Health System in Odisha: Challenges and Opportunities for Investment and Improvement

Odisha, formerly known as Orissa, is a major state in eastern India, with an estimated population of thirty five million people. There has been a gradual improvement in the health status of the population due to several factors, including developmental and educational interventions, economic improvement, and better healthcare services. The health system in Odisha is largely publicly provided. The private sector has played a limited role. Geographic inaccessibility of health services, cultural barriers restricting the demand for healthcare, ignorance of health practices, poor service quality, and heavy reliance on informal health providers are few of the features of the health ecosystem in Odisha. In this blog post, I discuss the status of the health system in the state. In addition to discussing some of the challenges, I identify achievable areas for improvement and areas for potential investment by policymakers, nongovernmental organizations, research bodies, and the private sector.

There is tremendous opportunity for the state to spend more on healthcare. From 2008 to 2009, health spending represented 0.57 percent of the total gross state domestic productA large portion of these funds is spent in the tertiary sector, a specialized level of healthcare that includes diagnosis and treatment of diseases. The bulk of the total state health expenditure is spent on salary, which decreases the availability of funds to support a productive health infrastructure.

Health System Performance: An Overview    

State efforts to improve the health status of its citizens have had successes, but there is still much progress to be made.

The mortality rate for people in Odisha is much higher and life expectancy is lower than the national levels. Infant mortality and under five mortality rates are among the highest in the country, at close to sixty five and eight one per thousand live births. The state has been proactive in reducing the infant and under five mortality rate. The state developed a comprehensive child health plan for the National Health Mission. While polio has been eradicated, barely seventy one percent of all children one year old are fully immunized. Diarrhea, gastroenteritis, anemia, and jaundice together accounted for thirty five percent of childhood mortality.[ref]Compiled from various sources: Annual Health Survey report for Orissa 2011, NFHS round III (2005-06), SRS Bulletins (1999-2010).[/ref]

The state aims to reduce the maternal mortality rate of 275 per hundred thousand live births in the state. Institutional deliveries are considered important to achieving this reduction. Although the number of institutional deliveries in Odisha is not high, at forty four percent, growing awareness and changing health seeking behaviors will contribute to safer deliveries. The demand for maternal health services is constrained by weak health infrastructure and a lack of trained and skilled health personnel for emergency obstetric, neonatal, and postnatal care.

The state has implemented malaria control programs and has demonstrated significant progress in this area. The state has used a combination of awareness generation and service delivery programs to curtail the number of HIV and AIDS cases in the state.

Health infrastructure improvements, including the opening of new subcenters, primary health centers, and community health centers, have been fundamental to improving and sustaining health indicators. State reforms have attempted to distribute human resources for health equitably across rural and urban areas. These reforms have mandated fixed tenures for doctors in remote and tribal areas and offered monetary incentives. In the state, there are 120 doctors per one million people and fewer than four beds per ten thousand people. State initiatives to improve the health infrastructure and quality of health personnel have resulted in mixed progress.

Health Financing in Odisha

The Orissa State Integrated Health Policy proposes that public expenditure on healthcare be two percent of the state gross domestic product and five to six percent of the state budget. The policy proposes to allocate fifty five percent of public healthcare spending for primary care, thirty five percent for secondary care, and ten percent for tertiary care. The policy calls for more equitable distribution of resources between rural and urban areas, lower and higher income districts, and allopathic and Indian systems of medicine.

Currently, health financing in Odisha is tremendously fragmented, with at least three sources of funding. The first and largest source of funding is out of pocket expenditure by households. The total estimated out of pocket spending on healthcare amounts to approximately eighty percent of total health expenditure by the state. The national average is seventy one percent. Medications account for the major share of out of pocket spending in public hospitals, at seventy three percent in rural areas and seventy seven percent in urban areas. Again, the figures for Odisha are higher than the national average of over sixty seven percent for rural and sixty two percent for urban areas. The second largest source of funding is the state government. A majority of these public funds, which are sourced through general tax revenues, are used to provide free or subsidized public health services. Public spending includes support for centrally sponsored programs, such as the National Health Mission. The third source of funding is government sponsored health insurance programs that are targeted toward the poor. These programs are non contributory by design. The beneficiaries of these programs do not incur any cost to avail their benefits.

Currently, there are four social protection programs to shelter the population of Odisha from health shocks. The largest is Rashtriya Swasthya Bima Yojana (RSBY). This program has succesfully covered seventy two percent of its eligible below poverty line population. RSBY provides benefit packages of up to thirty thousand rupees per year. Biju Krushak Kalyan Yojana targets farmer families and provides an additional seventy thousand rupees per year for maternal and child care. Both of these programs provide health insurance through the insurance companies. A mix of public and private empaneled hospitals is responsible for providing healthcare under both of these programs. A similar program provides medical benefits of up to fifteen thousand rupees per year to handloom weavers and artisans through a service delivery network recommended by the specified insurance company. Finally, a state specific program, the Odisha State Treatment Fund, uses income qualifying criteria to target beneficiaries. The fund provides coverage for below poverty line cardholders earning less than forty thousand rupees in rural areas and less than sixty thousand rupees in urban areas.

Evaluation of the Health Financing System in Odisha

Lack of Coordination Among Multiple Implementing Agencies

The Integrated Health Society is the primary implementing agency at state and district levels for programs that fall under the umbrella of the National Health Mission. The Labour and Employee’s State Insurance Department of Odisha and the Department of Agriculture and Food Production fund the empaneled hospitals in RSBY and Biju Krushak Kalyan Yojana, respectively, through insurance agencies. The target populations of these programs overlap. Anganwadi workers and multipurpose health workers make a concerted effort to provide care effectively through these programs, but there is a lack of trust and coordination among the various departments at the senior levels.

Geographical Coverage

The availability of healthcare providers and skilled professionals in tribal and hilly areas is limited due to poor accessibility and scattered habitations. The mandatory posting of doctors in these districts has addressed the vacancy problem to some extent. Mobile health units are also expected to cover the remote areas. There has not been any assessment of the quality of healthcare provided by these units. Many unidentified migrants live in urban slum areas. These migrants often have undocumented health issues and must rely on unorganized and uncertified private clinics that have poor accountability.

Human Resource Management

Acute staff shortages, low salaries, unsatisfactory promotion avenues, low morale, and high absenteeism are major obstacles to progress in addressing healthcare needs in Odisha. The State Human Resource Management Unit was established to emphasize career restructuring for doctors and capacity building of health staff. The unit also ensures the adequate supply of skilled health professionals in underserved and remote areas of the state by providing promotional avenues and better earning opportunities.

Modernizing Health Services

The Odisha government has come to rely heavily on information technology for evidence based policymaking in the delivery of health services. Examples of information technology innovations in the health sector include health workforce information systems, eBlood banks, eAttendance immunization and malaria information systems, drug inventory management systems, surveillance systems for epidemic prone diseases, health management information systems, and dashboard monitoring systems. Better accessibility of accurate information at all levels of the health sector supports better planning and decision making and increased transparency.

High Out of Pocket Expenditures

Out of pocket spending on all healthcare is a cause of great concern in Odisha. Out of pocket spending represents nearly eighty percent of total health spending.[ref]Ministry of Health and Family Welfare India: National Health Accounts, India – 2004/2005. 2009, National Health Accounts Cell, Ministry of Health and Family Welfare, Government of India, New Delhi.[/ref] The burden of out of pocket expenditure for medical care, specifically on drugs and medications, was far higher on users of higher tier facilities, like district hospitals, than on lower tier and more local facilities, even when treating the same types of ailments. The prescribing of expensive drugs coupled with a higher load of complicated procedures result in conspicuously high out of pocket expenditures on medications at higher tier facilities. The use of higher tier facilities to treat common ailments is a product of a weak referral system. The district level secondary hospitals often serve as first points of contact for preventive and basic curative services, rather than primary care centers or community health centers.

Out of pocket expenditures are regressive in nature since poor people spend a higher percentage of their income as compared to their richer counterparts. In the absence of any financial protection, out of pocket expenditures have greater consequences for the poor.

Public Private Partnerships

The National Health Mission provides a unique opportunity to collaborate with nongovernmental organizations and private agencies to deliver health services to inaccessible areas. The involvement of nongovernmental organizations ensures that policies are customized to meet people’s needs. A Regional Resource Center helps build the capacity of nongovernmental organizations by providing the technical and managerial support. For example, the Health of the Urban Poor Unit at the Population Foundation of India provides technical support for the urban health program of the National Health Mission.

Decentralization and Community Involvement

Decentralization in the state and in the health sector has been limited. The limited community involvement has been in the form of nongovernmental organizations and women’s groups focusing on social mobilization. Fiscal devolution means that the state will have autonomy over its own funds. This process allows communities to spread awareness of health programs, for the delivery of primary care services, and for greater transparency. For instance, the state nodal agency has effectively engaged the Poorest Areas Civil Society, a network of civil society organizations, to overcome challenges of low awareness on the ground about the RSBY program.

Communications Strategies

Effective health communications strategies initiated by the state government have increased the demand for health services and encouraged better health seeking behaviors. Targeted communication is designed to overcome challenges associated with low literacy, low health awareness, and the limited accessibility of media and transport in remote and tribal areas. The Centre of Excellence for Communication manages behavior change communication initiatives and training in close collaboration with communication institutes and media houses.


In Odisha, service delivery is heavily dominated by the public sector. Good quality care is not guaranteed in the private sector. The state has existing spending commitments. The essential drug list has over five hundred medicines. The budget for drugs has been increasing. The demand for emergency transportation has also been increasing. Based on our evaluation of the Odisha health system, we have made several recommendations to consider as the state restructures its health financing.

Tap Other Sources to Reduce Out of Pocket Expenditures

Apart from the existing health insurance programs, the potential of the private sector to fund investments for hospitals and medical colleges cannot be ignored. Private donor agencies are another option.

Increase Efficiency in Expenditure

There needs to be a systematic investment into learning how to allocate budgets more effectively. The state have established public sector units or Corporations”. Odisha now has a program for free drugs called Niramaya, which is managed by the Odisha State Medical Corporation Ltd. Under this program, drug procurement is centralized. These dedicated agencies are an excellent example of efficient allocation of expenditures.

Shift the Role of Vertical Programs

Vertical programs that are aimed at a particular disease, combined with the availability of qualified and trained manpower, have reduced the incidence of diseases like smallpox, malaria, and leprosy. To maintain vertical programs exclusively for a single disease is expensive. Integration with the general healthcare system is important. The integration and conversion of vertical programs requires a careful assessment of the disease burden; capacity building of horizontal systems to take on additional responsibility; proper planning for logistics of pharmaceuticals, medical and surgical supplies, medical devices and equipment, and other products needed to support doctors, nurses, and other health and dental care providers; and management of the information system. Unrestricted funds also provide policymakers direct funds to spend where needed.

Ensure the Quality of Healthcare

Regulation, such as enforcement of standard treatment guidelines and referral protocols, is required to ensure the quality of services provided.

The healthcare system in Odisha is in transition. The state is investing in health technology to promote scientific, evidence based decision making that promotes efficiency. The state still struggles with high levels of out of pocket expenditures and poor accessibility and quality of healthcare services in remote areas. There is a tremendous opportunity for private sector investment to improve healthcare in this state, but private sector investment should be accompanied by strong private sector regulation.