The public-private differential in health care and health-care costs in India: the case of inpatients

In India the public health-care system is unable to keep pace with the growing need, and the country has witnessed unprecedented growth in the number of private health-care institutions. However, the pattern of utilization of public and private health-care facilities and the cost of treatment in these hospitals remains unclear; thus, this is the main objective of this study.

The study explores the data of 6,726 inpatients hospitalized for treatment of diarrheal diseases, heart disease, tuberculosis, urological diseases and gynecological disorders from a nationally representative survey on health care conducted by the National Sample Survey Organization (NSSO, 2006) in its 60th round in 2004. A multilevel model, with patients (first level) nested in states (second level), was used to unearth the adjusted costs of hospitalization for people of different backgrounds. Logistic regression was used to obtain the adjusted odds of choosing public facilities compared to private facilities by ailment type, hospital characteristics and patient backgrounds.

The analysis revealed that more than 58 percent of the patients have utilized private health-care facilities in India. As expected, the mean cost of treatment in private hospitals is Rs. 5,019 after adjusting for confounders compared to Rs. 1,307 for public hospitals. The mean adjusted cost of treatment of heart diseases is Rs. 5,981, followed by Rs. 5,402, Rs. 4,616, Rs. 2,478 and Rs. 891 for urological diseases, gynecological disorders, tuberculosis and diarrheal diseases, respectively. Better off patients incurred the highest out-of-pocket costs, in the range of Rs. 4,967 to Rs. 8,457. It is evident that for the diseases considered in the study, the private sector plays an important role in providing health facilities.

The cost of hospitalization in private health facilities is considerably higher compared to that of public facilities as far as the five ailments are concerned. Among the ailments, chronic conditions were seen to consume higher costs of treatment. However, more people opted for the unregulated private facilities.