Decentred regulation

The COVID-19 pandemic shone a light on the deficiencies of how healthcare is managed and regulated in many countries. Problems with access and accountability fuelled longer-standing claims that parts of the sector often appear unregulated. Here a group of researchers point to evidence from Maharashtra to show how healthcare regulation is partial, disjointed and decentred – administered by a range of public and private institutions and organisations which do not necessarily regulate in the interests of public good.

Regulatory failures

There is often a tendency to equate ‘regulation’ of healthcare with ‘legislation’, resulting in a narrow focus on how states and statutory (medical) councils do or do not regulate healthcare. But does this prevent a full understanding of the incentives and practices in healthcare systems?

As part of our project to analyse recent transformations in Maharashtra’s private healthcare sector, we were interested in examining how the sector is regulated, and by whom. Private healthcare in Maharashtra has seen rapid expansion and transformation. Chains of corporate hospitals from Maharashtra and other parts of India have been set up and have grown in a sector characterised by new facilities and advanced technologies. At the same time the costs of healthcare have spiralled out of control and there are well-documented issues with unethical practices such as unnecessary testing and treatment, and cash-for-referral arrangements.

We conducted interviews and ran witness seminars with a range of respondents with detailed knowledge of the sector. What became quickly apparent was that it is not enough to think about what the state is doing to regulate healthcare, as a host of other organisations have taken it upon themselves to try to address issues such as unethical practice and cost inflation.

In our World Development article we describe a regulatory landscape for private healthcare in Maharashtra in which the state is both conspicuously present and absent: on the one hand making detailed procedural demands of private providers that are enforced sporadically when it is politically (and financially) expedient to do so, but on the other doing little to assess the appropriateness of care being provided. That has instead been left to healthcare’s professional bodies to self-regulate, yet they too have fallen short of expectations (to the extent that the federal government announced the dissolution of the national Medical Council of India in 2010), and the state-level Maharashtra Medical Council (MMC) has been similarly ineffectual and mired in politicised disputes over territorial boundaries. It is a scenario which has stimulated the decentring of responsibility for setting the rules and norms that govern practices in the sector.

New loci of regulation

We point to four regulatory systems which exist beyond the kinds of state regulation and professional self-regulation that are often assumed to govern healthcare. These are:

  • voluntary commercial accreditation initiatives such as FEQH and NABH that aim to ensure minimum standards in the sector
  • public and private insurance companies which have interests in curtailing price inflation and curbing unnecessary testing and treatment
  • digital marketplace platforms such as Practo that operate as gatekeepers and facilitate consumerist interactions between healthcare providers and healthcare seekers, and
  • user- and activist-based actions, through means such as consumer rights litigation, that influence norms and prompt government and other agencies to take action in this area.

In each of these regulatory systems, people and organisations are attempting to influence, demand and enforce particular norms and standards regarding how healthcare should be provided and administered. But that does not necessarily mean they work in the interests of the public good. For example private companies are typically driven by the needs of owners and managers to contain costs, enhance revenue and grow market share; they are not driven by concerns with ensuring fair and equitable access to healthcare for all.

Decentred regulation

The broader definition of regulation we have used above is drawn from public policy and regulation studies. Our findings show that it would be too simplistic to describe private healthcare in Maharashtra as ‘unregulated’, even if the state and the professional councils are not fulfilling their responsibilities. Rather, regulation of the sector has become ‘decentred’ to a range of actors who are pushing and pulling healthcare providers in different directions. This brings its own problems. Complaints we heard during the research about aggressive negotiating tactics used by insurance companies and by third party administrators acting on their behalf are a reminder that these new loci of regulation themselves require oversight and governance. In a decentered regime who regulates the regulators and holds them to account in the public interest?

This blogpost was written by Benjamin Hunter, Susan Fairley Murray, Shweta Marathe and Indira Chakravarthi. It is based on an open-access article published in World Development. This work was part of a research project: Practices, regulation and accountability in the evolving private healthcare sector: lessons from Maharashtra State, India. The project was funded by the UK Joint Health Systems Research Initiative. For more information on the project click here.