Resource allocation for public hospitals in Andhra Pradesh, India

The composition of the hospital sector has important implications for cost effectiveness accessibility and coverage. The classification of acute general hospitals is reviewed here with particular reference to India and Andhra Pradesh. Approaches to arrive at a norm for allocation of hospital expenditure among secondary and tertiary hospitals are discussed. The actual allocation of public sector hospital expenditures is analyzed with data from Andhra Pradesh. The shift in allocative emphasis away from hospitals and in favour of primary health care during the 1980s was found to have been equally shared by secondary and tertiary hospitals. The shares of recurrent (non-plan) expenditure to secondary and tertiary hospitals were 51% and 49% respectively. This can be compared to a derived norm of 66% and 33%. The opportunity that new investment funds (plan schemes) could have provided to rectify the expenditure bias against secondary level hospitals was missed as two-thirds of plan expenditure were also spent on tertiary level hospitals. The share of secondary hospital bed capacity was 45.5% against India's Planning Commission norm of 70%. Public spending strategies should explicitly consider what mix of hospital services is being financed as well as the balance between hospital and primary health care expenditures.