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Giving functional autonomy to secondary and tertiary level government hospitals through Hospital Welfare Societies, Himachal Pradesh
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Subject Area="Management structures and systems." Objective="Effective decentralised management of services."
Details for Reform Option "Giving functional autonomy to secondary and tertiary level government hospitals through Hospital Welfare Societies, Himachal Pradesh"

Background: In 2000-2001 the state of Himachal Pradesh was faced with an acute financial shortage, which particularly affected the health system, as there was a shortage of drugs and supplies and meagre funds for maintenance. The government could not take the decision to levy user charges as it had come to power with the promise of providing free health services. So it decided to create autonomous ’societies’ at secondary and tertiary level government hospitals, which would decide their own mechanism of financing through means such as charges, or donations. Action: In May 2001, societies were formed at district and medical college hospitals in the state. The focus was on generation of resources through charges, donations and other fees. Initially, directions regarding rates for hospital services, ways and procedures of spending the money collected were not very clear. There was also opposition from political parties who wanted to protect the poor. In May 2003, the societies were named as Aspatal Kalyan Samities (AKS), through a government order.These samities have a two tier structure comprising a Governing Body (GB) and an Executive Committee (EC). The Chairperson of the GB is the Deputy Commissioner and the Vice Chairperson is the Chief Medical Officer (CMO). In the EC, the Chairperson is the CMO. In both tiers, the member secretary is the Medical Superindendent. Other members of the committee are President of the Zila Parishad, two senior most doctors and Assistant controller (finance and accountant). The society is registered under the Society Act 1860. The GB is the decision-making authority. It formulates policies and provides directions, whereas the EC is responsible for the day-to-day functioning and implementation of decisions taken by GB. At the end of the financial year, the annual report on the working of the samities and work undertaken during the year is prepared by the EC for the GB and copies are sent to the Director of Health Services and Secretary, Health and Family welfare. Results:Within around one year (2003-04) the societies, put together, generated an amount of INR 2 crore 72 lakh, which was around 10% of the state recurrent cost budget. The money generated by these hospitals was first used for giving a face-lift to the hospitals, which involved white-washing and cleaning, repairing furniture and other facilities for patients, minor civil repair works. This was followed by purchase of reagents for diagnostic tests, x-ray films and equipment like auto-analysers, which allowed the hospitals to conduct more diagnostic tests and give quicker results. Income and expenditure of user charges under AKS in Hamirpur district from January to September 2005 was as follows: Total income – INR 10, 20, 385 Total expenditure- INR 10,08,325 INR 2 lakh to 5 lakh (for 50 to 300 bedded hospitals) to make the services functional (for example, the purchase and repair of equipment and furniture in the out patient department, whitewashing, building repairs).

Cost Two Medical College Hospitals (state level), three Zonal, four referral hospitals, eight regional hospitals, 19 civil hospitals and two community Health Centre. At the Medical College, Zonal and District Hospitals since May 2001 and at the Civil Hospitals since January 2002.
Place Two Medical College Hospitals (state level), two Zonal and 10 District Hospitals (district level) and over 30 Civil Hospitals (sub-division level) in Himachal Pradesh. At the Medical College, Zonal and District Hospitals since May 2001 and at the Civil Hospitals since January 2002.
Time Frame Takes three to 4 months to register the society with the Registrar of Societies, after this government notification to this effect is needed, Then comes orientation of the hospital staff, formation of the society with the members and convening of the first meeting. It takes almost a year after the creation of the society to make it credible and acceptable to the clients, to make the hospital staff comfortable with independent decision making, to streamline administrative procedures for procurement and purchases.

Accountability: Hospital Welfare Societies enjoy administrative and financial autonomy meaning decisions are taken more quickly, are needs based and have greater potential to take into account the wishes of staff and patients. Management flexibility: decentralised financial power at the health facilities level helps the authority to by pass the traditional procedure to make decisions.


Promotes disparities: As the hospitals are independent in decision making, disparities arise in the standards and quality of care, rates charged for similar services, financial and administrative procedures, etc. This calls for a coordinated effort at the state level. Staff opposition: Staff might feel that the society could make them redundant by employing cheap workers on a daily-wage basis from the open job-market.


Government Order to create Hospital Welfare Societies.Guidelines for administrative and financial procedures need to be clarified. Good quality services: As generation of funds depends on public support, minimum basic services must be of acceptable quality. This may require giving some seed money to the hospitals to start with.

Who needs to be consulted

State government authorities. It may require the approval from the state cabinet. Rules and regulation of society operations can be decided at the society level.Hospital staff and local administration.



Highly sustainable if rates cover the recurrent cost of providing the hospital services. Also, if the money is spent judiciously, it brings about a visible change from the patients’ perspective and thus public support is also gained.

Chances of Replication

Replicable in hospitals providing curative care, with no immediate competition from private sector. Was extended to sub-divisional hospitals in 2002.


If the facilities or the providers do not enjoy the respect of the public, the initiative will face public and political backlash.


Submitted By

Gautam Chakraborty, Health Economist, BHPHP, June 2004. Updated in October 2005 by Dr. Anuradha Davey, Research Consultant, NIMS.

Status Active
Reference Files
Cost Recovery HP.ppt
Experience of HP Societies.ppt
GO-Aspatal Kalyan Samiti, HP.pdf
Income and Expenditure of User Charge Under AKS.pdf
CHC Ghumarwin, Bilaspur district17.JPG
CHC Ghumarwin, Bilaspur district20.JPG
CHC Ghumarwin, Bilaspur district.JPG
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