India, South Asia Studies

A quiet death: Uttar Pradesh’s rural public health system at the cross roads under Modicare


The hierarchy of public healthcare facilities in India has been the bedrock of India’s health system since independence. However, the future of the public sector in rural north India is decidedly unclear following the announcement of Ayushman Bharat (long-lived India) by the current Modi government, known informally as Modicare. While the strength of the public sector in rural areas of north India has waxed and waned over the decades since independence, its role has not been seriously questioned. However, the long-term future of the network of Community and Primary Health Centres (CHC and PHC), sitting under a District Hospital, is not certain following the Modicare announcement.

Although the public healthcare system in much of rural north India is weak, it continues to play an important role as India strives to achieve its Sustainable Development Goals. National health utilisation data from 2014 indicates that only five percent of episodes of illness are treated at CHC or PHCs in Uttar Pradesh. This is in contrast to 75 percent at private doctors (public and private hospitals constitute the remainder). The level of utilisation in Bihar is three percent and in West Bengal it is four.  Although the figure for public sector utilisation in rural areas is assumed to be larger, given reduced assess and choice compared to the urban sector, the aggregate level of utilisation is low. In the same breath, it should be noted that the public sector has been instrumental in reducing India’s Maternal Mortality ratio. Estimates from 2013 state that approximately 39 percent of deliveries occurred in the public sector in Uttar Pradesh. The public sector’s role in the successful Janani Suraksha Yojana (safety initiative for mothers) was critical to promoting institutional deliveries and thereby helping to protect the lives of women

Existing incentives for government doctors to build concurrent private practices and associated government doctor absenteeism from rural public healthcare facilities will be further intensified through Ayushman Bharat. As a consequence, the supply of healthcare workers in rural areas, particularly north India, will continued to be reduced due to insufficient incentives for public workers to exclusively practice in the public, rural sector.

The Ayushman Bharat initiative – dubbed Modicare – commits to increase government spending on health among India’s lowest two income quintiles. The policy initiative consists of two elements – i) ‘creation’ of Health and Wellness Centres, and ii) expansion of health insurance for secondary and tertiary private healthcare. The Health and Wellness Centre initiative commits public investment in upskilling existing health workers, expanding diagnostics at PHCs and upgrading infrastructure are designed to strengthen the existing public health system in rural areas. The second initiative sits on the back of Rashtriya Swasthya Bima Yojana (RSBY), which funded below-poverty-line households to INR 30,000 p.a, will enable households in the lowest two income quintiles of income to access private healthcare up to INR 500,000 p.a.

Policy discussion of the implications of Ayushman Bharat for the future roles of the public and private healthcare sectors has not been widely discussed. While on paper, the Ayushman Bharat initiative appears to support both sectors, given recent evidence, a strong argument may be held that the initiative will: i) further incentivize the private sector at the expense of the public, and ii) disproportionately assist urban households compared to rural where access and choices are constrained.


The distribution of private healthcare providers is naturally uneven, tending to cluster in select urban areas. A mapping exercise of private healthcare providers across urban and peri-urban areas of 5 districts of Uttar Pradesh revealed that very few secondary or tertiary private facilities operate outside district centres. As a result, rural communities have a limited range of available choices. Well-functioning Community and Primary Health Centres are vital to many rural communities. However, evidence is increasingly pointing to the fact that there are strong connections between the private and public healthcare sectors. It is not clear that the Modi government’s Ayushman Bharat initiative recognizes these relationships and their expected consequences for the provision of healthcare in north India.

The distinction between outpatient (public sector) and inpatient care (private sector), may not equally reflect the work and priorities of qualified (MBBS) doctors who are able to work across both. Weak effective oversight of government doctors enables some doctors to moonlight in the private sector, while taking public sector wages. This sustained practice has the effect of restricting demand for government outpatient care, particularly in rural north India.

The interaction between doctor altruism (e.g. adherence to professional codes of practice) and financial incentives to practice in the private sector encourages public doctors to, on average, provide lower levels of effort to patients. While the Ayushman Bharat initiative claims to increase the incentives of public sector rural doctors, these incentives will need to be great enough to counteract the interaction between both factors – altruism and current private sector incentives. It remains to be seen whether incentives through Ayushman Bharat will be large enough to stem-the-tied of public doctor moonlighting, particularly among doctors posted to rural CHC and PHCs.

The role of incentives guiding health provider behaviours is strong throughout north India. The practice of supplier-induced repeat consultations for outpatient treatments indicates that incentives for moonlighting are large. Evidence shows that the practice is prevalent across all healthcare providers in Uttar Pradesh. Across 1100 patient respondents in Uttar Pradesh a mean of 2.0 – 2.4 visits per episode of fever was recorded across all ‘doctor’ types. The practice of repeat visits is a common business model used by unqualified providers who often dispense small quantities of medicines at any one time. This enables patients to pay small amounts for each consultation. However, the practice is also evident among qualified public and private providers. It is unclear whether the practice among qualified doctors is by design or a result of ineffective treatment. Irrespective, there is evidence that in rural Uttar Pradesh private MBBS doctors charge a mean price of INR 1300 to treat a fever that is 7-9 days in duration. Compared to INR 100 for government MBBS providers and INR 250 from unqualified providers it is clear that the incentives for MBBS doctors to practice in the private sector are great. 

Understanding existing incentives is important also for improving the quality of private sector care. The recent evaluation of a large social franchise intervention (Matrika), targeting maternal healthcare providers in Uttar Pradesh, revealed a null effect on improving patient access to antenatal care. The authors argued that the null results could be explained, in part, by a lack of incentive for providers to fully engage.

The incentives for government doctors to moonlight in the private sector contributes to absenteeism in rural CHC and PHC settings. One of the effects of this known absenteeism is reduced patient demand for public outpatient sector services. Continued limited supply of public sector doctors in rural settings may be expected under the Modicare plan. If so, then the effectiveness of the proposed Health and Wellness Centres must be questioned. My own recent work demonstrates that addressing absenteeism would lift the market share for outpatient fever consultations in CHCs and PHCs at the expense of the unqualified private sector. Outpatient fever treatment market shares for first choice provider are expected to rise from approximately 18 percent to 50, if absenteeism was eliminated in rural Uttar Pradesh.

A range of secondary arguments also exist that suggest that without a focused, sustained, and comprehensive effort to correct weaknesses in the public health system in rural north India it will continue to atrophy. These arguments include: past underutilization of funds during the National Rural Health Mission, and corruption within the administration of health budgets. As a consequence, these additional issues further cast doubt around the effective use of Modicare resources in north India.


In the current healthcare environment of rural north India, increased incentives for doctors to practice in the private sector is likely to further undermine the supply of healthcare workers. While the above argument is based on evidence related to doctors, similar arguments may be made for nurses. Further eroding of general utilisation of rural public facilities may be enough for future governments to scale back their funding.

The merit of the Ayushman Bharat and its focus on improving patient access to secondary and tertiary healthcare, while the long standing primary care system in north India struggles, is not clear. The injection of funds into the private sector, which is predominantly located in urban settings, suggests that urban communities will disproportionately benefit by the scheme. In addition, there is a strong body of evidence that indicates that promoting the private sector will come at the cost of rural outpatient services.

The merit of the Ayushman Bharat and its focus on improving patient access to secondary and tertiary healthcare, while the long standing primary care system in north India struggles, is not clear. The injection of funds into the private sector, which is predominantly located in urban settings, suggests that urban communities will disproportionately benefit by the scheme. In addition, there is a strong body of evidence that indicates that promoting the private sector will come at the cost of rural outpatient services.

Featured image: Community Health Centre, Korai (outside Fatehpur) Uttar Pradesh, India (photo by author).

About Richard Iles

Richard Iles is an Assistant Professor in Economics at Washington State University (USA). Prior to this appointment, he was at London School of Hygiene and Tropical Medicine and Griffith University (Ph.D).

25th February, 2019

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