Wide Disparity Seen In Urban and Rural Health Care Services

Despite overall improvements in public health delivery, the large gap between service quality in rural and urban areas, and the uneven distribution of medical workers has shown no significant progress in the past decade, an official at the National Development Planning Board said at a seminar in Jakarta on Tuesday . The worst thing is that there is often a large disparity in the quality of health services among districts in the same province, said Nina Sardjunani, deputy head of human resources and cultural affairs at the agency, which is also known as Bappenas. Nina said that the uneven quality of health care was due in part to the drastic difference in the number of medical workers in rural and urban areas. A 2008 survey conducted by Bappenas showed that in Jakarta one doctor served about 3,000 people, while in the more rural provinces there is, on average, one doctor for every 47,000 people. A great disparity can also be seen in infant mortality rates which vary drastically from one province to another, Nina noted. She said that in Yogyakarta the infant mortality rate was 19 out of every 1,000 births; in West Sulawesi an average of 74 babies died out of every 1,000 births. The same sort of disparity, she said, could also be seen in the maternal mortality rate and in the number of cases of malnutrition. A 2007 survey conducted by the Central Statistics Bureau showed that the number of deaths in children under five in poor communities was twice as high as the number of deaths in middle to high-income groups. Eradicating the huge gap between different provinces and between rural and urban areas will be a priority in the 2010 to 2014 national plan for mid-term development, she said. Aparnaa Somanathan, a World Bank health economist for East Asia and the Pacific, said that the disparity was common in developing countries, where the level of overall health service might improve, as it has in Indonesia, but not its equity and distribution. In Indonesia, although health care is making great progress, the disparity between the health services received by the poor and by the rich is still very large, Aparnaa said.

To illustrate her point, Aparnaa cited World Bank data showing that only 50 percent of poor children below the age of five who were experiencing high fever were taken to medical facilities, while more than 80 percent of children from middle and high-income families with the same condition were taken to clinics or hospitals. Elan Satriawan, a researcher from Gadjah Mada University in Yogyakarta, agreed that uneven distribution of medical workers and facilities exacerbates the poor quality of health care. Elan said that the problem has existed for years and little has changed over the past decade. He said that in 1996, in urban areas there were 40.2 physicians for every 100,000 people and only 5.4 physicians for every 100,000 people in rural areas. Similarly, in 2006, statistics from the Indonesian Household Survey conducted by the Ministry of Health showed 38.2 physicians serving every 100,000 people in urban areas, against 5.96 doctors for the same number of people in rural areas. Not only are the number of medical workers in rural areas inadequate, many of them are actually not sufficiently competent to serve people and provide the best medical advice and care, Elan said. Nina said that the best way to narrow the gap in health services between different provinces and between the rich and the poor was to improve regulations and involve regional governments in more creative ways. She urged creating more programs that promote preventive health care and healthy lifestyles, rather than focusing exclusively on treating people after they are already sick. Nina said Bappenas had earmarked Rp 141.7 trillion ($15 billion) for the health budget over the next five years and that nearly half of it would be used for preventive health measures. In the past five years, preventive health received less than 30 percent of the total health budget.

Enayet Rasul According to reports, the Bangladesh Bank (BB) recently frustrated a move by BRAC Bank to set up 140 new branches in rural areas in 2008. The BB finally authorised the establishment of only 20 such branches by BRAC Bank. The BB had its reasons for not giving the permission but one understands that the BRAC bank has a reputation for doing positive work specially in the area of small and medium enterprises that suit the entrepreneurs in the rural areas. Ii is also well known that there is a dearth of banking facilities in the rural areas. Banking in Bangladesh has a heavy urban bias. The country's 30 commercial banks (PCBs) have 72.50 per cent of their branches in the urban areas and only 27.50 per cent in the rural areas. The foreign banks have a nil presence in rural areas. The state-owned banks have been progressively winding up their operation from non urban areas. In this backdrop when the overall progress of banking activities in rural areas is already comparatively smaller and has been slowing down further, it is pertinent to ask how far pragmatic was the BB's decision to curtail the BRAC Bank's major expansion move in the rural areas. Grammen bank and others operating non-conventional banking services in the rural areas report high degrees of recovery or success in their loan operations. With easy access to banking services, the rural areas, on the one hand, would be fast growing and diversifying economically with positive impact of the same on income generation and poverty reduction and, on the other, the banks would be doing well for themselves by dealing with dependable clients. Clearly, the banks must think up innovative ways to extend their services to rural areas and help the people of these areas climb out of the poverty trap. This is a challenge facing the country's banking sector but it needs to be seen as opportunity also as the success rate of lending activities by some non-governmental organisations(NGOs) in rural areas has shown. According to various studies , the rural areas provide substantial deposits to the banking system of the country. Such mobilisation of deposits in rural areas could be much greater if the banks' presence in these areas was bigger. But presently, as mentioned, the presence of the banks in rural areas is thin and these areas have a marginal or non existent role as the beneficiaries of the loan operations of the banks. Not only this is helping economic inequalities, the same contradicts the principle of extending banking services uniformly to all areas of the country. Thus, the banks need to be 'facilitated' to take greater interest in expanding their services to rural areas in their own business interest of greater deposit mobilisation and loan operations in these areas and to promote economic growth and development uniformly throughout the country in the process. The BB is expected to be a facilitator in expanding the network of rural banking services, not to be ironically an obstructive factor. The extension of rural banking by the private commercial banks has assumed greater importance in the backdrop of the closure of many branches of the nationalised commercial banks (NCBs) countrywide as part of their restructuring activities. Extension of banking services by private commercial banks in areas where the public sector banks have withdrawn, specially in semiurban or rural areas, will be much appreciated by the people of those areas. It is sometimes stressed that the operations of the nationalised commercial banks (NCBs) in rural areas need to be curbed in view of their mounting losses. But the response to such alleged losses need not be closing the channels of rural banking of the NCBs but to improve their operations to guard against losses. Banking in the context of Bangladesh, cannot be entirely divorced

From the needs and principlesof extending vital services in neglected areas or extending uniform facilities in the country to meet the requirements of equity and justice. Besides, mobilisation of resources from the rural areas-- where the country's population are preponderantly concentrated and to aid their development or economic growth--also shows up the necessity of providing ample banking facilities there. Thus, the issues are how to reconcile these socio-economic needs of creating and maintaining banking facilities in rural areas with the equally important task of maintaining viable operations of the banks in the rural areas. A careful and unbiased study is required to determine the factors for the losses of the NCB branches in the rural areas to take immediate curative actions in relation to the same. Many of the NCB units in rural areas are overstaffed and suffer from unscrupulous activities of their officers. In some cases, branches of NCBs are located in close proximity that undermine the gainful operations of all. Yet, there are other issues not directly linked to banking activities but their existence such as lack of infrastructures and underdevelopment that impede a rise in banking activities in the rural areas. Policies need to be in operation in response to all and more of the above factors that adversely impact on rural banking. Actions can be taken against overstaffing and this would have an effect on the losses. Similarly, the relocation of some of the units can be tried to improve the chances of their viable functioning. Devolution of power to local authorities, the establishment of strong local government and making them resourceful enough to undertake local development activities, more investment in infrastructures in rural areas, etc., would be also creating indirectly the conditions for expanding the rural banking system. The private banks, so far, have concentrated in urban areas considering the returns from rural areas to be small. But they can possibly have a rethink in view of the very gainful experiences in terms of profits by the bank like operations of some NGO bodies in the rural areas. The private banks, of course, are not expected to emulate these NGOs by servicing their rural clients at cut throat interest rates. But there is very probably a market for them in the rural areas which they can explore to expand their own business while responsibly filling gaps in banking services in the rural areas. But expansion of services in rural areas will be a non-starter for the private commercial banks as long as they are constrained by imprudent regulatory activities of the BB.

The Rural Banking Environment Because loan demand and deposit supply are determined by economic activity, it follows that bank performance is greatly influenced by prevailing local economic conditions. As local wealth and economic activity increase, banks experience increased demand for their services and realize greater growth and profitability. In general, one would expect that banks located in quickly growing locations would exhibit better performance than banks located in slow-growth areas. In fact, over the period 1991-1997 (the most recent for which complete Bureau of Economic Analysis (BEA BEA - Basic programming Environment for interactive-graphical Applications, from Siemens-Nixdorf. ) local area data are available) there was considerable disparity disparity

n. pl. disparities 1. The condition or fact of being unequal, as in age, rank, or degree; difference: "narrow the economic disparities among regions and industries" in growth in personal income, population, and per capita income Noun 1. per capita income - the total national income divided by the number of people in the nation income - the financial gain (earned or unearned) accruing over a given period of time levels and growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. between Arkansas' urban and rural areas. Table 1 shows aggregate values of personal income, population, and per capita income for Arkansas' metropolitan areas and nonmetropolitan areas. Over the period 1991-1997, Arkansas' metropolitan counties grew faster both in terms of total personal income (43.8 percent versus 37.8 percent) and population (8.9 percent versus 4.2 percent) than the non-metropolitan portion of the state. And, although per capita income grew slightly more in the non-metropolitan counties (32.2 percent) than in the metropolitan counties (32.0 percent), the dollar value of per capita income in urban counties remains almost 25 percent greater. Thus, Arkansas' rural banks generally operate in slower-growth markets than urban firms. There is some evidence that in addition to slower aggregate economic growth, banks in rural markets serve a different customer base than those in urban areas. Table 2 summarizes selected 1997 BEA income and employment data for Arkansas' urban and rural counties. Not surprisingly, farming accounts for a much greater share of personal income (5.43 percent versus 1.52 percent) and employment (6.08 percent versus 2.16 percent) in rural, relative to urban, areas. Interestingly, the rural counties also derive derive v. 1. To obtain or receive from a source. 2. To produce or obtain a chemical compound from another substance by chemical reaction. a greater share of their income (12.22 percent versus 8.44 percent) and employment (19.34 percent versus 16.28 percent) from proprietary business activity than do the urban counties. Therefore, in addition to experiencing slower economic growth, rural banking markets differ from metropolitan areas with respect to both customer base and product mix. The following section provides a summary of how these differences are reflected in rural bank loan portfolios.

Rural Banks' Operating Characteristics In order to evaluate relative operating and performance characteristics, call report data are examined for a sample of Arkansas-based banks during 1998. For the purposes of this study, a rural bank is defined as an independently chartered bank Chartered Bank A financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, but usually a chartered bank in operation has obtained government permission headquartered in an Arkansas county neither in nor bordering a metropolitan statistical area (MSA (Metropolitan Service Area) An urban area with at least 50,000 people plus surrounding counties. There are 306 MSAs and 428 RSAs (rural service areas) in the U.S. MSAs and RSAs are used to allocate cellular licenses. ). Application of this definition produces 36 rural counties. For comparison purposes, urban banks are defined as independently chartered banks headquartered in MSAs; excluding the Arkansas counties located in MSAs centered in other states (i.e., Texarkana, Texas Texarkana, Texas is a municipal designation in Bowie County, Texas, United States which forms the western half of Texarkana. It is separated from Texarkana, Arkansas, by State Line Avenue. and Memphis, Tennessee For the ancient Egyptian capital, see . Memphis is a city in the southwest corner of Tennessee, and the county seat of Shelby County. Memphis rises above the Mississippi River on the 4th Chickasaw Bluff just below the mouth of the Wolf River. MSAs). This definition produces 10 urban counties. The sample of banks includes 35 urban banks and 54 rural banks. The number of banks in the sample appears small due to the fact that several rural counties are served only by branches of banks headquartered in other counties, and that many banks serving Arkansas are not headquartered in the state. Given the positive economies of scale as well documented and expected in community banking, the relative sizes of urban and rural banks becomes of interest. Not surprisingly, urban banks tend to be much larger than rural institutions. Table 3 lists the twenty largest Arkansas based banks in 1998 based on total assets. It is noteworthy that the top eight are urban banks, and rural banks account for five of the top twenty. The largest urban banks were nearly double the size of the largest rural banks. The size differences also obtain in the sample averages, with the average urban bank having 1998 average assets of almost $112 million more than the average rural bank. [2] The urban banks also tend to be more leveraged, as indicated by their higher equity multiplier Equity Multiplier A measure of financial leverage calculated as: Total Assets / Total Stockholders' Equity.

Like all debt management ratios, the equity multiplier is a way of examining how a company uses debt to finance its assets. (the ratio of assets to equity capital). Given the urban banks average size advantage and the existence of scale economies, one would expect that urban banks would be more costeffective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. . That is, the urban banks should be able to spread their operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. over a larger asset base and operate more efficiently. However, the expense ratios summarized in Table 4 indicate that Arkansas urban banks do not achieve significant economies of scale relative to their rural counterparts. Rural banks have higher profit margins and lower ratios of non-interest expense as a percent of average assets (2.72 percent versus 3.32 percent). Rural institutions also have lower overhead as a percent of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (57.0 percent versus 63.68 percent) and lower personnel expenses relative to operating income (31.21 percent versus 33.54 percent). These tower expense ratios indicate that any economy of scale advantages of the generally larger, urban banks are more than offset by lower labor and general overhead cost advantages of rural institutions. Although there are significant differences in the state's urban and rural economies, Table 4 shows little urban/rural variation in the rates paid to depositors or charged to loan customers. The financial ratios labeled as "Average Rates" measure the rates paid on deposit liabilities and received on loans. Average rates in 1998 were almost identical between the two markets. While this result does not preclude preclude tr.v. precluded, precluding, precludes 1. To make impossible, as by action taken in advance; prevent. See Synonyms at prevent.

2. the existence of some pockets of pricing inefficiency or market power concentration, it does provide evidence that no general pricing disparity exists between urban and rural institutions, Consistent with the economic differences discussed earlier, significant disparity exists between the loan composition of the urban and rural banks. As Table 2 shows, agriculture and proprietary business activity make a greater contribution to rural personal income and employment in rural areas. The ratios in Table 4 indicate that rural banks' loan portfolios are more concentrated in commercial and industrial (C&I) loans than the urban banks. They are, however, less focused on non-agricultural small business lending than urban banks. Urban institutions tend to make more small business loans (as measured by commercial loans under $250,000) relative to their total loans. Therefore, while rural banks are more focused on C&I lending in general, they do not invest as heavily in small C&I loans. In addition, rural bank portfolios have a higher proportion of consumer and agricultural loans than their urban peers. The ratios for agricultural anti commercial loans reflect the more agrarian and proprietary nature of the rural Arkansas economy. Finally, higher levels of real estate lending and generally higher loan to deposit ratios of urban banks are consistent with faster population growth in the MSAs relative to rural areas. Rural Bank Performance Selected performance ratios for both urban and rural banks are summarized in Table 4. As indicated by the difference in ratios of non-interest income to total assets, urban banks focus more intently on fee generating services as a revenue source. Rural institutions have generally higher levels of non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. and loan loss reserves. While this result is consistent with the higher levels of consumer and agricultural loans in rural bank portfolios, differences in credit risk related ratios between urban and rural institutions are not statistically significant. During 1998, rural banks had higher profit margins than urban firms (13.98 percent versus 11.62 percent). In addition, average asset utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be is only slightly higher for urban institutions. The combined effect of higher profit margins and similar asset utilization levels results in higher rural bank asset returns (ROAs). However, due to their higher degree of leveraging, urban banks experienced higher returns on equity. This result is not surprising as larger banks traditionally employ greater leverage. Furthermore, banks with rapid asset growth often experience decreases in their capital ratios and increases in their equity multipliers. Table 5 summarizes the most striking differences between urban and rural Arkansas-based banks. During the period 1996-1998, net income, asset, and loan growth was much higher for urban institutions. While much of the growth can be attributed to mergers and acquisitions, the results

also mirror the disparity in population and personal income growth among Arkansas' urban and rural counties. Conclusion Arkansas bank portfolios, operating characteristics, and growth rates are largely dependent on whether the institution is situated in a rural or urban environment. Higher income, wealth, and growth rates in Arkansas' MSAs have translated to higher bank asset and loan growth in those areas. Although urban banks are, on average, considerably larger than rural banks, the urban/rural dichotomy dichotomy n. pl. dichotomies 1. Division into two usually contradictory parts or opinions: "the dichotomy of the one and the many" Louis Auchincloss. produces different operating and performance comparison results than the large/ small asset size dichotomy studied by Hall and Shull. Hall and Shull find that large banks (assets $100 million) have greater profit margins than smaller banks. This, coupled with large banks' higher leverage meant greater returns to equity for the large banks. However, when we compare banks based on locale (programming) locale - A geopolitical place or area, especially in the context of configuring an operating system or application program with its character sets, date and time formats, currency formats etc. Locales are significant for internationalisation and localisation. , we find that rural banks experienced higher returns on assets in 1998, due in part to the fact that rural banks had lower personnel expenses and higher overall profit margins than their urban counterparts. Notwithstanding their higher ROAs, the comparatively lower equity multipliers of rural institutions drove down their returns to equity relative to urban banks. When we examine loan portfolio composition based on bank locale, we find that urban and rural banks' loan portfolios reflect the local economy and demography demography (dmg`rf), science of human population. Demography represents a fundamental approach to the understanding of human society. . Urban institutions tend to have higher loan to deposit ratios, generate more fee income, and concentrate more of their loan portfolio in real estate. For their part, rural banks maintain higher levels of agriculture, consumer, and total C&I loans as a percentage of their total loan portfolio. Interestingly, however, the generally smaller rural banks do not focus as heavily on small C&I loans. In addition, no appreciable appreciable adj. Possible to estimate, measure, or perceive: appreciable changes in temperature. See Synonyms at perceptible. difference was noted among rural and urban institutions with regard to their deposit costs or loan rates. Based on these results, no evidence is found to indicate that any appreciable scale or market power differences exist between institutions situated in MSAs and those in rural areas. Finally, consistent with

demographic See demographics. ..... Click the link for more information. changes and continued industry consolidation, the most recent data indicate that Arkansas-based banks are continuing to grow at a rapid pace, with the highest growth rates concentrated in urban counties.