Home >Budget >Economic Survey >Economic Survey stresses on need for healthcare sector regulator

New Delhi: The Economic Survey for 2020-21 on Friday stressed on the need for a regulator to supervise the healthcare sector, given the failures stemming from information asymmetry.

The survey, authored by chief economic advisor Krishnamurthy Subramanian and his team and tabled by finance minister Nirmala Sitharaman in Parliament, said unregulated private enterprise can create significant negative effects on the healthcare system.

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The survey said parallels can be drawn from banking and financial intermediation, another industry that suffers from significant market failures due to asymmetric information, to design policies for mitigating these issues, it said.

Healthcare policymakers should consider creating agencies to assess the quality of healthcare providers – both doctors and hospitals, the survey pointed out. “Credit bureaus assess the quality of individual borrowers by assigning them credit scores, thereby mitigating the information asymmetry faced by a bank or financial institution in lending to the individual borrower. In the healthcare context, insurers as well as healthcare providers suffer from similar information asymmetry about the patient," the survey said.

The report said the Quality and Outcomes Framework, introduced by the National Health Service (NHS) in the United Kingdom in 2004, as well as other quality assessment practices introduced by NHS could be taken as good examples.

The National Digital Health Mission can be utilised within the framework of data privacy. "By utilising such data with the aid of artificial intelligence and machine learning algorithms, the predictive aspects can be used to mitigate information asymmetry with respect to the patients," the report said.

While the share of public institutions has increased both in hospital and outpatient cares, the private sector dominates in total healthcare provision in India. Around 74% of outpatient care and 65% of hospitalisation care is provided through the private sector in urban India.

The presence of a regulator is especially pertinent as regulation has grown in importance as a key lever for governments to affect the quantity, quality, safety and distribution of services in health systems.

The survey said the problem of asymmetric information in healthcare is also reflected in the substantial variation in costs for treating the same disease between public and private sector.

“The quality of treatment in the private sector does not seem to be markedly better in the private sector when compared to the public sector. Yet, the costs of treatment are not only uniformly higher in the private sector, the differences are humongous for in-patient treatments of severe illnesses such as cancers (3.7x), cardio (6.8x), injuries (5.9x), gastro (6.2x), and respiratory (5.2x)," the survey said.

It also said a large proportion of deaths in India manifests due to poor quality of healthcare than due to insufficient access; this proportion is significantly higher than neighbouring countries and other countries in the world.

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