should improve, the cost should be made to accommodate the average Indian’s salary. 

The government has shown progress in health care reform in the past.  The Indian constitution does not require the government to provide equal health care, but court decisions have supported this idea.  Judicial proceedings mark progress, showing that “the government is viewing health as a human right, though not explicitly stated in the Indian Constitution” (Singh et al., 2007).  The fact that these rulings were made shows that the government is not limited by prior precedents, but instead views change and general reform with favor.  The government is willing to expand its role in serving the public, which shows its potential to significantly improve its health care system.

Recent economic growth has allowed the Indian government to make an explicit commitment to increasing state funding on health from 0.9 to 2-3 percent of the GDP (Das, 2007).   The primary argument to encourage private participation is no longer lack of funds but “a lack of managerial and technical ability” (Das, 2007).  The lack of ability will not be an issue, however, with an organized government effort to attract skilled physicians.  In the past, offers of higher pay and benefits in the private sector have drained the government hospitals of the best physicians. 

According to a field study of health care providers in Madhya Pradesh, one of India’s largest states, 75.6% of the qualified physicians mapped work in the private sector, and 80% of these private physicians work in urban areas (De Costa et al., 2007).  Money has played a big role in this issue thus far.  Logically, since the government now has funds, investment in hospitals and increased salaries would likely attract these same physicians to public hospitals.  If these physicians were present, more of the wealthy would start coming to public hospitals, the services would improve, and ultimately, society would become more integrated, all of which are important for India’s nation-building.

Another approach the government should take is to fully decentralize power to local governments.  This will increase accountability of local officials, reducing corruption and forcing the appropriate allocation of funds.  States have “a well-defined locus of authority and long-standing,” while local governments “still lack independent bureaucracies, which constrains their ability to act, even if funds are available” (Singh, 2008).  At the sub national level, services essential to everyday life are a responsibility of local officials, but these officials do not have much fiscal or administrative capacity (Singh, 2008).  As a result, those with the greatest distance from the decision center are most disadvantaged in the services they receive, further increasing the disparity in care.  Recent evidence suggests that “decentralization has improved local responsiveness, targeting, and service delivery in some cases” (Singh, 2008). 

In order to supplement this political decentralization, decentralizing “funds, functions, and functionaries” would also be beneficial to the development of the system.  Centralized databases are important for local units to operate smoothly.  Radical reform, like decentralizing tax authority, would allow local governments to rely less on slowly executed transfers of funds from higher-level government (Singh, 2008). 

Freedom from Hunger, an international non-profit organization, has attempted to improve health care access in West Bengal, India, with their microfinance institution BANDHAN.  The organization teaches people how to take control of their own health through an informal health education system (Braine, 2006).  Education about accessing community health services is an important part of health care and needs to be better addressed.  There are several models like these available through the World Health Organization that would help the government decide which specific policies to implement.  

The shift to decentralization would symbolize India’s willingness to advance reform to the next level.  This particular strategy requires trust in the local officials to harness their new power for the better.  A government policy with this belief at its core will be good for public morale, while marking a real transition in the way the Indian government operates.  Risks are present, but strict implementation of this policy will allow better health care services to surface.

Overall, increased funds and the current movement towards reform enable the government to improve the health care system.  This will not only benefit the entire public in the immediate future, but also in the long term, as India becomes a stronger nation.  Reform of the health care system will catalyze the development of the entire country and a shift in ideology towards accepting change and equality.  As a country on the rise, India will benefit on many levels from an improved health care system. 

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