Private sector participation in delivering tertiary health care: a dichotomy of access and affordability across two Indian states

Poor quality care in public sector hospitals coupled with the costs of care in the private sector have trapped India's poor in a vicious cycle of poverty, ill health and debt for many decades. To address this, the governments of Andhra Pradesh (AP) and Maharashtra (MH), India, have attempted to improve people’s access to hospital care by partnering with the private sector. A number of government-sponsored schemes with differing specifications have been launched to facilitate this strategy.

Aims This article aims to compare changes in access to, and affordability and efficiency of private and public hospital inpatient (IP) treatments between MH and AP from 2004 to 2012 and to assess whether the health financing innovations in one state resulted in larger or smaller benefits compared with the other.

Methods We used data from household surveys conducted in 2004 and 2012 in the two states and undertook a difference-in-difference (DID) analysis. The results focus on hospitalization, out-of-pocket expenditure and length of stay.

Results The average IP expenditure for private hospital care has increased in both states, but more so in MH. There was also an observable increase in both utilization of and expenditure on nephrology treatment in private hospitals in AP. The duration of stay recorded in days for private hospitals has increased slightly in MH and declined in AP with a significant DID. The utilization of public hospitals has reduced in AP and increased in MH.

Conclusion The state of AP appears to have benefited more than MH in terms of improved access to care by involving the private sector. The Aarogyasri scheme is likely to have contributed to these impacts in AP at least in part. Our study needs to be followed up with repeated evaluations to ascertain the long-term impacts of involving the private sector in providing hospital care.

Journal special issue arising from Symposium on the Private Sector in Health held in Sydney 2013.