Health Policy Issues and Health Programmes in ... - Amazon S3

Public–Private Interaction in Health: Policy Issuesdevelopment of the private sector, which is also unfamiliar territory. Public policy in this area isin a nascent stage. Some of the experiences from India are provided below.Financing of Providers’ FacilitiesIt has been observed that large numbers of providers are working in small clinics or small privatehospitals (called nursing homes in India). The average number of beds in these nursing homes is20. Most of these facilities are located in prime areas and are affected by what we call the smallscalesyndrome. Having no access to market-based financing mechanisms, these facilities tend toborrow money from informal markets with interest rates that are phenomenally high. In a recentsurvey by the author, the average rate of interest paid by these facility holders was found to be inthe range of 18%–22%. Looking at the amount of investment required to start a new facility, the costof capital of these enterprises is unreasonably high, reflected in the prices charged from patients.Since the demand for services is quite uncertain and has significant seasonal variation, there isalways a temptation to indulge in various types of malpractice, such as fee splitting, induceddemand, and so forth. All these have implications for the cost of health care.Financing Mechanisms Available to ConsumersOn the demand side, it has been observed that most of the cost is out-of-pocket. In addition,insurance mechanisms are quite limited. In India only eight per cent of financing in the privatesector is through insurance.Joint VenturesJoint ventures are specifically formed to achieve some common goal by providing services thatmeet the requirements of both the entities forming the venture. Introduction of a joint ventureconcept to the health care industry in India is quite new and is in the exploratory stage. Anumber of joint venture projects are under consultation. One such project has already beeninitiated in Delhi.The need for the joint ventures emanates from the urge to create greater opportunities forimproving health care facilities within the framework of the knowledge, expertise, and physicalpresence built up by the two sectors. The nature of the health care industry has changedconsiderably. With the advent of new technologies, the capital intensity has grownphenomenally throughout the period. At the same time, public institutions have found it difficultto find sufficient resources and technical manpower to cope.Joint ventures can assume two different forms, as described below.Contracting out for services (primarily non-clinical): This type of joint venture includes anagreement between two or more (in terms of ownership) separate firms for the exchange ofperformance. There have been a number of collaborations between the private and publicsectors. We have some documentation on contracting experiences and how effective thesemechanisms are in improving the performance of public health care facilities.104Equity joint ventures: This type of joint venture provides for future joint decision making in ajointly owned company. In India, this form of collaboration is proposed on the grounds that the