It is widely accepted that the deficiencies in public sector health system can only be
overcome by significant reforms.
The World Bank (2001:12,14), which has been catalytic in initiating health sector reforms in many states, categorically emphasized: now is the time to carry out radical experiments in India’s
health sector, particularly since the status quo is leading to a dead end. . But it is evident
that there is no single strategy that would be best option. The proposed reforms are not
cheap, but the cost of not reforming is even greater.
Reform strategies include
(i) alternative financing (user-fees, health insurance, community financing,private sector investment);
(ii) institutional management (autonomy to hospitals,monitoring and management by local government agencies, contracting);
(iii) public sector reforms (civil service reforms, capacity building, productivity improvement); and
(iv) collaboration with the private sector (public/private partnerships, joint ventures)
Partnership with the private sector has emerged as a new avenue of reforms, in part
due to resource constraints in the public sector of governments across the world.
There is growing realisation that, given their respective strengths and weaknesses, neither the public sector nor the private sector alone can operate in the best interest of the health system. There is also a growing belief that public and private sectors in health can potentially gain from one another. Involvement of the private sector is, in part, linked to the wider belief that public sector bureaucracies are inefficient and unresponsive and that market mechanisms will promote efficiency and ensure cost effective, good quality services (WHO 2001).
Collaborating with the private sector and fostering a partnership for providing health
services to the underserved sections of the population are particularly critical in the
Indian context. Due to the deficiencies in the public sector health systems, the poor in
India are forced to seek services from the private sector, often borrowing to pay for
them.
India has one of the world s highest levels of private out-of-pocket financing (87 percent
estimated in World Bank 2001). Out-of-pocket expense at the point of service use is
about 85 percent (Kulkarni 2003). Such a mode of financing imposes debilitating effects
on the poor. Hospitalisation or chronic illnesses often lead to liquidation of assets or
indebtedness. It is estimated that more than 40% of hospitalised people borrow money
or sell assets to cover expenses, and 35% of hospitalised Indians fall below the poverty
line because of hospital expenses. Out-of-pocket medical costs alone may push 2.2% of
the population below poverty line in one year (Selvaraju and Annigeri 2001; Mahal et al.
2002). Approximately 29 percent of the Indian population (almost 300 million people) live
below the poverty line and depend on free health services from the public sector. The
inequities in the health system are further aggravated by the fact that public spending on
health has remained stagnant at around one percent of GDP (0.9%) compared to the
global average of 5.5%. Yet even the public subsidy on health does not automatically
benefit the poor. The poorest quintile of the population uses only one-tenth of the public
(state) subsidies on health care while the richest quintile accesses 34 percent of the
subsidies (Mahal et al. 2002).
.
