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Issues in Health: Public-Private Partnership Author(s): Ramesh Bhat Source: Economic and Political Weekly, Vol. 35, No.

52/53 (Dec. 30, 2000 - Jan. 5, 2001), pp. 4706-4716 Published by: Economic and Political Weekly Stable URL: http://www.jstor.org/stable/4410118 . Accessed: 17/12/2013 10:21
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The health infrastructure at present is not geared to handle this changing disease pattern load. secondary and tertiary levels need adequate resources to maintain an appropriatebalance at various levels to meet the health care requirements of the population. the revenue expenditure has exhibited a positive growth of 5. These financial and fiscal pressures have also put considerable pressure on capital expenditure. primarilyselected based on the availability of data have been used to describe the broad nature of the PPPs initiated by government agencies. tertiary care and in the provision of services in remote areas. India is going through the health transition. and the ability of government facilities to provide basic health care facilities in remote areas. Section I describes the policy context and discusses health financing scenario in India. For example. I PolicyContext The health financing situation in India is not very encouraging. 2000 This content downloaded from 86. some of the state governments are exploring the options of promoting public-private partnerships(PPPs) in health sector.96 on Tue.5 and 2. The limited insurance facilities are making it difficult to cope with the increasing finan- andfiscal problems.4 per cent. Most state government budgets show that a major component of budgetary allocations go to meet the recurrent costs to maintain existing levels of public health care delivery system. Analysis of two states. The last section discusses the implications and summarises the key issues and prospects of developing such public-private partnerships in India. The areas of health care delivery system which have been seriously affected are curative and super-speciality care in the government sector on the one hand. No doubt the are low.Issues in Health Public-Private Partnership Public-private partnerships in the health sector can bring needed resources while also taking care that the vulnerable groups .have access to health facilities. The difficulties experienced in providing health carespecifically in these areashave compel led many state governments to explore alternative options. on the other. The net effect of this has been a reduction in non-salary component of health expenditures. The objective of this paper is to discuss and analyse the policy initiatives of selected state governments and the ministry of health and family welfare of the central government.the poor and rural populations . In Section II. Moreover the unintended consequences of private sector growth are becoming evident. The low budgetary allocations in recent times have created serious imbalances at various levels and has affected certain aspects of a good delivery system. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions . The cases discussed in this paper do not constitute an exhaustive list of all PPPs. Most of these options are in curative. Having experienced significant growth in private sector at curative primary and secondary care. the areas which have suffered most are secondary and tertiary care. One of the important aspects missed in planning the curative health delivery' system has been geographicspreadof varioustypes of health facilities within states. The expansion of tertiary and modern curative facilities need considerable resources. various initiatives of state andcentral governments have been described in brief. during the period 1986-87 and 1990-91 this rate has been -3.5 per cent of the total health sector 4706 Economic and Political Weekly December 30. The number of deaths due to noncommunicable diseases has increased and are likely to increase disproportionately in future. There is pressure on state governments to consider instituting some protection mechanisms for these groups.most state governmentbudgetaryallocations to health governments are finding it difficult to expand their public facilities to cater to the growing health care needs of their populations. Emanating from the financial crunchand fiscal problems.1 per cial burden arising out of the changing scenario. It must also determine a structure of subsidies and incentives for such partnerships. Other state governments such as of West Bengal are also considering using a state sickness fund to protect the poor from catastrophic financial burdens arising out of illness. This is evidenced by the fact that the growth rate of capital expenditure of government on social sectors overall has shown a declining trend during the recent periods.55. Goa and Maharashtrahave already initiated schemes to protect lower income groups [Whyatt and Bhat 1997]. as many people from lower income strata are not in a position to use these facilities. In most states salaries and wages account for about 70 per cent of the total health budget. RAMESH BHAT ith shrinking budgetary support cent [World Bank 1997b]. The government must clarify its policy towards the private sector and ensure that public spending on health does not decline. In terms of resource allocation.176. Cases. The share of capital expenditure in total health budget has remained low and the data suggest a declining trendduringrecentyears. During the same period. Punjab and Rajasthan indicates that the average capital expenditure on health has been around 5. In 1993-94 health expenditure as per cent of GSDP of 14 major states in India was around 1.5 per cent [Rao and Sen 1993]. many states have experienced and continue to experience a reduction in allocation of resources to health sector. The ground level situation has taken furtherserious turnbecause of the rapidly changing health needs of the community. With this health transition taking place. there is and will be considerable demand on the government to expand and upgrade its facilities to meet the growing health care requirements in curative and tertiary areas. The gains made in controlling communicable diseases are likely to be completely offset by this change [Reddy 1993]. For example. The health delivery system having components of primary.

There have been attempts to augment the resources of health facilities through the introduction of user fees. was recognised in 1982 in the National Health Policy (NHP) of the governmentof India(GoI). respectively (Table 1). The policy recognised that the state and central governments responsible for maintaining public health face many financial constraints in their objective of providing effective and efficient health care services. The policy statement had also recommended ". Economic and Political Weekly December 30. reporting. 2000 4707 This content downloaded from 86.47 per cent [Bhat 1996].e g. reducing a financial burden of government expenditure on specialty and super-specialtycare. and also. the following policy change was made regarding the importof medical equipment ". investment in medical equipment and technology. and in specified areas. About 57 per cent of hospitals and 32 per cent of hospital beds are in the private sector. The severity of financial crunch in health facilities. etc. Insurancecoverage mechanisms are negligible and most of this expenditure is out-of-pocket. The data suggest that at present about 80 per cent of 3.7 per cent and Rajasthanaverages at 2." The budget then proposed abolishing the system of certification for charitable hospitals and allowed importof specified medical equipment at 15 per cent.50. Import at zero rate for government hospitals and for all specified life saving equipment. hospitals.000 qualified allopathic doctors registered with medical councils in India and 6.. No doubt the dependence on private sector is considerable. The overall impact of these financial constraints is thatqualityas well as quantityof curative health care has suffered. Towards implementing this policy the government evolved a policy of providing duty exemption on import of medical equipment. in the 1994-95 budget. The share of private sector in health infrastructure is also quite significant. various state governments are exploring the options of involving the private sector in meeting growing health care needs.000 providers from other systems of medicine are working in the private sector.4 per cent of the total hospitl expenditure incurred by the hospitals [NIPFP 1994]. Utilisation studies also show that a third of in-patient and three-fourths of out-patients utilise private health care facilities [Duggal and Amin 1989. Reaching remote areas or targeting specific groups of population.176. There are also various other managementissues such as lack of proper guidelines.planned attention would also require to be devoted to the establishment of centres equipped to provide specialty andsuper-specialtyservices. effective exemption policy. The domestic industry is also not able to compete with imported equipmentbecause it is now availabledutyfree to hospitals on production of certificates by designatedauthorities. For example. etc.8 per cent. Visaria and Gumber 1994]. The duties for importing such equipment were significantly high in the range of 150 to 300 per cent.5 per cent per annum. These attempts have not produced any significant result. By mid-1990s the domestic industry for medical technologies had also grown. Most qualified doctors work in private sector. Overall. The recent health financing patternsuggests that out- of-pocket cost on health accounts for about 78 per cent of the total expenditure on health in the country. Yesudian 1990. In general. The all-India figures suggest that during 1992-93 the average hospital receipts amounted to about 1. For each 1 per cent increasein percapita income privatehealth care expenditure has increased by about 1.8 per cent [World Bank 1997b].96 on Tue. monitoring. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions . however.. etc.the present import duty structurefor medical equipments is complex and involves in some cases time consuming administrative procedure. Over the period private health sector growth has been considerable in both provision and financing side. througha well dispersed network of centres. involving qualified providersthroughcontractmechanismsin rural areas to improve the health delivery care system are some of the options being explored. Private health care expenditure in India has grown at the rate of 12. enhancing the capacity to meet growing health needs. in implementing the user fee policy [Bhat and Sharma 1997]. to ensure that the present and future requirements of specialist treatment are adequately available within the country.90. [WorldBank 1997b]. continued to exist. Most states in Indiaare underpressure to find alternative mechanisms to provide better curative services to their populations and to develop mechanisms to reach the poor in remote areas. particularly in super-specialty care. For 15 major states in India the average cost recovery is about 3. and improving efficiency throughevolving new management structures." The policy document of the Gol also suggested a reduction of government expendituresinvolved in the establishment of such centres and proposed a planned effort to encourage private investments in such fields so that the majority of such centreswithin thegovernmentset-up. the overall duty structure has been substantially reduced in recent budget announcements following the liberalisation programme of the government of India in 1991. The share of private sector investment in total health infrastructure. Private health expenditure in India is estimated to be about 4. In most cases the state government treasury rules do not permit the facilities to retain the funds. To promote growth in investment in health and super-specialty care. This defeats the main purpose of implementing the user fees policy in public facilities as the system does not facilitate the use of these funds to improve the quality standards of healthfacility.55..reducing regional and geographic disparity in health care provision and ensuring access. the import duty on various other medical equipment which was 85 per cent was reduced to 40 per cent. This policy of the government has gone through a number of changes over the period.could provide adequate care.budget. the policy documenthadrecommendedthatthe states should design processes which encourage the establishment of practice by private medical professionals and investment by non-government agencies in establishing curativecentres. To mitigate the problem of resource crunch.25 per cent of the GDP. The involvement of the private sector in health care is another option being explored by a number of states in India to augment resources in the health sector. A large number of equipment and machines needed to be imported. the focus of various privatepublic collaborations has been on: developing strategies to utilise untapped resources and strengthsof the private sector. is also quite significant.. One of the problems in expanding the super-specialties care in the early 1980s was the almost non-existent manufacturing base for producing such technologies. Developing incentives system to influence the desired geographic distribution of health facilities. the government of India provided duty exemption for the import of medical technology to the health care institutions in non-government sector having the status of charitable institution. Punjab tops the list with cost recovery of 7. Private-public partnerships have emerged as one of the options to direct the growth of private sector towards public goals. Given the role of the private sector in health. Components for their manufacture were allowed to be imported at 15 per cent customs duty. lack of appropriate management systems such as accounting.

* Hospitalshould have affiliation with exitingcentre. Authorised tendercommitteeof the government.no mentionof coordination inter-department PUDAadministration involvedin implementation Response and follow-up * Applications received ir 1995 were * Morethan30 applications received * Stay orderbrought approvedbutrejectedlater.the document indicated overofhealth taking facilitiesfrommunicipal corporation.000 Within three years the facilityshould startoperating No participation except in case of JV No conditionspecifiedforoperation of the facility 1/3 nominees on the boardfrom governmentof Delhi * Specified urbanlocationsin Delhi * Readilyavailableand inpossession of government * Free care to proposedpercentage of patientsin OPD and IPD(to be proposedby bidding institution) * Selection of patientsforfree care to be decided by the government Not specified Land andselected valuable equipment as equityfromthe state government Condition formakingfacility operational in management Participation Location and rural). However.Comparison of Policy Initiatives of Three State Governments In India Characteristics Yearof policyimplementation Policystatement the Implementing agency within government Information to prospectivebidders Proposedformof participation Rajasthan Endof 1996 Punjab Endof 1995 and renewed in 1997 Delhi May1997 No policyof documentavailable of HealthServices (DHS) Directorate document available No policydocumentavailable Explicit publicly policy Medical and Health Department (MHD) PunjabUrbanDevelopmentAgency (PUDA) Detailedbrochure containing information and guidelinesprovided 100 per cent ownershipbasis to * Institutions * Hospitals * Diagnosticcentres * Charitable institutions * Charitable institutions settinghealth facilityas per governmentplan * Allothercharitable institutions * Institutions setting-upspecialty hospitalas per governmentplan * Profit-making not institutions covered above Construction shouldbe complete in two years and hospitalshouldstart functioning No participation fromgovernmentin management No information availableto prospective Generalone-page guidelinesfor biddersexcept advertisement bidders besidesadvertisement potential * Preferred .96 on Tue. BIP 14 applicationsreceived No information available The guidelinesdid not containany information on this. * To be decided by the bidder on the request made by applicant Free care to poorand other price specification * 10 per cent free IPDand free OPD * No free care condition forone hourin morning andone hour * No otherpricespecificiations in evening forfirsttwo categories * No pricespecificationsforlast two categories Notspecified * Subsidised land * Sa!es-taxexemptionon equipment * iNooctori * Otherbenefitsfromfinancial institutions Minimum capitalcost of Rs 50 crore Subsidised land(offering below marketprice) Minimum investmentrequirement Incentives Amendments orderforsales tax in.JV withgovernment * Open to participation on ownership basis (individuals.Industry. 2000 This content downloaded from 86.lawsenablingpolicy * Exemption implementation alreadyissued * Amendment in RajasthanLand Revenue Act coordination Inter-departmental of Healthand Family Departments Welfare. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions .176.55.Table 2: Public-PrivatePartnerships In Health Sector . * Choice availablefromsix specified specificationand availability * Choiceof locations(urban * Exactlocationto be identified based urbancentres. corporatesor charitable organisations) JV (government to equitylimited 26 percent) requirement Eligible 1995 policy: Professional qualification Open to all must 1997 policy:Minimum experience of 10 years running a specialtyhospital. public through * Freshset of applicationshave been litigation in invited 1997through advertisement World Bank health systemsdevelopment ApolloHospitalwas startedas a JV projectto strengthenthe secondary level hospitals(createdPunjabHealth Systems Corporation) to strengthen and keepingimage ApolloHospital viewed as hi-tech Trying of not privatising the healthsector andhighpriced and hospital corporate not as JV withgovernment NA in the state having Otherinitiatives forprivate-public implications collaboration Publicimage Morethan 50-bed hospitalshave been converted intoregistered societies (autonomyto take decision. * Minimum earnest money Rs 35.Finance. aboutthe process and Clarity technicalissues Governmenthas set up one more medicalcollage and is establishing centre paramedical Paramedical staff is consideredas a issue andtraining facilities need major augmentation of qualifiedpersonnel Availability Adequatesupplyof trainedmedical staff 4708 Economic and Political Weekly December 30. Revenue.life line medicalstores) Hospitalsociety concept is being no information on implemented performance Implementation problems to have singlewindow the PUDAto handle Attempt concept Capacitywithin healthproject.

1991-92 994.13 4051. relevant the well known Apollo group having a to set up tertiaryand super-specialty health experience in super-specialty areas could hospital chain in the country.35 2.14 3. Any ap. Financial capability in Rs 1.04 28114.81 1.59 1975-76 1717. The preference for (Per Cent) (Per Cent) a particularlocation by all bidding insti5.hospital in interested invited for six locations Bids were plicant setting up healthfacility participation policy.22 ' 1221.39 3. Punjab Urban Development laid a condition of time also down having guidelines to interested institutions advertisement any Authority(PUDA) through in November 1995 invited bids for the at least 10 yearsof experience in therelevant describing the process and did not provide allotmentof sites for setting up specialised field and the applicant should have estab.72 2630.three years and that the allotted land could involvement of NGOs and industry in ever. Chandi.08 1437.Jalandhar.69 506.15 316.40 56.16 4466. The government this facilities.38 2.91 11212.73 5.99 2.14 2116.12 491.69 7452. etc. but the offer 1983-84 5.25 2.92 516. havingland areaof five acres and 10 acres.15 in the state(Ludhiana.70 155.43.1974-75 5.060 per square yard process of short-listing of the institutions setting up a hospital was one of the im. This time the pre.02 458.56 subsidisedprices to these organisations. How.35 was cancelled later.58 15181. 1990-91 16032.54 2700. The total capital cost was doctors who formed separate consortiums Punjab envisaged to be about Rs 500 million or abroadand submittedbid applications.50 1978-79 2353.sponses were from non-resident Indian resident Indians. Large corporate houses and a well known pharmaceuticalcompany were Table 1: Medical and Public Health: Capital and Revenue Expenditures among the applicants.19 In 1997. the response to this initiative In the revived initiative private partici.71 3950.67 3523.97 296. Punjab health systems corporation of professionals or any institution having or hospital.19 14675.52 2774. 177.90 3. In 1982-83 4.83 4269.39 350.involve other departmentssuch as finance.29 2911.33 181. it was not clear from garh).95.45 406.84 2510. other applicants were big business houses.97 4968.67 7572.75 1634.51 6.92 197.46 9722.. Only those having.46 4421.viding subsidised finance and other infradiscussion. however.58 4223.09 Bhatinda and Patiala). II Initiatives Government Economic and Political Weekly December 30.37 143.29 5130.23 2533. advertisement.30 2259.73 3.15 322.24 1992-93 17200.38 6863.46 15003.99 9940.43 tutions was cited as the reason for non.18 14023.45 3. did not issue set up the facility.82 2209. Rajasthan and problems faced in implementing the pre. the advertisement suggested that not be used for any other purpose than for managing public health facilities and in.34 40.06 8798.64 1. This initiative did not result in any Rajasthan Punjab Total Total Revenue Capital Revenue Capital Capital Capital workable arrangement or collaboration Year to Total to Total with the private sector.final allotment of land area would be which it was allotted to the institution.35 24200.55.74 17473. In response to the subsidies ranging from 40 to 60 per cent.34 26893.40 20869.Amritsar.94 earmarked for institutional purposes. Interestingly.23 2.75 forinvitingapplicationsfor super-specialty 1988-89 10942.21 8975. Some of these preferences. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions .90 1787.29 1. but not having past experience in health the advertisement whether PUDA did The eligibility conditions suggested that was directed to seek collaboration or af.28 395.16 3530.53 11433.45 241.73 3826. acceptanceof offers. The condition was Delhi in developing these partnerships.176.46 4.However.14 5223.01 2. PUDA this time did not provide specialty centres by entering into joint detailed information on these locations in venture with the government also featured terms of numberand size of available land one of the options in collaboration.82 120.60 3.74 6.92 18195.93 list. No policy document was to set up the super-specialty centre within The other initiatives discussed are the available on the present initiative.16 670. The government also 1976-77 6.86 2968.30 14722.24 3. receiving only five appliinitiatives also describe the reasons for initiatingsuch private-publicpartnerships.59 1984-85 5860. While implementing the private area adjoining (the capital city.30 5497.79 2. levies.35 1981-82 248. involving and criteria for allotting the land sites.31 13223. doctors having MBBS degree or a group filiation with a recognised medical centre health.14 1977-78 6.92 8107.47 20421. the government revived the 1985-86 1986-87 7628.47 7045.19 22565.85 13730.26 vious locations were not included in the 1993-94 18927.03 4. 2000 4709 This content downloaded from 86. requisite experience in the field of health land for this project at rates ranging from The advertisement did not describe the care could apply.42 2.31 2279.59 14419.1979-80 7.depending on the urban estate. In such Table 2 summarises the characteristics areas as was done in the previous offer.96 on Tue.84 1812.47 rience in health and therefore the govern.12 70.40 19597. this time two reservices from institutions in India or non.39 5.89 756. quirements.03 1907.68 a few cases land was allotted.24 hospitals in five specified urban locations 1989-90 2.any opportunity to clarify any questions super-specialty arising in the process of submitting the hospitals in urban estate of SAS Nagar lished super-specialty/multi of international repute. This did not include the cost of land.47 478. vious initiative. octroi and proof which 12 were short-listed for further lump-sum or instalments.09 3.86 11638.07 162.equity capital in the JV.98 6108. Due to high minimum investment revolving qualified doctors in provision of based on an applicant's requirements and health care in rural areas.350 to Rs 2. pation was invited for 13 super-specialty cations.64 7531.59 448. The revised schemes like previous one portant requirements.bids.37 120.84 4.62 8.73 17463.63 3564.96 82.38 5. cases the cost of land was proposed to form of threeimportantpolicy initiatives of state This step was guided by the number of the government's contribution towards governments of Punjab.88 94.66 and another issued advertisement proposal 1987-88 9205. initiative in public-private partnership by The conditions for applying this time were one of them proposing collaboration with offering subsidised land to private sector stringent.89 1430.94 184. 7180. Proposals to consider setting up super.79 17880.50 organisationsdid not have adequate expe4311.65 4.The governmentagreedto offer and ministry of urban development.was very poor.83 5312.51 247.The The government of Punjab evolved an more.42 30793. The department.58 31549.87 156.66 9623.16 5.86 1520.37 101.97 8.PUDA received 20 bids out The cost of land was to be paid either in did not propose providing any other benefits such as taxes.23 425.00 ment was reluctant to offer land at 1980-81 4020.01 328.54 5545. Most of these locations were in areas Average 5.49 69.36 3.43 found that a number of shortlisted 1.

Delhi With a view to attractprivate investment in health sector. neurology.665.96 on Tue. Out of these 10 locations. Otherswere earmarked masterplan. Each a facility was expected to offer free care to a certain percentage of OPD and IPD patients. the growing incidence of chronic diseases have made it imperative to develop an effective secondary and tertiarycare system. which had participatedin the previous bid. Of these. The state has 218 hospitals having a bed capacity of 35. responded to the revived initiative of the government. the government had proposed to contribute additional resources to meet the requirementof minimum capital contributionfrom government. In orderto encourage private investment in hospitals. It acknowledges that' the ability of the government to expand in these areas was significantly constrained by availability of funds. Each facility was expected to participatein public health programmes of the government. directorate of health services (DHS).176. Most of these facilities were at commercial and busy locations. the government in Delhi provided a set of general guidelines for participatingin this venture. The entire process of the revived initiative has taken more than a year and the selection has yet to be finalised. seven were government hospitals. The need to increase the access to and quality of services and better clientele relationship as the reason for involving private sector in. Rajasthan The policy document on PPPs in Rajasthan is the most comprehensive of any state government policy statement in India. The experience also suggests thatthe earlierinvitationhad attractedmore of local institutions having specific preference for a particular region. The biddinginstitutionswere requiredto specify the percentage of free OPD and IPD care they proposed to provide. In forming these joint ventures the government also made it a condition that up to a third of the board nominees will be from the government. Public litigation case on social security grounds was filed in the high court of Delhi and a stay order was issued halting the entire process of forming joint ventures. government's contributionwas to come in the form of cost of land and it was supposed to form a part of equity capital of the proposed organisation. government of Delhi in May 1997 proposed setting up 10 hospitals as joint ventures on some of the sites available with the government.structure facilities. only six hospitals provide specialty care in areas such as cardiology. Besides the stringent conditions of the department for bidding under the new proposed arrangement.55. In order to attract investment from private providers in specialty services and curative care. diagnostic centres and Category/ Base Rural Area nursinghomes. These were: Urban Area Table 3: Subsidies to Different Categories of Providers Price CategoryA CategoryB CategoryC CategoryD Market Priceof Agriculture Land(MPAL) 25 per cent of MPAL (no ceilingon area) 25 per cent of MPAL (no ceilingon area) 50 per cent of MPAL (no ceilingon area) MPAL Revenue ResidentialPrice(RRP) < 2000 sq yd > 2000 sq yd < J 000 sq yd 1000-2000 sq yd > 2000 sq yd < 200 sq yd > 200 sq yd < 100 sq yd 100-2000 sq yd 50 percent of RRP 25 per cent of RRP 50 per cent of RRF Twice RRP RRP RRP Twice RRP ThriceRRP Twice RRP Table 4: Policy Issues and Policy Measures for PPPs Issues/Concern hi-techsuperExpanding specialtyservices Effects Unintended Cost Quality Demandinducement Unethicalpractices PolicyMeasures * Protectingpoorfromcatastrophic financialburden * Protectingand increasinggovernment allocationto publicsector budgetary * Developmentof monitoring mechanism and appropriate regulations Rate regulation (change provider payment system) * Continuing medical education programmes interventions such as access for rural distribution Equity: Regulatory Geographic ? Licensing areas of facilities ? Creatinghealthmap ? Varioustypes of incentives money ? Channelling ? Remoteareasubsidy toallocate programmes of new investments Cost channelswithin specialisedfinancial Creating Financing to the existingset-up of financial institutions quality providefundsto privatehealthcare sector forfinancingtheirnew investmentsin appropriate technologiesafterexaminingits cost-effectiveness access forthe poor * Developingappropriatefinancial mechanisms Utilisation patterns Equity: * Protectingpoor 4710 Economic and Political Weekly December 30. The applicantswere given the option for either setting up of a general hospital or superspecialtyfacility. The location of proposed facilities being at prime commercial and busy places. A numberof other cases were also filed on the ground that sufficient time was not provided for submitting bids. etc. No specific guidelines were provided for identifying the poor patients but the government retained the right to refer eligible patients for free care. 2000 This content downloaded from 86. Very broad details were provided about the process of selection. The policy document indicates that while the government is focusing more on increasing access to primary care. GoR categorised bidding institutions into four categories. respondents to previous advertisement did not find any major perceptible shift in the policy and process of implementing the proposed initiative. attractedconsiderable attention from public and others. providing health services was also emphasised. nephrology. As per instructions provided. gastro-entrology. In the proposed JV. applicants had to submit two separatebids: one technical and the other financial. The proposal indicated that government's contribution in any case would not exceed 26 per cent of the total share capital. These hospitals were proposed to be acquired from municipal corporation of sites of Delhi Delhi. More than 30 applications were received by the DHS in response to their advertisement. As comparedto the Punjabinitiative. medical and health department of government of Rajasthan (GoR) announced a detailed policy in 1996. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions . None of the organisations.

176. Since improving the performance of PHCs. secretaries from the department Monitoring systems are weak. The details of subsidy on account of concessions in land prices are provided in Table 3.exemption from payment of octroi on medical equipment. The gov. it would have resulted in a loss to the Gujarat: In Gujarat. Indusernment also experienced delays in imple. performance of PHCs and their utilisation. Under the agreement. backbone of the health delivery system in SEWA-Rural could retain flexibility in each state. SEWA-Rural was development authority.Very little attention is paid to improve the listing and final selection of institutions. It services in SEWA-Rural's project area. A time frame of two years from the date of allotment was laid for the use of allotted land.450 million.by governm-ent personnel. plants and machinery whether imported or from other state. 1999. Each bidding institution is emerging as an important option to was requiredto submitan applicationalong improve the performance of the PHCs in with project feasibility reportand proof of various states. it became difficult ment agreed to drawa flexible MOU where to co-ordinate the process. Otherforms of subsidy constitute the cost of medical equipments by lower or zero duties and exemption from various fiscal requirements or providing finances at subsidised rates.96 on Tue. December 30. For this purpose. This resulted in an applicant getting the industry houses choose the PHCs number of options of land locations for his around their plants. harnessing GoR was reasonable. health. Most of the related departmentsecretaries There are no effective mechanisms to were members of this committee (for evaluateandmonitorperformanceof PHCs. Category B: Charitable medical institutions having their own plan to set up health facilities. CategoryC:Institutions(registeredfirms.exemption from payment of sales tax on purchasesof medical equipment. they do not attend the facilities The response to the policy initiative of regularly. This created confusion Rs 10. Of the total budget of proposed project. SEWA-Rural seen as a major departurefrom set proce. . short. but managed wholly by SEWAthese propertiesthroughauction.health services effectively and utilisation based empowered committee responsible of these facilities is very low [Rao 1997].other fiscal benefits from state level and other financial institutions as per the provisions of those institutions. the criteria for their recruitIndustry and NGOs ment remained the same as in the governPrimary health care (PHC) forms the ment. Each agency corporates had flexibility to increase or was required to come up with detailed reduce their involvement depending on informationaboutpossible sites of required the performance of the scheme. and where there are of industrial promotion). the final clearances and allotment decisions have faced government has involved industry in a number of procedural difficulty. Since the land was get feedback from industryon various mangoing to be provided at subsidised rates agement issues of the PHCs [Shoney 1998]. the governthere was no agreement on how the losses ment agreed to 'finance the entire PHC will be shared across the departments. the ity of building. This was Rural. the implementation of to adopt a local PHC.operations as it was going to be manned ment authorities and municipalities in. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions . for screening all bidding proposals. plant and machinery. A number of finance. Tainil Nadu: In Tamil Nadu the state on private participation. 2000 4711 This content downloaded from 86. with some exceptions. provided they arefrom approvedlist of DoHFW and facilities are set up before March 31. Under this scenario. societies. health sub-centre or policy had to work out the details of district hospital. While SEWA-Rural was free to recruitits own workers.of surveyshave highlightedthatmanyPHCs ban development and housing and bureau are without doctors. and Gujarat highlight the nature of these Despite having a comprehensive policy initiatives.was required to fulfil the same targets dures and there was reluctance to depart in various health schemes which the from existing practices.million. In all 14 proposals local level support and private initiatives were received.industry anticipated poor flexibility in poration. Category D: For-profit organisations (nursing homes providing maternity and child care facilities having at least 10 beds and OPD facilities. industry. development authority or municipal cor. revenue. Under this collaborative arwere collated first.55. hospitals having at least 50 beds and OPD facilities. Economic and Political Weekly The government constituted a broad. Rs 250 million are and delays in decision-making. Most of sizes. maintaining and equipping preferences from each bidding institution the facility.rangementthe state government continued warded this information to respective to provide staff and medicine. trusts) interested in setting up specialty hospital in specialities approved by the state government and in particular geographic region. GoR also provided fiscal incentives on all purchasesof medical equipments. . The cases of Tamil Nadu sources of funding to set up the project. example. The collaboration also provides lems faced in getting clearances from opportunity to the state government to various departments. As per the MOU. Since the number of develop. doctors.try has committed to spend up to Rs 13 menting the policy because of the prob.allocated to maintenance of PHCs. The committee for. A number of au. The no locations were identified before the primary role of industry was envisioned start of the process. ur. They had the responsibilavailable locations. Initially. One of the areas to facilitate the setting upof privatefacility was subsidising initial set up costs of establishing health care facility. government fixed from time to time.Category A: Charitablemedical institutions (non-profit organisation) willing to set up at least one advanced diagnostic or curative services by acquiring medical equipment from approved list of state government or offer specialty services as per the plan approved by the state government. plants andmachineryunder this policy. The GoR announcedpolicy of providing land at subsidised rates and also included other fiscal benefits to institutions interested in setting up health facilities. diagnostic centres). The subsidy was not uniform across all organisations but varied according to categorisation as defined above and whetherthe facility was to be set up in rural or urban area. also created procedural difficulties in These services were planned to be run on implementing the policy because most of the same pattern as that in the governthe developmental authoritieswere selling ment. However. Surveys have shown that PHCs providing the necessary training to all its do not have adequate facilities to provide health workers. As seen in the previous two cases the governments used subsidised land as one of the mechanisms to attract private sector. These incentives were as follows: .The stategovernvolved were too many.given the entire primary health care serthorities were not prepared to implement vices in one district by the state governthe scheme and give clearances because ment. These subsidies are generally provided by offering land at reduced prices.

For example. eligibility requirements.The areas with good potential for contracts include clinical and other non-clinical services. (1997) discuss the case of eight Mumbai hospitals and evaluate efficiency of contractual arrangements for non-clinical services. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions . laundry. private sector and implications of its providing subsidies and various fiscal growth. etc. The involvement of the private sector is considered impor. Rajasthan had an elaborate policy statement describing the need for PPPs and all other necessary information related to the proposed form of partnership. At district level the government of West Bengal has constituted district health committees (DHCs) which would have responsibility for planning and managing health programmes and services. .-[Uplekar 1989a. 1989b. having informal understanding on issues of cost and quality. etc. Recently the importantpointersof the directionin which issue of consumer protection and effecgovernment is proposing to proceed with tiveness of legislation in this areahave also these initiatives. Bhat described some of these arrangementsthat 1996]. Maharashtra. and 1989. .Reproductive and child health (RCH): The MoHFW. tion of activities. government of India has recently announced schemes for implementing the RCH programme. not much critical insights. one of the areas identified is shortage of anaesthetists in meeting the needs of EOC. No data or information is available on contracting out such services. RCH ).focus: clinical or non-clinical services. During the recent budget.lic organisations is based on certaincritical tant from the viewpoint of improving the assumptions. The policy context and the efficiency of limited resources available ongoing debate on private sector provide with the governments. reach.Two stategovernments (Delhi and Punjab) provided brief policy statements in the form of advertisements in national dailies. . Interalia. effectiveness of these public-private part- IssuesandProspects 4712 Economic and Political Weekly December 30. Studies about the provision of services. The development of these attentionhas been paid to managementand collaborations cannot work in a vacuum other implementation issues in initiating and in isolation. Nadu and West Bengal). The collaboration between private-pubwork on contract basis. However. the schemes of implementation include the involvement of the private sector in programme implementation. dered by private physicians and hospitals The experiments in PPPs are still new. in STD.96 on Tue. Many states in India and several health projects of the government of India do have components which are contracted to outside agencies. nificantly affect both the cost and quality . On non-clinical side there are tives on various dimensions. This lation (eg. The schemes for implementation also include a number of other measuressuch as involving NGOs through state level registered societies (SCOVAs) for various components of RCH programme. . Most of this debate has focused incentives. these do not assure us of success of these security. The lack of monitoring mechahave been initiated by the state and central nisms and absence of appropriateregulagovernments. 100 per indicate that private health care does sigcent privatisation.form of the partnership:joint venture. Duggal and Amin ment aspects. However.co-ordination with various implementing ing vulnerable and target groups of popu. where private providers can partnerships. Vishwanathan and Rohde 1990. TB) and process needs to be defined in advance. It has to work within the frameworkof the exiting role of the private these partnerships. Some of the experiences are emerging as Duggal and Amin 1989]. The programme in the past has experienced a number of implementation constraints in the areaof emergency obstetriccare (EOC).176.55. the GoWB has also proposed to bring 341 PHCs under the supervisionofpanchayat samitis. minimum investment requirements. etc. in detail. security and IEC programmesis being implemented in Tamil manystatesin India(eg. .location specificationandother Ill conditions. HIV/AIDS. areas such as diet and catering.The health facilities in West Bengal have also startedhiring vehicles as ambulances and proposes to charge users per km basis with a cap on the total amount.agencies also need to be addressed. The limited experiPublic-private partnerships in health ence in PPPs process suggests a need for coordinasector form an important part of many considerable inter-departmental health sector reform strategies nowadays. of available health care services in India other provisions such as handling manage. Contractservices Another way in which public-private partnershipdevelops is through contracting out clinical and non-clinical services. Similarly in the area of MTP. addressing problems of access in remote Table 2 provides details of PPPs initiatives areas where public services cannot reach in three states and examine these initia(eg. in making amendmentsto certainstatutesand tertiary and hi-tech curative care). In Tamil Nadu contractingout for high technology services in major teaching hospitals has been identified as one important area [Bennett and Muraleedharan 1998]. time-frame.The other area for contracting out services is the maintenance of equipment and facilities.flexibility: in terms of having their own Yesudian 1990.The policy statement is a tool to provide all possible information on proposed collaborations and relationship.The stateof West Bengal has been facing problems of manning the PHCs. It is important to consider the ongoing public providers in health care assumes debate in the country on the role of the several forms: . Nandraj 1994]. The interaction between private and sector. The policy implications of tory instruments raise doubts about the these experiences are yet to be ascertained. Bhatia and Mills Some of the initiatives have run into problems and raise a number of management and policy questions. As one of the steps to ensure that PHCs are manned. The RCH implementation scheme now provides that the states can engage the services of anaesthetists on a payment of Rs 500 per case at the sub-district and CHC level for EOC. Cases of fee structureor personnel policy or train. the districtscan engage privatedoctors trained in MTP to the PHCs once in a week or once in a fortnight for performing MTPs and these doctors will be paid Rs 500 per day or visit. The previous section has been discussed [Tulsidhar 1994. These samitis would have the power to appoint doctors on contract basis.superfluous and expensive services rening structureand flexibility in time-frame. 2000 This content downloaded from 86.The contracting of services in the area of diet and catering. Some of the cases of contracting-out are illustrated below: . etc. the DoHFW allowed the DHCs to hire the services of privatedoctorson contractbasis. MTP. The experience suggests The scope of these partnerships on the that inter-departmental policies such as clinical side include specialty care (eg. laundry. have also been reported [Uplekar 1989a. The PPPs process starts with a policy statement from the government to define the scope and nature of partnership.

Other state governments such as West Bengal are examining strategies to link the use of state sickness fund for meeting high financial burden of poor people.176. At the same time if the government gets out of super-specialty care or provides limited options to its population. despite the problems resulting from the growth of the private sector. has also initiated a similar scheme. 2000 4713 This content downloaded from 86. and quality of services. These may fail because the process did not involve all concerned and did not evolve appropriate monitoring systems. The present review of PPPs also suggests that there is no attempt by the governmentto address these issues and institute a propermonitoring system to ensure that the obligations are adequately met. There seems less interaction and involvement of concerned departments in promoting such initiatives on the one hand and less consideration of public viewpoint on the other. For example. should the governmentfocus on improvingefficiency. the entire initiative may be perceived as an extreme form of privatisation of public facilities. One importantlesson from this experience is that the success of any PPP critically hinges on having an adequate monitoring system in place to meet the public policy goals of these initiatives. The policy intent of having these initiatives may have well defined objectives which meet the criteria of efficiency and partly or indirectly equity concerns. For example. The recent West Bengal initiative of involving panchayats in contracting services of qualified doctors in remote areas is one attempt in India to involve a community in PPPs. Another important issue in these partnerships has been the absence of appropriate mechanisms of sharing information and transparency in the process. thejudiciary has intervened to investigatelapses in monitoringandin fulfilment of these obligations. It is also importantto examine the question of publicpolicy goals of these PPPs. Recently.nershipapproaches. the chances of success of these interactions would be very low.55. little is known aboutthese. it seems that many such proposals have not taken into account stakeholder views.It is also important that each partnership is evaluated at regular intervals. as discussed in the previous section. The policy needs to determine the basic objectives of private-publicinteractionand the public goals these initiatives should achieve. For example. many of these facilities ventured into designing the mechanisms of having either fake registration of poor patientsor establishing substandardhealth facilities in remote areas for the poor. Policy-makers need to ask whether subsidising the inputs on condition of providing free care to poor patients is an appropriate mechanism to attract private investment in health. it is important to identify areas of intervention to make it more responsive towards public goals and to minimise the unintended consequences of private sector growth (Table 4). through public interest litigation. In the absence of an appropriate monitoring system. It is important to recognise that all public-private partnerships would be required to go through public scrutiny at some time. The need for having appropriatemonitoring system also arises because of other reasons. The importantpolicy question therefore is whether the governments should focus on equity as a public policy goal in the PPP initiatives. The targeting is difficult in the absence of effective monitoring mechanisms.96 on Tue. The basic assumption that setting up of private partnerships with public health facilities is in the public interest and therefore these initiatives will not face any public scrutiny. For example. Information and transparency are Economic and Political Weekly December 30.marketsandviewpoints of various stakeholders. The extreme form of privatisationof public health facilities or creation of such impressions would attract lot of attention and may be ultimately abandoned. It has become evident that the involvement of the community through some process is critical. where public facilities are not sufficient to meet growing demands. are: equity and protecting poor patients. There is strong need to ensure that all process steps are followed and there is complete transparency. Signifi- cantly. One of the ways in which thes-e can be done is through the involvement of all stakeholders and prospective private sector partners. There is also a danger thatif the process of creating partnerships is not steered properly. efficiency (technical and allocational). to meet the desired obligation of PPPs. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions . the system of protecting the poor through the PPPs will remain ad hoc and thereis no guaranteethatthis objective can be achieved: In the past.As discussed above experiences so far suggest that it is difficult to address theequityissue andprotectthe poor through PPP initiatives. the catastrophic financial burden of the poor would become a major concern. Goa has started catastrophic illness insurance for populations belonging to lower income groups. the experiences of implementing user fees policy in various states and in other countries suggest how difficult it is to identify poor. However. It would therefore be important to evolve policy to strengthen the public facilities along with the development of PPPsorelse develop a mechanismto protect the poor from high financial burden. Many PPPs propose providing free care to popupations belonging to lower income groups. the panchayats would also need appropriate monitoring mechanism to ensure that contracted doctors do provide services in remote areas. Putting adequate monitoring mechanisms in place would ensure such transparency. Experience suggests that it has not worked. It is now evident that many of these facilities did not meet these obligations. The development of these approaches looks very much top-down. Which one would address the equity question better? Trade-offs in policy decisions in privatepublic interaction. The departments of health at the centre or at the state developing or proposingPPPs need to address this issue.For example. There has been no debate on whether subsidising inputs or providing direct subsidy to the poor is more effective. This would halt the process of implementing PPPs. Should the objective be to protect the poor through the PPPs? Experiences in programme implementation suggest that it has always been a problem to target the poor. The case of Delhi shows how public litigation can be used to halt the process of handing over public hospitals to private providers. the duty exemptions granted to health care institutions in the 1980s were on condition that the organisations availing such benefits would provide a certain percentage (in most cases 30 per cent) of health care free to poor patients. there is no policy frame of linkingproposed facilities with the already existing government referral chain. In case some of these aspect are not given adequate attention. For example. Maharashtra. In order to strengthen public-private partnershipsand in general the role of the private sector. No monitoring systems were in place to identify or forewarn of deficiencies. if there are areas where it is not possible to promote equity. There is a great deal of evidence that governments need to steer the process of nurturing these collaborations in an appropriate manner. has turnedout to be wrong. The latter can be effectively implemented by the government by becoming a purchaser of services from private sector and making those services available to the poor. This would have been one attemptto strengthen the government referral system.

This would reduce the overall costs of such partnerships. working capital requirementsand the urge for growth. In the absence of any explicit policy of regional distribution of these facilities.. The undesirable consequence of this development would be situation of overcapitalisation. MRI. To ensure that they do not incur high transaction costs in searching for information. In private sector. Public-private partnerships in health in Indiaare at very early stages.eed for overall monitoringmechanisms to keep trackof operationsof these facilities. The implications of this are quite serious. The health reform strategies proposed by the World Bank and other agencies suggest that government should move away from provision and should assume the role of financier. Many urban areas in India have started experiencing this trend. For example. Most PPPs are likely to redefine the roles of various constituencies in the health sector. are very expensive technologies and have significant recurring costs. Any changes made in the plan should be updated and need to be communicated properly. With public-private partnerships . Questions such as what should be the appropriate form and scope of these initiatives need to be debated and appropriate policy frame needs to be evolved. Overcapitalisation in this sector would lead to inefficiencies. This would require developing links at the service delivery points. monitoring and evaluations systems.which ic aregoing to be developed on exiti i'ti '-)i health facilities set-up. This split. it is important to create a master plan or mapping of delivery points. The success of PPPs will critically hinge on the clarity in relationships between these constituencies. For example. curative and tertiary services get concentrated in urban areas. clarifying the role of public and private appropriately. particularly land. No policy frame has been evolved which takes a sectorwide view. Even without profit motive. appropriate mechanisms need to be instituted to ensure that information is available to all. Since the use of this facility is not covered under insurance. demand inducement and cost escalation. As experienced in the past. etc. there would be questions of deployment of personnel and who controls them. in states where private nursing home or clinical establishment legislation are in place. The policy frame of the govern- ment on health does not have a sector side view.176.critical components of the entire PPPs process. Many developed countries which have promotedcompetitionas means pf achieving efficiency do experience such problems. can lead to many complications. There is likely to be considerable amount of interaction across various departments within the government. These areas require huge investments in medical equipment and health care infrastructure. Informationdissemination would play a critical role in ensuring that the private sector does not behave opportunistically. cost escalation and unethical use of facilities. The roles andcontributionsof public and private sectors are not appropriately defined. The present policy frame of various state governmentsandof the GoI primarilyfocus on public health programmes. promoting PPPs therefore will requireappropriateregulations to mitigate the unintended outcomes of private sector growth in health. investment in new technology gives rise to financial problems leading to demand inducement conditions. There would be constituencies which would have a prime role in financing and others which would have a role only in provision of services. It is evident that one of the areas wherepublic-privatepartnerships arebeing suggested is curative super-specialty care. The experience suggests that not having a sectorwide policy on health has resulted in lop-sided development in this sector with too much dependence on private sector. having many obligations for example to repay the instalments of the loan. These inefficiencies arise because of market imperfectionsandmarketdistortionswhich have a significant effect on the behavioural characteristics of the physicians recommending the use of various procedures. if not clearly understood. The premise is that in the role of purchaser of services.55. This also highlights the . These initiatives are being evolved when we have not yet evolved a consensus on what should be the private-public mix of health care andwhatis thepublicpolicy towardsprivate sector. One must recognise that in any public-private partnership which goes through a bidding process or would have the option to go through public scrutiny at some point of time. there are no mecha- 4714 Economic and Political Weekly December 30. However. the achievability of these results critically depends on number of conditions. Most of these initiativeswill need significant institutional development work. Under these conditions the investment in the technologies and private-public partnerships in hi-tech super-speciality care raise questions aboutequity. free-forall competition would result in unethical practices. The unintended consequences of such a trend is demand inducement. arejust a few examples of the tasks involved. One majorconcern aboutthe PPPs would be their policy perspective. Most of these initiatives also propose some type of governance mechanism. the present system of reimbursement in private sector is likely to fuel the proliferation of medical procedures and technology. In India. Yang (1990) has examined the question of equity and shows that in Korea only people belonging to high-income classes use the MRI facility. The private sector would have a tendency to grow in urban areas. One of the factors affecting the price charged from the patient for the use of these facilities is the investment in these equipments. In the absence of proper regulation on prices and distribution of facilities. For example. The form of partnership through subsidising the inputs. The private sector operates in an unregulatedsetting with no price controls and most of the patients having limited insurance coverage. Some of these technologies such as CT scan. the government will be able to encourage competition among the providers and this will help efficiency in the system. along with the promotionof these initiatives. would perhaps remainan importantform of collaboration. increase in prices and unethical use (Appendix 1). As explained in Appendix 1. ESWL. government funding to public facilities will be protected. etc. an important policy concern would be whether. Developing capacities to handle these initiatives focusing on financial analysis capabilities. One of the conditions would be having appropriateregulation in the system.96 on Tue. the providers of these facilities operate in a business like environment. In one sense the constituencies which have financing role become purchasersof services. the use of MRI puts a greaterburden on low-income families than on high-income families. Government would continue to play a key role in the strategic process of these facilities but would have limitations in getting involved in operations aspects. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions . excessive investments in medical technology and infrastructure may lead to overcapitalisation resulting in demand inducement. The prospective partnerswould be required to go through the process of search for information. This role can be achieved through handing over the provision to the private sector and government becoming purchaser of services. On information side adequate care is required to be taken to have appropriate information on private sector role and possibilities of partnerships. has costs associated with it. 2000 This content downloaded from 86.

institutionalising appropriate tasks and managementstucturetohandlenew strengthening public systems were discussed as necessary pre-requisites for evolving effective PPPs. There are also other reasons like improving the image of the private health facility which affect the investment behaviour of many providers. The public policy towards private sector needs to adequately address this question. planned coordination across various departments within the government and various implementing agencies. It is important for effective PPPs that public facilities are strengthened simultaneously. First. management structure has now assumed critical importance in implementing the new partnerships. Having more and more of PPPs will create two different systems of health care delivery systems. The policy document. the provider must push up the demand curve through demand inducement behaviour (such as fee-splitting practice. providing the services at the existing prices will generate less revenue and as a result many providers will experience a deficit. providing different quality of care to different clientele. The existing medical technology is priced at P0 for which the demand is Q for poor and Qrfor rich. the total demand will get divided resulting into a downward shift in the demand curve for a single provider (e g. these structures would also provide an appropriate mechanism to monitor the performanceof the PPPs. Assume that the aggregate demand curves of poor people and rich people have different elasticities (for the poor the elasticity is higher than for the rich). The private sector would have significant attractions and there would be movement of personnel from public to private. Equity implications are that fewer poor people will be able to use the new technology. Ensuring appropriatequality standards has become a major issue in health delivery system.96 on Tue. One of the problems is the lack of infrastructure and capacity within these institutions to undertake this work. It would be important that the regulatory frame also focuses on ensuring adequate standards of care. This problem arises because policies do not take a sectorwide view focusing on and ensuring appropriateroles of private and public in thehealthsector. The need to have appropriatemonitoring arid governance system.furtheraggravatingthe problem in the public sector. (e g. public and private. for rich to Dr). inter alia. it has argued that we need to have a 'public policy towardsprivatesector' andthepolicy framework should have sectorwide (addressing both public and private sector roles together) focus. We must recognise the fact that privatepublic collaborations are possible if there are adequateincentive structuresin place. However. the lower are the chances that poor people will shift to the new technology. The role of regulatory mechanisms to ensure proper standards of care is also considered important. scope of private-public partnerships.role of subsidies and incentives in promoting these partnerships. Taking on a new task such as managing PPPs mean a big leap forward for the government departments under the present circumstances when governments are facing a numberof human resource issues. The recent experiences in PPPs (for example. The governments need to evolve appropriatemechanisms to provide this information to the public. The two areas which would need attention are institutionalising the process of standard setting and continuous medical education and training in clinical areas. Disparity in the availability of medical technologies and of skills the two sectors would be an area of concern. Encouraging investment in the public sector by the private sector also has implicationsfor allocating adequateresources to public facilities. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions . The medical councils at the centreand at state levels have not assumed adequateinterest in developing appropri- ate mechanisms for continuing medical education (CME) programmes and standard setting. the UK government announced new provisions of allowing private sector investment in the nationalhealth service (NHS) and this was done without reduction in public funding (Appendix 2). As the competition in health care (because of the use of this new technology) intensifies more and more providers invest in this facility as there is assured demand from the rich people.Developing these structures is difficult and takes considerable time. The rich people can afford more care and therefore the quantity demanded by them is higher than the poor people. The higher the price differential. The poor people will still utilise the existing facility. 2000 4715 This content downloaded from 86.176. provision of adequate information to all participants and transparency. The last option available to him would be to increase the price for the use of this facility.55. As competition intensifies and other providers decide. The public policy towards private sector needs to spell out the mechanisms of providing incentives to the private sector. the paper discussed selected cases of private-public partnerships and suggests the following. the poor will suffer. Suppose more competition is introduced and number of hi-tech superspecialty technologies are introduced. both private and public. If it is not possible to shift the demand up. Because of its high investment requirements. We expect the demand for care from poor people significantly lower at P1 price. Given the experiences in PPPs so far. it is importantthat these agencies are provided opportunities of training and time to develop capacities and appropriatesystems to handle these tasks better. All PPPs should ensure that government spending on public facilities would not decline. promoting unethical use or sacrificing quality standards). Under the changed circumstances. If steered and directed carefully. There is also a potential danger of PPPs leading to unequal standards of clinical care across public and private sectors. Some of the recent experiences in implementingPPPs through the districthealthcommittees (for example in West Bengal) and through creation of registered societies in various states are an attempt in this direction. This problem would worsen as a result of lower allocation of government resources to public facilities. the provider would reduce costs by sacrificing overall quality of car. In 1992. Appendix 1: Implications of Competition in Health Sector We use the demandfor healthcareframework to explain the implication of encouraging competition in health sector. In conclusion.the issue of protecting the public sector from any reduction in budgetary allocations. etc). The subsidising of various inputs in these partnerships try to create such incentives. In order to cover the deficits. once developed these structures ensure that various management system and process aspects of these partnerships are adequately addressed. it is priced higher than the existing procedure. In the process.to install this new piece of equipment. There is need to have explicit and adequately described statement on PPPs.nisms in place to publicise the information about facilities that are registered with the government. ensuring availability of critical resource such as qualified manpower. should address the question of public-private mix in health sector. cases of Delhi and Punjab) suggest that governments would be vulnerablein proposing andhandlingthe PPPs directly by themselves. Economic and Political Weekly December 30. However.

PFI moved from being an add-onto being considered a major source of capital investment in the NHS.Department of Health and Family Welfare. The importance of the PFI in the NHS only gradually became clear.India'. New Delhi. Bhat. Development University of Birmingham. By 1994-95 NHS managers realised that conventional sources of funding for major building schemes hadvirtually disappearedand that all schemes had to be tested to see whether there was likely to be funding from the private sector. Compression and Health Sector Outlays'. Uplekar. Bong Min (1990): 'TechnologyInvestment by Hospitalsin Korea'. The Case of Leprosy in Bombay'.Dr Price Dr P2 0 D P0 Qp Qrn Qr" Qp Qr' Qr Quantity Appendix 2: Investment in Public Sector by Private Sector In 1992.Almost the entire service rationalisation agenda in London now hangs on the success of about half a dozen capital schemes that are being pursued through the PFI process. New Delhi.Sunil (1994): 'Beyond the Law and the Lord:Qualityof PrivateHealthCare'. Diseases in Reddy. Government Department. pp 253-74. Andhra Pradesh: Agenda for Economic Reform. World Bank (1997a): India.International Journal of Health Planningand Management. of India(GoI)(1983):NationalHealth Government Policy. London and other cities in the UK remain overprovided with worn-out assets and face huge backlog maintenance bills which they cannotafford.Research Program in International Health. 9 (I). in RuralIndia:A Nation-wideStudyof Mothers and Practitioners.(1994): 'The Nature of Private Sector Health Services in Bombay'. Rao. Paper No 28. Planning Commission: 'Approach Paper to the Ninth Five Year Plan'. New Delhi. Takemi Program in International School of Public Health. Visaria.May. Gujarat. July 13. By 1997. 4716 Economicand PoliticalWeekly December30. Governmentof Rajasthan(GoR) (1996): Policy in MedicalInstitutions. HarvardSchool of Public Health. Mumbai. PrivateHealthProviders in Developing Countries. Yang. Report No 15901-IN. Private sector investment to support public sector services is accepted politically as the only realistic way to achieve the scale of investment in its asset base that the NHS needs over the next decade.176. Whyatt. GujaratInstitute of Development Research. Ministryof HealthandFamilyWelfare. 17 Dec 2013 10:21:51 AM All use subject to JSTOR Terms and Conditions . DFID Report prepared for StrategicPlanning Cell. Health Policy and Planning.Governmentof West Bengal. P and A Gumber(1994): 'Utilisation of and Expenditure on Health Care in India: 1986-87'. National Institute of Public Finance and Policy. 14 PFI schemes have been given the go-ahead by the new Labourgovernment and there are many more ready to start. pp 1680-85. the chancellor of the exchequer in theUK announcednew provisions which allowed private sector investment in the nationalhealth service (NHS) without the reduction of public funding. M G and Tapas Sen (1993): Government Expenditure in India: Level Growth and Composition. Ravi and Suchetha Amin (1989): Cost of Health Care: A Household Survey in an Indian District. Economic and Political Weekly. Experience of the first five years of the PFIin the UK has been mixed and there are many lessons that have emerged from the process. Gota. Economic and Political Weekly. . World Health Statistics Quarterly. July 2. Bhatia. Administration Group. Sara and V R Muraleedharan (1998): 'Reformingthe Role of Governmentin Tamil Nadu Health Sector'.and (iii) ensuring that projects deliver value for money. there were some 50 schemes between ?1 million-?50 million in the pipeline.96 on Tue. Governmentof India. Mukund (1989a): 'Implications of PrescribingPatternsin PrivateDoctors in the Treatment of Pulmonary iTuberculosis in PaperNo 41. South Asia Country DepartmentII. Bennett. 2000 This content downloaded from 86.Harvard Health (draft).Health and Family Welfare Department. for PrivateInvestment Medical and HealthDepartment. V B (1993): 'Expenditure Tulsidhar. . K Sujatha (1997): 'Financing of Primary HealthCarein Andhra pradesh' report prepared for World Health Organisation. M and Anne Mills (1997): 'Contracting Out of Dietary Services by Public Hospitals in Bombay' in SaraBennett. National Council of Applied Economic Research (NCAER) (1991): Household Survey of Medical Care. The range featured MRI scanners. Foundationfor Research in Community Health. Duggal. TakemiProgram Health. lI1 References Bhat. pp 87. In 1996. Meera(1998): 'The RightCure:Will the Initiativein ImprovingTamilNadu's Industry PrimaryHealth Centres Succeed?' Business World.DFIDReport preparedfor Strategic Planning Cell. November.(1989b): 'Private Doctors and Public Health:.55. August. Shoney. leasing of assets and the private provision of services in order to help finance capital intensive projects. Nandraj. August. West Bengal Health Sector Development Programme. (ii) providing the means by which the private sector can genuinely assume some of the risk. Zed Books.Vol 11.Barbara McPake andAnneMills (eds).Vision Books. Ramesh (1996): 'Regulationof the Private HealthSector in India'. National Institute of Public Finance and Policy (NIPFP)(1994): Hospital Financing in India. 1997-98. National Council of Applied Economic Research. West Bengal Health Sector Development Programme. Harvard School of Public Health. Population and Human Resource Division.ResearchPaperNo 53.(1997b): India New Directions in HealthSector Development at the State Level: An Operational Perspective. Takemi Bombay. Ramesh and S Sharma (1997): 'Current of User Fees in Issues in the Implementation PublicFacilitiesin WestBengal'. H andJ E Rohde(1990): Diarrhoea Vishwanathan. 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