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Indian Journal of Community Medicine

Vol. 27, No. 3 (2002-07 - 2002-09)


Editorial - Reforms in Health System in India

Sunder Lal, B.M. Vashisht

Health systems have undergone overlapping generations of reforms in the past 100 years, including the founding of national health care systems and extension of social insurance schemes. Subsequently to realize the goal of "Health for all" the system of primary health care was adopted the world over. The system of primary health care paid too little attention to the people's demand for health care and it concentrated exclusively on the perceived needs1,2

In the past decade or so there has been gradual shift of vision towards what WHO calls the "New Universalism" high quality delivery of essential care, defined mostly by criterion of cost-effectiveness, for everyone, rather than all possible care for the whole population or only the simplest and most basic care for the poor (World Health Report 2000)1,2.

First generation of reforms in development of health system in India through Primary Health Care approach started with the recommendation and guidance provided by the "Health Survey and Development Committee" (Bhore Committee)3. India developed ambitious five year plans for a health system based on the recommendations of Bhore Committee Report of 1946. The development of Primary Health Centres (PHC) and Subcentres (SC), proceeded along the recommendations of Bhore Committee and PHCs became integral part of community development blocks, with all round rural development programme launched in the country in 1952. Founding of National Health Care Systems was given a new push by adopting National Health Policy by Govt. of India in 19833,4. The health services infrastructure was reorganized and health functionaries were reoriented. It was envisaged to universalize primary health care to achieve `Health for all by 2000 AD' through establishment of subcentres, primary health centres, community health centres, in rural areas based on population norms. With the advent of Primary Health Care in 1978, the journey of second generation reform started.

Over the years India evolved its indigenous system of health care services which has had strong base entrenched in the community as part of socio-economic development programme. Though the World Health Organization thought of second generation reforms, only in 1978, India took a lead to establish system of Primary Health Care way back in 1952.

In pursuance to the recommendations of Bhore Committee gradual development and expansion of three tier health system continued till 5th five year plan period, when minimum needs programme was introduced. The emphasis, during these plans was on to produce manpower and build health infrastructure to cover vast rural population. In urban areas infrastructure consisted of district hospitals, nursing homes, private practitioners, urban health centres and dispensaries, urban family welfare clinics, post partum clinic (PPC), ESI dispensaries and institutions set up by NGOs and philanthropists.

The second generation reforms in India led to formulation of `National Health Policy' in 1983 to achieve the set goals within time frame through universalisation of "Primary Health Care" to achieve "Health for All"4. The enthusiasm was soon lost as the primary health care was found to be too demanding, as any approach based on self reliance and social justice bound to be. The prime approach was "Governmental approach" to achieve set target without clear cut role of private sector and community and other related sectors towards national health goals. We did succeed in establishing infrastructure for primary health care (PHC) and achieved impressive results but primary health care functioned suboptimally because of several gaps in the infrastructure and under funded primary health care in rural areas with substantial backlog in remote areas. Soon the momentum of PHC was diminished at global level. The WHO which played lead role in advocacy and promotion of primary health care the world over, back tracked on its stand and shifted over to "New Universalism" as described in overlapping generation of reforms. Despite its (Primary health care) many virtures a criticism of route of primary health care has been that it gave too little attention to peoples' demand for health care and instead concentrated almost exclusively on their perceived needs" [WHR 2000]. However, this criticism may not be valid universally, particularly in India which relied on the three tier system of Primary health care initiated way back in 1952. The third generations' reforms in health sector in India can be linked with economic reforms that has been brought about by reforms initiated in 1991; as also with the political change which ushered in by 73rd and 74th constitutional Amendment Act passed in December 1992.

The publication of World Development Report in 1993 by World Bank dictated the nations to implement the reforms in health sector5. Accordingly the National Health Policy 2002 adopted and embodied some of the necessary measures and reforms in the policy guidelines, like accessibility of decentralized public health system, equity, decentralization, partnership with private sector and NGO, improved spending on health system and strengthening of primary health care infrastructure6.

The focus of first generation reforms was to establish health care delivery system in the country and we are proud of establishing a strong three tier rural based and rural biased health care infrastructure in the country, with well defined functions and services at different levels. Overlapping reforms in health sector continued, following the transformation of Family Planning Programme into Family Welfare Programme, child survival was added to the programme agenda through Universal Immunization in 1985. These health related interventions were branded into Child Survival and Safe Motherhood (CSSM) package in eighth plan (1992-97). Govt. of India publication "The Paradigm Shift" 1996 launched Reproductive and Child Health programme which became major vehicle for health sector reforms. In order to further the process of reform in India's Health and Family Welfare sector as set out in the Govt. of India (GOI) publication `The Paradigm Shift', The European Commission (EC) is providing grants/assistance of 200 million Euro (European currency unit (ECU). The primary objective of EC assistance was to enhance central, state and district capacities in implementing the Family Welfare system policy reforms and Community Needs Assessment Approach (CNAA). The key emphasis area for the Sector Investment Programme (SIP) is to bring about policy, systemic, structural and operational reforms in the health and family welfare sector in India. The initial results of SIP are quite interesting, however, outcomes are awaited eagerly7.

Health systems and their problems:

The planning and decision making for health care system has been highly centralized. The system of Primary Health Care was highly centralized right from the Bhore Committee down to the current centrally sponsored sector approach under the development plans. There was hardly any decentralization or devolution of powers to the people or district and level down to district. Top down approach pursued increased the dependency on government health system and it incapacitated the absorptive capacity of the system. All planning-training- IEC activities were highly centralized and there was little initiative for local planning and enhancing the community capacities.

Founding of health care delivery system as an integral part of Community Development Programme started way back in 1952, when it was decided to set up one primary health centre and three subcentres in each Community Development Block area (60,000-80,000 population). Subsequently during the sixth and seventh five year plan the infrastructure was expanded and reorganized in the set up of three tiers. Primary health care system is based on the following norms8:

Tier/level Population norm
Plain area Hilly or Tribal area
Subcentre 5,000 3,000
PHC 30,000 20,000
CHC 120,000 80,000

The normative approach for establishment of appropriate infrastructure was followed. Present population based infrastructure norms under the public health system raises some fundamental questions in the critical areas of coverage of population, quality of services, referral back up or support, utilization of infrastructure and above all the efficiency and effectiveness of services. The vastness of the country in terms of geographical area, terrains and above all the 1027 million population to be covered appears to be a herculean task by public health system alone to meet the rising cost of health care. Advancement of health technologies have led to escalation of cost of health care/treatment, while technologies in other fields reduced the cost structure of commodities. It is strange paradox in health technology advancement. Utilization of the infrastructure and facilities have been maximum for immunization, contraception and other prophylaxis; however, public health system is used by 20% only for outdoor sickness and by 45% for indoor treatment. We have not established linkage with private and NGO health facilities/infrastructure. The Govt. must play effective role of stewardship. The managers at all level should change their stererotyped leadership role to that of stewardship to establish partnership with private sector and NGOs and other stakeholders. Resource mapping should be routine exercise for district health organization. Geographical information system in health sector appears to be positive step. The uniform three tier public health system for the country as a whole may not be an answer. The functioning of subcentres, primary health centres and community health centres needs to be evaluated. We have the buildings and facilities but no doctor or specialist available. We have wonderful district hospital but it works suboptimally and works in a single shift. Doctors and workers are non-resident in rural area and consequently deliveries and emergencies are seldom attended in the evening and night hours. Could we identify accredited private practitioners and enforce regulatory mechanism to ensure desired quality of services. Services of primary health care system could be contracted out to such accredited private practitioners for fixed duration and thereafter, depending upon the track records it could be further extended. The money thus generated through contract system could be used locally to augment the purchase of medicines and equipment etc. to enhance the quality of services.

Medical Education:

Training and continuing education system have not produced the manpower of the kind suited to meet the challenges of community health. With the passage of time the primary health care infrastructure became dysfunctional.
Since there are district societies under several vertical national health programmes and attempts have been made to integrate these societies to one agency operating at state and district level. This unified agency will plan and manage local services as per assessed needs. Fund flow mechanism through state health society to district society would facilitate direct transfer of funds from central government to the operating unit at the field level without the usual budgetary tight line/constraints. The society model which has been experimented in some States has proved to be effective and efficient mechanism for implementation of targeted programmes and it should be adopted by all states at state and district level. The district and state societies have to create conditions conducive to involving private sector as well as NGOs present in the district. It could hire consultants and draw institutional support. The district society is expected to discharge management functions rather than being a mere fund flow mechanism and should have sufficient decision making powers.

Referral services:

The deficiency in respect of community health centres is to the extent of 50%. Specialists are not available. The CHCs which have been established are non-functional because of several inadequacies and consequently the referral services are deficient. How to rectify such a situation? Attempts have been made to contract specialists and give incentive to lady doctors and other staff for 24 hours institutional deliveries but the success rate has been low. District health managers should be given autonomy (functional and administrative) to deploy the infrastructure in community health centres or else, district society could discharge this function through hiring/recruitment and deployment of staff out of accredited private practitioners and NGOs.

The job descriptions of primary health care infrastructure were formulated way back when multipurpose health worker scheme was evolved and implemented in fifth five year plan9. Since then lot many things have changed, new diseases have emerged, new policies have been formulated and there is change in focus and thrust areas. In view of these developments, job descriptions need to be revised/updated. Normative approach followed so for can be rethought and, similarly, having one male and one female health workers at subcentres or some alternative model can be thought of, as the performance of male health workers seems to be questionable.

Secondary and tertiary care:

Improved public health spending on the secondary and tertiary health care will go a long way. Secondary and tertiary care could be entrusted to private sector or NGOs with adequate regulatory mechanism. This way the public health spending on primary health care can be enhanced considerably to ensure the equity and access of services to rural areas and urban poor.

Improvement of referral services in rural areas is one of the main objectives for the World Bank assisted State Health Systems (SHS) projects. The SHS projects are already under implementation in the State of Andhra Pradesh, Karnataka, Punjab, West Bengal, Maharashtra and Orissa. Some measures that have been included in these projects for improving the management of health care include the following7:

  • Cut back in secondary and tertiary spending and channel it into interventions at primary level; (increase allocation of drugs and other material supplies and maintenance of equipment and buildings).
  • Participation by private lady doctors in government facilities (also recommended under RCH).
  • Infrastructure upgradation in selected facilities for strengthening and improving referral services.
  • Referrals between Private Primary Care and Public Secondary Care or vice versa for diagnosis and treatment.
  • Engaging NGOs to operate Govt. facilities in remote tribal areas.
  • Introducing user charges (Poor being exempted)
  • Contracting out selected services specially support services such as laundry, cleaning, dietary services, sanitation and manufacturing I/V fluids etc.
  • Special incentives for doctors in rural area, including housing, in-service education programme etc.

The measures adopted under SHS projects have started yielding positive effects. For instance contracting out non-clinical services have led to cost reduction as well as quality improvement. User charges and their retention at local level have also helped in quality improvement (European Commission 1999).

User charges:

The experience of cost recovery through user charges was not encouraging at the level of PHC and CHC as the amount collected through this mechanism was too meager (Rupees 20,00 per month on an average) and electricity and water bill expenditure alone ranged from 7,75,00 to 15,65,00 per CHC. While user charges collected at district hospital were approximately 13.5 lacs per annum; which could hardly meet electricity and water bills. Users charges have to be realistic to make any head way. Below poverty line (BPL) were exempted from payment of users' charges.

There is imperative need to improve the management of existing resources and activities rather than expanding the services or infrastructure, which may add to existing problem. Investment devoted to improve management will have considerable impact on the effectiveness of existing services. It will also enhance the sectors capacity to absorb resources effectively and will lead to the extension of services and improvement of quality.

Intersectoral linkages:

Particularly linkages with ICDS, rural development, education and literacy, water and sanitation, agriculture and nutrition and poverty alleviation programme will lead to better and cohesive delivery services and will have additive effect on the system. PRIs can spearhead such activities if supported adequately.

Reforming health systems as enumerated by World Bank Report (WBR 1993), wherein, public health sector should ensure basic public health services and essential clinical care while the rest of health system becomes self financed. This will necessitate substantial health reforms and reallocation of public health spending. WBR has proposed three pronged approaches:

  1. Fostering and enabling environment for households to improve health by
    1. Economic growth policies that benefit poor
    2. Expand investment in education particularly for females
    3. Women empowerment
  2. Improve Govt. investment in health
    1. Reduce government expenditure on tertiary care facilities, specialist training and discretionary services.
    2. Finance and ensure public health package (immunization, school based services, information and selected services for family planning and nutrition, programme to reduce tobacco and alcohol consumption, regulatory action, information and limited public investments to improve the household environment, AIDS prevention and improve management of public health services, finance and ensure delivery of essential services).
  3. Facilitate involvement of private sector
    1. Encourage private finance and provision of insurance for all discretionary clinical services.
    2. Encourage private sector delivery of clinical services (including those that are public financed)
    3. Provide information on performance and cost.

The response of Govt. of India is quite favourable. Policies and programmes have been favourable to poor; poverty alleviation programmes and universal elementary education are on the forefront but the size of the population poses a real challenge.

NHP 2002 made a bold decision to allocate 55% of budget to Primary Health care to ensure benefits reaching the poor and services accessible to majority of population. Similarly, it has introduced several other necessary measures, involvement of private sector, social insurance on experimental basis and decentralization of primary health care services and enhanced investment in public health and increased share of central government spending. States are to ensure enhanced budget for health and workout district-wise priorities and plans to allocate resources based on differential approach for weak, moderate and high performing districts. Under RCH programme, 265 districts have been identified as category C districts based on crude death rate and female literacy rate. Similarly, formation of an Empowered Action Group (EAG) under NPP 2000 to focus on states that have below average socio-demographic indices to prepare area specific programmes. These weak states include UP, Bihar, MP, Rajasthan, Orissa, Jharkhand, Uttranchal and Chattisgarh10-12.

Most people in India turn first to the private sector for curative care and even poor people are prepared to pay substantial sums for it. Private sector limitations are that it primarily focuses mainly on curative services because that is what the clients are prepared to pay for, that a poorest person cannot always afford services, that quality as in the public sector, is very variable. The private sector accounts for three quarters of all health expenditures in India. Around 87% of expenditure on health tends to be out of pocket expenditure.

Direct consumer education on quality care and price information could help patients when they seek providers. The public sector should take responsibility to guide private providers on standard regimens of diagnosis and treatment through training programmes to improve their practices. Regulatory mechanism for private sector as proposed in NHP 2002 may be difficult to implement on the ground situation - Public-private partnership, within these limitations can be mobilized for enhancing access to health care.

Trade related intellectual property rights (TRIPS), International trade in health and health technologies have led inequities of serious nature affecting the poor people to ill afford the rising costs.

Public health budget should target the poor and should spend enough on preventing and treating the diseases and conditions of the poor. A focussed and comprehensive approach is especially important to protect and improve health of the poor.

The third generation reforms are on account of development of market oriented economies and globalization and these reforms respond more to demand, ushering in an era of competition within stakeholders of private sector12. One consequence has been greatly increased, intent in explicit insurance mechanism, including privately financed insurance. Over the last two decades several health insurance schemes have been introduced. These are individual, family and group insurance schemes for health care, senior citizens' insurance and insurance for specific disease. Some of the currently operationalized schemes include Mediclaim, Group medical Insurance scheme, Group health insurance scheme, Bhavishya Arogya (Insurance for senior citizen), Senior citizens unit plan, Carrier insurance, Ashadeep and Jan Arogya Bima Policy13. NHP 2002 contemplates social insurance for poor on experimental basis.

Development of health care system through health insurance has been in operation in several countries of the world with different mix ups and results. In India, very recently Insurance Regulatory and Development Authority (IRDA) has been set up with a stipulation that authority still offers priority to those insurance companies which take up the health insurance as an exclusive operation. Licences have been given to fifteen private companies by now with the condition that these companies will have to market viable health care products. Most of these schemes of insurance subscribe to limited approach of limiting reimbursement of hospitalization charges for medical interventions. The hope and expectations are that the health insurance would lead on to development of "health care system" which provides cover for preventive and public health services besides curative services. We in India do not have any social insurance programme. The government has so for covered workers under ESI and central govt. employees under CGHS. The health benefits under these schemes are limited to small segment of work force and government employees and, moreover, these services enjoy heavy government subsidies14. Health insurance system appears to be a shrewd business with heavy investment, the coverage may be limited to urban elites only who may have abilities to pay premiums. The coverage of rural population by insurance is not foreseeable in near future. People in rural area used public health system or private sector with distinct line of choices. Government have opened up avenues for social insurance schemes for urban poor and below poverty line people on experimental basis in few selected districts to begin with (NHP-2002). Private health insurance system has its potential for group coverage and initiate competitions amongst private companies. The government is to ensure that consumers' interests are protected and premia are regulated and effective monitoring is ensured to regulate quality of services.

Since the health systems are being subjected to continuous overlapping reforms with several precautious steps and safeguards for the poor; it becomes incumbent on faculty of medical colleges in general and that of department of Community Medicine in particular to keep abreast with latest development of health care delivery systems, partnership with private sector and NGOs devolution of power to manage the sub health system to state, district and down to the level of CHC, PHC, subcentre and community. Experiences of devolution and partnership with private sectors need to be documented for better understanding and wider dissemination for their application. The department of Community Medicine has the desired potential to undertake operational research studies to measure the inputs process and outcome of varied systems. Of necessity, India needs to have mix of diversified health care systems for rural and urban areas to accomplish the health goals as envisaged to health policy 2002 and NPP 2000. The RCH model of reforms encompasses community needs assessment approach (CNAA), decentralization of planning and management of health services, training and development of IEC activities, contracting services to accredited private sector and involvement of NGOs, offer a rich ground for policy review in the areas of work force management options, delineation and decentralization, rational use of infrastructure, performance based funding option as enunciated under European Commission health and family welfare Sector Investment Programme (SIP). Results of regional experiences can provide a model/models to be implemented in different parts of country on sustainable basis. The health functionaries, teachers of Community Medicine and managers of health services need to be oriented on these reforms processes. Similarly, the undergraduate and postgraduate curriculum should incorporate health system reforms to enrich the teaching and training programmes for better understanding of health care delivery system.


  1. World Health Organization (WHO). World Health Report 2000 - Health Systems: Improving Performance. Geneva: WHO 2000.
  2. World Health Organization (WHO). Formulating Strategies for health for all by 2000.
  3. Health Survey and Development Committee (Bhore Committee Report), Vol I-III. Govt. of India; 1946.
  4. Ministry of Health and Family Welfare (MOHFW), Govt. of India (GOI). National Health Policy 1983. New Delhi: MOHFW; 1983.
  5. World Development Report 1993. Investing in Health - World Development Indicators. Oxford University Press; 1993.
  6. Ministry of Health and Family Welfare (MOHFW), Govt. of India (GOI). National Health Policy 2002. New Delhi: MOHFW; 2002.
  7. Govt. of India. Supported by The European Commission. Health and Family Welfare Sector Investment Programme. New Delhi: Govt. of India with European Commission; Oct 1998.
  8. Directorate General of Health Services, Deptt. of Family Welfare (Rural health division) MOHFW (GOI). Bulletin of Rural health statistics. New Delhi: MOHFW; June 2000.
  9. National Institute of Health and Family Welfare (NIHFW), Govt. of India. Management Training Module for Medical Officer - Primary Health Care. 1st Ed. New Delhi: NIHFW (Govt. of India); March 1987.
  10. Deptt. of Family Welfare (Ministry of Health and Family Welfare), Govt. of India. Data base of EAG states. New Delhi: MOHFW (GOI); 2001.
  11. National Commission on Population (Govt. of India). District-Wise Sectoral Economic Indicators: 11th July 2001. New Delhi: National Commission on Population (GOI), Yojna Bhawan, Sansad Marg; 2001.
  12. Alag Vibha, Kapilasharmi MC, Tiwari KN, Talwar PP. Reproductive and Child Health Needs: Prioritization of Districts of India. New Delhi: National Institute of Health and Family Welfare (Govt. of India).
  13. Planning Commission of India (Govt. of India). Thematic Issues and Secotral Programmes - Ninth Five Year Plan 1997-2002 (Volume II) New Delhi: Planning Commission (GOI).
  14. Deptt. of Planning and Evaluation on Social Science (National Institute of Health and Family Welfare). Development of Health Insurance in India: Current status and future directions. Seminar report. New Delhi: NIHFW (GOI), Munirka; December 29-30-2000.

Sunder Lal, B.M. Vashisht*
Prof. & Head, Reader*
Deptt. of SPM
Pt. BDS PGIMS, Rohtak

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