HEALTHCARE CO-OPERATIVES:

POSSIBLE THIRD REALM OF HEALTHCARE IN INDIA

Ms. R. M. Devasoorya * & Dr. S. V. Srinivasa Vallabhan **

Introduction

‘Public Health’ is always a high-priority state policy issue everywhere. In almost all countries, the
major challenge lies in delivering adequate healthcare to all people in their jurisdictions. This is
true in India also though recently the Government of India has made an ambitious declaration that
‘right to health’ will be conferred on the people on the lines of ‘right to education’. When ‘right to
health’ comes into reality, it would mean that non provision of healthcare will be an offence and
people can invoke jurisdictions of the courts to seek remedy and punishment of the guilty. It would
be really beneficial to the people when such a boon comes into being. Presently, healthcare in
India is delivered via ‘public’ and ‘private’ modes and both of them put together still struggle and
leaves a large segment of mostly rural population uncovered and in distress. There is great need
for finding viable ways and means to augment the overall resources and competence of the
healthcare system to reach all. The crisis of continuing deficit in healthcare delivery in a vast nation
with a large population urgently warrants Indian planners to seriously explore newer options and
try innovation in modes of healthcare delivery.

It is seen that at the global level, “there exists a renewed interest in a “third realm”, an intermediary
between the receding state and the profit-oriented private sector.”1 In the search for new realms,
the “co-operatives are seen as a potential “third realm”, and already there appears to be “a global
2
revival of co-operatives in the social and health fields.” In the background of India’s rich

1
Lindenthal R. Structural adjustment and co-operatives in developing countries. Occasional discussion paper 94-1.
Geneva: International Labour Organization – Co-operative branch; 1994 [quoted in K. Rajasekharan Nayar, Oliver
Razum, Health Co-operatives: Review of International Experiences Croatian Medical Journal, 2003]
2
United Nations. Co-operatives in social development: report of the secretary-general. Geneva: UN Economic and
Social Council; 2001. 573 Nayar and Razum: International Health Co-operatives Croat Med J 2003;44:568-575 [
quoted in K.Rajasekaran Nayar & Oliver Razum, cited above]

Electronic copy available at: https://ssrn.com/abstract=2860548

experience in co-operative movement since 1904 and in running co-operative institutions in credit
and banking, marketing, fertilizers, dairy, tea, sugar, housing, agriculture, fisheries, handlooms,
handicrafts etc.at various levels, there are good and sufficient grounds to add healthcare sector in
the landscape of the co-operatives and attempt a renewed try in the country.

Global Experience in healthcare co-operatives

In developed countries, during the last two centuries, the Co-operatives have developed. ‘Friendly”
or mutual health society, that insured people against sickness and provided basic healthcare has
emerged during early days. “In countries with a mixed system of State and private funding, such
as France, Germany and the Netherlands, becoming a member of one of the health mutuals is even
today common for people to gain access to healthcare.” 3 In the United States of America, there
exists some largest health providers in the Consumer Co-operative sector.4 Healthcare
cooperatives in U.S.A operate hospitals and clinics, such as the Group Health Cooperative of Puget
Sound with 650,000 members, 30 medical facilities, and 9,500 employees including 1,000
physicians. 5 “According to sociologist and writer Paul Starr, the first healthcare cooperative in
U.S.A was formed in 1929 by Dr. Michael Shadid in Elk City, Oklahoma. Dr. Shadid’s success
inspired others to form regional health cooperatives that provide networks of healthcare plans and
providers.”6 The U.S.A presents the two most successful modern examples of cooperative health
systems- HealthPartners, based in the Twin Cities of Minnesota, and the Seattle-based Group
Health Cooperative. Both of these consumer-governed healthcare organizations serve more than
500,000 members in a wide geographic region. 7 In the Pacific Northwest, there is a single co-
operative providing healthcare to 570,000 members. In Pacific Mid-West another such co-
operative serves as many as 630,000 members.8 Japan’s healthcare map has around 120 Consumer

3
Satish Marathe , Co-operatives in developed countries, October 2016 Available at:
http://www.indianco-operative.com/from-states/co-operatives-in-developed-countries/
4
Satish Marathe (2016) cited above.
5
Oemichen, W. L. (2011), “Healthcare Cooperatives and Consumer-Governed Healthcare,” A presentation made
at the Consumer-Owned Private Health Insurance Plans Conference, April 26. (Available at:
http://www.cooperativenetwork.coop/wm/coopcare/web/COOPERATIVEColoradoPresentationApril2011.pdf
Quoted in Cooperatives And The Post-2015 Debate, Available at : www.ica.coop
6
Karen Davis, Cooperative Healthcare: The Way Forward?, June 22, 2009 Available at:
http://www.commonwealthfund.org/publications/blog/health-cooperatives-the-way-forward
7
Karan Davis cited above
8
Satish Marathe (2016)

Electronic copy available at: https://ssrn.com/abstract=2860548

Co-operatives that ‘provide healthcare to around three million members, who meet in small “han”
groups to discuss preventive health issues.’9 It is reported that “in China, a New Cooperative
Medical Scheme (NCMS) was piloted, and it had mixed results.”10

The International Health Cooperative Alliance (ICA) estimates that there are more than 100
million households worldwide that are served by health cooperatives.11 It is stated that ‘across
Canada, there are more than 100 healthcare cooperatives providing mainly home care to more than
a million people spanning its eight provinces. Salud Coop in Colombia is a healthcare cooperative,
and it is the second largest national employer serving 25 per cent of the population.’12 In
neighboring Sri Lanka, health cooperatives provide healthcare and hospitals to members of
consumer and agricultural cooperatives.’13 Nepal has brought into operation a scheme by which
primary healthcare services are offered by cooperatives at a low annual family fee. Pharmacy
cooperatives in Turkey, give members access to genuine and affordable medicines. 14 Cooperatives
that do business under the fair trade label in Africa, such as the Oromia Coffee Farmers
Cooperative Union in Ethiopia, Kuapa Kokoo Ltd. in Ghana, and Heiveld Cooperative Society in
South Africa, often use fair trade rebates to provide public health and healthcare services in remote
areas. There are reports informing that HIV/AIDS home-based care services are provided by
cooperatives in Kenya, South Africa, Tanzania, Lesotho and Swaziland, as well as in parts of
Asia.15 The ILO-ICA report speaks about existence of different models of healthcare co-
operatives: ‘Healthcare cooperatives include workers cooperatives that provide health services,
patient or community cooperatives that are user-owned, and hybrid multi-stakeholder
cooperatives. They can provide anything from homecare to full-scale hospitals.’16 These different
types of cooperatives devote themselves to ‘ ensure healthy lives by creating the infrastructure for

9
Satish Marathe (2016)
10
Wagstaff A, Lindelow M, Jun G, Ling X, Juncheng Q: Extending health insurance to the rural population: An
impact evaluation of China's new cooperative medical scheme. Journal of Health Economics 2009, 28:1-19
11
For more information see: www.ica.coop
12
MacKay, L. (2007), “Health Cooperatives in BC: the Unmet Potential,” in British Columbia Medical Journal, Vol.
49, No. 3, pp. 139-142.
13
Birchall, J. (2004), “Cooperative and the Millennium Development Goals,” Geneva: ILO.
14
ILO, ICA , Cooperatives and the Sustainable Development Goals A Contribution to the Post-2015 Development
Debate,
15
For detailed information see: ILO-ICA Report [www.ica.coop]
16
ILO-ICA Cooperatives and SDA Goals cited earlier

3
delivering healthcare services; financing healthcare and providing home-based healthcare services
to people living with HIV/AIDS, among others.’ 17

Indian Experience in Healthcare co-operatives

Health co-operative initiatives are, in fact, not new to India. Perhaps inspired by the spread of co-
operative movement started in 1904, as early as in the 1920s and 1930s, health co-operative
initiatives had taken shape, establishing such co-operatives though at a limited scale in Bengal and
the Punjab provinces.18 There are reports that the ‘community-based, health co-operatives,
established in the Birbhum District of Bengal, devoted on curative and preventive healthcare
activities’ besides mother and child care. The activities of the Better-living Co-operative Societies,
in the Punjab and the United Province were ‘broadly similar to health co-operatives.’19 Health
oriented co-operatives were established in the western and southern states of Maharashtra, Goa,
Karnataka, and Kerala during post-war period.20 The Self-Employed Women’s Association
(SEWA) of Ahmedabad in Gujarat has brought into operation many health-oriented Co-
operatives. 21 ‘SEWA has been working to improve its members’ health or health security. It trains
health workers who are performing the function of doctors in their unique way in their own
communities. SEWA’s midwives and health workers have also formed their own cooperatives
which are run democratically and are sustainable both in financial terms and activity-wise. These
cooperatives make drugs available to SEWA members at low cost through outlets run by local
women.’22 The Vimo SEWA Health Insurance Scheme is another noteworthy co-operative effort.

The Yeshasvini Health Insurance Scheme (YHIS) introduced throughout rural Karnataka, 13 years
before, is another successful co-operative initiative in healthcare in South India. ‘In its first year
of operation, the YHIS covered 1.6 million rural farmers and peasants dispersed throughout

17
Ibid
18
United Nations. Co-operative enterprise in the health and social care sectors. A global survey. New York: UN
Department for Policy Coordination and Sustainable Development; 1997.
19
K. Rajasekharan Nayar, Oliver Razum, Health Co-operatives: Review of International Experiences Croatian
Medical Journal, 44(5):568-575,2003 Available at: http://www.cmj.hr/2003/44/5/14515415.pdf
20
K.Rajasekaran Nayar & Oliver Razum (2003)
21
K.Rajasekaran Nayar & Oliver Razum (2003)
22
Sanjay Kumar Verma, Cooperative Health Care Model In India-Current Trends Available at:
www.cehat.org/go/uploads/PPP/sanjay.pdf

4
Karnataka state’ and it stands as ‘the world’s largest health insurance scheme for the rural poor.’23
Under this scheme, for a low premium payment of just Rs. 5 per month or Rs. 60 per year, coverage
is extended for all, major or minor surgical interventions of the participant-members, and for
outpatient services at a network of private hospitals.24 Similarly, though at a limited geographical
and population level, in Gudalur (Tamil Nadu), a co-operative scheme, ‘Accord’ was started in the
year 1992 to provide hospitalization coverage to Adivasi families of the area who are free to
become members contributing a very small amount. Under this health co-operative initiative, 7
health centers and Gudalur Adivasi Hospital (GAH) are maintained. The Accord programme has
been actively supported by an NGO, Ashwini . 25

In Kerala, during the post-Pakistan war times, the pinch of ‘medically underserved’ condition and
growing unemployment of medical graduates was felt in around 450 villages and they considered
co-operatives as ‘a viable alternative for providing basic medical care to the people and at the same
time, for accommodating the new medical graduates’ who were unable to get employment.26 Based
on the initial experience of healthcare co-operatives, ‘more co-operative rural dispensaries as self-
contained medical units were established in the late 1970s in several districts, with the idea of
containing government expenditure for social sectors.’27 The early healthcare co-operatives were
established with enthusiasm, social purpose and on felt needs but after a decade or so many
healthcare co-operatives have faded out due to various factors and only a few (33 of them ) in
Kerala were functioning’ for more than two decades.28

Though the healthcare co-operatives in Kerala are found littered with some failures, there are also
some standing success examples in Kerala itself. The Irinjalakuda Co-operative Hospital Ltd
established in March 1995 and its social initiative Asha Charitable Society are functioning

23
Sarosh Kuruvilla et al, The Karnataka Yeshasvini Health Insurance Scheme for Rural Farmers & Peasants:
Towards Comprehensive Health Insurance Coverage for Karnataka? 2005
24
Sarosh Kuruvilla et al (2005) cited
25
Sarosh Kuruvilla et al (2005) cited
26
Government of Kerala. Study report of the committee on co-operative hospitals and dispensaries. Trivandrum:
Registrar of Co-operative Societies; 1998
27
George MV. A community approach to healthcare services by popularizing co-operative rural dispensaries. In:
Indian Council of Medical Research. Alternative approaches to healthcare: report of a symposium organized jointly
by ICMR and ICSSR. New Delhi: ICMR; 1976.
28
K.Rajasekaran Nayar & Oliver Razum (2003)

5
successfully till date.29 The Thrikkakara Grama Panchayat Co-operative Hospital Ltd. (No. E 993)
registered in 1999, as a Co-operative society under the Kerala Co-operative Act is serving the
people at the primary level even today. The findings of a research project report states that “on
noting the success of the Thrikkakara co-operative hospital, Alangad block Panchayat in
Ernakulum district registered a co-operative society to start a co-operative hospital. Altogether
Kerala has 150 cooperative hospitals, but few have been brought to such high levels of service in
so short a time. The Thrikkakara Cooperative Hospital success story is a success story of the
30
People’s Campaign.” The 100 bedded District Co-operative Hospital and Research Centre,
Palakkad stands as another shining success of more than two decades.31

The successful examples brighten our hopes for a renewed attempt in health co-operatives. If the
lapses and factors for not reaping continuing success in Kerala could be thoroughly studied and
eradicated through appropriate remedial actions, healthcare co-operatives can really become the
‘third realm’ of providing healthcare, very particularly at the primary level in rural and yet
uncovered areas of the country. At the international level also, “there is a growing interest in
consumer co-operatives in health care. This interest is driven by a recognition of continuing state
and market failure in the provision of health services: both the public sector and the private sector
have disappointing records in providing consumer-focused service models with an emphasis on
integration and continuity in care.”32

Why Co-operatives in healthcare in India?

In India, so far the Governments are not able to invest more on public health. The public health is
plagued mainly by deficient infrastructure, acute shortage of manpower, unmanageable patient
loads and uneven quality of services.33 As the cascading effect of such conditions existing in

29
For more information on this hospital see: http://www.co-operativehospital.com/index.html
30
Kerala Health and Decentralization Project, Case Study: Thrikkakara Co-operative Hospital, Available at:
[https://msuweb.montclair.edu/~franker/Thrikkakkara.htm]
31
For more information see: http://www.thesundayindian.com/en/story/district-co-operative-hospital-and-
research-centre-palakkad/7/5066/
32
Opportunities for Co-operatives in Health Care, Co-operative Federation of Victoria Ltd, Melbourne, Australia
Discussion Paper No 3, April 1997
33
See: Vikas Bajpai, The Challenges Confronting Public Hospitals in India, Their Origins, and Possible Solutions,
Advances in Public Health, Volume 2014 (2014), Article ID 898502, http://dx.doi.org/10.1155/2014/898502

6
healthcare for long periods, primary healthcare in rural areas lies in shambles. It is a fact that
increased healthcare funding alone cannot solve the problem. There should also be easily
accessible and efficient delivery mechanism. Due to the fact that the primary healthcare has not
been properly taken care of- both by funding and delivery- for quite some time, the burden on
secondary and tertiary healthcare has been increasing and this requires more expenditure. The
picture of the private sector is also not encouraging. The private sector healthcare is particularly
more urban-centric, concentrating on curative care and delivered through high costs. The gap
between rural and urban healthcare is increasing unabatedly and the resulting deprivation in rural
areas is doing havoc as two-thirds of its population still lives in rural areas. At present, even the
combined capacity of both public and private sector providers is not able to meet the burgeoning
demands of all people and regions.

Considering the incapacities of the public health provision and the ills (high costs, location etc.)
of private sector, there is urgent need to explore a ‘third route’- perhaps in between the
handicapped public health mode and unaffordable and elite private mode. As stated earlier, “an
intermediary between the receding state and the profit-oriented private sector”- the healthcare co-
operatives has to (re) emerge to meet the need of the hour in India. After all it is a popular way,
but less-travelled by the healthcare providers. In a different perspective, Healthcare co-operatives
can also be viewed as an innovation arising from the currently much-hyped Public-Private
Partnership (PPP) mode. The co-operative association involves the regulation of co-operative
institutions through state laws, voluntary and contributory participation of the public and
democratic self-governance by members ensuring decision- making is based on felt needs and
capacity. At its core “co-operatives are social enterprises formed by members, for members.”34

The International Cooperative Alliance (ICA) defines that “a co-operative is an autonomous

association of persons united voluntarily to meet their common economic, social, and cultural
needs and aspirations through a jointly owned and democratically-controlled enterprise.”35
Further, the co-operatives are based on the values of self-help, self-responsibility, democracy,
equality, equity and solidarity in accordance with its six basic principles of the co-operatives:
‘voluntary and open membership, democratic member control, member’s economic participation,

34
http://www.ncui.coop/about-coop.html
35
Cooperative Enterprises Builds A Better World Available at: http://ica.coop/en/what-co-operative

7
autonomy and independency, education training and information, cooperation among co-
operatives and concern for the community.’36

In India, healthcare co-operatives can be established, to take care of primary healthcare, through
voluntary participation of people in places where the need for the facilities are being felt, as was
done in Kerala during the 1970s. Through such strengthening of primary healthcare, via the co-
operative initiatives, positive results on relieving the pressure and immediate burden on further
levels of healthcare can be gained, gradually. The problems of accessibility impacting healthcare
provision for people living in remote areas, hilly region etc. can also be answered by establishing
healthcare co-operatives in presently inaccessible areas. Additionally, these co-operatives can be
effectively used for health education and awareness creation on prevention of communicable
diseases. The SEWA example of training youth in first-aid, nursing, midwifery, health education
etc. can be tried in other regions. Offering home care for people requiring regular, long-term
assistance like the patients suffering from diabetes, hypertension, arthritis, mobility difficulties etc.
can be undertaken. Emergency assistance for pregnant women and children with diarrhea can be
provided.

The models of successfully serving co-operative hospitals and healthcare services in Kerala and
SEWA activities can be adopted with necessary modifications to suit local community needs and
resources. The Karnataka’s unique co-operative scheme of providing insurance coverage to rural
people, through its acclaimed YHIS should inspire more innovative adoptions in other parts of the
country. In the context of a view that “keeping the scheme small and defined in terms of coverage
(geographical or population) facilitates the organization of the scheme, collecting premiums, and
providing access to health insurance via clinics and dispensaries, ”37 the Accord model (Gudalur,
Tamil Nadu) of providing coverage to defined population in limited, still unserved area gains
attraction for emulation. The one great advantage with co-operatives is that they are not born out
of profit motives. But they have to thrive as viable self-help entities. Supports for implementing
cost-to- cost system to those who can afford, shelters of helpful insurance coverage, Government

36
Ibid
37
Sarosh Kuruvilla et al (2005)

8
support, patronage of corporates and philanthropists should flow towards health co-operatives to
make them successful peoples enterprises.

A proposal for co-operative healthcare model does not mean moving towards total divestment of
the Governments responsibility in health sector. Government policies and programmes should lay
emphasis on setting up healthcare cooperatives including hospitals, health centers, pharmacies,
clinical labs, testing centers, health-worker training schemes, health insurance etc. and adequate
financial support should also be ensured to sustain the co-operative efforts and institutions. Apart
from supportive policies, and fund support, Corporates-, both Public and Private sector- shall be
encouraged to link their Corporate Social Responsibility (CSR) efforts with healthcare co-
operatives in rural areas.

Experiences from the past

In the past, one of the reasons for the co-operative efforts in healthcare not taking off was that “the
cooperative sector in fact has not been able to undertake strong advocacy to popularise the
cooperative model in the health sector.”38 This aspect has to be attended to through vigorous
campaign for health co-operatives. Additional grounds have also been listed, through a study of
health co-operatives in Kerala, that among others, ‘lack of working capital and of committed staff,
including physicians’; structural problems such as ‘limited membership and contribution’;
‘absence of incentives for the institution such as special tax concessions or building assistance’;
‘unsatisfactory service conditions’; ‘inadequate representation of Physicians and other technical
staff on the governing body of the co-operatives and so on.39

Moreover, the erstwhile healthcare entities were not able to take care of tertiary and even secondary
healthcare requirements and could not serve larger number of patients, save a few. Complex cases
were beyond the capacity of healthcare co-operatives of the previous generation. There were no
incentives from Government for land, building etc. Health professionals did not evince interest
in co-operative philosophy and so got disillusioned. Doctors and professionals felt frustrated due

38
S.K. Verma, cited.
39
Nayar KR. Decline of co-operative medical services in Kerala, India. Economic and Political Weekly 2000; 35: 519-
21. & also Government of Kerala. Study report of the committee on cooperative hospitals and dispensaries.
Trivandrum: Registrar of Cooperative Societies; 1998

9
to the absence of career growth and prospects of higher income resulting in their migration to urban
or private locations. In short, with rising costs on infrastructure and equipments, salary etc.,
limited capacities to serve, the co-operative healthcare institutions found difficulty to survive
competing with high-end (though costly) private sector.

Conclusion

The health co-operatives are acknowledged ‘third option’ and is highly relevant particularly in the
background of India’s experience with and some success in the movement. Of course, the early
experience is mixed with success and failures. But it is always prudent to learn lessons from both
the shades- of success and failures- in this sphere. With availability of technology and better tools
of communication and administration, knowledge and skills of management techniques, the
successful running of the co-operatives can be easier than before.

It may be helpful to consider the possibilities of the following five co-operative models in health
care, identified by the Australian Co-operative Federation: i) Primary care co-operatives, in
particular communities to provide quality medical, dental, allied health and home-based services
with an emphasis upon continuity and integration of care.; ii) Community hospitals co-operative to
offer, maintain hospital services covering identified needs; iii) Health services and products
purchasing co-operatives that would aggregate the purchase of health services and/or insurance
products to obtain benefits for members; iv) Health insurance co-operatives to provide insurance
products for its members (individuals and/or organizations); and v) Integrated provision and
insurance co-operatives that would integrate the purchasing and provision of services in the form
of pre-paid health care packages, or managed care arrangements.40 Based on India’s previous
experience spanning more than three decades in healthcare co-operatives appropriate adaptations
from the Australian proposals could be sincerely thought of for implementation.

The health co-operatives should have clarity of purpose. It would do well if they concentrate on
and commit themselves to primary healthcare and health education in communities where the need
is already assessed. They should avoid duplication of services, if available through public health
systems. Hospitals established in the sector, shall consistently devote, apart from offering primary

40
Opportunities for Co-operatives in Health Care, Co-operative Federation of Victoria Ltd, 1997 cited

10
healthcare, on health education and prevention of diseases. Home care for people requiring regular,
long-term assistance is another area that could be focused on by the health co-operatives. Easy
local availability of medicines, tablets etc. required commonly and for post-treatment
maintenance- at minimum sales margin but less than commercial prices- can be ensured through
co-operative pharmacy outlets. Governments and Insurance companies shall encourage tie-ups
with healthcare co-operatives to promote health insurance in their service area. Already existing
Government insurance schemes for the poor and the aged, such as the Rashtriya Swasthya Bima
Yojana (National Health Insurance Scheme), (RSBY); Rajiv Aarogyasri Health Insurance Scheme
in Andhra Pradesh, can also be routed to health co-operatives for group membership. The medical
professionals and staff shall, to the extent possible, be drawn from local areas and be motivated to
serve people by instilling the philosophy of co-operatives among them. Above all, the healthcare
co-operatives shall have to desist from the desire to compete with market and profit-oriented
institutions.

It is true that ultimately, “the co-operative healthcare experience -both successful and
unsuccessful- underscores the difficulty of reconciling the public’s desire for low-cost, high-
quality care with physicians’ desire for professional autonomy and control of health resources. It
is also difficult to maintain the ideals of consumer-governed healthcare in the face of a marketplace
that rewards volume over value.”41 If all players- the Governments, Corporates, Philanthropists,
Professionals, NGOs, Private healthcare providers and service-minded individuals- commit
themselves to put in sincere attempts to overcome such ‘difficulties of such a reconciliation’,
evolve and implement appropriate strategies, healthcare co-operatives in India can turn to be the
‘third realm’ in future for extending affordable healthcare to all those in need. The re-emergence
of health co-operatives, with renewed vigour and in a rejuvenated format most suited to current
environment in the country is much needed.

-------------------------------------------------------------------------------------------

* Research Scholar in Management, National College, Tiruchirapalli- 620001

(Bharathidasn University), T.N. India (Corresponding Author)
** Associate Professor in Commerce, National College, Tiruchirapalli- 620001

41
Karen Davis, cited earlier.

11