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Punjab Health System Corporation, Punjab
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Subject Area="Management structures and systems." Objective="Integrated planning and management."
Details for Reform Option "Punjab Health System Corporation, Punjab"

Background: Hospital services at the secondary level play a vital and complementary role to the services provided at the primary level of healthcare. However, various gaps were found in the Punjab healthcare system making it impossible to deliver these services efficiently and effectively. These were: (i) Lack of basic medical equipment (ii) Critical lack of infrastructure (iii) Lack of basic diagnostic services. Action: To revamp the services at secondary level hospitals, the Punjab Health System Corporation (PHSC) was set up in 1995 to implement the World Bank-sanctioned Second State Health System Project for secondary level health care services. The Secretary to the Government of Punjab, Department of Health and Family Welfare, heads the PHSC with a managing director. The PHSC is fully autonomous and has the administrative flexibility to make rapid decisions for efficient and effective delivery of the health services. Policy decisions were taken by the PHSC in the following areas between 1995 2002: (i) Retention and utilisation of user charges at the point of collection: Under government notification, PHSC were allowed to retain the revenue at the point of collection and were allowed to use it in definite proportion in different heads. (See PROD entry No 146: Retention of User fees at the health facilities) (ii) Decentralised financial power for emergency local purchases Financial powers were assigned to the Senior Medical Officer (SMO), Deputy Medical Commissioner (DMC) and Chief Medical Officer for direct purchase and with quotations. (See PROD entry No 147: Devolution of financial powers, PHSC, Punjab) (iii) Benchmarking of specialist doctors for their performance: To monitor the performance of the specialist doctors from the revamped health facilities, monthly benchmarks were assigned as per the bed strength of the hospital. (See PROD entry No 144: Benchmarking to improve performance of the specialist Doctors, Punjab) (iv) Outsourcing of non clinical services: Non clinical services such as sanitary services, electricity and plumbing services and ambulance services were outsourced to maintain the continuity of health care efficiently and effectively.(See PROD entry: Outsourcing of the non- clinical services, PHSC, Punjab) (v) External and internal quality checking system for clinical laboratories. Serum containing 13 biomedical parameters, which have been tested at the department of clinical biochemistry, CMC Vellore, are sent by post every month to the participating clinical laboratories under PHSC. These laboratories test the sample sera. The estimated values are conveyed to the CMC Vellore, which in turn sends monthly feedback. Results: By 2002 (i) Civil works such as repairing of the existing building and construction of infrastructure as per requirement was completed in 154 hospitals. (ii) Major and minor medical equipment supplied and installed where required. (iii) 324 existing ambulances repaired. (iv) 133 additional ambulances and 17 surveillance vans positioned. (v) 32 blood banks in the state revamped by providing buildings, equipment and infrastructure.

Cost World Bank sanctioned US$106.10 million (INR 4670.5 million) to upgrade the selected hospitals, in the following proportions: Loan: INR 252.00 crore . Grant: INR 127.00 crore. State government share: INR 45 crore.
Place One hundred and fifty four hospitals in Punjab, including Community Health Centres, Sub divisional hospitals and District hospitals.
Time Frame Approximate time from planning to implement the reform was one year.

Administrative flexibility: Power assigned to the Corporation has given it the flexibility to take rapid decisions in favour of patients’ welfare. Efficient health service delivery: Maintenance of infrastructure and equipment and setting of benchmarks for specialist doctors promotes efficient service from the health facilities.


None perceived.


Government Order.

Who needs to be consulted

State government, funding agency.



The strategies adopted by the corporation are sustained by the user fees.

Chances of Replication

Replicable, but need strong political will to initiate the process.


Though setting up a corporation with the necessary political will is a difficult process, once it starts it helps in the making of speedy decisions for the welfare of the patients.


Submitted By

Dr. Anuradha Davey, Research Consultant, IRMS, September, 2005.

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