Medicine and surgery date back to the beginning of civilization. because diseases preceded humans on earth. Early medical treatment was

History of Hospitals Medicine and surgery date back to the beginning of civilization because diseases preceded humans on earth. Early medical treatment was always identified with religious services and ceremonies. Priests were also physicians or medicine men, ministering to spirits, mind and body, Priests/doctors were part of the ruling class with great political influences and the temple/hospital was also a meeting place. Medicine as an organized entity first appeared 4000 years ago in the ancient region of Southwest Asia known as Mesopotamia. Between the Tigris and Euphrates rivers, which have their origin in Asia Minor and merge to flow into the Persian Gulf. 1 The first recorded doctor s prescription came from Sumer in ancient Babylon under the rule of the dynasty of Hammurabi (1728-1686BC). Hummurabi s code of law provides the first record of the regulation of doctors practice, as well as the regulation of their fees. The Mesopotamian civilization made political, educational, and medical contributions to the later development of the Egyptian, Hebrew, Persian and even Indian cultures. For Hundreds of years, the Greeks enjoyed the benefits of contact and cross fertilization of ideas with numerous other ancient peoples, especially the Egyptians. Although patients were treated by magic rituals and cures were related to miracles and divine intervention, the Greek recognized the natural causes of diseases and rational methods of healing were important. Hippocrates is usually considered the personification of the rational nonreligious approach to medicine, and in 480 BC, he started to use auscultation, 32

perform surgical operations and provide historians with detailed records of his patients and descriptions of diseases ranging from tuberculosis to ulcers. The temples of Saturn, Hygeia and Aesculapius, the Greek god of medicine all served as both medical schools for practitioners and resting places for patients under observation or treatment. 2 The Roman talent for organizations did not extent as readily to institutional care of the sick and injured. Although infirmaries for the sick were established, it was only among the military legions that a system for hospitalization was developed. After the injured were cared for in field tents, the soldiers were moved to valetudinarians, a form of hospital erected in all garrisons along the frontiers. Apparently those stone and wooden structures were carefully planned and were stocked with instruments, supplies and medications. The decree of Emperor Constantine in 335 AD closed the Aesculapia and stimulated the building of Christian hospitals. Around 370AD St Basil of Caesarea established a religious foundation in Cappadocia that includes a hospital, an isolation unit for those suffering from leprosy and buildings to house the poor, the elderly and the sick. Following this example similar hospitals were later built in the eastern part of the Roman Empire. Another notable foundation was that of St Benedict at Monte Cassino, founded early in the 6 th century, where the care of the sick was placed above and before every other Christian duty. It was from this beginning that one of the first medical schools in Europe ultimately grew at Salerno and was of high repute by the 11 th Century. This example led to the establishment of similar monastic infirmaries in the western part of the empire. 3 33

The development of efficient hospitals was an outstanding contribution of the Islamic civilization. The Roman military hospitals and the few Christian hospitals were no match for the number, organization and excellence of the Arabic hospitals. The Arab s medical inspiration came largely from the Persian Hospital in Djoundisabour (sixth century Turkey), at which may of them studied. Returning to their homes, they founded institutions that were remarkable for the times. During the time of Mohammed, a real system of hospitals was developed. He was the first to order the establishment of small mobile military Bimaristan (hospital).asylums for the insane were founded ten centuries before they first appeared in Europe. In addition, Islamic physicians were responsible for the establishment of Pharmacy and chemistry as sciences. Some of the best known of the great hospitals in the middle Ages were in Baghdad, Damascus and Cairo. In particular, the hospitals and medical schools of Damascus had elegant rooms, an extensive library and a great reputation for its cuisine. Separate wards were set aside for different diseases, such as fever, eye conditions, diarrhea, wounds and gynecological disorders. Convalescing patients were separated from sicker patients and provisions were made for ambulatory patients. Clinical reports of cases were collected and used for teaching. 4 Modern World: The first hospitals of the New World were built in colonies of Spain, France and England. Those built under the flags of Catholic Spain and France retained the ideals of the Jesuits, the Sisters of Charity and the Augustine Sisters and their hundreds of years of hospital knowledge. Hospitals built in the English colonies, however, reacted against English traditions. 34

The first hospital in the New World was constructed as part of a system for the occupation of overseas territories. Bartholomew de las Casas, one of the priests who accompanied Columbus on his first voyage and a well known historian referred to the founding of the village of La Isabella in Hispaniola(today, Santo Domingo),in January of 1494: Columbus made haste in constructing a house to keep supplies and the ammunition for the soldiers, a church and a hospital. 5 No further information survives to indicate whether the hospital was actually built. The first hospital in North America was built in Mexico City in 1524 by Cortes: the structure still stands. The French established a hospital in Canada in 1639 at Quebec City, the Hotel Dieu du Precieux Sang, which is still in operation although not at its original location. In 1644 Jeanne Mance,a French noblewoman, built a hospital of ax-hewn logs on the island of Montreal; this was the beginning of the Hotel Dieu de St Joseph, out of which grew the order of the Sisters of St Joseph, now considered to be the oldest nursing group organized in North America. The first hospital in the territory of the present day United States is said to have been a hospital for soldiers on Manhattan Islands, established in 1663. The early hospitals were primarily almshouses, one of the first of which was established by William Penn in Philadelphia in 1713. The first incorporated hospital in America was the Pennsylvania Hospital, in Philadelphia, which obtained the charter from the crown in 1751. According to an inscription on its wall, the institution intended to foster patient s self respect and remove any stigma from a hospital visit by charging fees. Benjamin Franklin helped to design the hospital, which was 35

built to provide a place for Philadelphia physicians to hospitalize their private patients. Franklin served as president from 1755 to 1757. 6 In another break from tradition the New York hospital was founded in 1771 by private citizens who formed the Society of the New York hospital and obtained a grant to build it. The hospital was characterized by a spirit of learning and research. As with other hospitals founded before the era of large fortunes, the New York hospital was built on the contribution of small merchants and farmers. Another innovation was the first hospital conducted only by women. The New York Infirmary for Women and Children was opened in 1853 by the first woman to earn a medical degree in the United States, Elizabeth Blackwell and her sister. Again, this is another example of a private owned hospital that was founded to accommodate physician s needs. The European and Latin American tradition of charity hospitals, based on love of God and neighbors and the conviction that the government owed a responsibility to helpless citizens was never a part of the US hospital traditions. As a result, a more competitive system of hospitals developed, with fewer subsidies and less involvement of religious organizations in total healthcare. Massive government involvement in healthcare began in 1926 with the return of veterans from World War I. Indian Hospitals Historical records show that efficient hospitals were constructed in India by 600 BC. During the splendid reign of King Asoka (273-232 BC), 36

Indian hospitals started to look like modern hospitals. They followed principles of sanitation and cesarean sections were performed with close attention to technique in order to save both mother and child. Physicians were appointed one for every ten villages-to serve the health care needs of the populations and regional hospitals for the infirm and destitute were built by Buddha. Ownership models The hospitals are predominantly classified into for-profit and non-profit. Or recent classifications like for-profit, private nonprofit and public. Unlike, most other sectors, for- profit organizations constituted a minority of firms supplying hospital care in the United States and in all developed countries. In the US, such hospitals constitute only 15% of all nonfederal short term general hospitals in 1996(American Hospital Association 1998). By contrast, 59 percent of hospitals were private nonprofit and the rest were operated by government, primarily local governments or special government authorities. Another stylized fact is that growth of for profit hospitals market share has been moderate.although for profit chains have grown both numerically and in influence since they first appeared in the late 1960 s,the share of small independent for profit hospitals has declined. 7 A recent study in India indicates that healthcare is delivered by a multitude of public and private providers. The government infrastructure is large in both rural and urban India. In rural areas, the government has a vast base of primary healthcare centers, community health centers and sub centers. The public infrastructure in urban India consists of tertiary medical colleges, district and taluk hospitals and urban health posts. The private 37

healthcare delivery sector consists of a large number of private practitioners, for profit hospitals and nursing homes and charitable institution. The average size of such hospitals is less than 22 beds-much lower than developed countries. The purpose of for profit, investor owned hospitals were primarily to increase the value of invested capital. Prior research finds that for profit hospitals tend to locate in more profitable areas and are smaller than nonprofit hospitals. For profit hospitals obtain fewer donations and are not tax subsidized and so rely primarily on patient fees. Church hospitals are owned and governed by religious organizations; they were originally organized to provide services for church members, to restrict procedures that are contrary to religious beliefs and to permit patients to follow the tenets of the religion for last rites and other ceremonies. These hospitals rely on both patient fees and donations. Government hospitals are owned and governed by governments, State or Central. These hospitals rely on subsidies and grants for part of their operations and perform more charity than other hospitals. Because these hospitals are tax supported, government agencies are likely to monitor operations and have the authority to increase or decrease funding through budgeting processes. Other nonprofit hospitals are privately owned and usually community hospitals or physician group hospitals. Physician influence tends to be stronger in these hospitals. These hospitals rely also on patient fees and public donation. 8 Non profit firms may earn profits. In fact, many, including hospitals, do. Rather nonprofit firms are precluded from distributing profits to persons who 38

exercise control over the firm. Although such firms can pay reasonable compensation to suppliers of inputs, resulting earnings cannot be distributed. Such earnings must be retained and used by the firm. Because of the non distribution constraint, nonprofit firms have no owners, that is, persons who control and share residual earnings. Ownership form and hospital behavior: The social welfare implications of for-profit versus nonprofit ownership, and private versus public ownership, have been of interest to economists for decades. In stylized microeconomic models of organizations, theory predicts that the for profit organizational form is efficient,because of the high powered incentives that arise from the presence of a well defined residual claimant with legally enforceable property rights. Researchers exploring the effects of for profit, private nonprofit and public hospital ownership on productivity have reported a wide range of empirical results. On one hand, some researchers report that the for-profit form achieves greater productive efficiency, on the other hand, many studies find that for-profit hospitals have higher costs or markups than do nonprofits. And a substantial literature argues that nonprofit hospitals have costs and /or quality similar to that of for profits, concluding that hospitals are socially indistinguishable on the basis of ownership status. In India too, the above conclusion stands true. There are hospitals both in the private and public who extend service quality par excellence. Due to the unregulated system, there are also the extreme cases of poor quality healthcare provided by hospitals, many operating with unskilled medical staff and in substandard facilities. 39

Rather than the ownership model, it would be prudent to mention that the leadership and the resultant vision, mission and goals of the organization, is what determines the outcome and its quality in an organization. The developing world is still struggling to overcome crippling health problems that have been largely contained in the developed world: from universal childhood immunization to oral rehydration therapy, from eradication of TB to spread of HIV, from maternal mortality rate to malnutrition. Many developing countries still have a long way to go before they reach the Millennium Development Goals (MDGs). 9 Many sector reports and health sector assessments done in the developing world have pointed out that the health systems in the developing world are not tuned to the needs of the majority of the public. The common view is that the systems are inequitable and inefficient. This happens even in developing countries with high donor support, leading to further speculation that infusion of more funds might not be an answer to the problem. The systemic changes that were undertaken to reforms the health systems in these developing countries in the nineties came to be known as health sector reforms. Defining Health Sector Reforms Despite its popularity since early nineties, the term "health sector reform" is very hard to define because of the various ways in which it is conceived and implemented in various regions of the world. In this report, the definition used by the International Health Systems Group at Harvard School of Public Health is taken as the operational definition. They define health 40

sector reforms as "sustained, purposeful and fundamental change" (Berman, 1995) in health systems. To elaborate further: 10 Sustained: in the sense the effort is not temporary with just short term impacts as goals, but long term and long lasting. Purposeful: in the sense the effort emerges out of rational, evidencebased and planned process. Fundamental: in the sense that the effort addresses significant, systemic and strategic dimensions of health systems. Others have defined the reforms in other ways, but the above definition has gained acceptance in the global health community in recent years and is accepted as a working definition in this report. Health Sector Reforms in India Health Sector Reforms in India started with the economic reforms of the early 1990s and were a response to the earlier models of health care that were conceived after the independence, yet which had failed to achieve equity in access and service provision. Until mid-eighties almost all health care was provided by the state. The fiscal crisis that marked the seventies and the eighties - the oil crisis, the devolution of dollar, the world recession, and the collapse of the Soviet Union, to name a few - led to liberalization of the Indian economy in 1991. The rise of the neo-liberal paradigm was also felt in the health sector and led to its reformation under the shrinking role of the state in public welfare. 11 The main aim of the health sector reforms in India was to close the gap between service provision and the utilization of the services, in other words, to 41

restructure the health system so that it would become equitable and improve the living standards of the people. This was reflected in the shift in policies promoted by the central government in its Eighth, Ninth, Tenth and Eleventh Five year plans. Among major changes, in the Eighth Five Year Plan (1992-97) a new concept of user fee was introduced: people below the poverty line got free medical care while people above the poverty line had to pay a nominal fee for the services they availed. This applied to all the diagnostic and curative services. This gave push to the private sector involvement and led to rapid growth in the nineties of the private sector both in urban and rural areas. 12 The Ninth Five Year Plan (1997-2002) focused on the involvement of voluntary, private organizations and self-help groups in the provision of health care, and encouraged inter-sectoral collaboration to provide health care to the public. In an attempt to decentralize, the plan also envisaged planning and monitoring role in health programs at the local level by the Panchayati Raj institutions, hoping it would lead to improved utilization of local and community resources. The role of the public sector, it was hoped, would turn managerial and the focus would shift to governance issues. Despite a decade of interventions under the neo-liberal paradigm, the expected goals were not reached. This led the Tenth Five Year Plan (2002-07) to focus on reforms that addressed the issues of equity and need, especially with focus on the poor. It kept the focus of previous five years plans that provided subsidized care to the poor and gave various payment options to those above the poverty line. Given the focus on secondary and tertiary 42

care, and increased reach of the private sector, it was suggested that a universal coverage for the poor to meet the cost of hospitalization should be a priority and health insurance as a financing option for individuals, institutions and industries was pursued alongside provision of social insurance for families living in poverty. 13 The Eleventh Five Year Plan (2007-2012) focuses on adopting a system-centric approach rather than a disease-centric approach to health. This is planned to be achieved by strengthening health system through upgrading infrastructure and by engaging in public private partnerships. It also supports converging of all programs, not allowing vertical programming below district level. Also, the plan tries to prevent indebtedness due to expenditure on health by creating mechanisms such as health insurance for the unorganized sector. The thrust is also on decentralizing governance by increasing the role of Panchayati Raj institutions and non-governmental organizations. There is a stated focus on human resources in the health department, supporting an effort to build its capacity. There is further a focus on mental health, oral health and care for the neglected populations such as elderly and disabled. The launch of the National Rural Health Mission (NRHM) in April, 2005 was a crucial step taken by the National Government towards supporting health sector reforms both at the national and the state level, bringing into focus the need for equity in health care. 43

National Rural Health Mission The National Rural Health Mission (NRHM) "seeks to provide universal access to equitable, affordable and quality health care which is accountable and responsive to the needs of the people, reduction of child and maternal deaths as well as population stabilization, gender and demographic balance". While the Mission sets the agenda for the entire country, it lays special focus on 18 states that have weak public health indicators and/or health infrastructure (Ministry of Health and Family Welfare, 2007). The states are: Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Jammu & Kashmir, Manipur, Mizoram, Meghalaya, Madhya Pradesh, Nagaland, Orissa, Rajasthan, Sikkim, Tripura, Uttaranchal and Uttar Pradesh. Note that fact that Andhra Pradesh is not one of the special focus states that got additional funding to implement special programs under NRHM, although the state gets allocated proportion of funds from the NRHM that can be used to implement the following goals. Goals of NRHM Reduction in Infant Mortality Rate (IMR) and Maternal Mortality Ratio (MMR). Universal access to public health services such as women's health, child health, water, sanitation and hygiene, immunization and nutrition. Prevention and control of communicable and non-communicable diseases, including locally endemic diseases. Access to integrated comprehensive primary health care. Population stabilization, gender and demographic balance. 44

Revitalize local health traditions and mainstream Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy (AYUSH) Promotion of healthy life styles (Ministry of Health and Family Welfare, 2005) Reform areas under NRHM According to Ministry of Health and Family Welfare (2007), the changes that the NRHM envisages to see can be grouped under three areas of reforms: 14 1. Structural and Functional Reforms: The focus is on inter-sectoral convergence, integration of existing services, strengthening of infrastructure, mainstreaming management initiatives, increased access to health services at household level, etc. 2. Finance related reforms: Focus is on social protection mechanism, insurance coverage, better management of human resources, supply chain management, drug procurement policies, etc. 3. Governance related reforms: Focus on involvement of Panchayati Raj institutions, decentralized management, monitoring and planning mechanisms, etc. Importantly, the focus is also on extended participation of private sector in public health activities and service provision, contracting out of services, provision of reproductive and child health services, as well as diagnostic services. It emphasizes the need for standardization, dissemination of standard treatment protocols, accreditation of hospitals, agreements on costs of health services and improved regulation of the private sector. 45

Health Infrastructure Health Infrastructure is an important indicator to understand the healthcare delivery provisions and mechanisms in a country. It also signifies the investments and priority accorded to creating the infrastructure in public and private sectors. The Health Infrastructure indicators are subdivided into two categories viz. educational infrastructure and service infrastructure. Educational infrastructure provides details of medical colleges, students admitted to M.B.B.S. course, post graduate degree/diploma in medical and dental colleges, admissions to BDS & MDS courses, AYUSH institutes, nursing courses and para-medical courses. Service infrastructure in health include details of allopathic hospitals, hospital beds, Indian System of Medicine & Homeopathy hospitals, sub centers, PHC, CHC, blood banks, mental hospitals and cancer hospitals. 15 a) Medical education infrastructures in the country have shown rapid growth during the last 19 years. The country has 300 medical colleges, 290 Colleges for BDS courses and 140 colleges conduct MDS courses with total admission of 34,595, 23520 and 2,644 respectively during 2009-10. b) There are 1,820 Institution for General Nurse Midwives with admission capacity of 65109 and 561 colleges for Pharmacy (dioploma) with an intake capacity of 33635 as on 31st March,2009. c) There are 11,613 hospitals having 5,40,328 beds in the country 6,281 hospitals are in rural area with 143069 beds and 3,115 hospital are in Urban area with 3,69,351 beds. Rural and Urban bifurcation is not available in the States of Bihar and Jharkhand. 46

d) Medical care facilities under AYUSH by management status i.e. dispensaries & hospitals are 22,312 & 3,378 respectively as on 1.4.2009 e) There are 1,46,036 Sub Centers, 23,458 Primary Health Centers and 4,276 Community Health Centers in India as on March 2008 (Latest). f) India has 961 Government licensed Blood banks and 1386 Private blood banks till 2009. Total No. of Blood Banks in the Country till November 2009 is 2347. g) CGHS has health facilities in 24 cities having 246 Allopathy Dispensaries and Total 435 Dispensaries in the Country with 934825 registered cards/ families. The table 2.1 gives a clear picture of growth of medical colleges and intake capacity of medical colleges in India since 1991. Table-2.1 Number of Medical Colleges & Students Admitted to the 1st Year M.B.B.S. in India during 1991-92 to 2009-10 S. No. Year No. of Medical Admission Colleges Male Female Total 1 1991-92 146 7468 4731 12199 2 1995-96 165 4416 2623 7039 3 1999-00 147 NA NA 10104 4 2000-01 189 NA NA 18168 5 2004-05 229 NA NA 24690 6 2005-06 242 NA NA 26449 7 2006-07 262 14449 10609 28928 8 2007-08 266 18208 12082 30290 9 2008-09 289 18486 14329 32815 10 2009-10 300 18224 15860 34595 Source: Medical Council of India. 47

Table 2.1 reveals that during 19 years of study the number of medical colleges was increased more than two times. In 1991-1992 the total number of medical colleges in the country is 146. By 2009-10 the number increased to 300 medical colleges. It is pertinent to note that in 1999-2000 the number of medical colleges showing downward trend as the medical council of India withdrawn its recognition to 18 medical colleges. In the following year (2001-02) as many as 42 new colleges were opened. On the other hand in 2007-08 only 4 new medical colleges were opened. In MBBS admissions the male outnumbered the female. In 1991-92 the percentage of female admissions is 38.78 and in 1995-96 the female percentage slightly reduced to 37.26. From 2006-07 onwards the percentage of women admitted in medical colleges gradually increased from 36.67 per cent to 45.84 per cent in 2009-10. Dental Colleges The table 2.2 gives a clear picture growth of dental colleges and intake capacity of these institutions in India since 1991. Table-2.2 Number of Dental Colleges and Admissions to BDS and MDS courses in India During 1995-96 to 2009-10 S. No. Year No. of Dental Colleges BDS No. of Admissions MDS No. of Admissions* 1 1995-96 94 2562 263 2 1999-00 121 7100 801 3 2000-01 135 8340 859 4 2001-02 149 9550 922 5 2002-03 165 10970 992 6 2003-04 181 12960 1106 7 2004-05 185 13400 1173 8 2005-06 205 15440 1298 9 2006-07 238 18120 1764 10 2007-08 267 20910 2069 11 2008-09 282 22650 2365 12 2009-10 290 23520 2644 Source: Dental Council of India. *MDS in 140 Dental Colleges. 48

It is evident from table 2.2 that the number of dental colleges in the country is gradually increasing. In 1995-1996 the number of dental colleges in the country is 94. By 2009-10 the number of dental colleges in the country increased to 290. It means that the number of dental colleges increased more than three times during 16 years of study. During the same period the number of admissions in BDS courses increased 9 times. On the other hand the number admissions in MDS course increased more than 10 times. In 2006-07 highest number of (33) new dental colleges were opened. While in 2004-05 only 4 new colleges were opened. State/UT wise Number of Sub Centre, PHCs and CHCs The State wise and Union Territory wise position of health Sub Centre, PHCs and CHCs were given in table 2.3. 49

Table-2.3 State/UT wise Number of Sub Centre, PHCs and CHCs functioning in India as on March 2008 S. No. State/UT Sub-Centres PHCs CHCs India 146036 23458 4276 1 Andhra Pradesh 12522 1570 167 2 Arunachal Pradesh 592 116 44 3 Assam 4592 844 103 4 Bihar 8858 1641 70 5 Chhattisgarh 4741 1721 136 6 Goa 172 19 5 7 Gujarat 7274 1073 273 8 Haryana 2433 420 86 9 Himachal Pradesh 2071 449 73 10 Jammu & Kashmir 1907 375 85 11 Jharkhand 3958 330 194 12 Karnataka 8143 2195 323 13 Kerala 5094 909 107 14 Madhya Pradesh 8834 1149 270 15 Maharashtra 10579 1816 407 16 Manipur 420 72 16 17 Meghalaya 401 103 26 18 Mizoram 366 757 9 19 Nagaland 397 86 21 20 Odesha 6688 1279 231 21 Punjab 2858 484 126 22 Rajasthan 10742 1503 349 23 Sikkim 147 24 4 24 Tamil Nadu 8706 1215 206 25 Tripura 579 76 11 26 Uttarakhand 1765 329 55 27 Uttar Pradesh 20521 3690 515 28 West Bengal 10356 924 349 29 A& N Islands 114 19 4 30 Chandigarh 14 0 2 31 Chandigarh 38 6 1 32 Daman & Diu 22 3 1 33 Delhi 41 8 0 34 Lakshadweep 14 4 3 35 Puducherry 77 39 4 Source: Bulletin on Rural Health Statistics in India 2008 infrastructure division MOHW/GOI 50

The data in table 2.3 shows that there are 146036 health sub centres, 23458 Primary Health Centres and 4276 Community Health Centres In the country. The most populous state of India i.e. Uttar Pradesh tops the list in case of three types of public health institutions. In case of health sub-centres the second and third places were occupied by Andhra Pradesh and Rajasthan with 12522, and 10742 centres respectively. With regard to Primary Health Centres the second and third places were occupied by Maharashtra (1816) and Chhattisgarh (1721) respectively. In case of Community Health Centres the second and third places were occupied by Maharashtra (407) and Rajasthan (349) and West Bengal (349) respectively. Bed Strength of Public Hospitals The State wise and Union Territory wise number of government hospitals and beds in rural and urban areas (Including CHCs) in India is presented in table 2.4. As per table 2.4 the total number of public hospitals in rural areas is 6281 with a bed capacity of 143,069. The total number of public hospitals in urban areas is 3115 with a bed capacity of 369,351. It is important to note even though the number of public hospitals in rural areas is nearly double to urban areas, but the bed strength of public hospitals is more than double to rural hospital bed strength. With regard to States, Odesha (1629) is quite ahead with regard to total rural hospitals. It is followed by Uttar Pradesh (666) and Karnataka (468) in second and third places respectively. Uttarakhand state top the list with regard to urban hospitals and followed by Karnataka (451) and Maharashtra (389) in second and third places respectively. The average population served by a government hospital at all India level is 97,958. 51

Table-2.4 State/UT wise Number of Govt. Hospitals & Beds in Rural & Urban Areas (Including CHCs) In India (Provisional) S. No. State/UT Rural Hospitals (Govt.) No Beds Urban Hospitals (Govt.) No Total Hospitals (Govt.) Average Population Served Per Govt. Hospital* Average Population Served Per Govt.Hospital Bed India 6281 143069 3115 369351 11613 540328 97958 2105 1 Andhra Pradesh 167 6220 192 28113 359 34333 224825 2351 2 Arunachal Pradesh 146 1356 15 862 161 2218 5920 533 3 Assam 108 3240 45 4382 153 7622 19486 3911 4 Bihar NR NR NR NR 1717 22494 54533 4163 5 Chhattisgarh 119 3270 99 6158 218 9428 105202 2433 6 Goa 9 552 11 2436 20 2988 82750 554 7 Gujarat 282 9619 91 19339 373 28958 153979 1983 8 Haryana 61 1212 93 6667 154 7879 159721 3122 9 Himachal Pradesh 95 2646 47 5315 142 7961 4692 838 10 Jammu & Kashmir 61 1820 31 2125 92 3945 120641 2813 11 Jharkhand NR NR NR NR 500 5414 59490 5494 12 Karnataka 468 8010 451 55731 919 63741 63309 913 13 Kerala 281 13756 105 17529 386 31285 88246 1089 14 Madhya Pradesh 275 8179 102 11739 377 19918 179228 3392 15 Maharashtra 376 11280 389 38299 765 49579 143207 2210 16 Manipur 24 669 4 1574 28 2243 83429 1067 17 Meghalaya 28 840 10 1742 38 2582 67368 991 18 Mizoram 10 320 10 904 20 1224 47900 783 19 Nagaland 23 705 25 1445 48 2150 45771 1022 20 Odesha 1629 9055 80 5708 1709 14763 23420 2711 21 Punjab 72 2180 159 8440 231 10620 114247 2485 22 Rajasthan 347 11850 128 20217 475 32167 133491 1977 23 Sikkim 29 700 1 300 30 1000 19933 598 24 Tamil Nadu 533 25078 48 22120 581 47198 112959 1391 25 Tripura 16 500 15 1762 31 2262 113935 1561 26 Uttarakhand 397 11910 528 20550 925 32460 198143 5646 27 Uttar Pradesh 666 3746 29 4219 695 7965 13685 1194 28 West Bengal 14 2399 280 52360 294 55759 298772 1604 29 A& N Islands 7 385 1 450 8 835 58125 557 30 Chandigarh 1 50 5 2562 6 2612 193500 444 31 Chandigarh 1 30 1 231 2 261 159000 1218 32 Daman & Diu 0 0 3 190 3 190 82667 1305 33 Delhi 21 972 109 22886 130 23858 130423 711 34 Lakshadweep 9 200 0 0 9 200 8111 365 35 Puducherry 6 320 8 2996 14 3316 90500 382 Source: Annual Report, 2009-2010, Ministry of Health and Family Welfare, Government of India. *As per Projected populations of Ministry of Health and Family Welfare, Government of India. Beds No Beds 52

Financing of Health Sector As we know, the health system in India comprises of two broad categories namely public and private sector. The public sector system comprises of the health system created, run and maintained by the Central and State Governments and covers national disease control programmes. Public health programmes are concerned mainly with preventive, promotive and rehabilitative aspects giving importance to primary health care. In the private sector, health care expenditure is made by households, voluntary organisations and non-governmental organisations. Although private household expenditure dominates the overall health expenditure of our nature, because of poverty, the responsibility of the public sector in this direction has increased. Government concentrates on basic primary health care sector and areas where externalities are more whereas private sector covers secondary and tertiary health services. 16 Public health investment and expenditure in India has increased substantially since independence but this has not been enough to secure a minimum decent standard of health care service in the country. The very social sector has been negleeted by government since the First Five Year Plan. Table 2.5 analyses various social services and expenditure made on them during different plan periods. It is evident from table 2.5 that during the First Five Year Plan, 1960 crore rupees were spent, out of which, 427 crore rupees were spent on social sector. This was 24.1% of the total expenditure. Though expenditure on social services increased quantum-wise, share of it to the total has shown a 53

declining trend. During the Second Plan, Rs. 855 crore were spent on social sector which is 18.3% of the total. In the 3rd Plan, this percentage again declined to 17.4% of the total; like this in almost all the plans we can see the allocation made towards social sector is very meager compared to the importance given to that sector. It deals with expenditure made on education, health, family planning, housing and urban development, etc. Education has been given more importance when compared to others, since education improves the awareness of the mass and can lead to the successful implementation of the programmes of the government. In India, the health sector's actual allocation was Rs. 98 crore for the First Plan 5.6% of total, 226 crore 4.84% for the Second and Third Five Year Plans, Rs.140 crore for the Annual Plans, Rs. 336 crore for the Fourth plan, Rs. 761 crore for Fifth Plan, Rs. 2214 crore for the 6th Plan Rs. 3393 crore for the Seventh and Rs.7576 crore for the 8 th Plan. There are been a declining trend. 54

Table-2.5 Five Year Plan wise Pattern of Central Allocation (Total for the country and Union MOHFW) (Rs. In Crores) S. No. Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Total Plan investement outlay (all heads of Devp.) of country) First Plan (1951-56) (Acutuals) 1960.0 Second Plan (1956-61) (Acutuals) 4672.0 Third Plan (1961-66) (Acutuals) 8576.5 Annual Plans (1966-69) (Acutuals) 6625.4 Fourth Plan (1969-74) (Acutuals) 15778.8 Fifth Plan (1974-79) (Acutuals) 39426.2 Annual Plan (1979-80) (Acutuals) 12176.5 Sixth Plan (1980-85) (Acutuals) 109291.7 Seventh Plan (1985-90) (Acutuals) 218729.6 Annual Plan (1990-91) (Acutuals) 61518.1 Annual Plan (1991-92) (Acutuals) 65855.8 Eight Plan (1992-97) (Outlays) 434100.0 Ninth Plan (1997-02) (Outlays) 859200.0 Tenth Plan (2002-07) (Outlays) 1484131.3 Eleventh Plan Health 65.2 (3.3) 140.8 (3.0) 225.9 (2.6) 140.2 (2.1) 335.5 (2.1) 760.8 (1.9) 223.1 (1.8) 2025.2 (1.8) 3688.6 (1.7) 960.9 (1.6) 1042.2 (1.6) 7494.2 (1.7) 1918.4 (2.31) 31020.3 (2.09) Health Sector 316147.0 s (6.31) Family Welfare 0.1 (0.1) 5.0 (0.1) 24.9 (0.3) 70.4 (1.2) 278.0 (1.8) 491.8 (1.2) 118.5 (1.0) 1387.0 (1.3) 3120.8 (1.4) 784.9 (1.3) 856.6 (1.3) 6500.0 (1.5) 15120.2 (1.76) 27125.0 (1.83) Ayush 108 (0.02) 266.35 (0.03) 775.0 (0.05) 3988.0 (0.18) (2007-12) (Outlays) 2156571.0 Source: Planning Commissioner of India Notes: 1. Dept. ISM&H (now AYUSH) was created created during 8th plan period * Figures in brackets indicate percentage to total plan investment outlay s Dept. of Health and Family Welfare merged from 2005 and Rs.136,147.00 crores includes in Rs.4496.08 crores for newly created health research department created during 2008-09. Total 65.3 (3.4) 145.8 (3.1) 250.8 (2.9) 210.6 (3.2) 613.5 (3.9) 1252.6 (3.1) 341.6 (2.8) 3412.2 (3.1) 6809.4 (3.1) 1745.8 (2.9) 1898.8 (2.9) 14102.2 (3.2) 35204.95 (4.09) 58920.3 (3.97) 140135.0 (6.05) 55

Out of Pocket Expenditure in Public Hospitals of India National Health Accounts data of 2001-02 indicate that out of pocket health expenditure contributes a significant 72% of the total health expenditure in India (GOI, 2006). Out of pocket expenditure refers to direct and indirect costs incurred by the individual and /or household in securing or maintaining their health and includes health service user fees, contribution to health insurance, costs on drugs, medicines and diagnostics and additional cost incurred for securing and maintaining health, such as that on nutritional supplements and transport costs. Currently the primary source of such data comes from household surveys conducted by the NSSO. While such data is useful in understanding trends and making overall estimates of out of pocket expenditure, the format in which data is collected is not amenable for a more in depth analysis of out of pocket expenditure on specific items such as that on drugs and consumables at specific levels of care. Given the 1 year recall period for expenditure on hospitalization, data is subject to recall bias and misclassification. Further such surveys do not provide much information on the volume of drugs and investigations purchased privately by patients seeking care at public hospitals. Given that cost of the same drug can vary significantly from manufacturer to manufacturer and the often unethical marketing and prescription practices, it is highly likely that patients may be actually spending more than what is required. Data for such expenditure is also not available. Such estimates will help generate evidence for appropriate allocation of resources for provision of drugs and investigations in public hospitals and framing of policies regarding prescription of drugs. 17 56

Public Expenditure on Health across States in India The economics of health and health care of a country is a product of several outcome indicators like, life expectancy, morbidity, mortality rates (infant mortality rate, under-five mortality rate, and maternal mortality ratio), nutrition, access to safe drinking water and sanitation etc. Health infrastructure, an output indicator, often plays a paramount role of delivering these outcomes. According to these measures, the health of India has achieved significant improvement over the past 60 years. Life expectancy has gone up from 56 years in the period of 1981-85 to 64 years during 2002-06. The infant mortality rate (IMR) has fallen from 115 in 1961 to 50 in the year 2009. Maternal Mortality Ratio (MMR) (per hundred thousand) has also improved from 437 in 1990 to 254 in the period of 2004-06. India s improvements in terms of these outcome indicators of health have been made possible due to the health infrastructure. Total number of government hospitals has increased from 7008 in 2005 to 12760 in 2009. During the same period, total number of beds has also increased substantially from 469672 to 576793. In spite of these achievements, India seems to be lagging behind of Millennium Development Goals (MDGs) target values in terms of health attainments. According to the National Health Profile 2010 of Central Bureau of Health Intelligence, morbidity and associated mortality in terms of communicable and non-communicable diseases remains very high though the absolute number of cases and deaths seem to be declining. MMR also remains far above the ground. In such a situation, the role of public expenditure is imperative for India. 57

Public expenditure incurred on health is more akin to investment and the outcome, i.e. improved health, yields returns to the individual and society at a large in the future through higher productivity from a healthier workforce as well as through improvement on the human development front. The United Progressive Alliance (UPA-I) government, that assumed office in 2004, in their common minimum programme (CMP), had an articulated target to raise public expenditure on health to 2-3 per cent of GDP by the end of the Eleventh Five Year Plan. But as the numbers bear-out, this proportion is far below than the desired levels in the CMP. Expenditure by states on medical and public health experienced a prolonged period of decline in proportion out of total public expenditure. This however, appears to be increasing since 2003-04. To some extent, this was also incentivised by the conditional grants of the Twelfth Finance Commission (TwFC) and Thirteenth Finance Commission (ThFC), as well as by the central government initiatives at expanding the National Rural Health Mission (NRHM). This centrally sponsored scheme uses labour in the form of doctors and nurses and other factors such as hospitals and buildings, to produce health services. States are mandated to not only share the cost of implementing the National Rural Health Mission (NRHM), but also to maintain this scheme upon completion. The committed liabilities arising out of this scheme should be included in their Non-Plan Revenue Expenditure (NPRE) to ensure that the gains of this scheme are not lost. In the extent exercise, this paper put emphasis on some selected problems which cause the low public spending on health in India. However, 58

Savedoff (2007) has tried to review the sensibility of this target and he has concluded that such quantified goals relating to expenditure are not backed by much concrete research analysis. While not linked to the deeper analysis behind setting this target, this paper put stress in finding the factors relating to low public spending on health. The paper is organized in four sections. Section 2 of the paper provides some quantitative and qualitative information of the present scenario in achieving the MDGs targeted goalposts on health related indicators. Section 3 describes selected issues relating to the public spending on health. The concluding remarks are presented is the last section. 18 As it is apparent from table 2.6 India is very slow in achieving IMR and MMR of the desired level. In 2009 on an average 50 infants died for every 1000 live births down from 80 in 1991. At this rate we are likely to reach IMR of 46 per 1000 live births by 2015, falling short of the target by 19 points wherein only two states namely, Arunachal Pradesh and Manipur are likely to reach the goal while the majority of the states show considerable gaps from their expected levels of 2015. Towards the goal of maternal health India s current status is much deteriorated than IMR. In the period of 2004-06 254 women (per hundred thousand) died due to giving birth to a child while the number was 327 in the year 1990. However, it has experienced a declining but in a very small pace as it is falling short of the goal by 26 points. Only 3 states (Bihar, Kerala and West Bengal) tend to reach their respective targets while rest of the states show wide variations. For Haryana the likely achievement by the year 2015 shows 272 while the target for the state is 27. More or less similar story can be seen for the states of Assam, 59

Karnataka, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh. Table 2.6 Millennium Development Goals: Selected Indicators on Health across States in India State IMR (per 1000 live MMR (per hundred 2009 MDG Target 2015 Likely Ach'nt 2015 2004-06 MDG Target 2015 Likely Ach'nt 2015 Andhra Pradesh 49 23 48 154 74 110 Arunachal 32 25 25 Assam 61 25 54 480 136 412 Bihar 52 25 51 312 184 148 Goa 11 7 17 Gujarat 48 24 45 160 77 100 Haryana 51 23 49 186 27 272 Himachal 45 23 39 Karnataka 41 23 38 213 79 167 Kerala 12 5 11 95 70 46 Madhya 67 37 59 335 151 227 Maharashtra 31 19 27 130 59 90 Manipur 16 10 7 Meghalaya 59 18 56 Orissa 65 41 56 303 121 245 Punjab 38 20 37 192 83 111 Rajasthan 59 28 58 388 181 261 Sikkim 34 17 27 Tamil Nadu 28 20 26 111 49 84 Tripura 31 15 28 Uttar Pradesh 63 33 59 440 214 286 West Bengal 33 21 28 141 167 49 India 50 27 46 254 109 135 Source: 1) Report of the Sample Registration System of respective years, Office of the Registrar General of India, Ministry of Home Affairs, Government of India. 2) Millennium Development Goals: States of India Report 2010 (Special Edition), Central Statistics Office, Ministry of Statistics and Programme Implementation, Government of India. However, there are only 2 states among all the states, which tend to attain their IMR targets well ahead of 2015 and 3 states to attain MMR 60

goals. Remaining states are falling significantly short in achieving those targets. In such a situation, public expenditure on health plays a crucial role for improving health related outcomes. But, sadly, in spite of massive economic growth, the centre and states combined public spending on health remains less than 1 per cent of gross domestic product (GDP) while the CMP target is 2-3 per cent of GDP. Thus, the next section explores the issues that are affecting adversely on public expenditure on health across states in India. Factors Affecting Public Spending on Health In nominal terms, during the period 2000-2010, combined (both, centre and states) public spending on health has risen at a annual compound rate of 12.06 per cent from Rs. 13969.35 crore in 1999-2000 to 43891.93 crore in 2009-10. A rising trend has also been observed in terms of per capita public expenditure on health (combined). It has gradually increased from Rs. 136.24 in 1999-2000 to Rs. 373.00 in 2009-10. However, India is among the lowest in the world in terms of the level of government expenditure on health. As a proportion of GDP, public spending on health for centre has marginally increased from 91.08 per cent in 1999-2000 to 0.09 per cent in 2004-05. After 2004-05, it has gone up steadily to 0.13 per cent in 2009-10. In contrast, for all states combined, it has gradually declined from 0.61 per cent in 1999-2000 to 0.57 per cent in 2009-10. As a proportion of gross domestic product, public expenditure on medical and public health for centre and all states combined has remained almost stagnant from 0.696 percent in 61

1999-2000 to 0.704 percent in 2009-10 wherein only 2 states (Mizoram and Sikkim) have reached the desired level of 2-3 per cent (Table 2.7). However, for all states combined, figure 2 reveals that the health expenditure has increased at a trend growth rate of 11.20 per cent per annum in 1990 to 18.53 per cent per annum in 2007-08 while per capita health spending has increased in a comparatively much lower rate than health expenditure. It has increased from 9.28 per cent to 16.89 per cent in the same period of time and this picture is reflected in the column 5 and 6 of table 2 for each of the states. This occurs only because of the higher rate of growth of population than the growth of public expenditure on health. Thus, while the states are far behind in achieving the desired target of CMP, the lower growth of per capita health expenditure than the growth of health expenditure is gaining ground of a serious concern as well. 62

State Table 2.7 Public Spending on Health across States: An Overview Committed Expenditure / Total Expenditure Per cent in 2008-09 Health Expenditure / Total Expenditure Health Expenditu re / GSDP Trend Growth Rate (Per cent), 1987-88 to 2008-09 Health Expenditure Per Capita Health Expenditure Andhra Pradesh 39.58 3.21 0.58 12.26 10.85 Bihar 63.67 3.17 0.77 9.27 6.97 Chhattisgarh 33.99 3.28 0.59 20.63 18.79 Gujarat 32.71 2.83 0.38 11.05 9.06 Haryana 40.94 2.73 0.38 12.59 10.15 Jharkhand 45.98 3.67 0.77 26.43 24.47 Karnataka 40.21 3.62 0.6 11.78 10.18 Kerala 64.69 4.87 0.69 12.02 11.03 Madhya Pradesh 47.31 3.35 0.65 9.53 7.38 Maharashtra 52.4 3.27 0.4 11.09 9.11 Orissa 50.28 3.29 0.57 11.19 9.73 Rajasthan 52.45 4.21 0.76 11.73 9.32 Tamil Nadu 48.25 3.28 0.5 10.77 9.67 Uttar Pradesh 35.66 4.29 0.94 11.77 9.47 West Bengal 54.39 3.45 0.56 10.85 9.28 Assam 57.39 4.98 0.99 10.53 8.8 Himachal Pradesh 55.87 4.32 1.3 12.79 11.2 Mizoram 42.54 5.83 3.47 12.46 10.28 Nagaland 48.88 3.6 1.83 10.22 6.71 Sikkim 26.6 2.81 2.79 12.5 10.11 Uttarkhand 47.5 4.34 0.84 28.14 26.11 All States 39.93 3.6 0.59 11.7 9.78 Source: 1) Finance Accounts, various issues. 2) State Finances: A Study of Budgets of 2010-11, Reserve Bank of India. 3) Registrar General of India, Census 2001, Population Projections for India and States 2001-2026 (Revised December 2006). 4) Central Statistical Estimates of GSDP, www.mospi.nic.in Notes: The data on committed expenditure for Bihar stands for the year 2004-05 and for Gujarat, Jharkhand, Assam, Mizoram and Sikkim stand for 2006-07 due to the lack of the availability of data on the expenditure relating to salaries and wages. 63

Chart-2.1 Long Term Trend in Public Expenditure on Medical and Public Health: All States Combined Source: 1) Finance Accounts, various issues. 2) Registrar General of India, Census 2001, Population Projections for India and States 2001-2026 (Revised December 2006). Notes: TGR plots represents trend growth rate. The point against the year 1990-91 refers to period between 1990-91 and 2008-09, against the year 1991-92 to the period between 1991-1992and 2008-09, and so on. In other words, the points on the plots represent a trend growth rate of a gradually shrinking period starting with 1990-91, advancing one year at a time, but fixed by the terminal year of 2008-09. Per capita income and per capita health expenditure for all states combined are Rs. 48968 and Rs. 303.04 respectively. Among all the states, 7 states namely, Bihar, Uttar Pradesh, Madhya Pradesh, Jharkhand, Rajasthan, Orissa and Chhattisgarh stand below than all states per capita health expenditure position, and rest of the states are above than it. Bihar holds the lowest position in both per capita terms. Only 3 states namely, Mizoram, Sikkim and Arunachal Pradesh have reached 4 digit of per capita health spending. These 3 states with high per capita health spending have 64