Academic journal article Journal of Financial Management & Analysis

Government of Uttar Pradesh State of India-Assisted 'Kamadhenu' Project Combined with Sound Financial Management Practices by Sanjay Gandhi Postgraduate Institute of Medical Sciences Provides Affordable Healthcare for 'Below Poverty Line' Patients

Academic journal article Journal of Financial Management & Analysis

Government of Uttar Pradesh State of India-Assisted 'Kamadhenu' Project Combined with Sound Financial Management Practices by Sanjay Gandhi Postgraduate Institute of Medical Sciences Provides Affordable Healthcare for 'Below Poverty Line' Patients

Article excerpt

Introduction

Economics Nobel Laureate Paul Samuelson, defines Economics as 'the study of how people and society end up choosing, with or without use of money, to employ scarce productive resources that could have alternate uses, to produce various commodities over time and distribute them for consumption, now or in the future, among various persons and groups in the society1. Health Economics can be defined as the application of theories, concepts and techniques of economics to the health sector2. Healthcare financing falls under the ambit of Health Economics. The two alternatives of healthcare financing viz., public financing and private financing have been emphasized. Public financing of health is taken care of by planned provisions and annual budgetary allocations3. India's economic growth is bringing with it an expected health transition in terms of shifting demographics, socio-economic transformations and changes in disease patterns resulting in altered healthcare behaviour and increase in lifestyle diseases. The growing demand for quality healthcare and the absence of matching delivery mechanism pose a challenge, and certainly a great opportunity4.

Public sector spending accounts for less than a quarter of the total health spending in India. However, it plays a major role in terms of planning, regulating and shaping the health care delivery system. Public spending (i.e., expenditures incurred by health departments of Central and State Governments) on health gradually accelerated from 0.22 per cent in 1 950-5 1 to 1 .05 per cent during the mid-1980s, and stagnated at around 0.9 per cent of the GDP during the later years5. According to die World Health Organization, greater than 80 per cent of total expenditure on health in India is private and most of this flows directly from households to the private-for-profit health care sector. Most studies of health care spending have found that out-of-pócket spending in India is actually progressive, or equity neutral; as a proportion of non-food expenditure. Richer Indians spend marginally more than poorer Indians on health care. However, because the poor lack the resources to pay for health care, they are far more likely to avoid going for care, or to become indebted or impoverished trying to pay for it. On average, the poorest quintile of Indians is 2.6 times more likely than the richest to forego medical treatment, when ill. Aside from cases where people believed that their illness was not serious, die main reason for not seeking care was cost. The richest quintile of the population is six. times more likely than die poorest quintile to have been hospitalized in either the public or private sector. It is further estimated that at least 24 per cent of all Indians hospitalized fall below die poverty line because they are hospitalized, and that outof-pocket spending on hospital care might have raisen by 2 per cent the proportion of the population in poverty.

Given this context, health insurance appears to be an equitable alternative to out of pocket payments6. However hardly 10 per cent of the current population in India is insured for health. The lack of formal health insurance and inadequate social safety nets cause families in most low-income countries to finance health spending through out of pocket payments7. Catastrophic spending rates from out of pocket health expenses are highest in countries like India. Three key preconditions for catastrophic payments have been identified: the availability of health services requiring payment, low capacity to pay and die lack of prepayment or health insurance. People, particularly in poor households, can be protected from these health expenditures by reducing a health system's reliance on out of pocket payments, and providing more financial risk protection8.

An earlier prospective study conducted by the same authors in 2007 at Sanjay Gandhi Postgraduate Institute of Medical Sciences (SGPGIMS) on 500 patients (154 patients receiving high cost treatment where cost incurred was more than Rs. …

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