Research Project

The Private Health Care Sector in India: Nature, Trends and a Critique

Research Area : Health Services and Financing

For the last five decades, the government has systematically nurtured the private health sector. This unwritten policy of the government runs parallel to the neglect, and now gradual, withdrawal of the state from the responsibility of people's health. Such a consistent support and encouragement to the private health sector are very important reasons for the failure to provide universal basic health care to all people of the country.

Today there are approximately 11,25,000 practitioners of different systems registered with various medical councils in the country. Of them, only 125,000 are in government service (including those in central health services, the armed forces, railways, state insurance etc). That leaves about a million doctors floating around in the private sector, not to mention tens of thousands of additional unqualified and unregistered medical practitioners. Fifty-nine % of all practitioners are concentrated in cities. For instance, 60 % of all medical graduates in Maharashtra are located in Mumbai, where no more than 11 % of the state's population lives! Similarly, 84 % of hospital beds are today located in urban areas, whereas 75 % of the population still resides in villages. This selective concentration of health care providers is a major concern to be addressed, especially since studies have shown that those living in rural areas spend about as much on health care as those in towns.

The State offers subsidies, loans, tax waivers and other benefits for the setting up of private practice, hospitals, diagnostic centres and pharmaceuticals. For instance, the government subsidises the unethical and exploitative private health sector via medical education at the expense of the public exchequer. Assuming that the government spends about Rs. 10 lakhs at current prices on the education and training of each doctor and about 80% of the out-turn of public medical schools either joins the private sector or migrates abroad, the country loses large resources which could have been used for public benefit. The country loses Rs. 4,000-5,000 million as a result of the out – migration of four to five thousand doctors every year. Thus, with such support the private health sector has grown into a giant – it is the largest private health sector in the world. With 60-80 % of health care sought in the private sector, and households contributing 4-6 % of their incomes, there's a whopping Rs. 400-600 billion health care market in India. Its mammoth size notwithstanding, this sector has remained completely unregulated.

While the expansion of the private sector is primarily responsible for high and increasing inequity in access to health care, its internal functioning is riddled with problems and its claim of better efficiency and quality service are yet to be objectively proven. Besides, malpractice is very common, irrational and unnecessary diagnostic tests and surgeries are rampant, and ethics are by and large jettisoned.

All over the world there is a tendency to move towards more organised national health systems and an increased share of public finance in health care. Almost all developed capitalist and socialist countries have universal health care systems where the public sector's share of the fiscal burden is between 60 to 100 %. This trend is inevitable in the pursuit of equity and universal coverage. A few countries which have not set up universal systems of health care, such as the USA, where 30 million people do not have reasonable access to health care, continue to have glaring inequities in health care provision despite being economically well-developed.

Project Supported By: Independent Commission for Health in India (ICHI), New Delhi
Team: Ravi Duggal

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