Regulating private healthcare: what should K'taka do?

Post macro-economic reforms, the governance arrangement in the states acknowledges the role of the private sector in healthcare. In culmination to that, enactment and amendment of laws and rules to regulate and monitor the private sector have become periodical assignments for many states. The new addition to this list is the Karnataka Private Medical Establishment (KPME) Act, 2007 which is undergoing changes at present.

The likely cause of this amendment attributes to the incapability of the regulatory mechanism to control private healthcare facilities against their supposed arbitrary charges for services offered. The charges of overpriced services and polluting the ‘spirit of care’ tradition against private healthcare facilities are not new in Karnataka or the rest of India.

The proposal is to empower the government to the perennial struggle of keeping the private sector on the path of delivering services at appropriate cost and with requisite empathy and care. This call for amendment gives an opportunity to discuss the structural reasons behind the repeated failure of such regulatory mechanisms. This article points out three significant challenges to elaborate the difficulty involved in regulating private sector.

Administrative competency: Private hea­lthcare is a sector where several industries come together for economic cooperation and revenue generation. For example, insti­tutional healthcare providers (corporate hospitals, nursing home, clinic, laboratory etc), pharmaceutical companies and private medical institutes are the most networked industries in the private health sector.

The practice of ‘kickback’ by the pharmaceutical companies/diagnostic centres to the doctors spoils existing professionals. The highly discriminatory capitation fee-based seat reservation practice in private medical institutes produces doctors with questionable integrity. These types of many unethical practices lower the moral of the most important actor in the care giving system — the doctor.

Private hospitals capitalise on this immorality and use doctors as machines for money spinning. They consider healthcare as any other commodity where care, quality and nobility are decorated to lure ‘custom­ers’. The primary motive is to generate revenue and make profit like in any business.

The profit making system of the hospital’s internal administration depends heavily on doctors who again are incentivised for their ‘prescription’. This incentivisation is linked to hospital’s business as well as the doctors’ own monthly revenue. True, it may not be applicable for all the private facilities or doctors but unfortunately, the majority of them are like that in public conscience.

The government administration has been failing to recognise the economy of the private health sector and its complex practices in hospital industry. The governance and the administration need to know why market forces are unjust in many occasions while delivering healthcare services.

Technical efficiency: The effort to amend KPME no doubt has expressed its honest intention to curb irregularities in private hospitals and save people from exorbitant costs. The cause of over medication (diagnostic, medicines and even at times, the operations) is the result of excessive cost. The agenda behind this amendment is to control and ensure transparency of private healthcare providers’ conduct. It is expected that the amended KPME would prescribe to follow STG (standard treatment guideline) to address the menace of over-medication and its nexus to the high price.

However, the diagnostic procedures are often out of the ambit of STG since it is mostly used as a pre or post-treatment exercise to understand and assess the patient’s condition. Treatment package is planned as procedure specific but again the doctor can influence the number of procedures at the time of diagnosis either through test or symptoms. Further, it is needed to see who will decide the treatment packages (self-pricing or government’s capped pricing) and what categories they will be based on.

The main challenge is to enforce the Act and remain vigilant. The KPME Act’s failure to protect patients/people from the high burden of healthcare cost is primarily due to implementation challenges. The under-staffed public system, technical incompetency and the market complexity make the regulation an extremely difficult activity to carry out. For instance, how will the government deal with the doctor’s apathy to accept the quality of drug and test reports from the generic stores. The implementation of the law depends on capacity, skill and efficiency of the governance.

Political will: Politics is a space for making decisions. Health sector is also not an exception. The limitations of administrative and technical deficiency remain staggering unless there is strong political commitment. In Karnataka, the government’s infrastructure alone cannot meet the needs of healthcare. The majority of the population in Karnataka avail private healthcare services, both formal and informal.
The regulation on private sector can become a political incentive if it is well articulated in public and projected as a pro-people measure on behalf of the government. The state needs to decide whether the reform of the KPME Act will be limited to the service providers or expanded for wider participation of beneficiaries to debate and discuss in public domain.

The growth of private sector development is very fast not only in Karnataka but also in other states. It is an arduous task for the existing governance systems to build a strong and responsive architecture that takes care of private sector related malpractices. Most states are struggling with the regulation mechanism. Interestingly, all efforts are involved in reforming the mechanism only.

The composition of the mechanism is also an outcome of this system. The reform of KPME without taking into account the system’s existing complexity would make it another periodical short-lived intervention. Karnataka should not miss this opportunity to make an intervention for long-term sustainability.

(The writer is a PhD researcher at the Centre for Social Medicine and Community Health, Jawaharlal Nehru University and presently Visiting Fellow at ISEC, Bengaluru)

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