The High Cost of India’s Private Health-care Boom

Syllabus: GS2/Health/Governance

Context

• The Parliamentary Standing Committee on Health and Family Welfare noted that the average cost of hospitalisation is ₹50,508 in a private facility, compared with ₹6,631 in a government facility.

Major Highlights

• For childbirth, the average out-of-pocket medical expenditure in private facilities is ₹37,630, against ₹2,299 in public facilities.
• The committee has made 368 recommendations, including standardised package rates and mandatory pre-treatment cost estimates. 
  • Basic room tariffs in metropolitan private hospitals should not exceed the average tariff of three-star hotels that are nearby. 
  • Large corporate hospitals earning from medical tourism, foreign patients and high-net-worth individuals should cross-subsidise poorer Indians and reserve beds for Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) beneficiaries at regulated rates. 

Private Care in India

• Public hospitals cannot currently meet all demand for secondary and tertiary care. Private hospitals therefore fill an important gap. 
  • Land, equipment, intensive care units, digital systems, laboratories and trained personnel are expensive. 

• Corporate hospital groups increasingly compete for well-known specialists, sophisticated technology and premium infrastructure. These can improve quality, but also create a high-cost ecosystem. 
• Revenue targets, procedure-linked incentives, higher occupancy expectations and higher revenue per bed can gradually influence institutional behaviour.

Healthcare Sector of India

• Healthcare Sector: It comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. 
• India’s healthcare delivery system is categorised into two major components – public and private. 
• Public Sector: It comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of Primary Healthcare Centers (PHCs) in rural areas. 
• Private Sector: The private sector provides the majority of secondary, tertiary, and quaternary care institutions with a major concentration in metros, tier-I, and tier-II cities.

Structure of Financing of Public Healthcare Sector in India

• In India, states bear the responsibility for public health and sanitation, including hospitals and clinics.  
• The Ministry of Health and Family Welfare broadly takes responsibility for formulating policy for public health.
  • It provides administrative and financial support to states to operate public health facilities and infrastructure, and to deal with specific health issues, such as maternal health and nutrition. 
  • It also establishes and runs medical Institutes of National Importance such as AIIMS as well as establishments in union territories including Delhi.
• The Ministry comprises: The Department of Health and Family Welfare, which is responsible for implementing public health schemes and regulating medical education,
  • And the Department of Health Research which is responsible for conducting medical research. 

Concerns with Low Public Expenditure on Healthcare

• This has resulted in inadequate health infrastructure including human resources, and slow improvement in key health indicators.  
• Limited Access to Healthcare Services: Low public spending hampers accessibility to healthcare services, particularly in rural and remote areas where infrastructure is already lacking. This exacerbates health disparities between urban and rural populations.
• Neglected Preventive and Primary Care: A large portion of healthcare spending in India is directed towards tertiary care, neglecting preventive and primary healthcare services. 
• Higher Disease Burden: Low public spending on healthcare contributes to a higher burden of preventable diseases such as communicable diseases, malnutrition, and maternal and child health issues. 
• Increased Out-of-Pocket Expenditure: The lack of public healthcare infrastructure has led people to use private health services more, and that has increased the financial burden on citizens.  

Recent Steps Taken by the Government for Strengthening Healthcare Sector

• National Health Policy 2017: It outlines the government’s vision to achieve the highest possible level of health and well-being for all and emphasizes preventive and promotive healthcare.
  • Equal treatment for modern medicine and traditional systems (Ayurveda, Yoga, Unani, Siddha, Homeopathy).
  • All India Institute of Medical Research was now promoting research on traditional medical systems and a comprehensive approach.
• Ayushman Arogya Mandirs: 1.75 lakh health centers functioning with 369 crore visits.
  • Focus on screening hypertension, blood pressure, and diabetes for people over 30 years.
• National Digital Health Mission (NDHM): Launched in 2020, NDHM aims to create a digital health ecosystem, including health IDs for citizens and the establishment of a national digital health infrastructure.
• Health and Wellness Centers (HWCs): The government is working towards transforming primary health centers into HWCs to provide comprehensive primary healthcare services, including preventive and promotive care.
• Pradhan Mantri Swasthya Suraksha Yojana (PMSSY): PMSSY aims to enhance tertiary care capacities and strengthen medical education in the country by setting up new AIIMS institutions and upgrading existing government medical colleges.
• Research and Development Initiatives: The government has been encouraging research and development in healthcare, including support for the development of vaccines, drugs, and medical technologies.
• National Medical Commission (NMC) Act: The NMC Act, passed in 2019, aims to bring reforms in medical education and practice by replacing the Medical Council of India (MCI) and promoting transparency and accountability.
• Jan Aushadhi Scheme: The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) aims to provide quality generic medicines at affordable prices through Jan Aushadhi Kendras.

Way Ahead

• If government hospitals remain overcrowded, understaffed or difficult to access, citizens will continue to depend heavily on private providers.
  • One effective form of regulation is a strong public health system that provides a credible alternative.
  • Public hospitals must therefore become a genuine option, not merely the last resort for those who cannot afford private care. 
• Primary health care needs strengthening so that disease is prevented, detected and treated early. 
• Insurance systems, including AB-PMJAY, should reward appropriate care rather than simply higher volumes of procedures. 
• Clinical audits, evidence-based treatment protocols and transparent billing can protect both patients and doctors from commercial pressures.

Conclusion

• The Parliamentary Committee is right to focus attention on affordability and to question whether the current pattern of investment in private health care aligns with public interest.
• The true measure of India’s health-care progress will not be how much money flows into hospitals or what is the annual compounded growth rate in medical tourism, but whether Indian citizens can enter them with confidence that they will receive what they need.

Source: TH