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PPPs will strengthen India’s healthcare system

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Tanya Philip, Associate with the Advisory Team, Intellecap, talks about leveraging strengths of the private sector to infuse greater efficiencies and resources that will help strengthen India’s public health

According to a study published by The Lancet, India’s performance in the global healthcare access and quality (HAQ) index was lower than our neighbours Bangladesh and Sri Lanka as well as all other BRICS nations. Poor quality of services in the public sector and a heavily commercialised private sector have together resulted in poor access to affordable and good quality healthcare for a majority of the Indian population.

One of the central issues plaguing the sector has been the abysmally low public spending on health. The National Health Policy 2017 aims to “increase government health expenditure as a percentage of GDP from the existing 1.15 per cent to 2.5 per cent by 2025.” This is unimpressive when the current global average stands at about 6 per cent, according to The Lancet. Furthermore, the World Health Organisation noted that it is difficult to get close to Universal Health Coverage at less than 4 per cent -5 per cent.

This leaves much to be desired from non-governmental stakeholders in order to help bridge this immense national resource gap. Niti Aayog’s proposal to rope in private sector providers for the treatment of non-communicable diseases demonstrates the government’s willingness to augment its healthcare response capacities by bringing private players on board. Additionally, the central government’s most recent Ayushman Bharat health insurance scheme seeks implementation support from the private sector by means of expanding their scope of operations. Overall, aside from the capital constraints, the sheer size of the national healthcare challenge at hand demands for a more collaborative approach.

Much of the conversations around healthcare reform recently have been constrained by ideological debates on public versus private. The ground reality is that about 70 per cent of healthcare service delivery in India today is driven by the private sector. Leveraging the strengths of the private sector can only infuse greater efficiencies and resources that will help to strengthen our national response to our healthcare challenges.

That being said, any collaborative healthcare delivery model should be based on clear terms and conditions, defined partner obligations and performance indicators monitored over a stipulated period of time in order to achieve common, pre-determined healthcare objectives. In addition, consideration needs to be given to technology changes that are likely to impact how healthcare is delivered.

The 108 Emergency Management and Research Institute (EMRI) is a unique public private partnership model between state governments in India and private players which employs an ‘operate and maintain’ service contract between the two. This initiative undoubtedly fills an existing needs gap with coverage estimated to be 750 million people at an annual per capital cost of less than $ 0.25. However, insufficient supervision and a lack of due diligence has caused some concerns recently. Audit reports noted that the MoUs were signed in a manner that undermined the ability of the state to enforce conditions of service and levy penalties for deficiencies. Competition is crucial for the success of the contracting and bidding process since it helps keep costs down and maintain high services quality. Unfortunately, there is not much competition in the emergency medical services suppliers market in India. More competition could be infused through shorter contract periods. Performance needs to be more closely linked to payments. Outcome indicators around quality of service, response time and utilisation rates need to be closely monitored and certain service delivery standards should be set as pre-requisits for contract reapplication.

Thus, the design and management of service contracts under PPPs in healthcare can determine the extent to which they can succeed. The absence of well designed and implemented service contracts should not be read as a failure of PPPs altogether. The key ingredients for the success of a PPP include the transfer of risk from public to private, strictly monitored performance indicators and government ownership of assets at the end of the contract period.

This is, in no way, a means of absolving the government of its financial responsibility of increasing budgetary allocation for public provisioning of healthcare services. Without exploring more collaborative, innovative approaches to help nudge things along, India’s public health crises will only multiply over the years.

 

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