Monitoring Publicly Funded Health Service Delivery through Private Agents: A Pilot Study with the Government of Rajasthan, India

Low quality care and leakages are known to plague the Indian public health system. Although the public sector is largely free (representing a large subsidy), poor households either forego care or pay high costs to go to the private sector, exposing themselves to considerable risk. In response, the Government of Rajasthan (GoR) has launched a program to cover the costs of secondary and tertiary care at empaneled private hospitals for low-income households, effectively outsourcing health care delivery to private agents. Private sector participation has expanded rapidly, comprising 70% of tertiary care 14 months into the program. However, the GoR is facing a new set of governance challenges in monitoring and appropriately incentivizing these private agents. Exploratory audits we conducted in January-February 2017 suggest partial capture of the subsidy by private hospitals, as well as over-reporting and over-provision. Our proposal for a pilot GI study is to conduct systematic audits that will enable us to estimate the rates, types, and incidence of fraud and leakage in the program. The findings will be used to design and test interventions that better align principal and agent objectives in three ways: top down monitoring of facilities, bottom up measures to improve patient information, and changes in reimbursement rates to meet private sector participation constraints. Identifying ways to effectively deliver health care through the private sector has the potential to increase the returns to scarce public health rupees.