The public sector is the only health system in India with a presence at every level of healthcare—from the remotest communities to the largest hospitals. With its widespread network of providers and the enormous resources at its command, it is well placed to offer not only Universal Health Coverage (UHC) but also good health for all. However, while this has happened in several countries globally such as Thailand and Sweden, in India, even after 70 years of its existence, there is no state where the public sector currently offers free, comprehensive, high-quality health care and ensures the good health of the entire population.
The Lancet Commission on a Citizen Centred Health System for India, established in 2020, is a cross-sectoral endeavour to lay out the roadmap to achieving universal health coverage for the people of India.
A guiding principle of the commission was that achieving structural change towards UHC requires consultative and participatory engagement with all sectors involved in health care, especially India’s citizens.
Guided by this principle, extensive research, and multiple consultation with experts, the commission identifies six reform actions for building a citizen-centred health system in India:
- Enable meaningful citizen engagement by firmly building the health system upon people’s participation.
- Implement a citizen-centred health system through financing, purchasing, and service-delivery reforms in the public sector.
- Engage the private sector to align with UHC goals.
- Invest in and scale up diverse technologies to catalyse all the reforms needed for UHC.
- Enable transparent and accountable governance of the entire health system through decentralisation and strengthened regulatory capacities.
- Foster a learning health system by embedding reflexivity, participatory approaches, and leadership that champions continuous learning and improvement.
This article explores the second and perhaps the most important recommendation of the commission: reforming the public sector.
Getting to the root of the problem: Why is the public sector unable to deliver UHC?
The problems of the public sector are usually attributed to insufficient financing, weak incentives, inadequate skills, or insufficient monitoring. It is important to begin the exploration of why the public sector is unable to deliver UHC by recognising that, while additional financial resources are always welcome, inadequate funding of the public sector may no longer be as significant an issue as it once was.
Research suggests that, at 2018 prices, about INR 2,000 per capita would be sufficient to deliver UHC. Several Indian state governments, including Delhi, Goa, Himachal Pradesh, Kerala, and all the northeastern states (with the exception of Assam) already spend enough on healthcare to finance a basic universal health coverage package and achieve good population health outcomes. The other states will get there over the next few years, even at their current budget allocations, with four, i.e., Bihar, Jharkhand, Madhya Pradesh, and Uttar Pradesh, requiring a modest level of continuing support from the central government, even after 2030.
The core problem, instead, appears to be rooted in the reality that public provision operates within short time horizons, fragmented schemes, and tightly specified annual budgets for each line-item of expenditure. Oversight is largely retrospective and procedural, while institutional support is uncertain and uneven.
If an X-ray machine breaks down at a district hospital, or a primary health centre runs out of amoxicillin, the immediate issue is service disruption. Yet what typically follows is procedural review: Was the indent placed on time? Was the stock register updated correctly? Was procurement compliant with financial rules? These are legitimate governance questions. But they are examined after the fact and focus primarily on rule compliance.
At the same time, institutional support for real-time resolution is often variable. Public Expenditure Reviews and implementation assessments of the National Health Mission have repeatedly documented delayed fund flows, rigid budget heads, procurement bottlenecks, and limited managerial autonomy at district level. For example, the World Bank’s public financial management review of the health sector in India notes constraints in fund-release processes, expenditure flexibility, and procurement systems that affect frontline service delivery.
It’s a question of risk
In the example described above, the risks of deviating from procedures are immediate and affect individuals directly, while the benefits of local innovation are rarely supported or protected by the institution. Over time, local managers start focusing more on strictly following procedures than experimentation—not because they lack commitment, but because the system rewards compliance more predictably than adaptive problem-solving.
Excess Caesarean sections in public hospitals, particularly in better-resourced states, reflect defensive responses to institutional risk rather than clinical need.
Decisions that go against established norms, even when clinically justified, can put health providers at personal risk. When outcomes are uncertain and adverse events are highly visible, providers learn quickly that avoiding exposure matters more than exercising judgement. This behaviour, often misread as indifference or incompetence, is a rational response to a system that places risk on individuals while reducing the responsibility borne by the system.
The consequences extend beyond risk avoidance. In such environments, tighter controls reliably deepen defensive behaviour and, over time, also produce disengagement. When initiative increases exposure but rarely improves outcomes, effort itself begins to feel futile. Providers learn not only to avoid risk, but also to withhold discretionary effort. Attendance becomes uneven. Responsiveness declines. The question quietly shifts from “What is the right thing to do?” to “Why bother?” This is not a failure of values or work ethic. It is learned futility produced by organisational design.
These institutional features also shape how public money is spent—and misspent. In some settings, fear-driven practice leads to overuse. Excess Caesarean sections in public hospitals, particularly in better-resourced states, reflect defensive responses to institutional risk rather than clinical need. They absorb scarce public resources without commensurate health gains.
In other settings, the same system design produces underuse. Where primary care is passive and responsibility diffuse, people without acute symptoms do not show up. Preventive care is delayed, chronic disease accumulates silently, and costs rise later through avoidable complications.
Overuse and underuse are not separate failures. They are joint outcomes of a public system that lacks responsibility for outcomes over time.
This diagnosis points to a different reform logic. Repeated efforts to improve performance through additional training, audits, and reporting address symptoms rather than causes. What matters instead is whether expectations are clear, responsibility is assigned coherently, and institutional support is credible.
What would a solution look like?
This is where a purchaser–provider split (PPS) within government becomes essential. Fundamentally, this means that the state separates its role as purchaser of health services from its role as a provider of health services. The state retains full public financing and ownership, but accountability changes character.
A public purchaser, such as the National/State Health Authority (if restricted to purchasing only from the public sector), can commit to providing stable, multi-year financing to public healthcare providers. These providers are held accountable to performance against certain mutually agreed upon indicators.
Healthcare providers must be able to absorb risk, mediate pressure, and sustain effort.
For instance, the health outcomes of a district may be measured by an improvement in the disability-adjusted life year (DALY) rate over a five-year period. If this district had a population of 20 lakh, the provider would receive INR 2,000 per person, and they would have to decide how to spend this money to get the best possible health outcomes for the population. The district health system manager may then choose to focus on identifying all people in the district with hypertension and find ways to address this particular condition to prevent adverse health outcomes in the future.
Importantly, providers are judged on sustained outcome-related performance rather than episodic compliance. Time horizons lengthen. Planning becomes possible. Accountability shifts from continuous surveillance to enduring responsibility.
Purchaser–provider separation alone, however, is insufficient. For this arrangement to work, healthcare providers must be able to absorb risk, mediate pressure, and sustain effort. Fragmented facilities and scheme-specific units cannot do this.
This is why integrated delivery systems (IDS)—in which primary, secondary, and tertiary care providers are closely integrated—are vital. An IDS brings healthcare providers at all levels into a single organisational entity with shared responsibility for outcomes. A patient cannot show up at the district hospital unless they have been seen by the primary care unit.
Clinical risk is pooled rather than personalised. Decisions made at the frontline are backed by organisational processes upstream and downstream.
When adverse outcomes occur in this system, they are treated as institutional events to be reviewed and managed collectively, not as individual failures to be punished in isolation. For example, if a doctor judged that a pregnant woman required a routine delivery rather than a C-section, but complications during delivery led to the death of the mother or the child, the case would undergo internal review. If the doctor’s clinical judgement was deemed appropriate, the department and hospital would support the decision rather than initiate disciplinary proceedings solely because the outcome was adverse.
Crucially, IDS allows resources to move with patients, needs, and outcomes, rather than remaining locked into rigid programme silos.
This configuration is neither novel nor speculative.
Over time, many of the more effective public health systems globally have converged towards some version of this arrangement. They have clarified purchasing roles, lengthened financing horizons, and organised delivery through integrated public entities capable of managing both performance and risk.
These shifts emerged through practice rather than ideology. Systems under sustained scrutiny found that fragmented budgets, individualised blame, and short-term controls made both sound judgement and the efficient use of public resources impossible.
Citizen and civil-society accountability must be understood in this light. In public systems, citizens’ claims carry the force of entitlement. When those claims land directly on individual clinicians rather than being mediated by delivery organisations, they create pressure without capacity and authority without means.
The predictable result is fear, withdrawal, and further misallocation of effort and resources. When accountability is directed upward, towards purchasers and governments responsible for service guarantees, financing, and system design, it strengthens performance rather than undermining it.
Trust, in this sense, is not a moral appeal and not a relaxation of oversight. It is a governance choice. It is built through institutions that pool risk, reward effort, and take responsibility for outcomes over time. A public health system organised around a PPS–IDS structure does not require more money to work better. It ensures that existing public resources are organised to support judgement, sustain effort, and spent wisely.
This article has been rewritten in parts by the author specifically for a nonprofit audience. The original version was published on LinkedIn.
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Know more
- Explore more perspectives on public health reform from this author.
- Read about what public health can learn from education.
- Learn more about how a shift towards institutional accountability is a key reform for India’s public health system.
