Comparing the average cost of outpatient care of public and for-profit private providers in India

INTRODUCTION: Understanding the cost of care associated with different kinds of healthcare providers is necessary for informing the policy debates in mixed health-systems like India’s. Existing studies reporting Out of Pocket Expenditure (OOPE) per episode of outpatient care in public and private providers in India do not provide a fair comparison because they have not taken into account the government subsidies received by public facilities. Public and private health insurance in India do not cover outpatient care and for-profit providers have to meet all their costs out of the payments they take from patients. METHODS: The average direct cost per acute episode of outpatient care was compared for public providers, for-profit formal providers and informal private providers in Chhattisgarh state of India. For public facilities, government subsidies for various inputs were taken into account. Resources used were apportioned using Activity Based Costing. Land provided free to public facilities was counted at market prices. The study used two datasets: a) household survey on outpatient utilisation and OOPE b) facility survey of public providers to find the input costs borne by government per outpatient-episode. RESULTS: The average cost per episode of outpatient care was Indian Rupees (INR) 400 for public providers, INR 586 for informal private providers and INR 2643 for formal for-profit providers and they managed 39.3, 37.9 and 22.9% of episodes respectively. The average cost for government and households put together was greater for using formal for-profit providers than the public providers. The disease profile of care handled by different types of providers was similar. Volume of patients and human-resources were key cost drivers in public facilities. Close to community providers involved less cost than others. CONCLUSIONS AND RECOMMENDATIONS: The findings have implications for the desired mix of public and private providers in India’s health-system. Poor regulation of for-profit providers was an important structural cost driver. Purchasing outpatient care from private providers may not reduce average cost. Policies to strengthen public provisioning of curative primary care close to communities can help in reducing cost. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1186/s12913-021-06777-7.