State and Private Sector in India

State Policy towards the private sector has to be addressed within a systemic perspective covering not just providers of health care services but also other related components in the health care system. Within this perspective it is essential to delineate the extent of private sector involvement in provisioning and financing, medical technology, medical/paramedical education, research, and pharmaceuticals (Qadeer: 1985). This integrated approach is necessary for evolving an effective policy towards the private sector because a piecemeal effort often leads to a fragmented and ineffective outcome. This has been amply demonstrated by the American experience, where there was initially an effort to only regulate provisioning but, during the seventies, the growth of medical technology and corporate hospitals gave rise to an increase in costs of medical care. Subsequently the federal government had to set up offices for technology assessment and boards for regulating technology in order to prevent its overuse or even misuse. (Relman: 1983) As a result, during the seventies and eighties, regulatory authorities were set up in order to register equipment and also set ceilings for the number of high technology equipment for a given population (Iglehart: 1977; Starr, P: 1982).

During the eighties, the Indian government gave fiscal concessions by way of reduction of import duties on medical technology. In addition, by being granted the status of industry, private corporate hospitals have been able to mobilise loans from large financial institutions. Public insurance schemes like the Central Government Health Scheme and several public sector undertakings have permitted their beneficiaries to avail of medical care in private hospitals. The introduction of medial insurance by the General Insurance Corporation and its subsidiaries has also given a fillip to the growth of the private sector. The current policy of allowing entry of foreign insurance companies in this field is bound to further accelerate this process.

Studies from the US highlight the role of insurance in inflating the cost of medical care and, more importantly its implications for equitable access because large sections of lower middle class and poor people who cannot afford to pay the premiums are excluded from insurance cover (Carrasquillo: 1999). Studies on the interface between public insurance schemes and the private sector in India indicate considerable variability in costs and quality of services, and a lack of transparency and accountability among participant private providers. They underscore the difficulty of implementing health insurance schemes in an unregulated private market (Baru et al: 1999). An effective system of public regulation of provisioning by private hospitals and also of insurance and putting in place an authority for effective monitoring and enforcement of the regulations is therefore, essential.

In the Indian context, where the government offers subsidies to private hospitals for import of high technology equipment, it is important for the State to provide guidelines and structures for licensing the use of equipment. So far there have been no initiatives to either register or regulate the flow of medical technology. Some form of a regulatory authority is essential for registering and regulating the flow of medical equipment.

Apart from regulations for banning specified drugs and laying down procedures for testing of new drugs – whose enforcement again leaves much to be desired – pharmaceutical companies and medical research centres are left free to decide their research priorities and budgets. The current trends in this respect have a significant bearing on the kind of drugs and technologies being developed and therefore on the costs of medical care and its accessibility to the lower income groups (This is reflected in our scanning of Newspapers). Some of the tertiary private hospitals have also been given tax exemption for research purposes but there seems to be no system of monitoring the research output available in the public domain. The government has no doubt laid down conditions for institutions availing of these subsidies essentially aimed at promoting some degree of equity through free treatment to the poor. These conditions however are not effectively enforced. Remedying these lacunae again calls for a stronger, more effective regulatory system.

Similarly, in the case of medical and paramedical education, a number of private medical, nursing, technician, and auxiliary nurse midwives training institutions have been established in several states. However there seems to be no control on their growth or the content and quality of training being offered by them. The State just does not have any policy for dealing with such institutions. The norms/standards for these training institutions need to be evolved along the lines of public sector institutions and national guidelines are needed to ensure some uniformity across states.

All these are issues have important policy implications. But, since each of these sub-systems comes under the purview of a different ministry, they are dealt with in a fragmented manner. There is clearly a need for mechanisms by which there can be better coordination between them, with the health ministry taking a lead role for such an initiative. It is worth considering the constitution of a regulatory authority at the national level under the purview of the health ministry, with representatives from each of the concerned ministries along with those of professional and consumer organisations, to provide integrated guidelines on different and interrelated aspects of the health care system to be followed by state and local, municipal bodies and Panchayati Raj institutions.

When several states passed the Bill banning Amniocentessis for purposes of sex determination, the loopholes in this bill related to the fact that the private sector was unregulated and was performing these tests with technology that was unregistered. Some of the members of the committee and women’s organisations demanded that the bill must address the dubious role of the private sector and have some regulatory mechanisms for registering medical equipment to prevent its misuse. However this issue was left unaddressed and some of the women MPs who were members of the committee to formulate this bill gave a note of dissent on this very issue.

Rama V. Baru, Imrana Qadeer & Ritu Priya