Healthcare providers

There are numerous healthcare providers in India. Households receive healthcare services from the public as well as private healthcare providers, depending on their accessibility and affordability of these facilities. As per the National Health Account Estimates for India (2014-2015) report published in October 2017, the contributions of various healthcare providers in India show that private hospitals contribute more than 25 per cent of healthcare services in India. Pharmacies are contributing as the largest

Figure 5.3 Healthcare providers in India

Source: National Health Account Estimates for India (2014-15), compiled by authors

healthcare providers, that is, about 29 per cent, while government hospitals cater to about 26 per cent of the healthcare services to the people, as shown in Figure 5.3.

According to the National Sample Survey Report 2014, healthcare services provided by the government covers only 21 per cent of urban India and 28 per cent of rural India. The private sector provides healthcare services to the remaining 79 per cent of urban India and 72 per cent of rural India (Figure 5.4).

Data show that private healthcare providers are playing a major role in the healthcare infrastructure of India, even though private hospitals are

Figure 5.4 Healthcare providers in urban and rural India Source: NSS 2014, Ministry of Statistics and Programme Implementation more expensive than government hospitals. According to an estimate, private hospitals charge about three times more than public hospitals; yet, the majority of all cases in India are treated by private healthcare providers. Private hospitalisation costs have been increasing continuously. The only reason people go to private hospitals is that government hospitals are so few in number and under so much pressure (The Times of India, July 9, 2015). The poor have no choice but to queue outside the government hospitals, because they do not have enough money to go to the private hospitals. Government healthcare providers should be in proportion to the population. Densely populated areas should have a greater number of government hospitals or healthcare centres. According to the National Health Profile 2017, there is one government allopathic doctor for every 10,189 Indians, one government hospital bed for every 2,046 Indians and one state- run hospital for every 90,343 Indians. This shortage is acute in rural areas.

Healthcare investment and expenditure by the government

The healthcare sector of any country is one of the most important sectors for human development and welfare of the people. This should be given the maximum preference under the social sector expenditure of the government. Healthcare expenditure is a very necessary social expenditure for a country. As per a report of the National Health Accounts, government expenditure on health out of the total planned expenditure has been always very less than required in India. At present, health accounts for only 5.1 percentage points expenditure out of the total of 24.9 percentage points expenditure on social services. As a proportion of GDP, the Indian government spends only 1.1 per cent on health.

Centre–state share in total public expenditure on health in India

Healthcare expenditure is a very necessary social expenditure for any country. Under the constitution of India, health is largely the responsibility of the states. It comes in the ‘State List’ of Constitution of India. Therefore, state role in developing a good health infrastructure and assuring good health to everyone becomes very crucial and important. At the same time, Union Government finance national public health programmes which have high social returns and are characterised as public goods. For most of the national health programs, government’s expenditure are jointly shared by the central and state governments. Health utilities like public health, hospitals and dispensaries are included in state list of functions, while others like population, medical education, medical profession, registration of births and deaths are under the concurrent list. Central government efforts at influencing public health in its five-year plans require coordinated planning with the state for sponsoring major health programs. The centre-state share in total public

Table 5.1 Trends in centre-state share (per cent) in total public expenditure on health

Source: Health Sector financing by centre and states/UTs in India, National Health accounts cell, Ministry of Health and Family welfare, 2017.

expenditure on health was 37:63 in 2017-18. Trends in percentage share of centre-state in total public expenditure on health is given in the Table 5.1.

Table 5.1 shows that state governments have a higher share in the expenditure on health as compared to the central government in total public expenditure. A study conducted by McKinsey and Company shows that during the period 2001-2010, India’s investment on health declined in comparison to the increase in GDP. During 2001-2010, India’s GDP grew by 14.2 per cent but the expenditure on health grew only by 12.4 per cent. According to the National Health Accounts, the difference between the compound annual growth rate of the economy and health expenditure was -1.7 per cent (National Health accounts cell, Ministry of Health and Family welfare, 2017).

Statistics show that expenditure on health by the Government of India under the various five-year plans has been very disappointing and has shown a decreasing trend since the first Five-Year Plan of 1951-1956, as shown in Figure 5.5. The National Health Policy of India, 2017, targets to increase health expenditure to 2.5 per cent of GDP by 2025, which is still considered to be very low as compared to the growth in population.

Figure 5.5 shows the investment on health in all the five-year plans in India. It can be seen that investment in health declined from 1951 to 1997. The subsequent period of 2007-2012 shows a rise of about Rs. 15 billion. This could imply a sudden realisation and shift to health care investment, although it looks like a nominal increase in relation to inflation.

The 12th Five-Year Plan (2012-2017) recommended to increase public expenditure on health to 2.5 per cent of GDP by 2017. The actual government expenditure on health as percentage of GDP in the 12th Five-Year Plan period has been almost below 1.5 per cent, as shown in Figure 5.6.

In comparison to the rising population and inflation in healthcare cost and medicines, the rise has been just an eyewash. The health sector should have been expanded and easy availability of medicines and medical

Figure 5.5 Investment on health in different plan periods (percentage of total plan investment)

Source: Compiled from various reports of the Planning Commission

Figure 5.6 Government expenditure on health as percentage of GDP in 12th Five-Year Plan

Source: Economic Survey (2017-18)

facilities should have been provided to people through various schemes. The scarcity of funds in the health sector has given a huge opportunity for the private sector to boom and capture the growing market.

On the one hand, the Government of India’s expenditure on healthcare has been stagnated over the past few decades and on the other hand, there has been a rapid increase in demand for healthcare services in the country due to increase in population and environmental externalities that are causing various health issues. This has given the opportunity for private entrepreneurs to tighten their hold on the healthcare industry. The latest report of National Health Accounts, 2017, shows that there is a prominence of private hospitals and clinics among healthcare providers in India. The expenditure on pharmacies accounted for 29 per cent of the current health

Figure 5.7 Health expenditure by healthcare providers in India

Source: Data on National Health Accounts estimates for India, Ministry of Health and Family Welfare (201 7), compiled by authors.

expenditure by both the government and private healthcare providers. Private expenditure includes general and specialised hospitals and clinics. Government expenditure includes general and specialised hospitals, family welfare and primary healthcare centres (Figure 5.7).

As per the Economic Survey (2017-18), expenditure by the government healthcare providers accounted for about 23 per cent of current health expenditure, whereas private healthcare providers accounted for about 31 per cent of the current health expenditure.