Analysis of Private Healthcare Providers

India’s health system is dominated by the private sector and as a result, out-of-pocket expenditure is very high. To provide financial risk protection and avoid catastrophic health consequences, policy emphasis is on the Ayushman Bharat programme which targets to cover 50 crore people. Such a large-scale insurance scheme needs huge infrastructural and administrative support. Unincorporated private healthcare providers comprise 99% of private health providers in India, the majority of them being small scale, employing less than 10 workers and having a strong urban bias. To better promote universal health coverage, policy emphasis on better monitoring, administering regulations, transparency in system, and ensuring quality in delivery of service is needed.

The authors are thankful to an anonymous referee for useful comments on an earlier draft of this article. The authors are also thankful to the discussants and participants of the 7th Annual Conference of the Indian Health Economics and Policy Association, held at GIFT, Thiruvananthapuram, Kerala, for their valuable insights.

The 2019–20 interim budget proposes a hike of `4,000 crore against the previous year’s budget allocation to India’s flagship insurance-based healthcare programme Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (henceforth Ayushman Bharat). There has not been any increase in budget allocation in real terms in state-sponsored programmes like the National Rural Health Mission (NRHM) while there is a marginal increase for the National Urban Health Mission (NUHM). Clearly, the government is shifting focus from a state-based social security system for health to an insurance-based mechanism. But is the country’s health system ready to accept the leap?

Public spending on healthcare is historically low in India. Federal and state governments together spend only 30% of the total spending on healthcare in India (NHSRC 2017). As a consequence of such low public spending on healthcare, out-of-pocket (OOP) expenditure covers most of the healthcare cost in India. Most importantly, healthcare infrastructure is not sufficient in terms of staff strength as well as institutions (hospitals, etc). Across the country, the available hospital beds per thousand population is 0.7¹ and average government hospital beds per thousand population in India is 0.4. One government hospital on an average serves a population of 90,000.