When Public Hospitals Cannot Deliver: The Hidden Economics of Co-Produced Healthcare in Bangladesh

Abstract Book of the 11th International Conference on Applied Research in Management, Economics and Accounting

Year: 2026

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When Public Hospitals Cannot Deliver: The Hidden Economics of Co-Produced Healthcare in Bangladesh

Prof. Rafia Rahman

ABSTRACT:

When a public hospital lacks the drugs a heart attack patient needs, someone else pays usually the family, standing in the corridor, scrambling to buy from a private pharmacy down the road. This paper calls that phenomenon co-produced healthcare and shows, for the first time with patient-level outcome data, that it is not an emergency workaround. It is a permanent structural feature of how health value is generated in Bangladesh’s publicly subsidised hospital system. Drawing on a cross-sectional study of 600 acute cardiac and stroke inpatients across eight public hospitals, linked to Delphi-weighted WHO SARA facility readiness scores and three validated patient-reported outcome measures (EQ-5D-5L, EQ-VAS, RHDS-B), we document an ‘input–outcome paradox’: even the lowest-readiness district hospitals produce measurable patient health gains, because households privately finance the diagnostic and pharmaceutical inputs that the hospital cannot supply. Multivariable OLS regression confirms that composite readiness is a statistically significant predictor of EQ-5D-5L utility change and discharge readiness across all facilities, but effect magnitudes are steepest at district level where the marginal return to structural investment is highest and attenuate at better-resourced medical college hospitals where case-mix severity dominates. The economics are stark: the co-production of healthcare value transfers a substantial but unmeasured financial burden to low-income households while simultaneously inflating institutional efficiency estimates. Standard value-based healthcare assessments, by counting only public inputs against public outputs, structurally overstate system performance and are blind to the private subsidy that sustains it. This paper proposes a co-production-adjusted VBHS assessment framework and derives three targeted policy priorities pharmaceutical supply reform, structured discharge planning, and governance accountability mechanisms that offer the highest marginal return for health gain per taka of public expenditure.

Keywords: Co-Production; Value-Based Health Services; Hospital Readiness; EQ-5D-5L; Out-Of-Pocket Expenditure; Bangladesh; Cardiovascular Disease; Health Economics