Express Healthcare
Home  »  Public Health  »  How to make public health spending in India efficient and effective?

How to make public health spending in India efficient and effective?

0 288
Read Article

Dr Krishna Reddy Nallamalla, Country Director, ACCESS Health International, India gives an insight into certain policy levers that can make current health spending more efficient and effective

Public spending on health in India, at ~1.3 per cent of GDP, is one of the lowest in the world. While the government is committed to increase it to 2.5 per cent over the next few years, there is an opportunity to make current spending more efficient (least cost per output) and effective (best outcomes in terms of access, quality, and dignity). It is estimated that nearly 20-40 per cent of current spend is wasted. There are no mechanisms to monitor whether this spend is improving health, reducing out of pocket expenses, and is responsive to health needs of people. This article reviews certain policy levers that can make current health spending more efficient and effective.


The amount government can spend is limited. However, there is an opportunity to allocate these funds through a systematic process. Effectiveness of money spent decreases in the following order – social determinants of health (clean air, clean water, healthy diet, good habits, safe roads etc.), preventive (vaccination, antenatal care, school health programmes, screening for diabetes and hypertension etc.), curative and palliative care. For example, money spent on single heart transplantation can screen thousands of people for cardiovascular disease risk factors (diabetes, high blood pressure, smoking, high cholesterol, and obesity) and provide preventive care for those at risk. There are scientific tools (collectively termed as Health Technology Assessment or HTA) that undertake multidimensional analysis (cultural, social, political, and economical) to guide the government in proper allocation of its funds.

Spending smart

Government essentially purchases services, either from its own facilities or private providers. Every housewife knows how to make a smart bargain to get value for money.

Purchasing from its own facilities: Currently it allocates funds to public facilities on line-item (salaries, drugs, disposables etc.) basis without consideration of neither output (number of patients seen in outpatient or admitted or number procedures performed) nor outcome (safety, clinical outcomes, patient experience etc.). Simple policy lever (a shift from ‘passive’ to ‘active’ purchasing) to fund for outputs and outcomes and not just for inputs will drive value. It requires that all inputs, outputs, and outcomes are actively monitored. Government can install standard hospital information system and medical record system across its provider network to simplify this. Penalties and Incentives can drive quality and efficiency. Quality Improvement (QI) tools can enable these facilities to continuously become safer with better clinical outcomes. Care Process Re-engineering (CPR) methods along with robust costing systems can improve efficiency.

Purchasing from Private providers: Currently government has been purchasing various services from private providers for its employees (CGHS, ECHS, ESI, EHS etc) and beneficiaries (State and Central Public Health Insurance schemes like Arogyashree, RSBY, and PMJAY) through a process of empanelment. Payments are made on fee per service basis or bundled packages. Each programme has its own pricing and range of services that it covers. Each has its own referral systems. Each has its own payment system. Each of these programmes is administered separately. There is a great opportunity to make these systems more efficient and effective by adopting uniform systems. Benefit packages can be made uniform across programmes and designed scientifically using cost-accounting tools so that they are viable to providers. All programmes can share a common claims processing system and IT solution. Payment cycles can be improved. Viable benefit packages and timely payments will bridge the trust gap that exists between the government and private providers and encourage more private providers offer their services. In return, government can demand or incentivise quality and accountability from the providers. Robust medical audit and fraud detection systems will eliminate wasteful spending.

Strengthen Primary Care

Strong primary care can not only acts as a gate-keeper through mandated referral policies, but also ensures continuity of care, especially for life-time diseases – all non-communicable diseases (cardiovascular, lung, liver, kidney diseases, cancer, mental health etc.) and certain communicable diseases (CD) like HIV and hepatitis. In addition, it can reduce disease burden through proactive population-based preventive services. In this context, plans for 150,000 Health and Wellness Clinics announced by the government of India under Ayushman Bharat programme are in the right direction. However, the government can face challenges, both financial and operational, in implementing the plan. While it creates its own clinics, there is a case to leverage vast but highly fragmented private primary care provider network. It can purchase services on capitation method (per capita per annum for defined services). However, there is a great challenge of high variability in quality of services and fragmentation that exists in current system. If government is willing to purchase, private providers may come forward to take responsibility to aggregate fragmented provider network into clusters and ensure standards of care across these clusters. There are technology solutions akin to Uber or Amazon that can enable aggregation of highly fragmented providers. Defined care pathways, clinical practice guidelines, and robust medical record systems can minimise the variability in standard of care and maximise outcomes. Access to affordable and high quality essential drugs and diagnostics and innovative financing methods like direct benefit transfer (DBT) are other solutions that can be considered.

Leverage Digital Health (DH)

Digital India policy gave thrust to quantum jump in digital applications in various aspects of social life. Broad band penetration and affordable rates have enabled inclusion of even remote villages in the transformation. Central government is keen on evolving a national digital health policy given its potential to transform health systems. NITI Ayog had published a concept paper titled National Health Stack on its website. It articulates standards for unique person ID, common language (Health Data Dictionary/ HDD) and national registers for every provider constituting the backbone for a national digital architecture. Information systems for administration of healthcare provision (HIS) and health insurance (HIIS), electronic medical and health records (EMR and HER), personal health records (PHR) etc., will improve efficiency of entire system and provider robust monitoring systems to continuously assess health systems performance. Tele-medicine, e-consults, online services, aggregator technologies, point-of-care diagnostics, smartphone apps, Artificial Intelligence (AI), Block Chain technology, Big data etc., if properly used, can leapfrog India overcoming current challenges in terms of human resources, access, monitoring etc.


India has articulated its Vision, Mission and Strategies in its Health Policy document. Its most ambitious programme – Ayushman Bharat, that aims at financial protection to nearly half of population and 150,000 Health and Wellness Clinics that aim at strengthening preventive and primary care services – is being implemented towards achieving its vision. System-wide reforms in terms of health financing and health provision, adopting proven strategies in similar contexts, leveraging digital health technologies to leap frog, along with participatory engagement of all stakeholders, have the ability to drive efficiency and effectiveness thereby maximising the value for money India can afford given its other social priorities. India, that created Aadhar as a unique ID for entire population, UPI for digital payments revolution and GST for amalgamating all taxes, has the ability to do it.

Leave A Reply

Your email address will not be published.

Attend an exclusive webinar to know more about biomarkers in diagnosis & therapy management of heart failure.
Register Now
 Introducing Smart Autoinjector: Changing the paradigm of usability, cost & size
Know More?