Urban residents in India face important health problems due to unhygienic conditions, excessive crowding and lack of proper sanitation. The private sector has started occupying the centre stage of the health system and households are burdened with increasing levels of health expenditure. This paper aims to study out-of-pocket expenditure (OOPE) and the extent of catastrophic payments for health care among households in a highly urbanised state, Tamil Nadu. The study used data on morbidity and health care for the year 2004 collected by the National Sample Survey Organization, India. Care was sought for 84 per cent of illness episodes in urban areas, and the majority used private sector providers (67 per cent for inpatients and 78 per cent for outpatients). Mean OOPE for inpatients and outpatients was higher for households with higher income. The average cost burden per visit was higher among those who sought care from private providers for inpatient services (29 per cent of household consumption expenditure) and outpatient services (20% of household consumption expenditure) compared with the burden associated with public health service use (3-4 per cent of consumption expenditure). About 60 per cent of households which used private health services faced catastrophic payments at the 10 per cent threshold level. To avoid catastrophic expenditure, greater use of the public sector which is providing services at an affordable cost is needed. Improving access to public health services, better gate-keeping systems, stronger controls on drug prices and increasing the quality of services are required to reduce the incidence of catastrophic expenditure both on inpatients and outpatients. Greater use of risk pooling mechanisms would encourage the poor to seek health care and also to protect households from all socio-economic groups from catastrophic expenditure. Copyright © 2009 John Wiley & Sons, Ltd.

The Government of Tamil Nadu state in India has been implementing various health sector reforms (for example, expansion and upgradation of public health facilities, provision of round the clock services in selected primary health centres and continuous availability of quality medicines decentralisation) in a bid to improve efficiency in health care. However, few attempts have been made to make an estimate of the efficiency of hospitals in Tamil Nadu as well as in India till date. The objectives of this study are: (i) to estimate the relative technical efficiency (TE) and scale efficiency (SE) of a sample of public hospitals in Tamil Nadu; and (ii) to demonstrate policy implications for health sector policy makers. The Data Envelopment Analysis (DEA) approach, a well-known operations research (OR) technique for evaluating the relative efficiency of a set of similar decision making units (DMU), was used to estimate the efficiency of these hospitals. To do so we made use of the data collected from the Directorate of Medical and Rural Health Services (DMRHS) for 29 districts of TamilNadu in 2004-05. The output data included are outpatient visits, number of inpatients, number of surgeries undertaken, number of deliveries and number of emergency cases. The numbers of staff members and bed strength were used as input. Of the 29 hospitals, it was found that 52 per cent were technically efficient as they had relative efficiency score 1.00 and lie on the efficiency frontier, while the remaining 48 per cent were technically inefficient and can use some of the efficient hospitals as their peers to improve their efficiency. Further, the average scale efficiency among the inefficient hospitals was 81 per cent, which implies that the scale inefficient hospitals could reduce their size by 19 per cent without reducing their current output levels.

Data envelopment analysis (DEA) was used to investigate the efficiency of a set of district hospitals in the state of Tamil Nadu. These facilities naturally provide primary and secondary care, but are also expected to function as health centres, addressing mostly preventive medicine, hygiene and other public health issues. This study aimed to obtain insight on their technical efficiency in light of their particular role. We have considered all the 29 district hospitals in the state. Variables chosen to characterise production were numbers of assistant surgeons, civil surgeons, staff nurses and beds as inputs; and in-patient and outpatient visits, surgeries both major and minor, and deliveries performed as outputs. The DEA model was input-oriented, allowed for variable returns to scale, and units were ranked according to a benchmarking approach. Results indicate that eight of the 29 hospitals (27 per cent) are efficient, the DEA score being 1.0, while the remaining 21 hospitals (72 per cent) are relatively inefficient, needing to benchmark their performance with that of their peer group.