ISSN (Online) - 2349-8846
-A A +A

Aspiring for Universal Health Coverage through Private Care

​Bijoya Roy ( is a public health researcher with the Centre for Women’s Developing Studies, New Delhi.

The National Health Policy 2017 makes a case for expanding private sector participation through collaboration. The policy offers little assurance of providing integrated and universal healthcare.

The healthcare system in India is remarkably privatised with stagnating healthcare expenditure over the past few decades. The poor and vulnerable groups have limited access to it. The third National Health Policy (NHP) 2017 assures progressive universal health coverage (UHC) with general taxation as one of the main elements to finance care. It assures free comprehensive primary care through “Health and Wellness Centres,” and reorientation of the public sector hospitals with free drugs and diagnostics with an overall emphasis on a larger role for the private sector in provisioning. It also recognises the need for retaining doctors in remote areas, disease surveillance and integrating health system information. Even though the focus of this policy is to improve health system performance, it opts to go slow in achieving the targets of infant mortality ratio (IMR) and under-five mortality compared to other South Asian countries.

This policy departs from the two previous health policies in terms of the ways it envisages the financing and purchase of healthcare services. It advocates purchaser–provider split (PPS) through contractual relationship. The framework of the NHP 2017 needs to be understood in the context of two World Health Reports (WHR) of 2000 and 2010. WHR 2000 recommended strategic purchasing as means to improve health system performance. Strategic purchasing will entail active decisions as to what healthcare services will be bought, how, and from whom. The main tools for purchasing services are contracting and prepaid schemes. The WHR 2010 pointed out that to achieve UHC, besides increasing health budget and reducing financial barriers, how services are purchased is important, as it links health financing and quality of service. The rationale behind this PPS model is to increase efficiency of the services purchased utilising market mechanisms of competition or collaboration among different providers.

The focus of this article is to understand how NHP 2017 envisages to practise strategic purchasing and what it means for a low- and middle-income country like India where organised private health sector has moved beyond metropolitan cities and is facing the triple burden of disease.

Public Healthcare Services

In an environment where India over the past seven decades has fallen short in building its healthcare services, this policy guarantees that the public sector will “remain the focal point of healthcare delivery system,” and these services will be expanded. To achieve this, NHP 2017 calls for reform in service production across the three levels of care.

Primary healthcare services will be mainly funded through taxation. From the UHC perspective, at the level of primary healthcare it seeks to expand the service basket by including non-communicable and occupational diseases. It emphasises on choices for patients between service providers through “collaboration with non-government sector on pro bono basis” when in real life, the purchaser of the service exercises this choice. It prescribes the need for targeting public sector provisioning for tribals and socially vulnerable population groups through Mobile Medical Units (MMUs) in collaboration with the non-government sector. In Chhattisgarh, public–private partnership (PPP) model of MMUs shows that they are expensive and less sustainable endeavours when compared to strengthening of existing government system (PHRN and JSA 2017).

In continuation with the draft NHP 2015, this policy too intends to “reorient public hospitals” where it suggests “pre-paid” funding through a combination of taxation and health insurance along with free drugs and diagnostics. It proposes strategic investment on “ten categories of … currently specialist skills” at the district hospital level and a subset of hospitals below it. At the tertiary care level, NHP suggests developing partnership with the private sector and buying select services to address the “specialist gaps.” It recommended shift in the funding model for these hospitals “from an input-oriented to an output-based strategic purchasing,” that is, hospitals will be funded based on the number and type of activities (procedures or surgeries) they perform. Overall, this funding model does not address the actual problems and inefficiencies in the public sector hospitals that are systemic in nature.

This reform in public healthcare services across the three levels of care raises certain concerns. First, beyond the free universal coverage of primary healthcare services, the entire conception of hospital services is based on targeting through strategic planning and purchasing. For coverage, expansion hospitals will depend on collaboration with the private sector. This furthers fragmentation, and fails to promote integration of the delivery of care. Second, it makes referrals across primary healthcare and hospital-oriented services, and between the public and private sector more complex. Third, over the years, purchasing of services from the private provider has increased. This has happened through contracting of clinical services (diagnostic services), empanelment of private hospitals or nursing homes in the Rashtriya Swasthya Bima Yojana (RSBY) or under the state-funded health insurance in secondary and tertiary hospitals. This has led to an increase in contractual relationships. One of the reasons behind this is to help in replacing the traditional hierarchical relationship. But in doing so, new avenues for the private sector are opening up. This impacts the power relationship as the decision-making process becomes more plural in nature (Buse and Harmer 2004).

Scaling-up Private Participation

NHP 2017 overall emphasises on collaboration with private provisioning through contracting and strategic purchase of services from the profit and not-for-profit private sector. The reason for scaling-up the private sector participation in healthcare provisioning is grounded on the following: “Over 70% of ailing population in rural areas and almost 80% in urban areas utilize private facilities” (GoI 2017a). A wide range of areas are laid out for collaborations or PPPs. Thus, through this act of buying care across all the levels of care, the state endeavours to “align” the private sector along the public health goals and make it more inclusive. There is enough evidence to show that the private sector cannot associate to health as a public good, undermining values of universal and comprehensive healthcare and distorting care through irrational therapies (Basu et al 2012; Gadre and Shukla 2016). Emerging literature on contracting from different states shows that private sector involvement has increased in the delivery of health services in public sector, and is gradually expanding its market.

The backdrop note recognises the heterogeneity, size and structure of the private healthcare industry in the country. It notes the huge presence of the own-account enterprises and smaller medical establishments besides the increasing number of corporate hospitals and the merging of the small and medium with large medical care entrepreneurs. Thus, the policy puts forth the existing structure of healthcare market within which the purchaser has to operate. To encourage private participation, it speaks about a mix of incentives either through fees/reimbursement or preferential treatment. It foresees collaboration and strategic purchase “through insurance, direct purchase from private sector and from public sector” (GoI 2017a), and in the process, develops a market that would help to harness the necessary resources.

These agencies would also be charged with ensuring that purchasing is strategic—giving preference to care from public facilities where they are in a position to do so—and developing a market base through encouraging the creation of capacity in services in areas where they are needed more … The payments will be made by the trust/society on a reimbursement basis for services provided. (GoI 2017)

Based on the level of care (rural–urban; primary, secondary, and tertiary level care) and the kind of healthcare services to be purchased, it distinguishes among the different types of private sector providers to collaborate with. The policy brings back user charges in the context of urban primary healthcare and involving for-profit enterprises in areas where it can maximise profits.

One form is through engagement in public goods, where the private sector contributes to preventive or promotive services without profit—as part of CSR work or on contractual terms with the Government. The other is in areas where the private sector is encouraged to invest—which implies an adequate return on investment that is on commercial terms which may entail contracting, strategic purchasing, etc. (GoI 2017) 

In India, over the past 15 years, contracting in healthcare has emerged. These are of different kinds such as service contracts, management and operation contracts, and build, manage, operate and transfer (BMOT/BOT) contracts. Shift to the PPS model requires huge amount of consistent data work to draw up successful purchase of services. Drawing up healthcare packages and flexibility within it is crucial with an increasing population suffering from complex needs (communicable/non-communicable diseases and disabilities). Contracts with an appropriate service mix will remain a continuous challenge in this context.

Another challenge is whether local and small private providers will be able to bid for the contracts and create a competitive environment or whether this will be taken over by big companies to gain local monopoly. Uttar Pradesh government has invited an international competitive bid to outsource primary healthcare centres with the Bill & Melinda Gates Foundation. The qualifying criteria for private providers are such that it will disqualify local and small private providers. Many European countries as well as New Zealand are facing difficulties in implementing the PPS model with high administrative and transaction costs.

Stewardship for Purchasing

With ushering of market through strategic purchasing, the policy calls for the role of stewardship as incumbent on the government. It is the central, state or local level government money that will be entrusted to purchase services. The effect of purchasing will depend on how well the purchaser can plan the population health needs annually and long-term for the quantity of services required, quality standards, and budget estimates. Its impact will be also dependent on how well the providers meet the contract objectives. PPS at all levels (centre/state/local) of healthcare services demands administrative reforms and strengthening of purchaser capacity. The emerging studies on outsourcing and PPPs show that state governments face a series of challenges in their role as stewards. Thus, to play the role of stewards, the government needs huge investment in developing skills as a steward and purchaser.

Healthcare Workforce

In view of expanding the primary healthcare services, reaching out to the community, and increased administrative role with strategic purchasing in the hospitals, the NHP 2017 suggests revival of the multipurpose male health worker cadre (second auxiliary nurse midwife or ANM post), increase in the intake of paramedics, and starting public health management cadre. This policy categorically states that accredited social health activists (ASHAs) will “remain mainly voluntary and remunerated for the time spent” with meagre scope of regularisation (GoI 2017).

Over time in remote and rural areas, ASHAs have emerged as major producers of healthcare services connecting communities to formal health services and continue to remain “lowly paid, honorary worker of the government health service system” (Som 2016). This policy continues to marginalise women’s labour at the lowest rung and compromise labour rights. Despite increasing informalisation within healthcare workforce, NHP 2017 is reluctant to invest in organised workforce that can play a pivotal role in providing quality healthcare services.

Concluding Remarks

It is now recognised that to achieve progressive UHC in low- and middle-income countries, government spending for healthcare has to be increased at least to 5% of the gross domestic product (GDP) of a country (Mcintyre et al 2017). NHP 2017 proposes to increase health expenditure as a percentage of GDP from 1.15% to 2.5% by 2025, of which 1% would come from the union budget. This year’s allocation of the union budget is at 0.29% of GDP, and budget allocation continues to be concentrated in the tertiary and secondary care. This trend is unlikely to elevate health system performance or strengthen the public sector.

As per the Fourteenth Finance Commission’s (FFC) recommendation in 2015–16, the share of tax pool to the states increased, but majority states used it for other sectors and not on health and education (Scroll 2016). Post the FFC recommendation, only Sikkim, Mizoram, Goa, Meghalaya, Himachal Pradesh, Jammu and Kashmir, and Kerala invested more on health (Scroll 2016). A recent study on the relationship between different types of tax and varied health indicators shows that direct tax can be linked to better health outcomes and increased levels of health spending (Reeves et al 2015). Therefore, it is critical for countries like India to pay greater emphasis on public finance, and how and where they are used.

Overall the NHP 2017 falls in line with the growing emphasis to provide universal access to primary healthcare, functioning as a “gatekeeping mechanism” and opening up secondary and tertiary levels of care to market-based reform. It, however, fails to address the existing crisis within the public sector and strengthening of public sector continues to remain a misnomer.


Basu, S J Andrews, S Kishore, R Panjabi and D Stuckler (2012): “Comparative Performance of Public and Private Health System in Low and Middle Income Countries: A Systematic Review,” PLoS Med, Vol 9, No 6.

Buse, K and A Harmer (2004): “Power to the Partners? The Politics of Public-Private Health Partnerships,” Development, Vol 47, No 2, pp 49–56.

Gadre, A and A Shukla (2016): Dissenting Diagnosis, New Delhi: Penguin.

GoI (2017): “National Health Policy, 2017,” Ministry of Health and Family Welfare, Government of India.

— (2017a): “Situational Analyses: Backdrop to the National Health Policy, 2017,” Ministry of Health and Family Welfare, Government of India.

Mcintyre, D F Meheus and J A Røttingen (2017): “What Level of Domestic Government Health Expenditure Should We Aspire to for Universal Health Coverage?,” Health Economics, Policy and Law, Vol 12, pp 125–37.

PHRN and JSA (2017): “Outsourcing of Mobile Medical Units in Chhattisgarh: A Case Study,” Public Health Resource Network (PHRN) and Jan Swasthya Abhiyan (JSA), Oxfam, India.

Reeves, R, Y Gourtsoyannis, S Basu, D McCoy, M McKee and D Stuckler (2015): “Financing Universal Health Coverage—Effects of Alternative Tax Structures on Public Health Systems: Cross-national Modelling in 89 Low-income and Middle-income Countries,” Lancet, 386(9990): 274–80.

Scroll (2016): “It Is Not Just the Central Spending on Health That Is Appalling—The States Too Are Giving up,” Scroll, 3 May,

Som, M (2016): “Volunteerism to Incentivisation: Changing Priorities of Mitanins Work in Chhattisgarh,” Indian Journal of Gender Studies, Vol 23, No 1, pp 26–42.

Updated On : 26th Apr, 2017


(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top