Privatisation of Health Care in India - Indian Institute of Public ...

Table of Contents123456Introduction 1Globalisation and Health Services: An Overview 2Private Health Services in India: An Overview 5Structure and Characteristics of Private Health Care Providers in India 11Utilisation of Private Health Services 16Conclusion 27References 29

Chhattisgarh Infrastructure Report

Chhattisgarh Infrastructure ReportList of Tables1. Growth of Private & Voluntary Hospitals and Beds in Major States 62. Infant Mortality Rates - 1993-95 73. State-wise Death Rates in India during 1986-1995 74. Growth of Private Beds Relative to Public Beds in Major States 145. Distribution of Outpatient Treatment Over Sources of Treatment for States/U.T. (Urban) 176. Distribution of Outpatient Treatment Over Sources of Treatment for States/U.T. (Rural) 187. State-wise Distribution of Access to Antenatal Care 198. Percentage of children under four years suffering from fever who were taken to a health facility orprovider and treatment given across states and social groups, 1992-93 219. Percentage Distribution of Inpatient Treatment Cases Over Type of Hospital forStates/U.T. (Urban) 2310. Percentage Distribution of Inpatient Treatment Cases Over Type of Hospital forStates/U.T. (Rural) 2411. Percentage distribution of women who gave live births during the four years preceding thesurvey by source of antenatal care during pregnancy according to SC & ST categories,India and states, 1992-93 2512. Trend in Utilisation of Outpatient Services in the Private Sector Between 42 nd and 52 nd Roundsof the NSS 2813. Trends in Utilisation of Inpatient Services in the Private Sector Between 42 nd and 52 nd Roundof the NSS 28

Chhattisgarh Infrastructure Report

Table of Contents123456Introduction 1Globalisation and Health Services: An Overview 2Private Health Services in India: An Overview 5Structure and Characteristics of Private Health Care Providers in India 1 1Utilisation of Private Health Services 1 6Conclusion 27References 29

Chhattisgarh Infrastructure ReportList of Tables1. Growth of Private & Voluntary Hospitals and Beds in Major States 62. Infant Mortality Rates - 1993-95 73. State-wise Death Rates in India during 1986-1995 74. Growth of Private Beds Relative to Public Beds in Major States 145. Distribution of Outpatient Treatment Over Sources of Treatment for States/U.T. (Urban) 176. Distribution of Outpatient Treatment Over Sources of Treatment for States/U.T. (Rural) 187. State-wise Distribution of Access to Antenatal Care 198. Percentage of children under four years suffering from fever who were taken to a health facility orprovider and treatment given across states and social groups, 1992-93 219. Percentage Distribution of Inpatient Treatment Cases Over Type of Hospital forStates/U.T. (Urban) 2310. Percentage Distribution of Inpatient Treatment Cases Over Type of Hospital forStates/U.T. (Rural) 2411. Percentage distribution of women who gave live births during the four years preceding thesurvey by source of antenatal care during pregnancy according to SC & ST categories,India and states, 1992-93 2512. Trend in Utilisation of Outpatient Services in the Private Sector Between 42 nd and 52 nd Roundsof the NSS 2813. Trends in Utilisation of Inpatient Services in the Private Sector Between 42 nd and 52 nd Roundof the NSS 28

Privatisation of Health Care in India:A Comparative Analysis of Orissa, Karnatakaand Maharashtra StatesRama Vaidyanathan Baru*1IntroductionThe mix of private and public health care provision hasalways been a major topic of health policy debates. Thechanging trend has invited the attention of both the governmentand academia. The term privatisation refers tothe growth of the ‘for profit’ sector and its inter relationshipwith the public sector. It also includes the introductionof market principles in the public sector viz. user fees, contractingout and private insurance schemes. While the privatesector existed even at the time of Independence, ithas grown and diversified over the years. This paper exploresthe characteristics, trends and the social basis ofprivate sector growth, based on the available literature anddata from the Ministry of Health and Family Welfare. Thetrends in privatisation are analysed in terms of the increasein private institutions and beds relative to public provisioningacross rural and urban areas and states.It explores the manner in which this sector has grown duringthe nineties after the introduction of the Structural AdjustmentProgramme (SAP). This period is not onlycharacterised by the growth of the ‘for profit’ health caresector, but the public sector was also being increasinglyrestructured with the introduction of market principles likeuser fees and various forms of public-private partnerships.In several states these elements were introduced throughthe health sector reform initiatives. This trend is a result ofstates facing a fiscal crisis and therefore, opting for loansand grants from multilateral and bilateral agencies that advocatepolicies to make the public sector generate its ownresources. The net effect of such a restructuring processon the utilisation patterns for outpatient and inpatient careacross states and income groups are analysed in relation tothe structures of provisioning.*The present paper is the outcome of a detailed empirical exercise carried out by the Centre for Multi Disciplinary Development Research (CMDR),Dharwad as part of its UNDP sponsored project “Economic Reforms and Health Sector in India”. The views expressed in this paper are those of theauthors and do not necessarily reflect the views of GOI, UNDP, IIPA or the collaborating institutions. The author is grateful to Prof. Gopal Kadekodiand Prof. Panchamukhi for their support.1

Privatisation of Health Care in India2Globalisation and Health Services:An OverviewviewThe most significant and widespread global trend in healthcare over the past decade and more has been the increasingshare of the ‘for profit’ health care sector and itsmarketisation across societies. This transformation in thehealth care sector has paralleled the process of economicglobalisation and is intrinsically linked to it.While private medical practice and the dispensation ofmedical care for a price have been known for a long time,the commercialisation, marketisation and corporatisationof health care are a phenomenon of the last quarter of the20 th century. Due to global recession, this process receiveda boost during the late seventies and early eighties, envelopingboth developed and developing countries, imposingfiscal constraints on government budgets and encouragingthem to cut back on public expenditure in the socialsectors. This increased the space for the growth of theprivate sector in the provisioning of health care, whichwas accelerated during the eighties and nineties with theincreasing role of the pharmaceutical and medical equipmentindustries’ in seeking markets for their products.In this process of globalisation multinational corporationshave systematically targeted both international agencies andnational governments for policy influence, defining prioritiesfor disease control programmes, provisioning of healthcare and medical research at the national level. Typicallythese MNCs (multinational companies) have influencednational policies through multilateral agencies like the WorldBank, the World Health Organisation and the World TradeOrganisation, in key areas such as provisioning and researchin health care. They have influenced development fundingin the social sectors, securing focus for programmes witha higher curative content. They have encouraged the fundingof curative and drug-based programmes rather thanfocusing on public health and preventive programmes.Through the WTO, the policy framework for intellectualproperty protection has been aimed at protecting pharmaceuticalcompany bottom lines and helping them generatesuper profits. Such policy interventionism has ensuredthe funding of specific programmes, the creationof a market for drugs and equipment and the freeing ofstate control on the market. During the nineties, the WHOincreasingly went in for partnerships with the industry,especially for the tropical disease research programmes.(Brundtland, 2000)The increased influence of global drug multinationals inthe nineties has been facilitated by the recent trend towardsmergers and the increased concentration of sellingpower within the pharmaceutical industry. As a result ofthese mergers, a few corporations account for the bulkof pharmaceutical sales in the world. Many of these companiesexport drugs, vaccines and biological instrumentsto developed and developing countries. The majorpharmaceutical, equipment and insurance related MNCsare based in the United States. During the nineties they expandedtheir markets across several developing and developedcountries. This process was also accompanied by the2

Globalisation and Health Services: An Overviewincreased importance given to the growth of the ‘for-profit’health care sector.2.1. International Experience withMarketisation of Health CareThe trend towards the commercialisation and marketisationof health care during the last three decades cuts acrossboth developed and developing countries. While the UnitedStates has been a leader of the ‘market model’, the phenomenonis spreading even to “socialist” societies. Marketforces have largely controlled financing, provisioning andresearch in the health care sector in the U.S. Financing hasbeen largely managed through insurance companies, provisioningby large hospital corporations and research bypharmaceutical and medical equipment companies. Thegovernment’s role has been minimal and includes providingpublic insurance to the elderly and poor, drawing upregulatory guidelines for the private sector and giving subsidiesfor private medical care (Brown, 1984). Themarketised model of American medical care came undersevere criticism during the eighties. Criticism essentially focussedon the rising costs of medical care, excessive emphasison curative and high technology care, the dominanceof medical technology and pharmaceutical industriesin medical care. The critics further argued that thesetrends marginalised sections of the middle and workingclasses from access to health care. This was corroboratedby the increase in both the uninsured and under-insuredpersons during the eighties and the nineties. The uninsuredconsumers of health services were largely drawn from theworking class and some sections of the middle class.(Carrasquillo et al, 1999) Given the high cost of medicalcare, the uninsured were effectively denied access to healthcare. However, efforts to introduce universal public insuranceand other progressive reforms were resisted both bythe pharmaceutical companies and the ‘for profit’ healthcare providers.Despite the problems faced by the US health care system,most countries have been moving towards the Americanmodel of care where the private sector plays a dominantrole. This undoubtedly is a consequence of globalisationand the influence of the U.S. experience on other countries,an influence which has been partly communicatedthrough the media and public perceptions of what is acceptableand partly imposed by multilateral lending agencieslike the World Bank. These agencies have strongly advocatedprivatisation measures in health care as part of thestructural adjustment programmes. This position was wellarticulated in the World Development Report 1998, thatwas entitled, ‘Investing in Health’ (Rao, 1999).Countries in Europe, Africa, Latin America and Asia thathad built state-supported health services during the sixtiesand seventies, have now encouraged privatisation both asa response to the fiscal crisis of the public sector and tofulfil conditionalities linked to multilateral lendingprogrammes ( Jimenez & Bossert, 1995). The erstwhileSoviet Union and several central and eastern Europeancountries have gone through a process of marketisationwith a subsequent weakening, and in some cases even dismantling,of state services. Similarly, China has also beenmarketising its health services and is encouraging MNCsto enter the health care market. Studies show that increasingmarketisation of health care has pushed up the cost ofmedical care and has contributed to increased inequality inaccess to services across regions and classes in China(Acharya et al, 2001).Similar trends are visible in the UK, several West Europeancountries and in East Asia. In the UK, several Americanhospitals and insurance companies entered the market duringthe eighties. During the same period, efforts were madeto restructure the National Health Service in order to reducegovernment spending. Several other countries in Africaand Asia have followed similar paths, with reduction ingovernment spending on health care and an increased pushfor privatisation. This has meant the shifting of responsibilityto individual households to pay for health care (Price,1989). The consequences of marketisation have been welldocumented for Latin America and Africa, as also for someAsian countries. These studies show that access to care hasbeen reduced for the poor, costs of drugs are high, and theprivate sector serves only those who can pay.3

Privatisation of Health Care in India2.2. Consequences ofMarketisation: Some Global TrendsWhat have been some of the consequences ofmarketisation in terms of cost, equity and universal access?Available data from both developed and developing countriesshow that marketisation has had serious consequencesfor equity. It has resulted in the poor being denied accessor often getting poor quality care. In many third worldcountries, paying for care has meant indebtedness for thehousehold. In the US, the percentage of the uninsured roseby 30 percent during the eighties and during the ninetiesthe number of uninsured rose by 15.6 percent. In 1998,approximately 44 million persons were uninsured in theUS and these included mostly ethnic minorities, the poor,elderly and women (Carrasquillo et al, 1999). Lack ofinsurance meant that these people could not access preventiveservices and treatment for chronic diseases wasalso beyond their reach. As a result, very often they hadto delay seeking medical care and hospitalisation. If thisis the situation in an affluent country, then it is bound tobe much worse in poorer countries where a larger proportionof the population is poor.Across the world the process of privatisation has somecommon features especially due to the influence of thepharmaceutical and technology industries coupled withthe policies of multilateral organisations. However, theextent and nature of privatisation varies across countries,and is influenced by the specific socio-politicalcontext.4

3Private Health Services in India:An OverviewviewThe following section traces the evolution of the privatesector and explores its characteristics for India and the specificstates under study. It is well known that India’s privatesector in health care is characterised by plurality in termsof systems of medicine and the forms of practice. Evenbefore Independence, the single largest category of providersconsisted of private practitioners across allopathic,ayurveda, unani, siddha and homeopathy (Baru, 1993). Individualpractitioners dominate the private sector in all thesesystems but from the seventies the growth of nursinghomes and hospitals was largely confined to the allopathicsystem of medicine. Other indigenous systems of medicinedid not witness a similar kind of growth at the secondaryand tertiary levels of health care. Clearly the growthof the private secondary and tertiary levels of care wereconfined largely to urban areas and rural areas where therewas agrarian prosperity. The relationship between economicdevelopment and the growth of private services is obviousand this has been empirically shown in a study comparingthe poorer and richer districts in Andhra Pradesh(Baru, 1993). This study showed that the number of privateinstitutions at the secondary level of care was skewedin favour of the developed districts as compared to thepoorer ones. This trend has been observed across states,supported by the data on the growth of private institutionsfrom the mid 1980s. The better developed states haveseen a growth of private institutions at the secondary andtertiary levels (Table 1).The three states under study represent varying levels ofdevelopment, private medical care and public health services.Maharashtra represents a developed state, Karnataka,a middle level and Orissa a poorly developed state. Giventhese variations, one would like to examine the growth ofthe public and private sectors in these states. Given thepaucity of data on the private sector, we are relying onpublished sources to discern the broad trends for the secondaryand tertiary levels of care. The data on primarylevel care is not available, but we have made use of publishedand unpublished studies that give us some insightinto the numbers and characteristics of the providers inthe private sector at this level. Utilisation of services forboth outpatient and inpatient care is examined in the contextof the structures of provisioning. This analysis willstudy the variations across selected states, across incomegroups and also the vulnerable social groups, namely, thescheduled castes and scheduled tribes. Since NSS (NationalSample Survey) data is available for the mid-eighties andthe nineties, it is possible to study if there has been any shiftin utilisation patterns. All these three states have opted forreforming health systems as a part of the World Bank financedproject, which is part of the ‘soft loans’ that severalstates have opted for.If one examines the trends in crude death and infant mortalityrates (IMR) for these three states one finds that thelatter reflects the level of development. In 1995,Maharashtra had an infant mortality rate of 55 per 10005

Privatisation of Health Care in IndiaTable 1: Growth of Private & Voluntary Hospitals and Beds in Major StatesSTATE 1973 1983 1985 1987 1989Andhra Pradesh 113 9,213 266 11,103 266 11,103 266 11,103 266 11,103Bihar N.A. N.A. 125 8,447 125 8,447 90 8,519 55 5,536Gujarat 41 1,219 669 16,929 733 16,339 1,211 21,128 1,319 25,093Haryana 17 1,877 18 2,566 18 2,566 17 2,558 20 2,772Karnataka 38 5,106 53 6,894 44 6,702 51 7,339 51 7,339Kerala N.A. N.A. 606 18,203 606 18,203 173 14,309 1,899 44,321Madhya Pradesh 8 1,601 N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.Maharashtra 68 8,300 682 26,024 945 32,033 1,121 35,296 1,319 35,849Orissa 35 1,741 34 1,408 31 1,227 31 1,227 29 1,306Punjab 20 2,070 35 2,913 35 2,913 43 3,466 39 3,781Tamil Nadu 69 9,618 61 8,562 61 8,562 73 9,505 119 10,366Uttar Pradesh 151 19,897 160 12,083 159 12,026 159 12,026 159 12,026West Bengal 78 8,452 126 6,424 126 6,610 126 6,463 129 6,511All-India 718 66,926 3,022 134,266 3,549 139,442 3,549 144,009 6,522 177,034Contd...Table 1: Contd...STATE 1991 1993 1996 1999Andhra Pradesh 841 19,784 N.A. 26,791 2802 42192 2802 42192Bihar 55 5,536 N.A. 8,519 90 8519 90 8519Gujarat 1,319 25,093 N.A. 83,487 - - 2152 36802Haryana 20 2,232 N.A. 2,232 20 2232 20 2232Karnataka 51 7,339 N.A. 9,999 56 9999 56 9999Kerala 1,899 49,169 N.A. 49,169 1899 49169 1958 67517Madhya Pradesh N.A. N.A. N.A. N.A. 0 0 0 0Maharashtra 1,319 37,781 N.A. 37,758 2583 37758 3023 42046Orissa 29 1,301 N.A. 1,306 14 201 14 201Punjab 39 3,782 N.A. 3,782 39 3782 39 3782Tamil Nadu 119 10,366 N.A. 10,366 119 10366 119 10366Uttar Pradesh 159 12,026 N.A. 12,026 159 12026 159 12026West Bengal 129 6,912 N.A. 6,912 134 6759 133 6529All-India 6,522 180,386 N.A. 210,987 10289 228155 10848 253437Source: Health Information of India, Central Bureau of Health Intelligence, Ministry of Health & Family Welfare, Government of India,New Delhi (Various Years).6

Private Health Services in India: An OverviewTable 2: Infant Mortality Rates - 1993-95(Per 1000 live births)States 1990 1993 1994 1995Rural Urban Combined Rural Urban Combined Rural Urban Combined Rural Urban CombinedKarnataka 80 39 70 79 73 69 42 45 43 63 65 62Maharashtra 64 44 58 67 67 66 32 36 36 50 54 55Orissa 127 68 122 115 108 107 69 65 65 110 103 103INDIA 86 50 80 82 79 80 45 51 51 74 73 74Source : Health Information of India, Central Bureau of Health Intelligence, Ministry of Health & Family Welfare, Government of India, New Delhi (1994; 1995; 1996).live births, followed by Karnataka with 62 and Orissa with103. Interestingly, the rural-urban differential is not verymuch in the infant mortality rates. It is also important tonote that both Maharashtra and Karnataka have IMRs lowerthan the all India average, while Orissa is significantly aboveit (Table 2). The death rates show a similar trend, with bothMaharashtra and Karnataka having crude death rates of7.4 and 7.6 per 1000 population respectively, while Orissahas 11.2. While Maharashtra and Karnataka have death ratesbelow the all India average, death rates in Orissa are higherthan the all India average (Table 3). Thus, one can see thatthe overall socio-economic development seems to showvariation in health status indicators as well as the provisionof health services. The objectives of this section of thepaper are to examine:1. The trends in health services development in the privatesector relative to the public sector in terms ofbed strength at the primary, secondary and tertiary levels.2. The utilisation patterns for outpatient and inpatient carein these states – across income and social groups.In order to address the first objective, we have made useof relevant data on the macro picture put forth by theCentral Bureau of Health Intelligence (CBHI) and otheravailable studies on the private sector. For the second objective,the 42 nd and 52 nd rounds of the National SampleSurvey (NSS) and the latest National Family Health Survey(NFHS) data are utilised. This analysis is possible for poorsocio-economic groups.Table 3: State-wise Death Rates in India during 1986-1995(Per 1000 Population)States Area 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995Karnataka Combined 8.7 8.7 8.8 8.8 8.1 9.0 8.5 8.0 8.1 7.6Rural 9.4 9.7 9.5 9.6 8.8 9.8 9.4 9.5 9.3 8.5Urban 6.8 6.1 7.0 6.5 6.1 6.9 6.0 5.2 5.5 5.6Maharashtra Combined 8.4 8.3 8.9 8.0 7.4 8.2 7.9 7.3 7.4 7.4Rural 9.7 9.5 10.1 8.9 8.5 9.3 9.1 9.3 9.2 8.9Urban 6.1 6.1 6.7 6.3 5.4 6.2 5.6 4.8 5.4 5.3Orissa Combined 13.0 13.1 12.3 12.7 11.7 12.8 11.7 12.2 11.1 10.8Rural 13.5 13.7 12.8 13.2 12.2 13.5 12.1 13.1 11.7 11.2Urban 8.1 7.8 7.1 8.1 6.9 6.6 7.8 5.8 7.2 7.4INDIA Combined 11.1 10.9 11.0 10.3 9.7 9.8 10.1 9.3 9.2 9.0Rural 12.2 12.0 12.0 11.1 10.5 10.6 10.9 10.6 10.1 9.7Urban 7.6 7.7 7.7 7.2 6.8 7.1 7.0 5.8 6.5 6.5Source : Health Information of India, Central Bureau of Health Intelligence, Ministry of Health & Family Welfare, Government of India, New Delhi (1995; 1996).7

Privatisation of Health Care in India3.1. Evolution of Health Services inIndia from the Forties to the lateNinetiesHealth services development in India can broadly be dividedinto three phases. The first phase of developmentwas the post-Independence period, which witnessed thegrowth of health services in the public sector up to theseventies. Investments in the health sector were meagre,but an effort was made to build a network of services inboth rural and urban areas. This phase was followed bythe period from the late seventies to the late eighties whenthere were cutbacks on public spending and concessionsgiven to the private sector. During the third phase Indiawent in for loans from the IMF and World Bank. This wasthe period when several state governments received loansfor reforming the publicly provided health services.Like many of the newly liberated countries during the 20 thcentury, the leadership of the Indian nationalist movementhad committed itself to principles of universality and anationalised health service system to ensure that all sectionsof the population get access to services. The vision at thatpoint in time was to build self-reliance in the economy andsocial sectors and hence, in health care, the emphasis wason the development of institutions, manpower, research,pharmaceuticals and technology.The nationalist movement and its commitment to democraticpolitics played a very important role in ensuring thatthe needs of the majority were represented (Bhargava,2000). This understanding received support from varioussections of civil society that included the political parties,big business groups, professional bodies and others. It isindeed interesting to note that different sections of thepolitical spectrum had clearly articulated the need for astate-supported health service system. These sections includedthe national bourgeoisie, the left parties and the IndianNational Congress. Each of them had clarified theirrespective positions through well-articulated plandocuments.Given the poor health of a majority of Indians, the thrustwas to invest in preventive and curative care in addition toimproving the overall living conditions of the population.The Bhore Committee report (Government of India, 1996)was an attempt at designing a health service system basedon the needs of the majority who belonged to the deprivedsections of the population. As the Bhore Committeeobserved, the majority of the Indian population wassuffering from malnutrition and anaemia. The major killerswere a host of communicable diseases more commonlyreferred to as diseases of the poor. Therefore, thepolitical leadership had to take cognisance of the extent ofthe problem and tackle it through state investment, sincethe market was restricted to individual private practitioners,both in allopathic and other systems of medicine.Due to limited private capital, even the representatives ofbig business houses relied on state investment in educationand health.Within the health services, the professional organisationssupported state investment, but did not want it to interferewith their autonomy to continue private practice. It is indeedinteresting that while the ‘left’ parties called for theabolition of private interests within the medical and pharmaceuticalsectors, the professional bodies wanted thedoctors to be allowed to continue their private practice.The Bhore committee accommodated the interests of theprofessional bodies by not taking measures to eliminateprivate interests both within and outside the public healthservice system.Thus, even at the time of Independence a substantial percentageof government doctors were practicing in the privatesector as individual practitioners, but the number ofinstitutions was very small. Private interests were also presentin the pharmaceutical industry during this period (Jesaniand Anantharam, 1993; Baru, 1998).A survey of the health status of the population during thelate forties revealed that death rates, infant mortality andmaternal mortality rates were very high and the major causesof death were a host of communicable diseases. Keepingin view the poor health conditions of the majority, thereport emphasised the need for strong primary health careservices supported by secondary and tertiary levels of care.It was estimated that around 12 percent of the GNP would8

Private Health Services in India: An Overviewneed to be invested in the health sector in order to providehealth services across the country. In addition, the reportrecommended investment in the pharmaceutical sector inorder to develop indigenous capabilities and reduce excessivereliance on the MNCs. The Bhore Committee, in1946, symbolised the Indian state’s effort to plan and deliverhealth services, which would be accessible to all itscitizens. The period of the sixties reflected the real growthperiod of health services, but even at that time the investmentswere far from adequate. Thus, the Bhore committee’svision suffered a setback during the sixties with most ofthe investment going into the secondary and tertiary levelsof care and primary health services remaining weakly developed(Banerji, 1985; Qadeer, 1985).In terms of structure, the Bhore committee had envisioneda three-tier model with a strong primary health servicenetwork as a base and supported by secondary and tertiarylevels of care. In order to build an extensive networkof services, the committee had suggested fairly high levelsof investment of up to 12 percent of the GDP. Despitethe rhetoric of primary health care, the structure of provisioningwas largely curative, biased towards urban areasand in the secondary and tertiary levels of care. The structuresof provisioning largely reflected the needs and aspirationsof the middle classes from both urban and ruralareas that resulted in the growth of the secondary and tertiarylevels and the neglect of primary level of care.Several scholars have often criticised this and some haveeven questioned whether India can be characterised as beinga ‘welfare state’ at all (Jayal, 1999). Despite the incrementalnature of health service planning, India did manageto build a fairly extensive network of services, createdindigenous capacity for training personnel for various levelsof care and invested in research and pharmaceuticalcapability. However, the low levels of investments in healthservices stunted the growth of the public sector, whichprovided the space for the growth and expansion of theprivate sector during the last three decades. Apart fromthe growing presence of the private sector, the public sectorwas marked by rural/urban, regional and class inequalities.These trends were questioned during the mid seventieswhen a progressive government was in power and setup a committee.The seventies were marked by a number of debates concerningthe problems of health services development andsuggestions for change within the country. Some of themwere seriously reviewed by national bodies and they wereextremely critical, but also offered alternatives to remedysome of the problems (ICSSR/ICMR Committee report,1981) 1 . The reviews discussed the under-funding of the healthsector and the structural inequalities within it. The critiquesemphasised the need for reorienting health services to ruralareas and also to make medical education more relevant tothe needs of rural areas. However, the oil shock of the lateseventies had a negative impact on the financial conditionand India, along with several other developing countries,found herself caught in the world recession. Due to thefinancial crunch most third world governments during theeighties were in no position to increase investments in health.This meant stagnation in the growth of public services, whichwas an important reason for the growth of market forcesin the health sector (Baru, 1998).The growth of the private sector and the gradual neglectof the public sector, have to be seen in terms of the changesin the social structure after Independence, in the rural/urbanareas and across regions in India. After Independencethe growth of the middle classes was not merely restrictedto urban areas. With agrarian prosperity as a result of thegreen revolution, there was a rise in the rich and middlepeasantry, who were largely drawn from the backwardcastes. This was mainly seen in some northern, western andsouthern states in the country (Kamat, 1985). These sectionshad made use of public investment in education as avehicle for social mobility in order to challenge traditionalsocial hierarchies. As a result, these upwardly mobile sectionsinvested heavily in the education of their children forsocial mobility and some of them, from the more prosperousareas of the country migrated to the UK and USAas qualified professionals during the late sixties and seventies(Baru, 1998; Omvedt, 1981; Khadria, 1999). Thus a1ICSSR/ICMR is the Indian Council for Social Science Research and Indian Council for Medical Research9

Privatisation of Health Care in Indiaglobalised middle class of professionals, who had bothurban and rural roots, was beginning to emerge. The aspirationsof this class were clearly different from the largesection of the poor. Typically the ‘new middle class’ foundthe public system inadequate to meet their needs and inthose states where there was a vibrant private sector theystarted moving out of the public sector. This is seen in thecase of health service utilisation during the mid-eightieswherein the urban and rural middle-income groups utilisedprivate health services depending on their ability to pay.Here it is important to underscore the fact that there areregional variations and this trend is seen in the richer statesas compared to the poorer ones (Baru, 1998). The movingout of upper and middle sections of the populationfrom public provisioning had serious consequences for financing,provisioning and quality of services. These sectionsreally provide the constituents for the support ofhealth sector reforms and support the neo liberal position thatpublic services are for the poor and those who can afford topay should use private services. With the middle class giving upownership of the public sector there is a further weakening ofthe state’s commitment towards public provisioning.India, with its fairly significant middle class provides a goodmarket for multinationals 2 . Computer software industrytie-ups with the medical sector and American insurancecompanies looking for tie-ups will further consolidate theposition of global capital in the private health sector. Thiswould definitely redefine and alter the spaces for the statesto plan their health services. These trends are not restrictedto the private sector, but with the restructuring of the publichospitals under the health sector reforms, the interests ofsome of these industries, especially, the medical equipmentindustry would grow.2McKinlay (1980) has observed that for any substantive analysis of privatisation of health services there needs to be recognition of the role played bylarge finance capital in the health sector. Large finance capital was largely confined to the pharmaceutical, medical equipment and insuranceindustries and these operated globally. The impact of these industries was very visible in the Indian case during the late eighties and nineties whenthere was a sharp increase in the import of medical equipment. The real peak was seen during the mid to late nineties with the government offeringreduced import duties for medical equipment (Baru, 1998). Apart from imports, many multinational equipment companies like Siemens, Philips,Becaton and Dickinson and General Electric started setting up assembling plants in the central and southern parts of India. As an executive of PhilipsInternational remarked “The health care business is a $3000 billion industry worldwide. If even we attract one percent of the market in India, thepotential for the medical equipment industry is tremendous” (Baru,1998).10

4Structure and Characteristics of PrivateHealth Care Providers in IndiaThe Indian private sector is characterised by a heterogeneousstructure consisting of institutions of varying sizesand patterns of ownership (Bhat, 1993; Baru, 1998). Thebulk of the private sector still consists of individual practitioners,both qualified and unqualified, who essentiallyprovide primary level, outpatient care and are located inboth rural and urban areas. These practitioners provideprimary level curative services of extremely variable qualityacross urban and rural areas in the country (Jesani andAnantharam, 1993; Yesudian, 1994; Baru, 1998).The secondary level of care in the private sector is providedby nursing homes with a bed strength ranging fromfive to 50 and is promoted by single owners or partners(Jesani and Anantharam, 1993; Bhat, 1993; Yesudian, 1994;Baru, 1998). While in most states they are largely an urbanphenomenon, in other states, where private sector growth(relative to public sector) is high, they have spread to evenurban peripheries and rural areas. Studies conducted inHyderabad and Chennai reveal that most of these nursinghomes offer general and maternity services and are managedby doctor entrepreneurs (Baru, 1998; Muraleedharan,1999). Within this category there is a further division betweensmall and large nursing homes, which differ widelyin terms of investments, equipment and facilities, range ofservices offered and quality of care. Most of these promotersare qualified doctors who have located these enterprisesin urban and semi-urban areas. The tertiary levelof care consists of multi-specialty hospitals that are promotedby partners or as private limited or public limitedenterprises. These are mostly located in the larger cities andhave a strong Non Resident Indian (NRI) connection withdoctors based in the United States (Baru, 1998).4.1. Characteristics of Primary LevelCare Private ProvidersAn analysis of studies on the private sector in India suggeststhat a considerable section of the population in bothrural and urban areas and across states, access the servicesof individual private practitioners for primary level care(Sunder, 1992; Krishnan, 1999). Micro-level studies fromDelhi, Hyderabad and rural Uttar Pradesh show that peoplefrom different sections of the population, in both ruraland urban areas, use these practitioners as a first resort foracute conditions, but also use government facilities (Nandaand Baru, 1993; Vishwanathan and Rhode, 1985). Theseutilisation studies show that the private practitioners areconsulted for a variety of minor illnesses. These studiesalso show that there is much heterogeneity among providersin terms of qualifications, systems of medicine andpractices. They include herbalists, indigenous and folk practitioners,compounders and others (Vishwanathan and Rhode,1985; Baru, 1998). These practitioners being easily availableand accessible locally are utilised extensively. Studiesconducted in urban slums and rural areas from UttarPradesh, West Bengal, Orissa, Kerala, Tamil Nadu and11

Privatisation of Health Care in IndiaMaharashtra indicate that the middle and better off sectionsin these communities use the services of both qualifiedand unqualified private practitioners. The really poorare unable to afford the doctor’s charges and hence, eitheropt for government hospitals or often go without care(Bisht, 1993; Soman, 1992; Vijaya, 1997; Kakade, 1998).Chemist shops and pharmaceutical representatives influencethe prescription patterns of both qualified and unqualifiedpractitioners. In addition, the former also dispensemedicines for a variety of ailments and act as providers ofprimary level care. Studies by Phadke and Greenhalgh inMaharashtra have amply demonstrated the nexus betweenthe pharmaceutical industry’s marketing network and prescriptionpatterns of doctors, both qualified and unqualified(Greenhalgh, 1987; Phadke, 1998; Shah, 1997). Phadke’sstudy on the supply and use of pharmaceuticals in Sataradistrict of Maharashtra shows that a high proportion ofprescriptions are irrational and often very expensive. Theinfluence of pharmaceutical representatives is significant andthey are the single most important source of continuingmedical education of doctors (Phadke, 1998). While examiningthe utilisation of health services in the Kandhamal districtof Orissa, it was seen that women utilise the pharmacist’sservices in both rural and urban areas without consultinghealth professionals (Samantaray, 2000).Given the poor knowledge base of these practitioners, itis not surprising that their treatment of even common ailmentsis often irrational, ineffective and sometimes harmful.Studies that have analysed provider behaviour withrespect to specific diseases like tuberculosis and diarrhoeain Maharashtra, Delhi slums and Tamil Nadu support thefindings from elsewhere (Uplekar and Shepherd, 1991;Bhandari,1992; Balambal et al, 1997).4.2. Characteristics of PrivateProviders at the Secondary andTerertiartiary Levels of CareA few studies on the secondary level of care show that itconsists of institutions with five to over 100 beds that provideboth outpatient and inpatient services. These studiesprovide an insight into the heterogeneity of these institutionsin terms of scale of operation, services offered, technologyemployed and the social background of patientsusing these facilities (Bhat, 1993; Jesani and Anantharam,1993; Nanda and Baru, 1993; Baru, 1998; Muraleedharan,1999). They have further shown that single owners or partners,who are mostly doctors, usually promote these institutions.Typically, these institutions are located in towns andcities, but in some states like Andhra Pradesh, Maharashtra,Gujarat and parts of Karnataka and Tamil Nadu, they havespread to urban peripheries and rural areas especially thosewhich are economically well developed. Given the variabilityin the size and characteristics of the institutions at thislevel of care there is much plurality in type, quality and costof services provided by such institutions.Nandraj and others have explored the variability in the physicalinfrastructure, qualifications of personnel and their practicesat the secondary level of care in Mumbai. The studies fromDelhi, Chennai and Hyderabad show similar trends and thislack of basic and uniform standards for service provisioninghas implications for the quality of care provided (Baru,1998; Muraleedharan, 1999). It is important to point outhere that there is a dearth of studies, which examine thequality of the private sector in some detail.The tertiary level forms only three to five percent of thetotal private sector and is located in larger cities. Typicallythese are promoted as trusts, public or private limited enterprisesand most are located in the southern cities of Chennai,Bangalore and Hyderabad. These hospitals have a strongNRI link and provide a range of super specialist care.4.3. Regional Variations in theGrowth of Private Health CareThe growth of the private sector is related to the level ofeconomic and infrastructure development. As mentionedin the earlier section, the primary level of care consistingof private practitioners is widespread in both rural/urbanareas and across states. However, when it comes to secondaryand tertiary levels of care there is a distinct variationacross states. A study across developed and backward12

Structure and Characteristics of Private Health Care Providers in Indiadistricts in Andhra Pradesh amply demonstrated this. Thebed strength of the private sector was much higher in thebetter-developed districts than the backward ones (Jesaniand Anantharam, 1993; Baru, 1993). This pattern is seenacross states as well. There is a paucity of data on individualpractitioners since the only source of informationavailable is the registration data from the various medicalcouncils. This data is limited because not all practitionersare registered with these councils and there is also a greatdeal of cross practice across systems of medicine (Baru,1993; Duggal, 2001). Duggal estimates that there are approximately12 lakh practitioners in the country and theyare concentrated in states like Maharashtra, Gujarat andthe southern states. The allopathic doctors constitute about45 percent of the total registered practitioners and are locatedmostly in urban areas, whereas non-allopathic practitionersare mostly located in the smaller towns and ruralareas (Duggal, 2001).At the secondary level of care, which consists of nursinghomes, the economically developed states like Maharashtra,Punjab, Tamil Nadu and Gujarat have a higher proportionof beds in the private sector compared to the public sector(Table 4). Relatively poorer states such as Orissa, MadhyaPradesh, Uttar Pradesh and Rajasthan have low privatesector growth. The growth of corporate hospitals is largelya phenomenon in those states, which have agrarian prosperityand also have strong NRI links. For the three statesunder study the trends are clear: Maharashtra is the highprivate sector growth state, Karnataka falls in the middlerange and Orissa is a poor state with very little privatesector growth. The trend in the growth of private bedsrelative to public beds, from the seventies to the nineties,indicates that the number of private beds has doubled overthe twenty-year period in Karnataka. In Maharashtra, privatebeds have increased four and a half times during thesame period, while for Orissa there has been no growth–in fact there has been a decrease in the number of privatebeds during this period (Table 4).A survey done by the Karnataka government in 1996 onnon- government facilities shows that there are a large numberof institutions in this sector at the secondary and tertiarylevels of care. 89 percent of these institutions weregeneral hospitals with total a bed strength of 36,042, followedby those that provided only maternal and child healthservices (10.04 %) and the remaining provided specialistservices like ophthalmology and oncology (Governmentof Karnataka, 2001, pp.29-30). In terms of ownership83.38 percent of these institutions were promoted by individuals,7.49 percent were partnerships, 3.98 percent werecharitable trusts 2.46 percent were registered societies, 1.58percent were religious missions and 1.11 percent were limitedcompanies. Nearly 52 percent of the total beds werein the category of institutions promoted by individuals.This data does not provide information on the distributionof these institutions within Karnataka, but the general patternis that they are mostly located in urban and its peripheries..Karnataka does have a sizeable private sector, but thereis no system for registration. Hence, there is an incompletepicture of the private sector. In recent years there has beenan increase in the number of nursing homes and corporatehospitals especially in urban areas (Government of Karnataka,2001). In terms of accessibility of services there are considerableregional variations in both the private and public sectors.North Karnataka has poor infrastructure in terms ofroads, communications and transport facilities, while southernKarnataka has better infrastructure facilities, which hasan impact on accessibility and utilisation.In Maharashtra, a few studies have focussed on the publicsector and the regional variations in terms of its distribution.The more developed regions of Marathwada andKonkan have better facilities and access as compared tothe poorer region of Vidarbha (Budhkar, 1996). Budhkarobserves that there has been a strong tradition of localbodies in the provisioning of health services in Maharashtra.During the late seventies those regions that experiencedagrarian prosperity viz. Marathwada and parts of Konkan,also witnessed a spurt in the growth of the private sectorat the secondary level of care. She also shows that dispensariesand small nursing homes, which are skewed in favourof urban areas, dominate the private sector. This trendwas observed in a study of the distribution of NGOs inMaharashtra, where there was a greater concentration in13

Privatisation of Health Care in Indiathe better developed districts than in the poorer ones (Jesani,et al 1986).When it comes to Orissa, there are no studies available onthe growth of the private sector. However, studies that havelooked at the health care services show that the public servicesare skewed towards urban areas and the private sector’scontribution is not more than 10 percent of the governmentbeds. Therefore, there is very little interface betweenthe public and private sectors. An analysis of bed strength inthe private sector in relation to the public sector (as shownin Table 4) shows that the presence of the private sector inOrissa is very low (Padhi and Mishra, 2000).4.4. Micro Studies on the PrivateSector: Maharashtra, Karnatakaand OrissaA survey of available literature on the private sector in thesethree states reveals that there is a paucity of both publishedand unpublished studies in this area (CEHAT 3 , IIT & JNU:2001). The maximum number of studies has been done inMaharashtra, followed by Karnataka and lastly, Orissa. ForMaharashtra, most of the studies have been conducted inBombay and focus on the utilisation of the private sector,the private practitioners and their practices.A few studies have looked at the practices of private practitioners,both allopathic and non-allopathic, with respect tocommunicable diseases like malaria, tuberculosis and leprosy(Uplekar and Shepherd, 1991; Uplekar and Rangan,1996). A study of private practitioners in Bombay with respectto the treatment of tuberculosis showed that bothallopathic and non-allopathic doctors were treating this disease.A survey of these practitioners revealed that there wasa lack of awareness among them about the standard regimenfor the treatment of tuberculosis. These practitionerswere also found to be using expensive regimens and providingincomplete treatment (Uplekar and Shepherd, 1991).A similar study tried to examine the knowledge, attitude,practice and beliefs with regard to leprosy. It showed thatwhile these practitioners knew about the disease, their attitudestowards the patients suffering from the disease werevery negative, which is bound to affect patient care.Source: Health Information of India, Central Bureau of Health Intelligence, Ministry of Health & Family Welfare, Government of India, New Delhi (Various Years).3Centre for Enquiry into Health and Allied Themes (CEHAT); Indian Institute of Technology (IIT) and Jawaharlal Nehru University (JNU).14Table 4: Growth of Private Beds Relative to Public Beds in Major States1973 1983 1993 1996 1999States Public Private Public Private Public Private Public Private Public PrivateBeds Beds Beds Beds Beds Beds Beds Beds Beds BedsAndhra Pradesh 19,356 9,213 22,722 11,103 22,776 26,761 3640 42192 27586 42192Bihar 11,722 N.A. 14,078 8,447 20,522 8,519 20522 8519 20522 8519Gujarat 10,150 1,219 11,502 16,929 20,708 33,487 - - 22229 36802Haryana 3,767 1,877 4,744 2,566 4,796 3,232 4948 2232 5018 2232Karnataka 18,485 5,106 21,267 7,779 27,216 9,999 27736 9999 27756 9999Kerala 19,623 N.A. 24,875 18,203 28,030 49,169 28030 46169 30323 67517Madhya Pradesh 12,551 1,601 16,827 N.A. 25,310 N.A. 18141 0 18141 0Maharashtra 23,653 8,300 37,790 26,024 34,261 37,758 34261 37758 39350 42046Orissa 7,235 1,741 9,988 1,408 13,077 1,306 14572 201 11668 201Punjab 5,918 2,070 11,316 2,913 10,786 3,782 10936 3782 11041 3782Tamil Nadu 13,287 9,618 31,574 8,562 37,935 10,366 37935 10366 37935 10366Uttar Pradesh 23,326 10,897 33,125 12,083 34,267 12,026 34267 12026 34267 12026West Bengal 25,106 8,452 42,319 6,424 47,252 6,912 47825 6759 46392 6529All-India 230,161 66,926 329,245 134,266 365,696 210,987 375987 228155 398284 253437

Structure and Characteristics of Private Health Care Providers in IndiaA study conducted in the rural and urban areas of Punedistrict showed that people who showed symptoms of tuberculosisgenerally went to a private clinic. Private practitionerstend to use X rays as a diagnostic tool rather than sputumexamination. It has been well known that the latter isnot only cheaper, but also more effective for the diagnosisof tuberculosis. People from both rural and urban areaspreferred private practitioners, because the waiting periodwas shorter and the clinic timings were more convenient.The study also showed that the cost of treatment was muchhigher in the private sector as compared to the public sector.As a result, about a third of the patients who were treated inthe private sector had incurred debts in order to bear theexpenses of the treatment. Rural patients had spent almostdouble the amount of money for treatment as their urbancounterparts. For cases of malaria, private practitioners werethe first option, as a study from the urban slums of Bombayreveals. The study showed that these practitioners use a numberof irrational formulations for treating malaria and infact had little or no interaction with the public health caresystem (Kamat, 2001).As far as Karnataka is concerned, the review shows thatthere are very few studies on the private sector. An advocacygroup based in Bangalore has looked into the utilisationof government, private and charitable hospitals by householdsearning less than Rs. 3,500 per month. This studyrevealed that the costs for medical treatment were high inthe case of private hospitals when compared to the governmentor charitable hospitals (Balakrishnan and Iyer, 1997).15

Privatisation of Health Care in India5Utilisation of Private Health ServicesThe structure of provisioning of health services will largelydetermine the patterns of utilisation and the expendituresincurred at the household level. Based on the 42 nd and 52 ndrounds of the NSS, the household survey conducted bythe National Council of Applied Economic Research(NCAER) and the NFHS, trends in utilisation of healthservices in the three states have been analysed. The analysishas been disaggregated for outpatient and inpatient care,states, rural/urban and income levels depending on theavailability of the data.5.1. Utilisation of Health Care forOutpatient ServicesAnalysis of the 42 nd round of the NSS data, pertaining to1985-86 period shows that in both rural and urban areasat the all India level, more than 50 percent of outpatientservices were provided by private doctors. In rural areasonly 18 percent of the cases requiring outpatient care soughttreatment in a public hospital, five percent at a primaryhealth centre (PHC) and a mere three percent in publicdispensaries. In urban areas, the proportion of those whoused public hospitals was higher than in rural areas. InMaharashtra, 49.94 percent used private doctors and 23percent used private hospitals for outpatient care in urbanareas. Only 19 percent of the households had used publichospitals and the remaining had used a public dispensaryor primary health centre (PHC). In rural areas, 51 percentof the households had opted for private doctors and 19.5percent for private hospitals. Only 14 percent had usedpublic hospitals, 10.4 percent had used PHCs and a mereone percent had used the public dispensaries.In Karnataka, 43 percent of outpatients had used the privatedoctors and 22 percent private hospitals for outpatientcare in urban areas. Moreover, 27 percent had usedpublic hospitals and mere 1.71 and 1.23 percent used PHCsand public dispensaries respectively.In rural areas, 41.5 percent had used private doctors and 18.5percent private hospitals. 25 percent of the households hadused public hospitals, 8.5 percent PHCs and a mere 1.2 percenthad used public dispensaries.Orissa shows a different trend from Karnataka andMaharashtra. In urban areas 38.7 percent used private doctorsand only four percent used private hospitals. Nearly 42percent of the households had used public hospitals whileonly one percent had used a PHC and 3.5 percent had usedpublic dispensaries for treatment. In rural areas, 31 percentused private doctors and there was no reported utilisation ofprivate hospitals at all. 34 percent of the population used thepublic hospitals, nearly 12 percent PHCs and six percent thepublic dispensaries (Tables 5 and 6).The 52 nd round of the NSS data pertaining to the 1995 to1996 period shows that there has been an increase in theutilisation of private sources for inpatient and outpatient careacross both the rural and urban areas. At the all India level, 64percent of rural and 72 percent of urban outpatient care wassought through the private sector. In Maharashtra, 73 percentin rural areas and 77 percent in urban areas had opted for theprivate sector. In Karnataka, 51 percent in rural and 74 percentin urban areas opted for the private sector for care. InOrissa, 31 percent in rural and 53 percent in urban areas hadopted for the private sector for outpatient care (Duggal, 2001).16

Utilisation of Private Health ServicesTable 5: Distribution of Outpatient Treatment Over Sources of Treatment for States/U.T. (Urban)States/UTs Public Primary Public Private Nursing Charit- ESI Private Other AllHospital Health Dispen- Hospital Home able Doctor DoctorCentre sary HospitalAndhra Pradesh 18.42 0.66 1.43 41 3.23 1.05 1.45 26.62 6.1 100Assam 26.03 2.09 1.48 6.58 0.81 0.03 - 51.07 11.97 100Bihar 15.62 1.2 0.81 20.95 0.66 0.18 0.37 56.45 3.76 100Gujarat 14 0.45 1.41 39.28 - 1.05 2.7 38.13 2.98 100Haryana 11.3 2.18 3.52 6.12 2.05 0.31 4.69 68.6 1.23 100Himachal Pradesh 40.77 4.69 2.25 2.07 - - - 50.22 - 100Jammu & Kashmir 40.39 4.3 2.35 0.81 - 2.86 0.38 44.84 4.07 100Karnataka 27 1.71 1.23 22.07 1.01 0.24 1.36 43.19 2.09 100Kerala 32.83 2.43 0.43 40.21 0.66 0.12 0.63 19.87 2.82 100Madhya Pradesh 28.77 1.01 0.63 12.48 0.34 0.72 1.59 51.65 2.81 100Maharashtra 19.39 1.66 3.1 23.01 0.3 0.92 0.87 49.94 0.81 100Manipur 40.1 18.16 3.18 9.83 - - - 17.8 10.93 100Meghalaya 23.42 0.06 1.54 6.07 - - 2.75 49.23 15.95 100Nagaland 30.6 - - 1 - - - 68.25 - 100Orissa 41.8 1.11 3.54 4.07 0.67 1.05 1.42 38.78 7.56 100Punjab 8.72 0.84 0.59 9.14 0.25 0.4 0.77 79 0.29 100Rajasthan 51.36 3.54 2.31 12.15 0.33 0.24 0.3 24.3 5.45 100Sikkim 83.3 3.9 - - 0.84 - - 11.96 - 100Tamil Nadu 29.94 1.11 1.52 17.28 3.94 0.49 2.5 40.91 2.31 100Tripura 17.72 6018 1.28 - - - - 50.9 23.92 100Uttar Pradesh 13.63 0.82 1.48 6.32 0.66 1 0.27 73.93 1.92 100West Bengal 19.52 0.58 0.74 1.95 0.34 2.03 2.39 69.6 2.85 100Chandigarh 20.9 - 3 1.59 - - 3.94 70 0.57 100Delhi 32.14 0.29 6.95 7.3 1.41 0.89 3.28 45026 2.48 100Goa, Daman & Diu 42.12 - 10.6 21.18 - - - 23.93 5.17 100Mizoram 63.85 3.13 5.24 7.12 - - - 14.67 5.99 100Pondicherry 67.6 1.42 - 2.16 - - - 26.52 2.3 100Andaman & Nicobar 74.81 1.41 3.96 7.23 - - - 7.4 5.19 100Lakshadweep 73.01 19.78 - 3.97 2.44 - - 0.8 - 100INDIA 22.6 1.19 1.75 16.18 1.15 0.81 1.61 51.83 2.88 100Note: Percentages may not add up to 100 due to rounding off figures.Source : Morbidity and Utilisation of Medical Services, Report 364, 42 nd Round, National Sample Survey, Central Statistical Organisation, Government of India (1989),cited in Baru (1998).The NCAER survey of 1993 shows that around 55 percentof the households had sought outpatient care withprivate doctors in rural areas while around 64 percent hadgone to private sources in urban areas. In Maharashtra,around 53 percent are using private sources in rural areasand around 66 percent are using private sources in urbanareas. In Karnataka the corresponding figures are 40 percentand around 50 percent . While in Orissa the figuresare 17 percent are and 55 percent respectively(Sunder, 1992).Analysis of the NFHS of 1993 has provided informationon the utilisation of maternal health services and alsoutilisation of health services for certain diseases sufferedby children. This data has been analysed for scheduled17

Privatisation of Health Care in IndiaTable 6: Distribution of Outpatient Treatment Over Sources of Treatment forStates/U.T. (Rural)States/UTs Public Primary Public Private Nursing Charit- ESI Private Other AllHospital Health Dispen- Hospital Home able Doctor DoctorCentre sary HospitalAndhra Pradesh 14.38 3.15 1.39 32.12 2.52 0.22 1.09 40.05 5.08 100Assam 20.01 16.24 16.76 7.21 0.01 - - 28.17 11.6 100Bihar 13.04 2.05 1.75 9.86 0.58 0.26 0.03 59.04 13.39 100Gujarat 25.28 4.64 2.5 20.89 0.1 2.8 0.08 40.77 2.94 100Haryana 11.94 3.28 1.68 8.52 0.8 0.35 - 68.79 4.64 100Himachal Pradesh 48.7 6.23 5.74 1.84 0.7 - - 35.79 1 100Jammu & Kashmir 37.78 5.33 15.68 0.24 - 0.07 0.99 2.37 7.54 100Karnataka 25.72 8.47 1.27 18.48 1016 0.17 0.94 41.51 21.28 100Kerala 27.5 4.32 2.32 41.64 1.04 0.11 0.38 20.57 2.12 100Madhya Pradesh 20 8.49 2.4 12.39 0.62 0.23 1.87 49.62 4.38 100Maharashtra 14.03 10.42 1.44 19.54 0.16 0.78 0.43 51.04 2.16 100Manipur 20.61 31.08 8.53 1.91 - - - 8.5 19.37 100Meghalaya 10.22 24.63 8.15 0.22 - 1.19 - 34.54 21.07 100Orissa 34.01 11.93 6 ** - 0.51 0.71 31.39 19.35 100Punjab 9.72 1.3 1.52 9.53 0.06 0.22 0.23 76.58 0.84 100Rajasthan 38.23 6017 11.04 7.84 0.72 0.07 0.68 27.39 7.86 100Sikkim 72.68 7.57 2.95 2.23 - - - 14.57 - 100Tamil Nadu 30.41 4.93 0.85 20.32 3.04 1.63 0.85 33.13 4.84 100Tripura 19.48 10.41 7.35 1.62 - 0.73 - 31.72 28.69 100West Bengal 12.48 6 0.89 0.93 0.17 0.18 0.04 74.74 4.49 100Chandigarh 10.95 - - - - - 10.95 78.09 - 100Dadar & Nagar Haveli 65.34 7.96 - 5.65 - - - 19.06 1.99 100New Delhi 30.73 3.23 - 14.69 - - - 51.35 - 100Goa, Daman & Diu 30.8 24.72 - 15.79 - - 28.69 - 100Mizoram 24.68 42.6 18.18 - 1.19 - - 0.48 12.87 100Pondicherry 46.51 8.63 1.84 9.62 - - 1.18 32.22 - 100Andaman & Nicobar 77.74 8.17 8.08 - - - - 1.57 4.44 100Lakshadweep 41.23 43.39 - 15.38 - - - - - 100INDIA 17.67 4.94 2.59 1.03 0.75 0.35 0.38 53.01 5.18 100Note: Percentages may not add up to 100 due to rounding off figures.Source: Morbidity and Utilisation of Medical Services, Report 364, 42 nd Round, National Sample Survey, Central Statistical Organisation, Government of India (1989),cited in Baru (1998).castes (SC), scheduled tribes (ST) and other groups separately.The data has also been analysed across major states.For antenatal care, which comes under outpatient consultations,at the all India level for the SC and ST categories,42 percent and 28 percent respectively, received antenatalcare from trained personnel, while only 14 percent and18.5 percent received care from trained personnel at theirhomes. It is important to note that 42.2 percent of SC and52.3 percent of ST households did not receive antenatalcare at all. The states of Maharashtra, Karnataka and Orissapresented wide variations. In Maharashtra, 10.3 percent ofSC households, 29.6 percent of ST households and 11.118

Utilisation of Private Health Servicespercent belonging to ‘others’ received antenatal care fromhealth personnel at their homes; 65.5 percent of SCs, 44.4percent of STs and 44.5 percent of ‘others’ received antenatalcare from trained personnel. In Karnataka, 24.7 percentof SCs, 20.5 percent of STs and 17.5 percent of othersreceived antenatal care at home, while 56.8 percent ofSCs, 58.1 percent STs and 66.4 percent of ‘others’ receivedantenatal care from trained personnel. In Orissa, 30.6 percentof SCs, 30 percent of STs and 18.9 percent of ‘others’received antenatal care from a health worker at home,while 35.3 percent of SCs, 22 percent of STs and 44.5percent of ‘others’ used the services of trained personnelfor antenatal care. There is clearly a variation in the utilisationof services across these three states. In all three states, thepercentage of households receiving care at home fromtrained personnel is low and in general the access to theseservices by STs is lower than for SCs. Across the threestates the levels of utilisation for antenatal care are extremelypoor (Ram et al, 1997. See Table 7).In the case of children suffering from fever, a fairly highproportion of households go to a nearby provider orhealth facility. At the all India level 66.7 percent of SCs,55 percent of STs and 68.2 percent of ‘others’ used thefacility nearby. Across states, the percentage of utilisationis high. It is found that in Karnataka, 72.3 percent ofSCs, 84 percent of STs and 76.7 percent of ‘others’ usedthe nearby health facility. In Maharashtra, 60 percent ofSCs, 68 percent of STs and 77.5 percent of ‘others’ usedthe providers. In Orissa, 51.7 percent of SCs, 41.6 percentof STs and 57.4 percent of ‘others’ used the providerfor treating their children. This data suggests thatpeople from all the three categories use the services; butthere is variation across states. While the percentage utilisingthe services is fairly high for all the three categories inMaharashtra and Karnataka, it is quite low in the case ofOrissa (Table 8).Table 7: State-wise Distribution of Access to Antenatal CareIndia /States ANC only at home Trained Personnel No ANCfrom health workerSC ST Others SC ST Others SC ST OthersINDIA 14 18.5 11.9 42.4 28.3 53 42.2 52.3 34A.P. 24.1 29.8 18.3 61.9 32.4 65.9 11.5 35.5 12.2Assam NA 0.8 3 63.6 30.3 49.3 36.4 68.9 47.2Bihar 13.4 6.4 9.7 21.2 14.8 28.3 63.6 78.8 60.8Goa NA 7.1 1.3 87.5 88.1 94 12.5 4.8 3.8Gujarat 19 39.4 22.6 62 28.3 54.2 15 31.5 22.6Haryana 5.6 NA 5.2 61.5 NA 69.4 32.8 NA 25H.P. 2.1 3.8 1.5 70.3 54.5 76.6 27.6 41.6 21Jammu 1.3 NA 0.6 74.7 NA 79.7 24 NA 18.5Karnataka 24.7 20.5 17.5 56.8 58.1 66.4 18.6 20.5 15.1Kerala NA 2.9 0.6 96.9 82.9 97 3.1 8.6 1.7M.P. 13.5 20.2 14 41.2 19.3 44 43.4 59.2 41.1Maharashtra 10.3 29.6 11.1 65.5 44.4 73 22.8 26.1 15.5Orissa 30.6 30 18.9 35.3 22.2 44.5 32.2 46.1 35.5Punjab 2 NA 1.7 85.3 NA 86.1 12.8 NA 11.8Rajasthan 4.2 14.3 7.1 17.2 16.9 27.7 76.7 68.5 63.1T.N. 25.9 13.6 65.5 81.3 8.3 NA 4.7U.P. 14.9 3.9 14.4 21.9 11.4 32.4 62.9 84.6 52W.B. 6.1 6.7 6.7 60.6 61 69.6 33.3 32.3 23.1Source: Utilization of Health Care Services by the Underprivileged Section of the Population in India: Results from NFHS, cited in Ram, Pathak and Annamma (1997).19

Privatisation of Health Care in India5.2. Utilisation of Inpatient ServicesWhen it comes to inpatient services the picture is somewhatdifferent. An analysis of the 42 nd round of the NSSdata at the all India level reveals that only around 36 percentof the hospitalisations were in private hospitals in urbanareas and around 35 percent in rural areas. InMaharashtra, around 48 percent of the households hadused a private hospital in urban areas while in rural areasthe figure was around 54 percent. In Karnataka, around50 percent in urban areas and around 38 percent in ruralareas had used private sources for treatment. In Orissa,around 15 percent in urban and seven percent in rural areashad been treated in a private hospital (Tables 9 and 10).The 52 nd round of the NSS data shows that at the all Indialevel 54.7 percent of households in rural areas and 56.9percent in urban areas had utilised private hospitals forhospitalisation. There has definitely been an increase in theproportion of persons utilising the private sector betweenthe 42 nd and 52 nd rounds of the NSS, which is roughlyover a decade.In Maharashtra, 68.8 percent in rural areas and 68.2 in urbanareas had utilised private sources. In Karnataka, 54.2percent in rural areas and 70.2 in urban areas had utilisedprivate sources. In Orissa, 9.4 percent in rural areas and 19percent in urban areas had utilised private sources. Apartfrom the inter-state differences in the utilisation of the privatesector there is also a difference between the poorestand richest quintiles. An analysis of the 52 nd round of theNSS shows an interesting picture that at the all India level39 percent of the poorest quintile were using the privatesector for hospitalisation while 77 percent of the richestquintile were utilising the private sector. Among the threestates, the poorest in Orissa relied more on the public sectorthan either Karnataka or Maharashtra. In many states,the middle and lower middle income groups have startedusing the private sector while the poor still continue to relyon public hospitals. Therefore, there is a clear indicationthat the utilisation of the private sector increases as theincome gradient increases. As far as the vulnerable sectionsviz. SCs and STs are concerned, utilisation by STs is verylow in both the public and private sectors while in the caseof SCs it is marginally higher and the dependence is greateron the public than the private sector.The NCAER survey on the utilisation of inpatient careshows that 38 percent of people in rural areas and 40 percentin urban areas opt for private sources at the all Indialevel. In Maharashtra, 69.5 percent of people in rural areasand 41.2 percent in urban areas opted for private sources.In Karnataka, 38.9 percent and 42.2 percent opted for privatesources in rural and urban areas respectively. In Orissa,a mere 1.9 percent of people in rural areas and 31.3 inurban areas opted for private sources (Sunder, 1992).While there is some variation between the findings of NSSand NCAER surveys across the three states, it also broadlyreflects the structures of provisioning in terms of privateand public sectors in these three states. Maharashtra has ahigher proportion of private beds, followed by Karnatakaand lastly Orissa, which is clearly reflected in the utilisationpatterns as well. The important issue to be underscored isthat in all three states there is dependence on the publicsector, especially for inpatient care, but the degree of dependencevaries across these states.The NFHS also provides data on the proportion of deliveriestaking place in institutions. Invariably, they are quitelow among the vulnerable sections. At the all India level,10.9 percent of the SCs used public hospitals while a mere5.1 percent used a private hospital. Among the STs, 6.7percent used public hospitals and 2.4 percent private hospitals.Among the category of ‘others’ 16.3 percent usedthe public sector while 12.9 percent used the private sector.Non-institutional or home deliveries formed a highproportion with 82.7 percent, 89.6 percent and 69.9 percentof SCs, STs and ‘others’ respectively (Table 11). InKarnataka, the proportion of SCs accessing private facilitieswas only 4.4 percent while for STs it was 4.5 percent. In Orissa,a mere 0.7 percent of SCs and 1.3 percent of STs were usingprivate facilities. However in Maharashtra, 16.6 percent of SCsand 6.1 percent of STs were using private facilities for deliveries.The proportion of home deliveries is high in Orissa with86.1 percent for SCs, 92.4 percent for STs and 80.6 percentfor others. In Karnataka, 77.8 percent of SCs, 73.2 percent ofSTs and 58.2 percent of others had deliveries at home. InMaharashtra, 55.2 percent of SCs, 82.2 percent and 51.7 percentof others had home deliveries (Table 11).20

Utilisation of Private Health ServicesTable 8: Percentage of children under four years suffering from fever who were taken to a healthfacility or provider and treatment given across states and social groups, 1992-93Percentage treated withIndia / % taken to Anti- Antibiotic Injection Home Other NoneStates a health malarial Pills remedy/facility or or Syrup herbalprovidermedicineIndiaSC 67.7 7.8 35 27 5.7 36.2 20.5ST 55 6.4 31.2 21.2 5.6 31.8 27.2Others 68.2 8.4 34.8 21.8 5.3 39.7 18.8A.P.SC 77.5 5 50 50 2.5 30 20ST 54.3 11.4 28.6 42.9 _ 14.3 34.3Others 70.9 10.7 45.6 47.6 _ 32 19.9AssamSC 25 3.1 25 5 2.5 15.6 56.3Others 32.8 4.7 17.2 2.8 5.3 28.8 47.5BiharSC 68.1 16.1 52.3 20.9 _ 22.8 23.9ST 53.5 5.6 47.9 5.6 8.5 26.7 31Others 59.3 10.7 47.7 19 2.3 26.2 23.7GujaratSC 63.1 9.2 30.8 21.5 1.5 23.1 30.8Others 78.7 8.7 47.4 20.2 2.4 32.8 11.5HaryanaSC 89.5 _ 2.5 38.1 _ 90.8 8Others 84.6 1.5 3.6 27.7 6.3 85.2 7.9H.P.SC 77.7 1.8 25.9 16.4 1.8 58.2 13.2Others 82.7 1.6 22.2 15.1 4.4 66.2 6.7JammuSC 64.2 6.1 14.6 7.8 8.5 70.1 9.7Others 73.7 8.1 7.1 12.3 6.2 73.8 12KarnatakaSC 72.3 8.5 25.5 38.3 2.1 51.1 14.9ST 84 12 60 56 _ 28 4Others 76.7 7.5 28.8 48.6 1.4 54.8 11.6M.P.SC 68.4 21.2 67 31 6.6 17.4 9.7ST 57.4 1.5 33.6 35.6 9.3 37.6 21.5Others 67.8 6 39.7 35.8 3.2 35 21.1Contd...21

Privatisation of Health Care in IndiaTable 8: Contd...Percentage treated withIndia / % taken to Anti- Antibiotic Injection Home Other NoneStates a health malarial Pills remedy/facility or or Syrup herbalprovidermedicineMaharashtraSC 60 8 20 4 4 44 32ST 68 4 30 2 2 38 20Others 77.5 8.4 30.9 28.7 1.7 52 17.1OrissaSC 51.7 2.1 23.5 2.8 6.2 45.5 28.3ST 41.6 5.4 18.7 9 9.3 35.8 35.5Others 57.4 5.1 20.6 4.9 6.2 48.5 25.6PunjabSC 86.7 9.3 6.7 29.3 1.3 78.7 6.7Others 93.4 13.2 7.1 27.9 1 78.7 2.5RajasthanSC 51.4 12.9 21.4 31.4 11.4 24.3 24.3ST 61.4 13 38.9 29.6 5.6 20.4 20.4Others 66.9 14.6 42.7 24.8 7.6 26.8 13.4T.N.SC 67.8 3.4 39 44.1 3.4 27.1 27.1Others 74.4 4.1 48.9 38.8 2.3 32.9 20.1U.P.SC 70.1 6.5 48.5 30.1 7.9 26.1 15.5Others 70.8 9 46.2 24.6 6 28.2 14.5W.B.SC 49.2 8.8 6.4 2.3 14.3 33.3 41.7Others 60.4 8.7 18.2 1.6 16.8 37.8 25.4Source: Utilization of Health Care Services by the Underprivileged Section of the Population in India: Results from NFHS, cited in Ram, Pathak and Annamma (1997)5.3. Trends in ImmunisationThe 52 nd round of the NSS data contains information onthe immunisation status of children aged 0 to four yearsfor polio, DPT, BCG and measles vaccine. Analysis of thisdata shows that at the all India level there are rural-urbandifferences in immunisation coverage. The coverage ishigher for urban areas as compared to rural areas and theimmunisation status is positively associated with the socioeconomicstatus measured by per capita expenditure.Immunisation rates were somewhat higher among non-SC/ST children as compared to SC/ST children (Mahalet al, 2001). The data reveals that there are regional variationsof children who received immunisations, across thestates. Kerala, Karnataka, Maharashtra, Andhra Pradesh,Tamil Nadu, Punjab and Haryana received higher averagedoses per child compared to the all India average. EvenOrissa, which is a poor state, had an average higher thanthe all India figure. The analysis also revealed that the governmentis the major provider of immunisation services22

Utilisation of Private Health ServicesTable 9: Percentage Distribution of Inpatient Treatment Cases Over Type of Hospitalfor States/U.T. (Urban)Type of HospitalStates/UTs Public Primary Private Charitable Nursing Others AllHospital Health Hospital Institute run HomeCentreby Public TrustAndhra Pradesh 37.98 - 55.15 3.75 2.74 0.38 100Assam 79.88 2.45 10.14 0.11 7.42 - 100Bihar 44.69 1.02 32.98 1.56 12.43 7.32 100Gujarat 59.21 - 34.25 3.13 0.26 0.39 100Haryana 55.31 - 34.25 1.8 8.64 - 100Himachal Pradesh 77.13 3.85 19.02 - - - 100Jammu & Kashmir 93.23 2.73 3.44 0.11 0.49 - 100Karnataka 48.51 0.39 40.49 1.26 9.06 0.29 100Kerala 54.77 0.88 41.79 0.64 1.92 - 100Madhya Pradesh 76.01 0.97 15.24 1.98 5.01 0.79 100Maharashtra 45.74 0.49 47.63 3.41 1.81 0.92 100Manipur 91.66 1.16 1.02 - 1.3 4.86 100Meghalaya 51.68 1.74 44.29 2.29 - - 100Orissa 78.94 2.54 13.9 1.15 1.28 2.19 100Punjab 48.37 0.4 43.21 3.22 2.01 2.79 100Rajasthan 84.98 0.64 7.92 1.24 3.05 2.17 100Sikkim 91.75 4.12 3.12 - 1.01 - 100Tamil Nadu 57.74 0.3 34.14 0.41 5.61 1.8 100Tripura 94.4 5.6 - - - - 100Uttar Pradesh 57.97 1.28 19.43 2.04 15.53 3.75 100West Bengal 72.64 1.26 10.06 2.45 13.48 0.11 100Chandigarh 92.89 - 7.11 - - - 100Dadra & Nagar - - - - - - 100HaveliNew Delhi 70.15 0.92 15.17 1.48 11.29 0.99 100Goa, Daman & Diu 61.71 - 38.29 - - - 100Mizoram 91.39 - 6.79 1.82 - - 100Pondicherry 85.68 - 12.9 - 1.42 - 100Andaman & Nicobar 93.74 - .6.26 - - - 100Lakshadweep 70.29 10.78 18.93 - - - 100INDIA 59.51 0.75 29.55 1.91 7.04 1.24 100Note: Percentages may not add up to 100 due to rounding off figures.Source : Morbidity and Utilisation of Medical Services, Report 364, 42 nd Round, National Sample Survey, Central Statistical Organisation, Government of India (1989),cited in Baru (1998).23

Privatisation of Health Care in IndiaTable 10: Percentage Distribution of Inpatient Treatment Cases OverType of Hospital for States/U.T. (Rural)Type of HospitalStates/UTs Public Primary Private Charitable Nursing Others AllHospital Health Centre Hospital Institute run Homeby Public TrustAndhra Pradesh 28.9 1.01 65.22 1.04 3.36 0.47 100Assam 82.51 7.51 7.56 0.59 0.73 1.1 100Bihar 47.19 2.67 27 0.88 13.82 8.44 100Gujarat 48.66 0.3 42.8 7.31 0.62 0.31 100Haryana 50.96 - 31.95 3.45 11.62 2.02 100Himachal Pradesh 80.09 7.84 8.89 - 1.2 1.98 100Jammu & Kashmir 91.17 4.98 2.6 0.88 - 0.45 100Karnataka 55.31 2.71 32.94 2.59 5.62 0.91 100Kerala 41.02 2.36 53.4 0.26 2.96 - 100Madhya Pradesh 72.62 6.61 14.8 1.64 3.29 1.04 100Maharashtra 40.67 2.9 53.38 2.18 0.11 0.76 100Manipur 69.07 9.66 17.72 0.19 0.19 3.17 100Meghalaya 80.2 2.22 17.58 - - - 100Orissa 80.25 7.81 6.36 2.62 0.89 2.07 100Punjab 45.46 2.03 47.14 1.97 1.66 1.74 100Rajasthan 77.03 2.98 13.16 1 3.11 2.72 100Sikkim 100 - - - - - 100Tamil Nadu 55.53 0.62 39.11 0.97 2.71 1.06 100Tripura 87.89 11.76 - 0.35 - - 100Uttar Pradesh 52.61 2.76 27.26 3.46 10.1 3.81 100West Bengal 76.77 14.85 1.43 0.66 6.05 0.24 100Chandigarh 91.21 - 8379 - - - 100Dadra & NagarHaveli 68.34 2.15 26.24 - - 3.27 100New Delhi 81.16 - 18.84 - - - 100Goa, Daman & Diu 82.3 - 17.7 - - - 100Mizoram 65.79 33.36 0.85 - - - 100Pondicherry 81.03 - 15.56 - - 3.41 100Andaman & Nicobar 94.73 5.27 - - - - 100Lakshadweep 33.04 30.01 36.95 - - - 100INDIA 55.4 4.34 31.99 1.71 4.86 1.7 100Note: Percentages may not add up to 100 due to rounding off figures.Source: Morbidity and Utilisation of Medical Services, Report 364, 42 nd Round, National Sample Survey, Central Statistical Organisation, Government of India (1989),cited in Baru (1998).24

Utilisation of Private Health ServicesTable 11 : Percentage distribution of women who gave live births during the four years precedingthe survey by source of antenatal care during pregnancy according to SC & ST categories,India and States, 1992-93Health Facility InstitutionsIndia /StatesPublicPrivateHome (Own Parents)SC ST Others SC ST Others SC ST OthersINDIA 10.9 6.7 16.3 5.1 2.4 12.9 82.7 89.6 69.9A.P. 15.1 2.4 14.3 10.8 4.8 22 72.7 90.3 54.7Assam 9.6 5.4 8.4 3.3 1.4 3.6 84.9 93.2 87.6Bihar 4.1 2.5 6.4 3.3 1.4 7.1 91.5 96.1 85.6Goa 50 52.4 41 15 11.9 47.5 35 35.7 10.9Gujarat 24 6.4 16.7 15 6.4 23.9 61 86.3 59Haryana 4.2 NA 11.3 3.6 NA 9.3 91.5 78.9H.P. 12.6 3.2 16.1 0.4 NA 2.2 86 90.5 80.8Jammu 11.7 NA 19.5 1.8 NA 6.6 85.7 73.3Karnataka 16.9 22.3 22.4 4.4 4.5 18.3 77.8 73.2 58.2Kerala 68.8 68.6 37.4 28.1 2.9 50.8 3.1 22.9 11.3M.P. 12.2 3.1 16 3.3 0.9 5.6 81.3 93.9 77.3Maharashtra 25.5 10 24.1 16.6 6.1 23.6 55.2 82.2 51.7Orissa 10.8 3.3 15 0.7 1.3 2.7 86.1 92.4 80.6Punjab 8.9 NA 10.1 10.1 NA 17 80.8 72.4Rajasthan 5.7 5.6 12.1 1.5 0.6 2.8 90.7 93.4 84.3T.N. 29.3 NA 34.8 14.9 NA 33.8 24.8 30.2U.P. 1.6 NA 8.2 1.6 NA 4.9 94.5 99 86W.B. 21.3 16.6 27.5 0.6 NA 6.2 78 83 65.9Source: Utilization of Health Care Services by the Underprivileged Section of the Population in India: Results from NFHS, cited in Ram, Pathak and Annamma (1997).and it is higher for urban areas compared to rural areas.Across states, the analysis shows that the share ofimmunisations in the private sector increases with socioeconomicstatus in urban areas. (Mahal et al, 2000)5.4. Expenditure Incurred onPrivate Sector in Relation to PublicSectorThree important messages emerge from the two NSS surveys.First, the average medical expenditure per ailmentepisode is higher for both inpatient and outpatient care inthe private sector. Second, the expenditure in the privatesector is higher for urban areas compared to rural areas.Third, there is also an increase in expenditure on medicalcare between the 42 nd and 52 nd rounds, which have a gapof a decade between them, for both the public and privatesectors. The NCAER’s survey also shows that the averageexpenditure is higher for the private sector as comparedto the public sector for both rural and urban areas.Krishnan has analysed the 42 nd round of the NSS data forexpenditure on medical care across states. He shows thatthe average total expenditure for hospitalisation is higherthan the all India mean in nine out of 15 states and theseinclude rural Delhi, Punjab, Haryana, Uttar Pradesh andBihar. The same trend holds true for the urban sector(Krishnan, 1999). A few household level studies have shownthat around seven to nine percent of household consumptionexpenditure is on health care, of which 85 percent isspent in the private sector. The 52 nd round of the NSSdata shows that per capita out-of-pocket expenditure peryear on private facilities ranges from over Rs. 500 amongthe richest, to Rs. 75 among the poorest (Mahal et al, 2000).25

Privatisation of Health Care in IndiaAnalysis of the 52 nd round of the NSS data shows that theexpenditure on both inpatient and outpatient care increasedbetween 1986 and 1996. Between 1986 and 1996 costs ofmedical care in both the public and private sectors rosesharply. The costs in the public sector rose by 549 percent inrural areas and 470 percent in urban areas while for the privatesector it rose by 486 percent in rural areas and 343percent in urban areas. The major reason for the rise in costsof medical care in the public sector has been the increasedprices of drugs. This rise in cost of medical care is bound toaffect both the accessibility and utilisation of health services,which would result in those requiring care, not getting it.This would also explain why the rates of untreated diseasesare very high among the poorer groups and why, when theydo seek care, they have to borrow to pay for it (Sen et al,2002). The 52 nd round estimates that 45 percent of thecountry’s poor had to borrow money or sell their assets tomeet the increasing cost of medical care.26

6ConclusionThis study has explored the evolution of the private sectorand its characteristics for India and also across states, morespecifically in Maharashtra, Karnataka and Orissa. The threestates under study represent varying levels of socio-economicdevelopment and this is reflected in the health outcomes,as well as the growth of the private sector. In termsof health outcomes, Maharashtra has lower infant mortalityrates than either Karnataka or Orissa. The available dataclearly shows that Orissa has the poorest health indicatorsamong the three states. The private sector is a heterogeneousstructure consisting of a substantial number of individualpractitioners who have been either formally or informallytrained. They are distributed across rural and urbanareas and offer primary level curative care. The secondarylevel of care consists of institutions, which deliverboth inpatient and outpatient care. There is great variationin the size of operations at this level and it is mostly anurban phenomenon. The tertiary level of care is an urbanphenomenon and there is a substantial presence of thesehospitals in cities like Delhi, Hyderabad, Mumbai, Chennaiand Bangalore.In terms of provisioning, Maharashtra has both a strongpublic and private presence, followed by Karnataka andthen Orissa. These structures of provisioning get reflectedin the patterns of utilisation. In general, available data suggeststhat the utilisation of private services is higher inMaharashtra and Karnataka compared to Orissa and thisholds true for the vulnerable groups as well.The patterns of private utilisation of health services havebeen quite different for outpatient and inpatient care. Acrossall the three states, there is a greater dependency on theprivate practitioners for outpatient care. However, when itcomes to hospitalisation there is variation in utilisation patternsacross the three states. This variation needs to be explainedwith respect to the structures of provisioning. Thestates that have experienced higher private sector growthare the ones, which are economically better off. There is ahigher utilisation of the private sector for hospitalisation inMaharashtra and Karnataka. In these states, it is the upperand middle-income groups that use these services, whereasin Orissa, the percentage of those using the private sectoramong the middle and upper middle-income groups isvery low (Krishnan, 1999).The NSS, NCAER and NFHS data show that there arevariations in the patterns of utilisation of the private sectoracross states, income groups and vulnerable social groups.The 52 nd round of the NSS data has shown a tremendousincrease in the costs of medical care in both the public andprivate sectors. For outpatient care, all the three states haveshown an increased use of the private sector. Of the threestates, urban Orissa has shown the highest increase from42.4 percent in the mid eighties to 53 percent in the midnineties (Table 12). For inpatient care there has been agreater increase in urban areas as compared to rural areas.Maharashtra and Karnataka show similar trends in increaseduse of the private sector whereas Orissa shows only a small27

Privatisation of Health Care in IndiaTable 12: Trend in Utilisation of Outpatient Services in the Private SectorBetween 42 nd and 52 nd Rounds of the NSS(Percentage)States 42 nd (Urban 42 nd (Rural) 52 nd (Urban) 52 nd (Rural) Change Urban Change RuralMaharashtra 72.4 70.5 77 73 +4.6 +2.5Karnataka 65 60 74 51 +9 -9Orissa 42.4 31 53 31 +10.6 No changeINDIA 50 50 72 64 +22 +14Source: Compiled from Duggal (2006: 34-35)Table 13: Trends in Utilisation of Inpatient Services in the Private Sector Between42 nd and 52 nd Round of the NSS(Percentage)States 42 nd (Urban) 42 nd (Rural) 52 nd (Urban) 52 nd (Rural) Change Urban Change RuralMaharashtra 48 54 68.2 68.8 +20.2 +14.8Karnataka 50 38 78.2 54.2 +20.2 +16.2Orissa 15 7 19 9.4 +4 + 2.4INDIA 36 35 56.9 54.7 +20.9 +19.7Source: Compiled from Duggal (2006: 34-35)increase (Table 13). This trend needs to be analysed furthernot only in the context of the increase in the growth ofprivate services, but also in terms of what has been happeningin the public sector. The issues concerning risingcosts in the public sector, the quality of care provided, andincrease in the costs of drugs have acted as push factorsfor utilising the private sector. What is indeed worrying isthat the STs across states have shown very low levels ofutilisation. This would mean that those who need care arenot seeking care, because they cannot afford it and thereforemay not be seeking care when they need it the most(Sen et al, 2002). In a sense, while the middle and uppermiddle classes can choose to use either the public or privatesectors, the poor may not be in a position to accesseither of them, because of the rising costs of medical care.Where the public sector is weak, this will definitely affectutilisation by the poorer sections of the population. Clearlythere are important questions regarding equity in this context.At the state level this calls for a rational use of availableresources and also for a policy that will strengthenpublic provisioning and regulate the private sector. In addition,other mechanisms like public insurance schemescould be given a serious thought to address some of theseinequities and their consequences.28

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About the Series EditorsAasha Kapur Mehta is Professor of Economics at the Indian Institute of Public Administration, New Delhi and leadsthe Chronic Poverty Research Centre’s work in India. She has a Masters from Delhi School of Economics, an M.Philfrom Jawaharlal Nehru University and a PhD from Iowa State University, USA. She has been teaching since 1975,initially at a college of Delhi University and then at IIPA since 1986. She is a Fulbright scholar and a McNamara fellow.Her area of research is now entirely focused on poverty reduction and equity related issues.Pradeep Sharma is an Assistant Resident Representative and heads the Public Policy and Local Governance Unit inthe India Country Office of United Nations Development Programme (UNDP). A post-graduate from University of EastAnglia (UK) and Doctorate from Jawaharlal Nehru University, he has held several advisory positions in the Governmentof India and has taught economic policy at LBS National Academy of Administration, Mussoorie. He has severalpublications to his credit.Sujata Singh is an Associate Professor at the Indian Institute of Public Administration. She completed her doctoralstudies in Public Administration and Public Policy at Auburn University, USA. Her primary research interests are in thearea of Comparative and Development Administration, Public Policy Analysis, Organizational Theory and Evaluation ofRural Development Programmes.R.K. Tiwari is Senior Consultant, Centre for Public Policy and Governance, Institute of Applied Manpower Research,Delhi. He was formerly Professor of Public Administration at the Indian Institute of Public Administration (IIPA), NewDelhi. He received his education at Gwalior, Allahabad and Delhi. He has undertaken a number of research studiesin Development Administration, Rural Development, Personnel Administration, Tribal Development, Human Rightsand Public Policy. He has conducted consultancy assignments for the Department of Posts and in the Ministry of RuralDevelopment, Government of India; and for the Government of Orissa and the Narmada Planning Agency, Governmentof Madhya Pradesh. He has published several books.P.R. Panchamukhi, is Professor Emeritus, Centre for Multi-disciplinary Development Research (CMDR), Dharwad,where he was Founder-Director. He has a doctorate in Pubic Finance from Bombay University. He has beenawarded a number of coveted scholarships and prizes including Seth Mangaldas Jeshingbhai Economics prize forstanding first in the Bombay University and V.K.R.V.Rao Award for significant original research contribution. He hasheld the CN Vakil Chair in General Economics of Bombay University and has worked as Director, Indian Institute ofEducation, Pune. He been Advisor to the Planning Commission and has served on a number of committees of Govt.of India, Govt. of Karnataka, and Maharashtra, and been a consultant/adviser to international agencies like TheWorld Bank, UNICEF, UNESCO, Columbia University, WHO-Geneva, ESCAP-Bangkok, Indo-French Round Table.He has been Chief Editor /Editor of different national level journals. He has authored 15 major research works andhas more than 89 research papers in national and international publications in the areas of Education, Health,Public Finance and Developmental Economics.

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