Developing financial autonomy in public hospitals in India: Rajasthan's model

Abstract

In India's state-administered health care system, many government decision-makers are exploring the introduction or expansion of hospital autonomy as a means of improving the efficiency and financial sustainability of the overall public health care system. One initiative that has recently received a considerable amount of attention is the introduction of Medicare Relief Societies (MRS) in the state of Rajasthan. The societies are autonomous organizations that are formed with the objective of complementing and supplementing existing service provision in public hospitals. The state has provided incentives for the formation of MRS by relaxing state-imposed restrictions on the collection and use of revenue by hospitals, thereby encouraging the use of alternative financing mechanisms such as user-fee schemes and in-hospital pharmacies. The purpose of this article is to describe and critically evaluate Rajasthan's experience with MRS. Emphasis is placed on whether and how the introduction of these societies have influenced two key aspects of hospital autonomy — operations and management, and financing. Data for the study come from a survey of representatives from each of the 69 hospitals in Rajasthan that contain 100 or more beds. Information was collected on whether a society was operating within the hospital, the management of the society, the range of activities carried out, and the revenue and expenditures of each activity. The results are used to identify key strengths and weakness of the MRS initiative in Rajasthan, and how future hospital autonomy efforts can be strengthened.