KOCHI:
Centre for Public Policy Research, Kochi, undertook a study titled ‘Public and Private Healthcare Institutions: Preference and Expenditure Pattern’ in an attempt to identify the extent of and reasons for the user preference for the type of healthcare service and its resultant impact on expenditure pattern. The study was conducted among 85 households selected randomly in Panangad and Kaloor, a rural area and an urban centre, respectively.
The study infers that most of the respondents (more than 70 per cent),even those from low-incom
The study revealed access to advanced medical facilities under a single roof as the main reason for the respondents’ choice of private hospitals in both rural and urban areas. The second major reason for private healthcare preference is proximity of the healthcare facility in the rural area and approachability/friendly conduct of doctors and staff in the urban centre. While reliability is the third major reason in the urban centre,approachability/friendly conductof doctors and staff is the third reason in the rural area. In short, advanced medical facilities, reliability and approachability/friendly conduct of doctors and staffare the major reasons identified for the preference forprivate healthcare institutions. However, proximity is an equally important reason for the user preference for private hospitals in the rural area.
The objectives of the study was to examine the extent of preference for private and public healthcare services, analyse the factors influencing the choice of healthcare services and understand the extent and pattern of health expenditure across types of healthcare institutions and regions
.
Primary data were collected through interviews conducted in Panangad and Kaloor in October and November 2016. The number of respondents interviewed was 30 from Panangad and 55 from Kaloor. They were selected through random sampling using the list of households as the sampling survey. The methodology required gathering relevant data from the specified interviews and documents, and compiling databases in order to analyse the material and arrive at a complete understanding and historical reconstruction of the people’s preference, when it came to healthcare choices. These interviews were administered through structured interview schedule.
Characteristics like age, gender, occupation, educational qualification and monthly income of the family were considered to form the profiles of the respondents. The respondents were categorised into three groups in terms of occupation: public service, private employee and business/self-employed. They were further categorised into five groups based on their level of education and income.
A focused group discussion was held with experts in the field of healthcare to understand the expenditure pattern and the reasons for the increase in healthcare expenditure in respect of different regions and hospital.
More than 70 per cent of the respondents were females because the study surveyed the head of households.The average age of the respondents surveyed is 51 years in Panangad and 52 years in Kaloor.
Hence, there is little difference between the average ages of the two samples selected for the study.
There are variations in the level of education of respondents across the study areas. Only few respondents received education beyond high school in Panangad, where the respondents mostly belonged to two categories, high school educated and undergraduates. The respondents in Kaloor, which is an urban centre, are distributed across the five categories identified in the survey. Though majority of the respondents come under high school educated, Kaloor has its share of postgraduates and PhD holders.
‘Married’ category constitutes the highest percentage of respondents in the study areas. This is followed by single, widowed and divorced categories. However, widowed and divorced categories were excluded from the rural study area.
In Panangad, 53 per cent of the respondents are employed in the private sector, while 37 per cent are self-employed. In Kaloor, 47 per cent of the respondents work in the private sector, while 29 per cent serve the public sector and the remaining 24 per cent are self-employed.
The average annual income of about 93 per cent of households surveyed in Panangad is below Rs 1 lakh. The respondents in Kaloor are distributed across the listed categories with a skewed concentration towards less than Rs 1 lakh. The average annual income of the respondents is Rs 1,03,500 in Panangad and Rs 1,80,000 in Kaloor. The combined average income is Rs 1,41,500 per annum.
They are mostly employed in the private sector with an average income of Rs 1,41,500 per annum. Having formed an understanding of the character profiles of the respondents in the two study areas, the study explored the respondents’ preference for healthcare.
The study finds that majority of the respondents surveyed prefer private healthcare to public healthcare institutes.
Nearly 70 per cent of the respondents prefer private healthcare system in Panangad, whereas 73 per cent prefer private healthcare in Kaloor. The percentage of households that prefers public healthcare services is 30 per cent in Panangad and only 16 per cent in Kaloor. About 11 per cent prefer both private and public healthcare services in Kaloor.
An expert discussion on the topic revealed that the general trend in the utilisation of private and public hospitals is that majority depended on private healthcare services. A study (Poornima, 2005) about the preference pattern of the public in obstetric care revealed that more than 58 per cent of the obstetric care took place in private institutions, while 39 per cent of the deliveries occurred in public healthcare facilities. The study also explored the reasons for selecting the healthcare system. Ernakulam has recorded 11.3 per cent growth in per capita income, which is the highest in the state. The district stands first in Kerala in
terms of its contributions to the secondary and tertiary sectors. This income–occupational
structure could perhaps explain the high affinity for private healthcare in the district.
The respondents have picked more than one reason for selecting private healthcare services. The key reason as ranked by the respondents in Panangad is the facilities available in private hospitals. They argue that these entities offer facilities such as varied tests and medicines under one roof. This is followed by proximity to private healthcare institutions and friendly personnel. The approachability/friendly conduct of doctors and staff comes under ‘friendly personnel’. Many respondents also cite the availability of specialist doctors in private hospitals as persuasive. When the responses are analysed in the context of an urban centre, the reasons vary slightly.
The respondents cite facilities offered in private healthcare institutions as the major reason for their preference for private services. While 35 per cent prefer private healthcare in the rural centre, 48 per cent prefer private healthcare in the urban centre. The urban respondents counted cleanliness as part of the facilities offered at hospitals. Almost 12 per cent of them pointed out that they consider cleanliness while selecting a hospital. Friendly personnel or approachability/friendly conduct of doctors and staff is the second major reason, followed by reliability. While 44 per cent of the respondents expressed their
preference for private hospitals due to friendly personnel, 27.27 per cent said they preferred private healthcare institutions since they were reliable. Only 13 per cent and 9 per cent of the respondents preferred private healthcare institutions because of proximity and affordability respectively.
Access to advanced medical facilities under a single roof is the main reason for selecting private hospitals in both rural and urban areas. This is followed by proximity in rural Panangad, and approachability/friendly conduct of doctors and staff in urban Kaloor.
Reliability is the third major reason in Kaloor, whereas friendly conduct of doctors and staff is the third major reason in Panangad. In short, advanced facilities, reliability and approachability/friendly conduct of doctors and staff are the major reasons identified for the preference for private healthcare institutions. However, proximity is an equally important reason for the preference for private hospitals in rural area.
As against the reasons for the selection of private healthcare, the key reason for preference for public healthcare is the proximity aspect, which received 56 per cent votes in Panangad. At 11 per cent each, affordability, reliability and availability of facilities under one roof constitute the other reasons for preference for private hospitals.
The major reason cited for selecting public hospitals is approachability/friendly conduct of doctors and staff, including experienced doctors. Nearly 27.28 per cent of the respondents expressed this view. About 12.73 per cent of the respondents, who preferred public healthcare institutions because they were clean, fall into this category. This is followed by the availability of advanced facilities under a single roof at 23.62 per cent. Proximity of public hospitals is another determining factor, which is supported by 18.18 per cent of the respondents. Nearly 14.5 per cent of the respondents stated that they preferred public healthcare institutions, as they were reliable. A mere 11 per cent of the respondents cited affordability as a factor determining their choice of public hospitals.
To sum up, the major reason for preference for public healthcare institutions is proximity in rural area and approachability/friendly conduct of doctors and staff in urban area. Most of the other reasons for preferring public hospitals to private in rural area received almost equal number of votes. Access to advanced facilities is the second key reason in urban area, followed by proximity and reliability. In short, proximity, advanced facilities under a single roof and approachability/friendly conduct of doctors and staff An expert discussion revealed the increasing role of the private sector in healthcare. The experts also indicated the increasing dependence on specialist doctors as another major trend in the sector.
The study failed to identify any significant relationship between healthcare preference and factors such as education, occupation, income etc in rural and urban centres.
The null hypothesis of no relationship between healthcare preference and the qualitative factors is accepted here, as shown by the probability values in both the cases. It means that healthcare preference does not vary significantly, according to the level of education, occupation and income in urban and rural areas. An evaluation of the types of illnesses among the respondents is necessary to take the study forward.
In Panangad, acute illnesses took up a major part of healthcare spending with 55 per cent votes. Trauma, injuries and poisoning came next with 34 per cent votes .It is interesting to note that none of the respondents utilised public healthcare institutes for these illness types. They relied on public healthcare institutes for routine preventive healthcare only.
In Kaloor, 28 per cent of the respondents stated that their highest healthcare spending was on pregnancy and delivery. Trauma, injury and poisoning received 24 per cent votes, while 21 per cent chose acute illnesses. The urban respondents used public healthcare institutes mainly for routine preventive healthcare. A few reports on healthcare claim that surgical and labour cases reported in government hospitals dipped in the recent years, due to the growth of private hospitals and users’ preference for private hospitals. Another study (HDRC, 2009) on the declining number of labour cases reported in government hospitals highlights a similar trend.
National Family Health Survey 4 (2015–16) reports that Kerala has relatively high caesarean section rate at 35.8 per cent as against 30.1 per cent in 2005–06 (The caesarean rate was 17.2 per cent in 2015–16 as against 8.5 per cent in 2005–06 at the national level.). The expert panel discussion revealed that Ernakulam has the highest incidence of caesarean cases, reported mostly in private hospitals, in Kerala. Majority of the experts on the Focus Group discussion panel considered profit as a major factor that led to the increase of caesarean rates in private hospitals. They cited the quality of services provided by private hospitals as a major reason for people depending on them, thereby leading to high incidence of caesarean
rates.
The respondents from Panangad spent an average of Rs 12,336 on private healthcare in a period of three months, while their average expenditure on public healthcare in the same period is Rs 76. The average expenditure of a household on private healthcare is Rs 4112 per month, whereas the combined average expenditure on private and public healthcare is Rs 2886 per month.
In Kaloor, the average expenditure is Rs 20,314.09 on private healthcare and Rs 335.63 on public healthcare in a period of three months. The average expenditure on private healthcare is Rs 6771 per month and the combined average expenditure is Rs 4928 per month. The overall average medical expenditure of a household in Kaloor and Panangad is estimated at Rs 4207 per month. The overall average expenditure on private healthcare is Rs 5833 per month, whereas it is Rs 244 on public healthcare. Hence, the medical expenditure on private healthcare in the urban centre is almost 65 per cent higher than that of the rural centre.
Medical expenditure of households on private healthcare services is almost 24 times higher than their expenditure on public healthcare services. The healthcare expenditure in the urban area is almost 71 per cent higher than that in the rural area.
The point to be noted is that the difference in expenditure incurred is not for treating the same type of diseases. It simply shows the expenditure borne by the households under different healthcare systems. The patients in the study depended on private hospitals for treating serious illnesses and public hospitals for routine preventive healthcare. Naturally, the money spent on healthcare institutes will be higher than that of public healthcare institutes.
This finding can be compared with the findings from two studies – Zachariah and Irudaya Rajan (2007) and Varma (2009). They calculated the average cost of medical services per month incurred by a household in Ernakulam as Rs 3880, as against the state average of Rs 2992. Hence, the healthcare cost in the district is almost 30 per cent higher than the state average. The present finding that analysed latest data indicates that the medical cost incurred has increased to Rs 4112.
Nearly 80 per cent of the respondents in Panangad and 86 per cent in Kaloor met their healthcare expenses with out-of-pocket expenses. About 3 per cent of the respondents in each study area had their medical expenses covered by insurance. The combined average of out-of-pocket expenses on healthcare is 84 per cent. The combined average of governmental support on healthcare expenditure is 9 per cent, followed by insurance at 3 per cent, charity at 1 per cent and other sources at 3 per cent. The study by Varma (2009) on asthma patients in Kochi Corporation estimated the annual average direct expenditure to be Rs 12,600 per year for an individual. Of this, the cost of medicines constituted 49 per cent of the expense.
While doctors’ fee is only 7 per cent, other non-medical costs constitute the rest of the expenditure. The direct cost is expected to rise sharply over the years.
The study reveals that health insurance coverage is negligible at just 3 per cent of the total medical expenditure. Yet, the penetration rate of health insurance is slightly better.
About 23 per cent of the respondents in Panangad and 47 per cent of them in Kaloor have healthcare insurance coverage.
Among the respondents, 86 per cent in Panangad and 65 per cent in Kaloor opted for insurance coverage for the family. In both the areas, hardly 20 per cent of them had individual health insurance policies. Vidya V Menon (2004), in her study on healthcare financing in the Kadavanthra and Thopumpady wards of Ernakulam district, found that people belonging to the lower economic sections of the society did not have any health insurance policy. Nearly 68.33 per cent had relied on hospital care, of which 43.9 per cent were
inpatients. Among them, only 11.11 per cent had their health insured. Nearly 40 per cent of the population did not have an insurance policy, due to financial difficulty, and about 23 per cent were unaware of health insurance policies.
The key reason for the lack of any type of healthcare insurance among the respondents of Panangad is their ignorance of such schemes. Nearly 36 per cent expressed this view. This is followed by expensive schemes and complicated procedure, each gaining 23 per cent votes.
The key reason for the lack of any type of healthcare insurance among the respondents in Kaloor is that most of them found insurance policies expensive. This is followed by complicated procedures (24 per cent) and lack of awareness (21 per cent). In short, the main reasons for the low penetration of healthcare insurance in these areas are expensive insurance schemes, lack of awareness and complicated procedures. Many NGOs run health insurance outreach programmes for the poor but their level of penetration is paltry.
On the other hand, while half the respondents with insurance coverage stated that they were satisfied with their schemes, the other half expressed their dissatisfaction over the schemes.
In Kaloor, 46 per cent of the respondents with insurance coverage were satisfied with the schemes as against 12 per cent, who were dissatisfied. Panangad had 62 per cent of its respondents with insurance coverage stating that they were satisfied and 24 per cent of them expressing their dissatisfaction over the schemes. The rest did not have an opinion on the performance of their insurance policy.
To sum up, respondents generally depended on public healthcare services for routine preventive healthcare and private healthcare institutions for acute illnesses, trauma, injury, poisoning etc. The average expenditure incurred for treatment in private healthcare institutes is higher than that of public healthcare institutes because of the high dependence on the former for treating serious illnesses. However, the average expenditure borne by the respondents on private healthcare in the urban area is 65 per cent higher than that of the rural area. This is 24 times higher when compared to the expenses in public healthcare institutions. This proves that respondents largely depended on private hospitals for treatment. The main source of health expenditure is out-of-pocket expenses. Insurance does not play a major role in meeting medical expenditure. Though 23 per cent of the respondents were insured, only 3 per cent of the total healthcare expenditure was met by way of insurance claims. The main obstacles for the high penetration of health insurance are expensive policies, lack of awareness about the policies and complicated procedures.
People’s need for advanced healthcare services is fulfilled by private or public (government) sectors. The study concludes that majority of the population avail the services of private healthcare institutes. Even the respondents from low-income groups relied on private healthcare services. The study did not find any significant relationship between the age group, income of the household, the mode of expenditure, education etc of the respondents and their preference for private healthcare services. It can be concluded that majority of the households surveyed prefer private hospitals to public because of the facilities offered in private institutes. Most of them were sceptical about the facilities provided in public hospitals. The moderate medical expenditure in public hospitals could not attract the respondents to the public healthcare system. The main reason to choose public hospitals happens to be proximity. This highlights the fact that the policy makers should take necessary steps to improve the facilities and offer quality services in public hospitals.
The role of the private sector in providing healthcare services is growing rapidly. A major trend of increasing dependence on specialist doctors can be discerned. Experts in the field of health and medicine explain that despite high costs, this service is called for, usually through private medical institutions. Such services could have been effectively managed through Primary and Block Health Centres, the roles of which need to be redefined in the present-day context and environment. The scope of improving the system through efficient intervention of the Local Self Government institutions is tremendous. This can improve the efficiency and effectiveness and revive the long lost glory of the State-sponsored healthcare system.
Undergoing medical treatment in the private sector is a costly affair. It is not always comfortable for a family in the low-income group to pay the steep fees at private hospitals. Insurance can be a pragmatic way to reduce the financial burden of a household, in case of a medical emergency. However, almost 80 per cent of the households did not have health insurance coverage. The insurance penetration and density is much lower in the study areas, even when most of the respondents were not privileged enough to handle private healthcare expenses comfortably. The present investigation shows that there exists a huge protection gap – the difference between losses covered by insurance and losses not covered by insurance. The main challenge leading to under-insurance is the practice of price fixing in insurance, which is not based on specific risks of the policyholder. Moreover, the adherent problems of health insurance such as adverse selection and moral hazards are noticed in this scheme also. Removing these constraints will create room for the health insurance market to expand and thus cover more areas. It will be risk minimisation for the households to insure themselves to prevent financial crisis at the time of need. No doubt, health insurance is a viable solution to minimise financial burden while availing medical services.
A wide network of health infrastructure, general health consciousness and clean health habits of the people, combined with virtually total literacy among not only men but also women of Kerala have helped to achieve high success in the healthcare outcome of the state. The current rate of mortality and life expectancy in the state is also impressive and is more akin to countries with higher per capita income. The Government of Kerala aims to move towards universal health coverage with an aim to provide accessible, equitable and affordable healthcare for all. The healthcare expenses in Kerala are disproportionately high compared to other Indian states. The implication of the study is that the government can build a viable
market for the people by improving the facilities in the public hospitals and facilitating private players to improve and provide their services at reasonable costs. In this way, a symbiotic relationship can been created, wherein both the systems can complement each other.
