Free and Public

IFC’s ‘model’ health public private partnership threatens to swamp country’s health budget

Lesotho has a new hospital – built and operated under the first public-private partnership (PPP) of its kind in any low-income country. The IFC advice and promise was that it would cost the same as the public hospital it replaced. Instead the PPP hospital is costing the government 51% of their total health budget while providing 25% returns to the private partner and a success fee of $723,000 for the IFC.

In a report released today, ‘A Dangerous Diversion’, Oxfam and the Consumer Protection Association (Lesotho) explain how the Lesotho health PPP was developed under the advice of the International Finance Corporation (IFC – the private sector investment arm of the World Bank) and now costs the government $67 million per year, or at least three times the cost of the old public hospital. The hospital is reported by the IFC to be delivering better outcomes in some areas. But the biggest concern is that as costs escalate for the PPP hospital in the capital, fewer and fewer resources will be available to tackle serious and increasing health problems in rural areas where three quarters of the population live.

A consortium called Tsepong Ltd – among whose shareholders are South African healthcare giant Netcare – won an 18-year contract to build and run the new 425-bed hospital. Its return on investment is 25%. The PPP is the first of its kind in a low-income country and more ambitious and complex than the majority of PPPs attempted in high-income contexts. Not only is the private consortium responsible for designing, building, maintaining and partly financing the hospital, it also provides all clinical services for the contract period.

Since well before the PPP contract was even signed (in 2009) the IFC was busy marketing it a major success, proposing it as a model for other countries to replicate. In 2007, Bernard Sheahan, the IFC‘s Director of Advisory Services, said:

‘This project provides a new model for governments and the private sector in providing health services for sub-Saharan Africa and other regions. The PPP structure enables the government to offer high-quality services more efficiently and within budget, while the private sector is presented with a new and robust market opportunity in health services.’

And despite a significant body of evidence highlighting the high risks and costs associated with health PPPs in rich and poor countries alike, similar IFC-supported health PPPs are now well advanced in Nigeria, and in the pipeline in Benin. The IFC’s health PPP advisory facility has financial backing from the governments of the UK, the Netherlands, South Africa and Japan.

So why is the PPP so expensive? There are multiple and wide-ranging reasons outlined in the new report and in a previous blog authored by Dr John Lister on this site. Some of these seem inherent to health PPPs and raise serious questions about why the model was pursued in a low-income, low-capacity context. Other cost increases appear to be a result of bad advice given by the IFC.

It is accepted that borrowing capital via the private sector will always be more expensive than governments borrowing on their own account. The theoretical cost saving and value for money potential of PPP financing and delivery therefore lies in effective risk transfer to the private sector and, in turn, the effective management of that risk by the private sector in the form of improved performance and greater cost efficiency in its operations. In the case of Lesotho, this potential benefit has not been realised, and the costs are already escalating to unsustainable levels. As savings on clinical services have not been delivered, it is even more important to raise serious questions about why cheaper public financing options were not pursued.

The biggest losers of the Lesotho health PPP are the majority of Basotho people who live below the poverty line in poor rural areas, who have little or no access to decent healthcare and where mortality rates are high and rising. Amongst the most severe challenges facing the health system is the shortage of health workers. Yet while the budget line covering the health PPP will see a 116% rise in the next 3 years, the health worker budget will see below inflation annual increases of just 4.7%.

As the country‘s health financing crisis escalates, the option of reintroducing and increasing user fees at primary and secondary level facilities has already been tabled for debate. Such a devastating and retrograde move in Lesotho would further exacerbate inequality and increase rather than reduce access to healthcare for the majority of the population. World Bank President, Jim Yong Kim, recently stated that user fees for healthcare are both unjust and unnecessary. In an interview just last week in the UK’s Guardian newspaper Kim said:

“There’s now just overwhelming evidence that those user fees actually worsened health outcomes. There’s no question about it. So did the bank get it wrong before? Yeah. I think the bank was ideological.”

To ensure ideology rather than evidence is not driving the IFC’s continuing promotion of health PPPs in poor countries, our report calls for a fully independent review using peer reviewed evidence to question the appropriateness, cost-effectiveness and equity impact of this model. Oxfam and the Consumer Protection Association (Lesotho) also say that the IFC’s role in exposing Lesotho to such a high-risk, high-cost long-term contract should be investigated and, until then, the World Bank should stop all IFC advisory work in support of health PPPs.

 

Anna Marriott is the author of A Dangerous Diversion’ and editor of Global Health Check.

 

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Universal health: from private coverage to public care

This great new two minute video captures the motivation and the rationale for the movement against a greater role for the private sector in the health care systems of low- and middle-income countries.

 

 

The video highlights the manipulation of the Universal Health Coverage agenda to serve the interests of profit making companies while simultaneously starving already crumbling public health services from badly needed investment.

 

 

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Health insurance schemes are leaving the poor behind

Manana Mikaberidze, 52, is a doctor from the Gori region of Georgia. There are lots of poor people in the village, and people don'‚t have money to buy medicine. The lucky ones who do have health insurance are able to get free consultations but post treatment and medicines aren'‚t included. Manana often uses her own salary to buy medicines for patients who cannot afford to pay themselves.

In a new report published today, Oxfam is warning that health insurance schemes introduced in the name of universal health coverage (UHC) are excluding the majority of people and leaving the poor behind.

While the new growing momentum for UHC is welcome there is a concern that the mistakes of history could be repeated. The optimism in 1978 following the Alma Ata ‘Health for All’ declaration was quickly replaced by disillusionment as influential donors failed to act on the shared vision of comprehensive universal primary health care.  They financed low cost selective interventions instead. Today, a similar danger exists as we witness a wide range of ‘business as usual’ interventions being rebranded as ‘UHC’ despite them bearing little resemblance to the World Health Organisation’s UHC principles.

This is certainly the case for health financing. Our new report takes a critical look at the almost exclusive focus of some donors and low and middle income countries on contributory insurance schemes as the way to achieve UHC. Such schemes fail to provide coverage for the majority of citizens and serve to divert attention away from needed reforms to national and international tax systems that could raise significant additional revenues for health.

Voluntary insurance – private and community-based – has never worked to achieve UHC yet is still being widely promoted. India’s voluntary RSBY insurance scheme for people below the poverty line is widely praised as a success but offers limited financial protection and has skewed public resources to curative rather than preventative care.

For those who recognise the pitfalls of voluntary schemes, social health insurance (SHI) has emerged as the model of choice. SHI has worked to achieve UHC in a number of high-income countries, but attempts to replicate in poorer countries have proved unsuccessful. In practice SHI schemes usually start with the small number of easy-to-reach formally employed and then struggle to scale up beyond. Premiums are too expensive for most and schemes become de facto voluntary, leading to large scale exclusion. Ten year old national insurance schemes in Tanzania and Ghana cover only 17% and 36% of citizens respectively. Kenya’s National Hospital Insurance Fund – established nearly 50 years ago – today insures just 18 per cent of Kenyans.

Hopes that insurance contributions from those outside of formal employment would raise significant additional revenue have also not been realised. In Ghana, premiums paid by the informal sector contribute just five per cent towards the cost of the national scheme. Governments also face huge bills to cover the SHI contributions of their workers. The Government of Tanzania spent $33m on employer contributions in 2009/10; this equated to $83 per employee – six times more than it spent per person, per year on health for the general population.

Instead of importing inappropriate health financing models from high-income countries, our paper recommends that developing country governments look to learn from the increasing number of home-grown UHC success stories in other, more comparable countries.

The countries making most progress towards UHC agree that entitlement to health care should be based on citizenship and/or residency (not employment status or financial contribution) and while specific journeys differ, these countries fall into two broad camps. First there are examples of countries at all income levels, including Sri Lanka, Malaysia, and Brazil, which use tax revenues to fund UHC. A second option increasingly being adopted by another set of successful UHC countries, including Thailand, Mexico, and Kyrgyzstan, is to collect insurance premiums only from those in formal salaried employment, and to pool these where possible with tax revenues to finance health coverage for the entire population. According to WHO, only eight of 49 low-income countries will be in a position to fully finance UHC from domestic resources in 2015 so international aid will continue to play a crucial role.

The focus on health insurance seems to have served as a distraction for the international health community from the key ingredient for all UHC success stories – public financing. Rather than focus efforts on collecting contributions from people who are too poor to pay, governments and donors should look to reform national and international tax systems in order to generate significant and urgently needed revenue for health. Oxfam estimates that strengthening tax administration alone could raise an additional 31 per cent of tax revenue across 52 developing countries, amounting to $269bn in increased domestic resources. Enough to double health budgets in these countries.

The growing momentum for UHC is welcome, exciting, and challenging. However, if we are to heed World Bank President Jim Kim’s warning that UHC could easily become a ‘toothless slogan’, then UHC advocates must stand true to the WHO UHC principles to reduce out of pocket payments, introduce mandatory pre-payment, create large risk pools and scale up public financing to cover those who cannot afford to contribute. To these we add that entitlement to health coverage should be based on citizenship and/or residence, and that progress can only be considered progress if women and men living in poverty benefit at least as much as the better off at every step of the way towards UHC.

 

Oxfam’s report ‘Universal health coverage: why health insurance schemes are leaving the poor behind’ is available to download from www.oxfam.org/uhc

 

Anna Marriott is a Health Policy Advisor for Oxfam and editor of Global Health Check

 

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Private health providers are NOT more efficient, accountable or medically effective

In 2009 Oxfam published “Blind Optimism: Challenging the Myths about Private Health Care in Poor Countries,” to help redress what we saw as an international health discourse increasingly dominated by unchallenged private sector advocates.  Some of those same advocates accused Oxfam of being purposefully selective with the evidence.

The health team at Oxfam were therefore very pleased to see the recent publication of a thorough and balanced independent appraisal of peer-reviewed evidence on this topic in PloS Medicine. The study supports many (not all) of our conclusions about both the public and private sector.

In their research Basu et al. assess the comparative performance of the private and public sectors in health across a range of health system performance areas. They are clear that comparative evidence is often lacking and that distinctions between what is public and private are often difficult (for example when public facilities act more like commercial operators by charging fees). With these limitations acknowledged, the authors’ own conclusion states:

‘Studies evaluated in this systematic review do not support the claim that the private sector is usually more efficient, accountable, or medically effective than the public sector; however, the public sector appears frequently to lack timeliness and hospitality towards patients’.   

Like Oxfam, the authors of this comparative study make special note of the World Bank as an influential advocate of public-private partnerships in health, but one whose claims are often unsubstantiated by their own data. The authors raise concerns about a conflict of interest for the World Bank that may undermine the validity of their research and analysis on this topic.

Some highlights from the paper are listed below (though I recommend reading this important article in full – especially for interesting country examples):

Access and responsiveness

  • A significant proportion of services in some developing countries are provided by the private sector but figures vary enormously by country and by income level. When informal or unlicensed providers are excluded, the public sector provided the majority of care in 19 out of 22 low- and middle-income countries for which World Bank data is available.  
  • Studies that measured utilization by income levels tended to find the private sector predominately serves the more affluent. In Colombo, Sri Lanka, where a universal public health service exists, the private sector provided 72% of childhood immunisations for the wealthiest, but only 3% for the poorest.
  • Waiting times are consistently reported to be shorter in private facilities and a number of studies found better hospitality, cleanliness and courtesy and availability of staff in the private sector.

Quality

  • Available studies find diagnostic accuracy, adherence to medical management standards and prescription practices are worse in the private sector.
  • Prescribing subtherapeutic doses, failure to provide oral rehydration salts, and prescribing of unnecessary antibiotics were more likely in the private sector, although there were exceptions.
  • Higher rates of potentially unnecessary procedures, particularly C-sections, were reported at private facilities. In South Africa for example, 62% of women delivering in the private sector had C-sections, compared with 18% in the public sector.
  • Two country studies found a lack of drug availability and service provision at public facilities, while surveys of patients’ perceptions on care quality in the public and private sector provided mixed results.

Patient outcomes

  • Public sector provision was associated with higher rates of treatment success for tuberculosis and HIV as well as vaccination. In South Korea for example, TB treatment success rates were 52% in private and 80% in public clinics. Similar figures were found for HIV treatment in Botswana.

Accountability, transparency and regulation

  • While national statistics collected from public sector clinics vary considerably in quality, private healthcare systems tended to lack published data on outcomes altogether. Public-private partnerships also lacked data.
  • Several reports observed significant public spending being used to regulate the private sector in order to improve patient care quality, and with limited effectiveness.

Fairness and equity

  • Financial barriers to care exist in the public and private sector.
  • Private sector services tend to cater for higher income groups with studies showing exclusion and discrimination against poorer patients and women.
  • Several studies suggested the process of privatizing existing public services increased inequalities in the distribution of services.
  • Private contracting and social franchises showed potential for reaching impoverished groups, though findings are tentative because comparisons to the public sector are unavailable.

Efficiency

  • Contrary to prevailing assumptions, the private sector appeared to have lower efficiency than the public sector, resulting from higher drug costs, perverse incentives for unnecessary testing and treatment, greater risks of complications, and weak regulation.
  • The evidence is mixed (and often weak) on the cost of contracting to private providers – increasing expenditure in some countries whilst reducing it in others.

Other important findings

  • Rather than adding resources, several studies reported that growth of the private healthcare sector, whether independently or via public-private partnerships, directly reduced public funds and staff available for public provision.

And on the World Bank….

  • The World Bank has made strong claims that investing in public-private partnerships will improve efficiency and effectiveness in the health sector, yet several of its publications revealed that these assertions were either unsupported by data or the data was not provided in sufficient detail to pass minimal inclusion criteria for this review’.
  • Despite the lack of data about private sector performance, recent initiatives by the World Bank’s International Finance Committee (IFC) are underwriting the expansion of private sector services among low- and middle-income countries. For example in sub-Saharan Africa, the IFC has created a private equity fund to make 30 long-term investments in private health companies. These conflicts of interest pose a potential threat to the validity of World Bank-sponsored studies and raise the need for independent scrutiny.

The evidence from this study shows that while public health systems are often weak and under-resourced they still deliver better quality of care, more equitably and with greater efficiency than the private sector.  The study highlights the tendencies of private providers to serve higher socio-economic groups, have higher risk of low-quality care, create perverse incentives for unnecessary testing and treatment, and suffer from weak regulation. It also suggests there are a number of ways public health systems can do better.  They must be more responsive to patients and more accountable to citizens, improve systems for distributing essential inputs like medicines, and address financial barriers to accessing care (such as formal and informal fees).

These are legitimate challenges that deserve thoughtful attention and action, but they should not be used as evidence of the superiority of private sector approaches. Instead, the policy response to these findings should be very clear: far more effort and resources must be mobilized to maximize the clear advantages of public health systems, rather than further starving them of the resources and support they need to deliver equitable and quality health care for all.

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Partners in Health call for action against user fees in health care

In a timely call for action (given their co-founder Jim Kim’s recent selection as World Bank President) Partners in Health take a stand against user fees for health care describing them as an ‘unjust rationing system’. They say that despite clear successes when donors support countries to abolish fees, ‘too few partners are stepping up to the plate’.

In their call to action at the end of last week, Partners in Health restate the growing consensus that user fees are inequitable and sharply limit access to health care for the poor; they act as a barrier to achieving the MDGs; they do not raise substantial revenue for the health sector and make public health interventions less effective. They also state that removing user fees increases health care utilization and improves health outcomes for the poor. They draw on some key successes:

Sierra Leone – in the first year (2010) of fee removal, with good donor support, medical care for children under five increased by 214% (2 million additional visits) and the number of maternal complications treated in health units increased by 150%, with a reduced fatality rate in these cases of 61%
Uganda – when fees were removed in 2001, against World Bank advice, use of outpatient facilities increased by nearly 90% nation wide, with strong indication that the poor benefited the most.
Haiti – Following elimination of user fees in six rural primary health care facilities from 2006 to 2009, Médecins du Monde observed a 662% increase in attendance for the 5-14 year old population and a 302% increase in total attendance. Overall preventative care doubled, as did facility-based births.

Without naming names, Partners in Health say it’s time “bilateral and multilateral donors answer this call to action [againt user fees] by acknowledging: (1) the negative impacts of user fees on poor people’s access to health care, and (2) their commitment to working with countries to eliminate these fees without requiring specific pre-conditions [emphasis added].”

Oxfam agrees and has been even more explicit that ensuring the World Bank in particular works with countries to make health care free should be one of Jim Kim’s top three priorities once in office. We have certainly seen some progress on this issue from the Bank in recent years with support being provided for fee removal in Sierra Leone for example. But it’s clear the Bank has a long way to go before they can say they have responded fully to the call for action from Partners in Health.

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Global Health Check was created by Anna Marriott and is currently edited by Mohga Kamal-Yanni