Designing Health Systems Based on Managed Competition
By Anognya P, Intern, Dvara Research
In light of the recent proliferation of Public-Private Partnership (PPP) models in social welfare delivery in India, the following piece briefly explains the origins, evolution, and progress of said models. Specifically, it contextualizes the PPP phenomenon within two theoretical frameworks – New Public Management (NPM) and Collaborative Governance (CG). Further, using the example of Common Services Centres (CSCs), the piece underscores the design and delivery challenges faced by PPP outlets while shouldering welfare roles traditionally performed by State functionaries.
New Public Management, which originated in the 1990s, was inspired by increasingly complex societies and the difficulties faced by the classic welfare state in coping with this complexity.[1,2,3] It was primarily focused on providing public services through the inclusion of private and non-profit actors in service delivery. In other words, NPM was an attempt to integrate government mechanisms with newer forms of collaboration[4] in service delivery and project implementation. A key example of this integration is the PPP model.
Centred around collaborative governance[5] ‘between and among’[6] public and private actors, PPPs began with a keen focus on infrastructure – largely because infrastructure projects are burdened with political and environmental concerns in conjunction with hefty financial commitments.[7] The Eleventh (2007-2012) and Twelfth Five Year Plans (2012-2017) clearly expounded the rationale for PPPs in developing infrastructure[8]. Grounded on macro-economic developments in the late 2000s – the slowdown in delivery and investment of infrastructure projects – both plans emphasized the need for increased investments in infrastructure through public investments and private execution.[9]
In recent times, however, India has extended the PPP model beyond infrastructure development into projects that traditionally fall under the mandate of the State. These include but are not limited to provisioning of welfare through food ration shops, delivery of monetary benefits such as pensions, and facilitating access to G2C services such as documentation and enrolment to government schemes. For example, the Rajasthan state government recently signed an MoU with Future Group Enterprise Ltd. to rebrand and manage Fair Price Shops via the Annapurna Bhandar Yojana.[10] Structured as a PPP model, the initiative aims to sell multi-brand consumer goods at 5000 fair price shops in its first phase.[11] To take a pan-India example, in 2006 the government launched CSCs – front-end delivery points for a range of G2C and B2C services across India.[12] Established under the National E-Governance Plan (NeGP) in 2006 under the Ministry of Electronics and Information Technology,[13] these centres are set up as information and communication technology-enabled PPP outlets. Run by private individuals called Village-Level Entrepreneurs (VLEs), CSCs are envisioned to be a ‘change instrument that provides a structured platform for socially-inclusive community participation for development.’[14] Their key objective is to fulfil the twin goals of social development and profitability (for VLEs) by enabling citizens to act as facilitators of government services in their own community.[15]
A survey of 10 districts was conducted in June 2018 by Rahul Lahoti and Rajendran Narayanan from Azim Premji University and Inayat Sabhikhi, an independent researcher who is now with Harvard Kennedy School, to assess the performance of CSCs in Jharkhand. The findings highlight a drift from the aforesaid objectives enunciated under the NeGP. Apart from serving a social purpose, CSCs are supposed to provide VLEs with a financially sustainable source of livelihood.[16] However, inadequate commissions from the state government forces them to overcharge consumers[17], a majority of whom come from ‘unbanked and isolated rural communities’.[18] This, in turn, signals inadequate accountability structures and grievance redressal mechanisms in the system. Moreover, not a single VLE from the survey identified themselves as a ‘change agent’,[19,20] thus highlighting the absence of any orientation that a role in providing public services mandates.
These findings from Jharkhand call for a more detailed assessment of PPP models in welfare delivery in India, particularly in light of CSCs and ‘agencification’[21] i.e. a phenomenon where policy formulation is retained by the government, but implementation is handled by public or private agencies. At a global level, this type of ‘agency fever’ has gained popularity since the late 1980s, largely due to the prevalence of NPM discourse in policy circles.[22]
Existing literature on agencification and PPP models remains restricted to infrastructure and health. In the Indian context, given the government’s recent push towards CSCs[23] in spite of their derisory effectiveness (at least in one state),[24] as well as the introduction of private players in other forms of public services such as education, health and elderly care,[25] it becomes imperative to critically review PPPs in the welfare delivery paradigm.
In a nutshell, this post sets the backdrop to our larger research engagement focused on the theoretical and empirical underpinnings of PPP models in welfare delivery in India. The provision of social sector services has traditionally been a core function of the ‘Welfare State’. However, given that the last decade has been characterized by a gradual outsourcing of some aspects of this function to private entities operating under a PPP model, it is crucial to assess and identify the theoretical underpinnings of PPPs, their regulatory (including accountability structures) and legal frameworks, incentive structures and the extent to which existing PPP models can balance social and private interests. These models, of which Common Services Centres are a prominent example, have been touted as the silver bullet to address implementation challenges, especially with respect to last-mile delivery of social welfare benefits. However, the ground reality is far from ideal. A plethora of these challenges continue to persist, and one can also argue, that some of these new ‘technocratic’ delivery models seem to have exacerbated the last-mile delivery conundrum. A critical review of PPPs in the welfare delivery paradigm is yet to be undertaken, especially in the context of India.
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Reference
[1] Hood, C. (1991). A Public Management for All Seasons. Public Administration. Vol. 69 Issue 1 pp.3-19.
[2] Osborne, S. P. 2006. “The New Public Governance?” Public Management Review 8 (3): 377–387.
Six key elements of NPM are – 1) an attention to lessons from private-sector management; 2) the growth both of hands-on ‘management’– in its own right and not as offshoot of professionalism – and of ‘arm’s length’ organizations where policy implementation is organizationally distanced from the policy makers (as opposed to the ‘inter-personal’ distancing of the policy –administration split within PA); 3) a focus upon entrepreneurial leadership within public service organizations; 4) an emphasis on inputs and output control and evaluation and upon performance management and audit; 5) the disaggregation of public services to their most basic units and a focus on their cost management; and 6) the growth of use of markets, competition and contracts for resource allocation and service delivery within public services.
[3] Klijn, E.-H. (2012). New Public Management and Governance: A Comparison. Oxford Handbooks
[4] Ibid. pp 206-209.
[5] Ansell, C. (2012). Collaborative Governance. Oxford Handbook of Governance.
[6] Ibid. pp 500.
[7] Casady, C Eriksson K Raymond E.L. and Richard, S. (2020). (Re)defining Public-Private Partnerships (PPPs) in the New Public Governance (NPG) Paradigm: An Institutional Maturity Perspective. Public Management Review. Volume 22 Issue 2 pp 161-183.
[8] Report of the Committee on Revisiting and Revitalising Public Private Partnership Model of Infrastructure, Department of Economic Affairs, Ministry of Finance (2015).
[9] Ibid.
[10] India Brand Equity Foundation. (2015).
[11] Ibid.
[12] Ministry of Electronics and Information Technology. (2006).
[13] Ibid.
[14] CSC 2.0 Implementation Guidelines, Ministry of Electronics and Information Technology. (2015).
[15] Sabhikhi, I Narayanan, R and Lahoti, R. (2019). Does Digital India deliver in improving Government front-end services?
[16] Ibid.
[17] Pragya Kendra Assessment Survey. (2018).
[18] Conversations Today. (2019).
[19] This analysis was inferred from the following question in the PKAS Questionnaire for VLEs in Jharkhand: Do you perceive the running of Pragya Kendras as a government job or as a business venture? a. Government job b. Business c. I don’t know d. NA
[20] CSC 2.0 Implementation Guidelines, Ministry of Electronics and Information Technology. (2015).
[21] Singh, A. (2007). Health Reforms in Rajasthan: An Empirical Study on Agencification. Policy and Society, 26(2), 61–82.
[22] Nchukwe, F. F and Adejuwon, K. D. (2014). Agencification of Public Service Delivery in Developing Societies: Experiences of Pakistan and Tanzania Agency Models. Africa’s Public Service Delivery and Performance Review, Volume 2 Issue 3 pp. 106-124.
[23] Conversations Today. (2019).
[24] Pragya Kendra Assessment Survey. (2018).
[25] Mital, K and Mital, V. (2016). Public Private Partnership and Social Infrastructure.
It was interesting reading this piece and I do hope there are follow-up articles on this. A few comments for consideration, though, when conducting further research on this.
1. No single method is a “silver bullet” in complex conditions typical in rural/remote/less developed areas. At best any method represents an improvement over what alternatives exist.
2. Expecting a village level entrepreneur to see himself/herself as a change agent, while eking out a livelihood in difficult socio-economic terrain is not reasonable. Millions of educated people working in public service in urban areas, paid well and in good economic contexts (education, health available) aren’t seeing themselves as change agents.
3. A starting point for private delivery is that for a citizen, seeking recourse to service improvements is a more accessible action, that through govt arms. Thus, insufficient water-supply or electricity against a contracted private obligation, may still have some recourse. With a state electricity board or water board, there is practically none. (just to illustrate the point).
4. The USO fund, for example has about Rs 50,000 cr unutilised (nearly half its collections). State Govts have been tardy about e-governance services – bear in mind that this is one item that reduces costs to HHS, as they don’t incur travel costs and loss of wages for routine govt-related procedures. The fund could easily used to subsidise on a transaction basis, costs to citizens for govt services – that way the VLE doesn’t turn into a bureaucracy on fixed incomes itself! This is just a suggestion.
Meanwhile, something like MFIs in rural/priority banking is a good example of how private delivery of services is an improvement on a status quo, without being the silver bullet for all developmental challenges. Whether one calls it PPP or not is irrelevant, but it creates system a that supports developmental outcomes.
In summary, there are complexities to evaluating private delivery of govt services through PPPs. Looking at remote, less developed areas with constraints on Human Resources as well, it doesn’t seem appropriate to hold up a prism of a perfect world to evaluate such services – given that even our most developed urban areas don’t have such quality. You may want to place that as a caveat when looking at this whole process!
Hi Prasanna,
Thank you for the insightful comments. You’re absolutely right when you say that assessment of service delivery in remote, less developed areas (with HR constraints) against near-perfect standards is unfair, given that urban areas (with way better facilities) do not live up to the same. However, we want to drive home the point that failure to reach even basic standards of delivery results in adverse consequences, with the rural populace being hit harder due to the same inadequacies. The lack of redressal mechanisms coupled with certain idiosyncratic socio-economic impediments further agravate their plight. This post is certainly the first part of a more nuanced research engagement and sets a backdrop to more our more detailed research on how such PPP models work and what can be done to cushion citizens from the fall-outs of the model. The idea is to ensure the mechanisms that are being created do not make anyone worse-off.
We have duly noted your other suggestions as well and look forward to engaging further on this. Thank you again.
Many thanks for the response! I just saw this today when reading the next instalment of your research series, so apologies if I didn’t acknowledge this earlier. Before I chip in a few more things, I’d just like to state that the research you and the team is undertaking isn’t an easy one, so please don’t take any of the comments – now or earlier – as a rejection of the considerable work done. However, I do think its necessary to fine tune the standard against which we evaluate any alternative to the existing govt run system. Let me cite a few examples from the latest note:
i). “Overcharging” isn’t a cost based assessment always. For a citizen if the net cost of obtaining a certificate is Rs 150 cash (travel to town etc) and Rs 150 lost wages for a day, the comparator for the VLE price is Rs 300. Suddenly, Rs 15 (or whatever) seems an attractive option; ii) sustaining an access point for local delivery is a huge issue in less developed areas. Quite simply people don’t hang around if they have a better option or prefer security of a govt job they will never be fired from. No different from a city. The overall viability of a local access point – whether CSC, Shop etc is better sustained through a cross subsidisation within the village/local context. That way, quirks of govt budget allocations don’t shut down the access. Plus, if the centre is usurious or bad, the local op is by a local resident who is part of the community and some degree of local dialogue/correction is possible. Suddenly, the overcharging may not look like overcharging at all, but a workable solution within the system. Lastly, the CSC system was championed way back in 2005/6 and is an evolution of the initial PCO concept that made telephones accessible in the 80s. I doubt you’d have experienced a govt PCO staying open till midnight or two o’clock so citizens could avail low long distance calling rates. So this system of “franchise” operations is not something recent for both govt systems or for private sector.
(i) Yes, you’re right in saying over-charging isn’t necessarily (just) a cost-based assessment. It also includes travel costs, wages lost etc. The CSC model however, aims to cut down on these by locating the centres in Panchayat Bhavans (for easy and quick access) and findings from Jharkhand show that while citizen users appreciated this accessibility, they were nevertheless disappointed by the over-charging (whether the margin was Rs.15 or Rs.100).
(ii) Findings from Jharkhand show that VLEs are (generally) not from the community they serve. For example, 86% of VLES were upper-caste male Hindus as compared to the residents where more than half are from the SC/ST Community. Moreover, a workable solution might exist if both parties are happy with the outcome. In this case however, neither the VLE nor the citizen is content despite over-charging and hence, the ‘non-zero sum’ outcome.
(iii) You’re absolutely correct – this system of franchise operations is not new – but we think it would be useful to explore the implications its features have on delivery of welfare-related services.
Thank you again for the comments – we look forward to engaging further with you.