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Dr K. Srinath Reddy: ‘A system of universal health coverage should pay for health services from a pooled fund’

Private hospitals: Why health can't be a business

Civil Society News, New Delhi

Published: May. 20, 2020
Updated: May. 28, 2020

Every now and then, tragic stories about the consequences of poor quality healthcare make news and come to public attention. They could be stories about infants dying in government hospitals for want of oxygen cylinders as has happened in Gorakhpur or about a private hospital allowing a little girl to die from dengue and then presenting the parents with a massive bill.

Since the government doesn’t provide reliable healthcare services, the private sector has stepped in. Citizens, rich or poor, have been forced to turn to private physicians, hospitals and testing facilities, often paying far beyond their means.

But even after paying, the quality of care is not what it should be because there is no regulation worth the name and private healthcare providers have been doing pretty much as they please.

A Clinical Establishments (Regulation and Registration) Act does exist but is operative in just four states. Health anyway is a state subject and each state is free to make its own rules.

Efforts to mend this broken system in a holistic way have been resisted. Doctors in Karnataka, for instance, protested and went on strike when the state government decided to bring in a law that would ensure standards and put a cap on charges.

Civil Society spoke to Dr K. Srinath Reddy, President of the Public Health Foundation of India (PHFI), on the kind of healthcare system India should be framing instead of a few fixes here and there. An eminent cardiologist, Dr Reddy was head of the Department of Cardiology at the reputable All India Institute of Medical Sciences (AIIMS) in Delhi before he joined PHFI.

Private sector healthcare has grown rapidly but as a business. What are the implications of this for medicine and healthcare?

Industry perceives healthcare as a business. Even senior doctors in private hospitals talk about healthcare as an industry and ask for concessions for the sector as an industry. If we make healthcare into a business the very ethos of medicine is lost.

It is also inaccurate because in any business transaction one expects the consumer to be setting the demand based on a very clearly recognised need and some idea about the value of what he or she is purchasing in that transaction.

Here it is the felt need of a person who is extremely vulnerable. There is huge asymmetry in knowledge and in the decision-making power. Now, if a doctor tells a patient he needs to get these tests or procedures done as part of treatment there is no way an ordinary patient can actually argue with that decision. Quite often, even if the patient is knowledgeable, he is unable to challenge the authority of the doctor. So this isn’t a proper business transaction in the traditional terms of what we understand is a business.

More important, even the moral origins and guidelines of good medical care do not see healthcare as a commercial transaction. The idea of a provider or a consumer or a client has been anathema to medicine over centuries because healthcare has been seen as a very important service. Of course, service providers will have to be paid and compensated so that they can also live. But that price cannot be extracted from a vulnerable patient. It is for the system, which society accepts as just and humane, to provide that compensation.

What is the kind of system you would recommend?

Previously, healthcare was purely a government service paid from tax-funded revenues. Now private hospitals have come up. Their charges should not be imposed on a vulnerable patient. A system of universal health coverage should pay for these services from a pooled fund consisting of tax-fund revenues like employer-provided insurance, government-subsidised social insurance programmes like Rashtriya Swasthya Bima Yojana (RSBY) and some of the Arogyashree programmes. A single-payer system at state level should purchase services from private healthcare providers.

First, we need strong public sector healthcare services. Then, if we need supplementary provisioning by private sector providers, we can carefully purchase those through a single-payer mechanism from empanelled healthcare providers in the private and voluntary sectors. We need to have a very clear mission about the kind of services to be purchased, how they are to be delivered, what is the level of payment, what is the quality of service and what are the accountability mechanisms.

So, universal healthcare can do that. After all, the United Kingdom’s National Health Service (NHS) purchases services, under certain conditions, from general physicians who are all individual private doctors running their clinics. It is possible to get services out of private providers in a responsible manner under a universal health coverage system.

In our mixed healthcare service, which has evolved by default and not by design, you can’t wish away the private sector. But you can’t also allow the public sector to grow feebler and feebler by the day. Strengthen it and then supplement it with private sector services but in a very clearly defined manner through contractual mechanisms which serve a public purpose.

Public-Private Partnership (PPP) in health is not a commercial venture like in infrastructure. It has to be a partnership for public purpose. PPP has a different nomenclature here. Public purpose is foremost. And that public purpose is to provide accessible, assured, quality healthcare at an affordable cost so that no individual or family is rendered financially vulnerable or bankrupt. This is only possible under the structure of universal health coverage.

But this would really mean strengthening government-run hospitals and healthcare facilities?

They have to be strengthened. After Independence we started off with a predominantly public sector healthcare delivery system. But under-resourcing and poor management led to the decline of the public healthcare sector. That led to the private sector emerging as the prominent player in the delivery of healthcare but in a very skewed manner both in terms of its presence — most private facilities are concentrated in urban areas — and in terms of cost. Quality too isn’t always certain.

What would quality in healthcare mean?

We mistake quality to be mere professional competence and a high degree of sophistry in equipment. But if it is inappropriate care, then that, too, isn’t good quality care. You do more tests than are necessary. You do treatments that aren’t really called for. Even if it is done by a highly skilled doctor it is still inappropriate care and amounts to bad-quality care.

So how do we set standard management guidelines? Are those guidelines being followed? Are there quality audits? Are there social audits to find out the level of satisfaction in the community? How are patients and their families being treated? All these become very important while defining quality. This is not happening now. More and more we are venturing into an unregulated zone in which the vulnerable patient and family are at the mercy of the care provider.

It is possible that a number of private doctors and private hospitals are ethical. For example, in eye care Sankar Nethralaya or LV Prasad Eye Institute are highly ethical. But you can’t leave it to the moral compass of an individual doctor or institution or the paying capacity of a family. As a just and humane society we must ensure that quality healthcare is available to all by creating systems and not by leaving it to a laissez faire method of operation.

Even economists in Western countries, which are free market economies, clearly recognize that there is a market failure in health because traditional market conditions do not operate in health. There is asymmetry and vulnerability. So you have to treat health and education very differently from other business transactions. We have to ensure, like Western countries, that a system is created in which people get healthcare without having to necessarily depend on their paying capacity.

You are saying that the public healthcare system must be given primacy. But it is in a shambles?

Yes, the public healthcare system has to be better managed. Unfortunately, public sector hospitals are ill-equipped, inadequately staffed and don’t have regular supply of drugs.

One of the terrible things that now happens in government hospitals, even in government medical college hospitals, is that doctors appear there for a short time and then go away to their private clinics and corporate hospitals.

Doctors are getting attached to four or five corporate hospitals apart from their private practice. They put in a guest appearance in the government hospital or government medical college hospital where they are actually supposed to be working. Their patients are left to be managed by postgraduates and others. A very, very decadent system has emerged because of misgovernance. Look at the states. Almost every doctor is allowed private practice right from PHC level. Some even do private practice in the government hospital!

When I was a student in Hyderabad’s Osmania Medical College, my consultants would come at 8.30 am, leave at 1 pm, go to the medical college to teach and open their private clinics only after 5 pm.

Of course, government doctors, including those in primary healthcare and community healthcare settings, have to be paid well, treated well and given enough social amenities to ensure they are happy and their children can go to reasonable schools.

But all this will only happen if there is political commitment to protecting and promoting the public healthcare sector. If we starve the public sector of funds and treat it with poor management practices and then say it doesn’t work and so let’s go to the private sector, then we are giving a free hand to the private sector to do what it wants. In a weak regulatory environment what the private sector wants is to make more money. Therefore, we have to bring out the good in the private sector and that can only happen by strengthening the public sector and then coupling the two.

But over the years the government has shown no inclination to increase funding and radically improve government-run healthcare facilities….

See, apart from AIIMs there are good hospitals like GB Pant Hospital and Kalawati Hospital. They are trying to do their best. The problem is that the government public sector advanced-care institutions are bursting at the seams because of the weakness of primary healthcare and intermediate healthcare.

You don’t have a good urban primary healthcare system. You don’t have good district hospitals. In most places they are starved of funds and personnel. So even for health problems that can be taken care of at that level, the tendency is for people to flock to advanced-care institutions. As a result, these are now overcrowded and, therefore, their standards of care will fall because they just don’t have the resources to cope with this huge mixed demand.

So if we strengthen primary healthcare in rural and urban areas we will be able to take care of several problems: first, by preventing disease and, second, by early detection. We can therefore limit the number of people going to advanced-care institutions in a very sick condition and those hospitals can then play their originally intended role.

In AIIMS because we run an undergraduate programme as well, we are a primary healthcare centre for south Delhi, a general hospital for Delhi and a referral hospital for all of India. That’s not the kind of role the institution should be playing. Despite this, if AIIMS is functioning and maintains a reputation, kudos to the doctors. 

Should regulation be applied to both public and private hospitals?

Regulation of quality is essential for both. Any institution that is delivering healthcare must have quality assurance. Regulation is required for public sector hospitals to ensure they are functioning well. But mere regulation does not help. You need to resource better.

What is the point of mandating a certain quality of care if there is no access since people can’t afford the quality of care? The private hospital will say, I will provide quality of care according to your management guidelines but I will still charge this amount of money.

You have to build in a universal health coverage system in which access is assured, quality is assured, costs are contained and financial protection is provided. Piecemeal solutions will never work. Even universal health coverage requires regulation to make it effective. You need both in tandem, the carrot and the stick.

Is the NITI Aayog’s PPP model for public healthcare facilities an appropriate one?

They are trying to assure access to certain services that don’t currently exist in district hospitals. For instance, non communicable diseases like heart disease, diabetes and cancer. The NITI Aayog’s proposal is to bring in a private partner who will be asked to build institutional structures on the campus of the district hospital and equip and operate services with some shared facilities.

But why not first invest in strengthening district hospitals to provide these services especially if you want to convert them into medical college hospitals, as envisaged in the national health policy? Second, if the private partner is given a 30-year lease, what is the assurance they will leave if they fail to keep their commitments? How will you remove them?

A better arrangement would be for the private partner to invest and build facilities and you can empanel them to augment your services. You are then the master. You can dis-empanel them if they don’t perform.

I don’t think the NITI Aayog model is appropriate. We ought to strengthen district hospitals with public investment, supplement their services from the private sector, but through a contractual mechanism. We should not be embedding them in government facilities.

Would you recommend putting a cap on prices in private hospitals?

Of course. I believe price control is absolutely necessary. You can do it effectively through a single-payer mechanism. In some states, for drug procurement they are able to bring down drug prices by directly negotiating the price.

If I am the single purchaser and I am buying large amounts, then the person who is selling will accept my conditions. On the other hand, if there are 10 different purchasers and 10 different providers they can play around and try and manipulate the system.

If you are the single purchaser, you have negotiating power which has been shown very clearly in drug procurement. Wherever there is a single purchase system you can drive down prices and eliminate the middleman.

The same system can be followed for bringing down the cost of healthcare. If you have purchasing power you can not only set price controls, you can make sure it is followed. If you have multiple mechanisms, then the provider will say, okay, I will set my own price. 


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