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  Structure and Dynamics of Private Health Sector in Andhra Pradesh

Summary findings:

Some general patterns have emerged from the review of available evidence on geographic spread and patient composition of health care institutions in private and public sectors, respectively. We found that public sector HCIs have a wider geographic spread compared to the private sector HCIs, which tend to be located in urban areas. 150 private HCIs randomly sampled for this study were from 19 cities or villages. The 106 randomly sampled public HCIs were from 76 cities or villages. Economic development of an area tends to improve the overall availability of health care facilities both in public and private sector. The geographic spread of private sector HCIs is more restricted compared to the public sector HCIs. The private sector HCIs have grown mostly in areas with higher levels of socioeconomic development. Although economic development does appear to some extent influence the public sector health care capacity, geographic distribution of public sector HCIs appear to have been comparatively better than in case of the private sector.


We have found in this study that private hospitals and nursing homes have grown at a much faster rate in numbers and bed capacity during the 1980s and 1990s. This would appear to be the most plausible explanation for the increase in resort to private hospitals during the 1990s. Estimates of pattern of resort to private and public HCIs by socioeconomic status reveal that people from poorer households tend to rely more on public HCIs. As socioeconomic status increases more and more people resort to the private HCIs. At the all India level, people in rural areas tend to rely more on the public sector. In AP, however, the rural-urban difference is not so much.


The only efficiency related information collected by this study were the utilisation rates like bed occupancy, turnover rate, outpatients per bed, etc. Even these estimates are based on rough data, since the private HCIs do not generate statistics to arrive at accurate estimates of utilisation rates. There was no difference in utilisation rates between private and public HCIs, except for the outpatient load, which was considerably higher in the public HCIs.


Only some rudimentary information on infrastructure, and process of care could be collected in this study. Approximate data on premises collected by this study showed that public sector HCIs are generally better endowed with land and floor space. Comparatively more number of public HCIs, particularly the PHCs and small hospitals reported that they use written medical protocols and therapeutic guidelines. More than 90% public HCIs reported that they maintain medical records, compared to only 65% in case of private HCIs. Comparison of the availability of auxiliary services in private and public HCIs gives a mixed picture. More public HCIs (85%) provided pharmacy services compared to private HCIs (42%). Prevalence of 24 hour emergency services was similar (about 40%) among private and public HCIs. Prevalence of telephone facility was much more among the private HCIs (88%) compared to public HCIs (29%). Results from the patient exit interview showed that the level of patient satisfaction was generally low in both private and public HCIs. Overall level of patient satisfaction was similar in the private and public sector HCIs. However, the private HCIs received better scores on access, availability and convenience, communication and general comfort. On the other hand, the public HCIs received better scores on the technical skill and interpersonal sub scales. Most importantly the level of patient satisfaction was generally low in both private and public HCIs, suggesting an environment of poor client orientation in the health sector.


An important finding from the data on the range of available services is about failure of rational planning process in the public HCIs. The range of services available in a cross section of private health care institutions would be a result of two factors, namely the range of skills that doctors have to offer and demand for various services. On the other hand, we would normally expect the public sector to offer a smaller but more consistent range, if they were implementing something like an essential clinical package. We found that the range of clinical service available in public sector health care institutions in AP is not very different from that of in the private sector. It appears that in the matter of general clinical services both private and public sectors operate alike. Availability of clinical services in public sector appears to be determined by what doctors working in public sector have to offer. This is mainly because the personnel policy does not yet adequately define the cadre strength of doctors by specialty


There is wide variation in density of human resource use by private health care institutions. Part of this variation could be due to errors in data. But lack of any staffing norms for private health care institution could be responsible for the wide variation. About 20% of private clinics operate without any staff. Another 40% operate with full time staff. The rest use both full and part time staff. Most clinics operate with less than 10 full or part time personnel. Most hospitals employ more than five full time personnel. About 40-60% all private HCIs use part time staff, mostly specialists. About 25% of small private hospitals and 10% of big private hospitals reported that specialists working in government institutions offer consultation in their hospital. This may be an underestimate of government doctors practicing in private hospitals.

Policy Recommendations:

Based on the understanding of the state of private health sector in India, with particualr reference to Andhra Pradesh, and review of literature on the subject, the following policy recommendations are proposed

  1. Develop and adopt a set of comprehensive policy towards the private forprofit and nonprofit health care institutions.
  2. Ambulatory medical care is best provided through a net work of family physicians (FP), who would usually be self employed doctors but can include ambulatory care services by other institutions as well.
  3. In the short and medium term, private hospital and nursing home capacity should be used to increase the incidence of institutional deliveries in the country.
  4. Governments should review the job descriptions, cadre strength, recruitment systems and posting policy to improve consistent availability of predefined services through all public HCIs. This, we believe, will help in better targeting of public subsidies to the poor.
  5. In the near and medium term, the public sector hospitals will have to respond to the hospitalisation needs of the poor. This would mean upgrading and expansion of first referral hospital facilities in the public sector.
  6. Encourage development of nonprofit health care facilities in the long run.
  7. Government programmes encouraging nonprofit HCIs will inevitably attract opportunistic nonprofit institution building in addition to spontaneous voluntary action. Hence the nonprofit HCI promotion policy should be accompanied by development of appropriate regulatory mechanisms for the nonprofit sector.
  8. Substantially increase allocations for healthcare services by;
    1. Streamlining, and expansion of fiduciary social security services, and
    2. Substantial increases in allocation of government expenditure to health sector.
  9. Establish rate setting policies and authorities to set fair rates of healthcare service charges. These rates will facilitate purchase of healthcare services by the government from private forprofit and nonprofit providers.
  10. Streamline existing state licensing mechanisms for healthcare professionals.
  11. Create state licensing mechanisms for healthcare facilities of all kinds including group practices, nursing homes, hospitals, diagnostic facilities etc.
    1. It will be desirable to study and review state licensing rules and regulations in different parts of the world, and prepare a model healthcare facility licensing law for Indian states.
    2. Develop national network of institutions to contribute towards development of standards and specifications for different aspects of the healthcare facility licensing process.
  12. Encourage voluntary accreditation in addition to the state licensing mechanism.
  13. Establish a program for development, periodic updating and dissemination of clinical practice guidelines (CPG).
  14. Immediate priority is to explicitly allocate existing cadre strength of entry level medical officers in first referral hospitals among the five commonly required specialties namely, (a) General Medicine, Obstetrics and Gynaecology, Paediatrics, General Surgery and Orthopaedics.
  15. Explicitly define the essential clinical package of services. Reorganise staffing in public HCIs commensurate with the essential clinical package. 

Establish a program of research on measurement of medical outcomes which will help in the long run, use of risk rated medical outcome data for comparison of technical quality of care by health care institutions.


The study is based on data on private and public health care institutions in Andhra Pradesh. The study was commissioned by the Government of India, Ministry of Health and funded by The World Bank.


Updated by Samatha Reddy on 23/04/2003

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