Why healthcare regulation in India will be slow to evolve?

India's healthcare system is at a stage of a complete redesign.

Health regulation in India is at least a few years away. This is despite the glare of the media, outcry of public and the concern of health administrators at incidents like in Gurgaon district of Haryana or Gorakhpur district of Uttar Pradesh. In the recent incident in Gurgaon a 7-year-old girl suffering from dengue fever had died while on treatment and a well-known private hospital had raised a huge bill. In a public hospital in Gorakhpur, over 200 children were reported to have died in August this year. These are not isolated incidents. Each time such incidents happen a renewed demand for a strong healthcare regulation is made.

Even so, health regulation in India will continue to remain weak for some time to come for at least three reasons: lack of resources (both financial and human), need for greater maturity of the private sector to be able to self-regulate and lack of regulatory knowledge for emerging, technology-driven disruptive models of care and diagnostics. Let me explain each of these at some length below.

Lack of resources: It is a well-known fact that the government, both at the Centre and states, spends too little on healthcare and that there is a need for a huge step up in this spending. Doubling the share of government health spending in GDP, for example, will not happen overnight but will be realisable over the next few years. Further, the overall shortage of doctors that currently exists in the country, will get eased only overtime, with the reformation of medical education in the country. Unless these resource constraints ease, which will only happen overtime, state governments will go slow on health regulation. For this very reason, not many states are interested in adopting the Clinical Establishment Act, which sets the basic minimum standards of health facilities and care. Currently, only 10 states and six Union Territories (UTs) have adopted the act. And even among the states/UTs that have adopted the act, not all of them are implementing it seriously.

Greater maturity of the private sector: Health regulation has several pieces, of which self-regulation by the private sector is an important one. Private players in the health sector are indeed quite diverse. In addition to healthcare providers, it consists of manufacturers of drugs and medical devices and equipment, institutes imparting medical education and training, health start-ups and so forth. Further, in each of these specific areas there is considerable heterogeneity. For example, providers of healthcare range from small next-door nursing homes to super-speciality hospitals. Even so, the diversity among players is no reason for the near absence of self-regulation by the private industry.

Left to itself, the private healthcare market in India has behaved in a sub-optimal manner where doctors routinely receive commissions and in-kind benefits from the pharma and medical device manufacturers as well as by diagnostic labs. Overpricing is not the only concern. When such considerations are at play, a thin line that separates appropriate prescription from over-prescription often gets crossed-over, compromising on the care quality. Widespread prevalence of such practices and the Gurgaon-like incidents amply demonstrate a near absence of peer pressure to discipline players. An effective self-regulation by the industry is important because when the Gurgaon-like incidents happen, it casts shadow of doubt on other reputed private players too. It is in the collective interest of private players to self-regulate, and let the regulator (read as government) step in only in case of egregious violations.

Lack of regulatory knowledge for technology-driven disruptive models: As is true of many other sectors, the digital technology is a big disruptor in the health sector too. And this is true not just in India, but globally. Application of the digital technology in the health sector is redefining the manner in which healthcare gets delivered. Traditional, brick-and-motor models of providing healthcare are getting challenged. Digital technology is increasingly being deployed to enable patients navigate healthcare system at the appropriate level. Tele-consultation, tele-medicine, tele-radiology, algorithm-determined care delivered by a trained nurse and so forth have already started and will increasingly become part of the larger health system in India. Regulations around these newer modes of services will need to be developed.

India’s healthcare system is at a stage of a complete redesign. Higher public health funding, greater availability of doctors, more responsible and mature private sector, and greater use of digital technology will all be an integral part of a redesigned health system. Further, in a redesigned health system, public provision of care will get reoriented to providing much wider range of services and will get financed based on outputs/outcomes it produces; private provision of care will get down to the path of affordable care; public-private partnership in the provision of care will be a norm.

A redesigned healthcare system in India therefore will take a few years to evolve. Accordingly, healthcare regulations, that will respond to the requirements of a redesigned healthcare system, will take a few years to evolve too.

Till such time, we will see more of measures such as the price controls of drugs and devices as well as moral suasion by the ministry of health to states in early adoption of the Clinical Establishment Act as witnessed in the wake of the Gurgaon incident.

The writer is a development economist, formerly with the Bill & Melinda Gates Foundation and the World Bank. Email:

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