Inequality in access to quality healthcare is a major health policy challenge in many low- and middle-income countries. This study aimed to identify the major sources of inequity in healthcare utilization using a population-based household survey from urban Nepal. A cross-sectional survey was conducted covering 9177 individuals residing in 1997 households in five municipalities of Kathmandu valley between 2011 and 2012. The concentration index was calculated and a decomposition method was used to measure inequality in healthcare utilization, along with a horizontal inequity index (HI) to estimate socioeconomic inequalities in healthcare utilization. Results showed a significant pro-rich distribution of general healthcare utilization in all service providers (Concentration Index: 0.062, P < 0.001; HI: 0.029, P < 0.05) and private service providers (Concentration Index: 0.070, P < 0.001; HI: 0.030, P < 0.05). The pro-rich distribution of probability in general healthcare utilization was attributable to inequalities in the level of household economic status (percentage contribution: 67.8%) and in the self-reported prevalence of non-communicable diseases such as hypertension (36.7%) and diabetes (14.4%). Despite the provision of free services by public healthcare providers, our analysis found no evidence of the poor making more use of public health services (Concentration Index: 0.041, P = 0.094). Interventions to reduce the household economic burden of major illnesses, coupled with improvement in the management of public health facilities, warrant further attention by policy-makers.
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