Too much faith in private healthcare

S. Srinivasan | Updated on March 12, 2018

The Rashtriya Swasthya Bima Yojana provides only an illusion of universal health coverage. — V. Sreenivasa Murthy

Essential health services should not be left to private players, as envisaged in the 12th Plan draft.

The idea of free medicines for all announced recently by the Government of India — that is, free for those availing of government health facilities — has been generally welcomed. The example of the Tamil Nadu Government, and subsequently emulated by the governments of Kerala and Rajasthan, is often cited. Free medicines are expected to bring back patients to public health services.

In a sense, it is true. The utilisation of public health services is very low in general. NSSO surveys tell us that out of every 100 persons who get sick in India, less than 20 use the public health services. In addition, 20 per cent of those who get sick in India do not ever access healthcare of any kind.

The rest, at least 60 to 70 per cent, negotiate their illnesses with private practitioners and private sector hospitals. (In Tamil Nadu which provides free medicines to a reasonable degree of efficiency in its public health facilities, the utilisation of public health facilities — if one goes by 2006-based NSSO estimates — is somewhat higher, but not more than 40 per cent.)

The fact that most people end up with private practitioners and private sector hospitals tells us why medical care is often the road to indebtedness and impoverishment for many, including the middle classes.

It is to offset such an imbalanced state of affairs that the Planning Commission-appointed High Level Expert Group (HLEG) had come out with recommendations on how free health for all can be achieved. Healthcare, and free healthcare, for all at that, is a public good in itself.

Public good is something the private sector is not interested in, unless it sees a way of generating profits out of it. Profit-seeking in healthcare often tends towards profiteering, with no thought given to how such high costs impact patients seeking treatment.

The HLEG report has recognised this truth, and therefore envisages that the State ought to be the primary organiser, provider and regulator of healthcare services.


However, the Planning Commission’s Draft 12th Plan strikes another note.

The draft Plan talks of delivering health services through ‘managed networks’. Managed care model has its genesis in the US — it sounds attractive in theory, but its effectiveness depends on who runs it.

If run by for-profit corporate groups, it is guaranteed to produce all-round resentment, as in the US where the general experience among consumer groups is that these for-profit networks are more interested in cutting their costs than servicing people’s health needs.

The managed networks envisaged by the Planning Commission draft plan would be funded by the government.

But they are to be run under some kind of an MoU between the government and the managed network for providing an ‘essential health package’ of clinical services.


In a country where corporate accountability is an oxymoron, public health experts feel that managed care in corporate hands would be a disaster.

The State, it is envisaged, will be essentially a manager providing some basic preventive services, such as immunisation. This means that, in effect, the clinical services will be handed over to corporate hospitals. Once corporates control clinical services, for the government to negotiate — forget controlling — costs of healthcare and standards will be difficult.

Even now, price setting of important procedures is benchmarked by corporate hospitals; and government schemes such as the CGHS, which allow government employees to access private hospitals, end up paying high costs.

For instance, a cataract surgery with intraocular lens should cost less than Rs 2,000 and is being done at these rates by some excellent groups with a world-class reputation in India. But the government allows cataract reimbursements up to Rs 25,000 because that is the “cost” decided by certain influential corporate health groups.

Likewise, the government’s Janani Suraksha Yojana, meant to encourage hospital-based delivery (which means largely in the private sector) has basically increased the cost of even ordinary deliveries, apart from bypassing the skills of traditional dais.

The managed network idea, especially when handled by for-profit corporate groups, and non-profit groups that are de facto for-profit, will likewise inflate the cost of healthcare — overpriced procedures will be the new normal, with taxpayer’s money paying for it.


Elsewhere, the experience of “purchased care” through the Rashtriya Swasthya Bima Yojana (RSBY) scheme at the national level and other such me-too schemes in different States, shows that costs of routine healthcare problems have gone up.

Many of us have had this experience — of the bill being inflated after the hospital comes to know that you have insurance.

More importantly, insurance schemes such as RSBY give the illusion of doing something for the poor by offering “packages”. Delivery of comprehensive, primary-level curative, preventive, and promotional services cannot be done by “package” peddlers.

The vision of the Planning Commission’s draft plan of Universal Health Care is a large-scale version of RSBY. It is a case of good money being thrown in — up to 1.58 per cent of the GDP is envisaged — for indifferent or poor health outcomes.

The idea of comprehensive free healthcare for all, especially for the poor, will be effectively buried. The draft Plan document talks of phasing out irrational medicines. That is good, but there is no time deadline mentioned. Nor is there a mention of price regulation of all medicines, a move that even the Supreme Court has directed.


The draft Plan rightly endorses the three-year doctor scheme — to be called B.Sc (Community Health). But it is silent on reversing the dangerous trend of privatisation of medical education. In the early 1990s, 80 per cent of medical colleges were government-run, whereas now in 2012, 80 per cent are in the private sector.

Private, for-profit medical colleges, with a few exceptions, are poorly regulated and are synonymous with purchasable MBBS and MDs, whatever your academic merit or aptitude.

“Investments” in such medical education runs into lakhs and crores, and therefore the sole aim of such graduates is to recover their investments by charging patients exorbitantly or joining hospitals that assure them of fancy salaries.

These hospitals, in turn, charge exorbitantly by resorting to all kinds of unethical practices in the name of quality care.

Not acting on privatisation and profiteering in medical, nursing and pharmacy education will undo any good intentions regarding healthcare for all.

Healthcare is riddled with market failures. For healthcare for all to become a reality, the State cannot sub-contract its responsibilities. It needs to strengthen state-owned health facilities.

(The author is associated with LOCOST, Vadodara, and Medico Friend Circle.)

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on August 15, 2012
This article is closed for comments.
Please Email the Editor