The paper attempts to present an overview of the existing private healthcare structure, its character, utilization pattern, the challenges and recommendations for effective utilization.

The healthcare system in India dates back to 5000 BC when the Ayurveda and Siddha system of medicine originated. These branches of Medicine developed on philanthropic lines. In modern times however, medicine has been practiced on fee for service basis at the individual rather than community level. In October 1943, Health Survey and Development Committee (Bhore Committee) was appointed and policy makers adopted the recommendations of this committee in 1946. The provision of health services was delegated to the public sector. The Constitution of India allocates various services to the State or Central Governments based on 3 lists viz. a) Central List - It includes research, establishment of tertiary level institutes etc and these activities fall under Central Government jurisdiction. b) State List includes provision and regulation of basic preventive, promotion and curative services, establishment of public health and sanitation services, hospitals and dispensaries etc. These activities fall under State Government jurisdiction c) Concurrent List – It includes programs like population control, family planning, medical education, registration of births and deaths etc. The Central Government provides guidelines (policy formation) and the respective State government implement them. On the whole, provision of majority of health services is States’ responsibility.

Bhore Committee and later Jungalwala Committee were critical of private sector participation in health care. It was assumed that only the affluent would afford (benefit) such services and this would disrupt the social equality, which India was trying to achieve after independence. It was probable that the profit driven private sector would undersupply socially desirable services such as immunization and personal preventive care, jeopardizing the healthcare status of the society at large. The fear that the ingrowth of private sector would worsen the precariously balanced allocative efficiency and bid away the scarce human and physical resources from public sector, persisted.

The private service providers developed strong footholds in healthcare provision due to lackadaisical performance of public sector. Poor infrastructure and failure to optimally utilize resources hampered the delivery of public sector healthcare services. The private sector not only buttressed the poor infrastructure, it also provided the concept of quality of healthcare services among patients. The increasing cost of allopathic treatment and the indifferent attitude of the government towards the cheaper indigenous medicine system (like Ayurveda; Siddha etc.) led to lack of affordable healthcare services among the population. The problem was further compounded by the absence of regulating authority, which could have effectively restricted participation of unskilled and non-licensed practitioners. The public sector failed to provide enough job opportunities to the trained doctors possibly due to lack of funds. The public health services employ only 25% of registered doctors (allopathic), whereas they train 85% of medical graduates (Duggal, 1994). The private sector provided an operational platform for such doctors. The private sector assumed to complement the role of public sector healthcare services.

During the Sixth Five Year Plan, the first National Health Policy (1983) was formulated and introduced. In the policy, participation of voluntary agencies and private practitioners were recommended. Thus, private healthcare sector was recognized to be an integral part of the Indian Healthcare system and complementary to the public healthcare sector – a mixed healthcare system was recognized to exist in India.

Insight into the healthcare provisioning showed that the private health sector accounts for over 70 percent of all primary medical care and over 40 percent of all hospital care (NSS 1987, Duggal & Amin1987, Thankappan et al 1987, NCAER 1992, George et al 1992). As per the National Health Policy 1983, the healthcare expenditure in India is 6 % of GDP of which 1.3% is contributed by the public sector and 4.7 % is contributed by private sector. The private sector healthcare provisioning has a pyramidal structure. The base is formed by individual practitioners; the large middle piece consists of small hospitals and nursing homes and the apex includes large Super Specialty Research Centres, Public Ltd., Corporate and Trust hospitals. Majority of the individual practitioners are usually general practitioners (GP). They are concentrated in rural areas.

The bulk of medical care in rural India is provided through the private practitioners who are untrained, non-graduates practicing allopathy and providing outpatient care. The nursing homes consist of 2 to 50 bed units, which are owned individually or in joint partnership. They generally operate as family businesses. These centers provide outpatient as well as in patient care. The Trust Hospitals, Corporate Hospitals, Public Ltd. and Superspecialty Research Institutes constitute the tertiary care providers. The private sector hospitals have 300 to 500 bed and have well trained nursing and paraclinical support staff. These hospitals generate revenue to self sustain and expand further. Majority of these hospitals are under private sector and located in urban areas.

Based on NSS survey (1986-87) and NCAER survey (1993), a study was conducted on the characteristic and utilization patterns of health care facilities in rural and urban sector (Purohit and Siddiqui, 1994). It was observed:

1. Majority of the outpatient services are provided by private doctors (both in rural and urban areas) but the inpatient (IPD) care is mostly provided by the public hospitals. The private sector possesses less than half the number (30%) of beds than that available with the public sector (70%).
   
   
2. The household expenditure on curative care is 5.28% of income in rural areas while in urban area the average is 4.29% of the income. The household expenditure is more in rural area probably due to the traveling expenses incurred during treatment. Interestingly, the per capita annual expenditure on health is less in rural than in urban area.
   
   
3. In rural areas, people utilizing private care either belong to the affluent or to the economically weaker class and majority are wage earners. Their education levels are low – usually secondary school education.
   
   
4. In urban areas, people utilizing private health care usually belong to the affluent class running their own businesses, salaried or wage earners. The education standard is also higher among them - the average qualification being graduate.

1. For outpatient treatment or consultations, the distance travelled by rural population is about 5.9 kms at an average while in urban area it is 2.2 kms. A large number of private clinics are concentrated in urban areas hence outpatient medical treatment is easily available which possibly explains the less distance traveled by urban population. The inpatient treatment facilities available in rural areas are almost at the same distance in public (18.6 kms.) and private (18.7 kms.) healthcare units. In urban areas, the average distance travelled for inpatient services is 5.7 kms. for public sector centres and 6.2 kms for private healthcare centers which is almost the same. This skewed availability is because of majority of inpatient facilities like hospitals and nursing homes are located in urban areas so the distance travelled is less within urban areas. In states like AP, Bihar , Maharashtra due to better accessibility among rural areas the average distance travelled by indoor patient is reduced to 12 - 13 kms against the national average of 18.6 kms. Similarly, the urban inpatient facilities are easily accessible in states of AP, Bihar , Haryana, Kerala and Rajasthan so distance traveled is less than the national average of 5.9 kms.
   
   
2. Inpatients typically face trade off: Public sector hospitals are inexpensive while private sector hospitals provide skilled and reputed clinicians.
   
   
3. The care given and the availability of trained staff at the private primary care units are not satisfactory. It was observed that the practitioners involved in primary care were unaware of the treatment regimens, used expensive and poor quality drugs, overprescribed diagnostic tests and used untrained and semi trained (ANM) staff for patient care (Private Health Sector and Related Issues, 1997). The pharmacists at these units were instrumental in recommending drugs to patients.

In a study conducted by Priya Nanda and Dr. Rama Baru in Delhi , it was found that majority of the nursing homes were operating as business centers. Often, a husband-wife team of doctors runs these nursing homes. The quality of nursing was undersupplied as untrained nurses had been recruited at lesser salary. The major revenue earners were outpatient consultations, investigations, obstetric cases and surgeries. Generally the patients were satisfied with the care given to them in the private sector, as time allotted during examination was more than that given by a public sector doctor.

In another study conducted by Dr. Rama Baru on corporate hospitals it was found that majority of hospitals were owned by business groups and operated as Public Ltd. / Pvt. Ltd. / Trust Hospitals . These superspecialty or multi specialty hospitals were run as profit earning institutes. These hospitals are catering to the middle and upper middle socio economic segment of the society. The consultants partially share the operating costs of these institutes. The cost of care is high by Indian standards but still cheap compared to western medical care (for same procedures and treatments).

• The expenses per illness episode for outpatients are higher in urban areas irrespective of public or private sector. The public sector is of course cheaper than private sector as consultations are usually free.
  
  
• Similarly, the inpatient care cost is high in urban private than rural private healthcare. Interestingly, the expenses per illness episode are high in inpatient rural public sector than urban public because of the transportation charges borne for transference of non-ambulatory patients to inpatient units concentrated in urban areas.
  
  
• States like Andhra Pradesh, Bihar , Karnataka and Gujarat have high rural private inpatient healthcare costs because of poor public healthcare infrastructure and patients need to be transferred to private inpatient units. States like Delhi, West Bengal, Madhya Pradesh and Uttar Pradesh have high urban private IPD healthcare cost. Majority of these affluent states are inhabited by population, which can afford and prefers the treatment in private sector.

Despite the tremendous growth of private healthcare sector, the initial fears of policy makers remain unassuaged. The polarization among the affordable and non –affordable population (socio-economic inequality) and the quality of care are the issues which have surfaced up. These challenges need to be carefully observed and analyzed. The recommendations would be based on a holistic view to avoid any socio-economic biases.

• Healthcare is always perceived to be on philanthropic lines but with the participation of private sector, this ideology needs to be undone. The professionals feel that they are doing a service to the mankind and they are not accountable for it (Jesani A. and Nandraj S. 1994). They tend to forget that for such services they are charging a fee and not providing it free! Hence, a set of regulations needs to be adopted to avoid exploitation of majority of population. It would be preferred if the professionals formulate regulations to operate private nursing home and hospitals. Otherwise, the government will have to participate in laying down guidelines, directives or regulations to ensure quality care. The Nursing Home Act of Mumbai and Delhi need to be revised (Nanda and Baru, 1994) and used as a backdrop for this. Strict enforcement of these regulations is desired. Non-compliance should result in harsh legal and capital punishments. Statutory bodies like MCI need to be involved and defaulters must be barred from clinical practice. Effective legislature and executive would minimize any non-conformity. Above all, political will would result in the desired achievement.
  
  
• The private healthcare units are concentrated in urban areas or centers of affluence. These curative facilities are not uniformly located and not accessible to all. A detailed areawise ‘need based’ planning of public and private medical services should be undertaken to establish uniform health care system (curative aspect) and accordingly identify pockets of private health sector participation (“health map”). Thus, private healthcare units would be evenly spaced unlike the present skewed conglomeration within urban centers. Secondary and tertiary private healthcare units being established in the rural areas should be encouraged and the government may provide higher subsidy or infrastructure assistance for such units.
• There is lack of continuous medical education programmes for these healthcare providers. A continuous education programme for physicians should be introduced to improve quality care.
  
  
• The drug industry is totally dominated by private sector and lacks proper legislation. Legislation to control sale of drugs and education and training programmes for pharmacists should be made mandatory. As per the National Drug Policy, 1994 a National Drug Authority needs to be set up. It will assist in defining quality standards, assess that pharmaceutical products meet India ’s medical need, monitor drug promotion and prescribing practices among professionals (Medicines, Medical Care and Drug Policy, 1997).
  
  
• The privatization of health insurance has ushered in a new concept. The Government has already established IRDA (Insurance Regulatory Development Authority) to regularize this sector. Minimum requirements to operate insurance companies and TPAs (Third Party Administrators) have also been proposed to generate confidence among the investors or public.
  
  
• It has been feared that the voluntary organizations and multinationals foreign aid agencies start dictating the health requirements and policies as per their interests and research activities in lieu of providing financial aid. This would result in digressing from the actual healthcare issues and need of the local population (Health Policy, 1997. Report of the Independent Commission on Health in India. ). Indian government needs to prioritize health needs based on the morbidity and mortality pattern rather than by the policies of the aiding agencies.
  
  
• To curtail the high costs of allopathy, indigenous system like Ayurveda, Unani or Siddha system of medicine need to be encouraged and promoted.
  
  
• The private, corporate hospitals and nursing homes need to associate with preventive care also. It should be mandatory for all private healthcare units to adopt a section of the underprivileged population before starting their treatment centers. This can be inducted as a part of the regulations for private healthcare units.
  
  
• The untrained and non-qualified practioners and quacks should be banned. People with better / higher education e.g. school teachers may be involved in providing emergency treatment as reinforcement agencies among healthcare delivery units. The teachers are closely associated with the community and are respected. Their availability is always guaranteed to the community.
  
  
• At the time of inception of a private hospital, the government heavily subsidizes land and waives off duty on equipment in lieu a certain percentage of underprivileged population is provided free healthcare services. This policy is not adhered by majority of the private sector hospitals. Government should be harsher and strictly enforce this rule. As mentioned above, apart from Medical Council of India other governmental agencies need to be involved for compliance.
  
  
• The usage of untrained staff – especially nurses, technicians etc. should be checked. Such units should be banned, their operating incharges should be tried in criminal courts and the public should be informed from time to time about such delisted organizations.
  
  
• The medical colleges which are run by private sector, receive government subsidies. Such colleges should also associate with public healthcare activities and programmes.
  
  
• New legislature might increase the bottlenecks but they need to be framed to assist in smooth and efficient disposal of work. These legislatures should bring in accountability and quality to the existing healthcare system rather than delays in implementation.
  
  
• A central committee or an organization should be formed for monitoring technology adoption by private sector. This would check the rising cost of healthcare with newer technology.
  
  
• The net effect of these recommendations is not to idealize the private sector but to regularize it (since it caters to 70% of primary healthcare). The public healthcare requires an upgradation to perform better and function harmoniously with the private sector. The policy makers need to note that future decisions will not be based on public or private sector alone but a mix of public – private healthcare system.