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The IFC’s Health in Africa initiative is failing to reach the poor By Jessica Hamer, Report Co-Author

Question: What do the following have in common?

  • A $6.1 million private health insurance scheme for IT workers in Lagos, Nigeria, reaching fewer than 40 per cent of its target beneficiaries; and
  • A luxury IVF clinic launched in a country bearing 14% of the entire global maternal mortality burden

One answer might be that these projects are not designed to deliver health services for the poorest sections of the population. The Lagos insurance scheme excludes all informal sector workers, while one IVF cycle at The Bridge Clinic costs $4,600.

A second might be that both projects make a deeply questionable contribution towards a country’s attainment of Universal Health Coverage (UHC), given their provision of services to small, predominantly urban, and comparatively wealthy elite.

A third is that they have both benefited from investments made as part of the International Finance Corporation’s (IFC) Health In Africa Initiative.

Health In Africa is a $1 billion investment project launched by the IFC in 2008, which aimed to ‘catalyze sustained improvements in access to quality health-related goods and services in Africa [and] financial protection against the impoverishing effects of illness’, through harnessing the potential of the private health sector. Specifically, it sought to improve access to capital for private health companies, and to help governments incorporate the private sector into their overall health care system. Health In Africa would do this through three mechanisms: an equity vehicle, a debt facility, and technical assistance.  Perhaps of most importance, the initiative would make extra efforts to ‘improve the availability of health care to Africa’s poor and rural population’.

Emanating from the World Bank Group, Health In Africa’s focus on delivering health care for people living in poverty makes sense. Anything contrary would be at odds with the Bank’s mandate and overarching goal to end extreme poverty by 2030. Oxfam welcomes World Bank President Jim Kim’s emphasis on the centrality of achieving Universal Health Coverage (UHC) to see this goal attained, and the Bank’s target to deliver health care for the poorest 40% by 2020.

However, it seems that with the Health In Africa initiative, the IFC may be working deeply at odds to these stated World Bank aims. Today, Oxfam launched Investing for the Few, analysing the investments made as part of Health In Africa to date. Oxfam’s assessment of the sporadic investment information available finds that far from delivering health care for the poorest, Health In Africa has favoured high-end urban hospitals, many of which explicitly target a country’s wealthy and expatriate populations.  The initiative’s biggest investment to date has been in South Africa’s second largest private hospital group Life Healthcare.  This $93 million endowment no doubt supported the company in its subsequent expansion (Life Healthcare acquired a 26% stake in one of India’s largest hospital groups in 2011), but there is no evidence it has used this investment to expand access to health care for the 85% of South Africans without health insurance.

Oxfam’s findings show that Health In Africa has also failed to deliver expansion of health care at any sufficient scale or pace to meaningfully contribute towards UHC. Instead the initiative has supported high-cost, low-impact investments. The Lagos health insurance scheme mentioned above cost triple the annual Nigerian government per capita health expenditure for example, and took over five years to secure fewer than 9,000 enrolees. In Nigeria, scaling up to reach UHC at this rate would take over 100,000 years.

Another major concern is the absence of sufficient attempts by Health In Africa to measure its performance. The initiative’s own mid-term evaluation found Health In Africa had failed to define and assess its anticipated results, and that the performance indicators it has used are inadequate to measure any development impact. Whilst an equity fund employed by Health In Africa boasts of its success at reaching patients at the so-called ‘base of the pyramid’, one of the annual income targets used to define this group include all but the top five per cent of earners in sub-Saharan Africa. It is likely Health in Africa’s use of financial intermediaries contributes to this failure to effectively measure impact on poor women and men. Such an arms-length approach to investment brings inherent problems around oversight and transparency.

Oxfam is clear that the IFC must improve the transparency and accountability of the Health In Africa initiative. Our report calls on the IFC to cease all Health In Africa investments until a robust, transparent and accountable framework is put in place to ensure that the initiative is pro-poor, and geared towards meeting unmet need. In addition, it calls on the World Bank Group to conduct a full review of the IFC’s operations and impact to date in the health sector in low- and middle-income countries, to investigate how they are aligned with, and are accountable to, the overarching goals of the World Bank Group: to end extreme poverty and promote shared prosperity.

The IFC needs to fundamentally rethink its activities in health, and ensure any potential projects are aligned with the Bank’s goals. The World Bank Group should focus on supporting African governments to expand publicly provided health care – a proven way to save millions of lives worldwide.

 

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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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Global Health Versus Private Profit

John Lister is well-known as a researcher, writer and campaigner against cutbacks and privatisation in the NHS. But his new book Global Health Versus Private Profit focuses on the changes taking place in global health care systems. It has received glowing endorsements from a number of specialists in the field, and described as “penetrating, highly readable, and extremely well researched”. We caught up with John and asked him to talk about the book.

Can you sum up the book’s main point in two sentences?

Market-style reforms result in health care systems that are more unequal, more costly, more fragmented and less accountable – but which offer more profits to the private sector. That’s why the question really is whether we want to see global health – or private profit.

Who will be interested in reading the book?

This book is for all those working to achieve universal access to health care, and anyone interested in the evolution of international health and the different ways in which the

I also hope it might be read by some of the people  working for the institutions assessed in the book including the WHO, World Bank (and especially IFC),  for national health care systems and for NGOs and donor agencies.  My analysis is based on research, analysis, literature and evidence, and I would be delighted to see a debate on issues which people find contentious. neoliberal agenda has brought its influence to bear on international health over time.

Global Health versus Private Profit offers a detailed analysis of the main “menu” of market-style reforms to health care systems that have been rolled out in country after country, despite the absence of evidence for their effectiveness, and ignoring the evidence of harm that is being done.

These include the emphasis on competition rather than planning and cooperation, the splitting of health care systems into purchasers and providers, privatisation in various guises – including buying in services from the private sector that were previously delivered by public sector providers – the imposition of user fees, and the focus on health insurance and managed care in place of social provision and universal coverage.

Many of these policies are being implemented in rich countries and poor alike, but they are having the most devastating impact on the poorest. They sap vital resources, dislocate and fragment systems, prevent them from responding to health needs, and obstruct the development of planning.

What evidence does the book bring to light of this conflict between global health and private profit?

Perhaps the most important examples come in the chapter entitled “The Missing Millennium Development Goals” which underlines the massive global gaps in provision of care for the growing elderly population, in mental health care and services for people with physical disabilities.

All of this is health need, but countless millions of people can’t pay a market price for care, and so they are the “customers the private sector doesn’t want”. The longer health care is shaped by the quest for private profit the larger these gaps will become.

So are we just looking at wrong-headed ideas, or is there more to it than that?

My book argues that these so called “reforms” are driven not by evidence, but by ideology – but that behind the ideology is a massive material factor: the insatiable pressure from the private sector which is desperate to recapture a much larger share of the massive $5 trillion-plus global health care industry, much of which only exists because of public funding.

That’s why rather than relying on hopes of expanding on the basis of private insurance, the private sector has been eager to get a larger slice from public sector budgets.

Why do you draw specific attention to the UK’s NHS in your book?

The costly experiments with competition, and slicing up publicly provided services to encourage private providers, have gone furthest in England, but that’s partly because compared with other countries there was a more integrated and publicly-provided service to dismantle.

But sadly England is not unique. Similar “reforms” from the same discredited menu are being adapted in different ways to different systems across much of Europe, and are even being driven in to the poorest developing countries where they are even less appropriate and more disastrous in their consequences.

For example, one growing problem is the international spread of “Public Private Partnerships,” to finance new hospitals, many of them drawing on the trail-blazing Private Finance Initiative (PFI) in the UK, which is proving itself to be a major liability, bankrupting hospitals in a cash-strapped NHS.

Despite many costly flaws, failures, and false starts, more PPPs (P3s in Canada) are now under way in OECD countries, but also in Latin America, Asia, South Africa and even Lesotho – in a costly $120m scheme I have written about for Global Health Check.

Where do you get the information for your critique?

I have made a point of using the most up to date material available from the World Bank (and its privatisation wing, the International Finance Corporation) and the IMF, as well as official figures from governments and the rich countries’ club, the OECD.  It’s important to use data that cannot be refuted – and in many case, let’s be honest, these are the only figures available.

Does the book raise any new issues?

I am not claiming to have invented many of the ideas in the book, but I hope I have helped to update, popularise and develop the argument for them.

And my concluding chapter “It doesn’t have to be this way” brings together a lot of different ideas, emphasising that the policies we are opposing are not inevitable products or even a rational response to the current situation, but choices that have been deliberately made by politicians working to a neoliberal agenda. They can be rejected and defeated by mass political action.

How do you hope the book will be used?

As I say in the preface, good ideas must be turned into political action to change the world. Bad ideas must be fought through political action too.

Sometimes good arguments can begin to prevail, such as the success that has been achieved by Oxfam and other campaigners challenging the logic of imposing user fees on health care.

So I hope my book will not sit gathering dust on library shelves, but be brandished — even used as a weapon — by those fighting for change.

A reinforced hardback edition may yet be needed to ensure we win!

 

Health Policy Reform: Global Health versus Private Profit, by John Lister is available from www.libripublishing.co.uk
(use voucher code HPR13 when purchasing to get discounted price of £20).

 

 

 

 

 

 

 

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Don’t try this at home! Lessons from England of what not to do to your health care system

For over 20 years now health system policy makers in developing countries around the world have had to endure a relentless sales pitch from advocates of market-style reforms.

Their menu of routine suggestions will be grimly familiar. These are not the painful measures which are clearly intended to contain spending (cash limits, centralisation of services, rationing and exclusions, “essential packages of care”, and of course user fees – which cut demand for services while seldom raising any significant resources).

The menu of market-style reforms can sound relatively harmless: the purchaser-provider split and “internal markets”; provider payment reforms (maybe even “payment by results”); provider autonomy; competition; outsourcing or privatisation of services; “partnership” with the private sector – even “Public-Private Partnerships”. But the same policies in the UK, have all cost more, not less.

And while it may seem that some of these proposals are to meet specific problems or to rescue failing public health care systems, beware:  these are not tailored solutions, but off the peg “one size fits all” policies – which in practice are equally inappropriate everywhere.

They are the rote learning of academics in wealthy northern countries, who have swallowed whole the illusion that health care can somehow be delivered efficiently, equitably, or economically through a competitive market.

Look at Britain, one of the few wealthy countries to adopt most of these ideas – despite the lack of any evidence that they could deliver improvements or efficiencies. Since 1991, the National Health Service, which for decades had management overhead costs of 5%, has been increasingly subject to a “purchaser-provider split”, initially in the “internal market” created by Margaret Thatcher, then, under Tony Blair, a market involving high cost private providers.

The additional costs of this market split in England have increased overheads to over 14% of NHS spending – an extra  £10 billion per year . Yet still there is no evidence that all the extra cost and bureaucracy have improved the quality of health care.

Tony Blair’s government also introduced highly complex provider payment reforms, the “payment by results” system  – nothing to do with results, since it simply imposes a national tariff (cost per case). This makes it possible to drain money out of the NHS budget to pay private providers.

Are private providers cheaper or better value? No, and no.

 In England Independent Sector Treatment Centres set up by Labour to create a new private sector provider network, charge an average 11.2% above the standard NHS cost. But they cherry-picked only the easiest cases  – leaving the rest to the NHS. And they were given generous 5-year contracts, which paid them for a fixed number of operations, regardless of how few patients chose to use the service. Millions were wasted on this, taking resources from NHS hospitals.

England has experimented with provider autonomy in the form of Foundation Trusts – providers which run outside the main managerial structures of the NHS and are responsible not to the government but an independent regulator.

The first Foundations were set up from the wealthiest, most successful hospitals, and have accumulated surpluses of £2 billion – while NHS hospitals which are not foundations face mounting financial problems. Now ministers want to let them make unlimited money from private medicine, while funding for NHS patients is being sharply reduced.

Competition, outsourcing and privatisation are best assessed by looking at the damage done to hospital cleaning standards by Margaret Thatcher’s government putting cleaning and other support services out to tender in the 1980s, forcing health bosses to accept the cheapest bid. Two decades later hospitals are still struggling with the rising tide of infections and hygiene problems caused.

And as for partnerships with the private sector – the English experience again shows that it’s like sharing a house with a lion. Your ‘partner’ sees you as his lunch.

100 hospitals have been built since 1997 using the “private finance initiative” – in which the private sector has scooped up massive guaranteed long-term profits paid from the public purse. £11 billion worth of new hospitals are set to cost £65 billion – far more than just borrowing the capital. Some early PFI hospitals have already paid back double the cost of the hospitals, but still have 15-20 years to pay. Many PFI hospitals are closing beds and wards in the new hospitals and sacking staff to cut costs: some need rescuing by government.

Now services in the English NHS could be opened up by the new government to competitive bids by “any qualified provider”. But the private sector will only bid for services where it is certain of a profit. So if NHS and non-profit providers are all expected to behave like businesses in a market, who will bid for services which can’t be profitable – like emergency care, mental health or care of the elderly?

The policies only sound tempting until you investigate their consequences. Markets are OK for fruit and vegetables, but they don’t deliver equity – and are not good for health care, where those with the greatest needs have the least ability to pay – and the least political power.

Don’t copy the costly mistakes made in England.

John Lister is a freelance journalist with over 27 years’ experience in analysing health policy for pressure group London Health Emergency, and now senior lecturer in Health Journalism at Coventry University. His PhD is in global health policy, and his books include Health Policy Reform, Driving the Wrong Way? (2005) and The NHS After 60, for patients or profits? (2008).

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Lesotho hospital public private partnership: new model or false start?

A new $120m privately financed hospital in Lesotho capital Maseru, the first in Africa to be built through a “Public Private Investment Partnership” (PPIP), and claimed a “success” by the World Bank, is already mired in controversy.

Just days after finally opening its doors the showpiece 390 bed Queen ‘Mamohato Memorial Hospital, which replaced the crumbling 450 bed Queen Elizabeth II Hospital in central Maseru, hit the headlines when it turned away an expectant 24-year-old woman, Metsana Rapotsane.

The incident triggered an investigation by the Ministry of Health, amid public questions over arrangements for urgent care and emergencies at the new hospital – which according to the World Bank is supposed to “operate as the national referral hospital as well as the district hospital for the greater Maseru area”. 
 
From the outset this project has received significant backing from the World Bank. The private sector arm of the World Bank Group, the International Finance Corporation (IFC), which describes itself as “a pioneer in the implementation of public-private partnerships in health” has supplied technical assistance, and a World Bank International Development Assistance (IDA) grant of US$6.25 million was provided through the Global Partnership on Output-Based Aid. Since before the hospital was built the World Bank’s marketing machine has been in action, showcasing this ‘truly exciting’ partnership as a successful model to be replicated elsewhere in Africa. These claims seem dangerously premature.

The Queen ‘Mamohato Memorial Hospital is built and run by a consortium headed up by South African private medical giant Netcare. The company is struggling to free itself of the disgrace caused by its involvement in the sale of kidneys between 2001 and 2003 – a number of them purchased from children – for which Netcare was fined £700,000 last year, with the possibility of further court action.

The 18-year government contract with Netcare involves the building of the new 390-bed hospital to replace the 450 in the closed Queen Elizabeth II, the provision of clinical services at the hospital and three filter clinics, and the ongoing training of health staff. In addition to the new hospital the PPIP scheme also financed the construction of a deluxe 35-bed private patient unit to serve Lesotho’s wealthy elite. The private unit will be run separately by Netcare who will keep all of the profits.

In return, the Lesotho government will pay a US$32.6m index-linked annual “unitary charge” to Netcare for the hospital and services. Given that the annual budget for the QEII hospital and the filter clinics in 2007/08 was less than $17m this represents a massive 100% increase in costs and throws into doubt claims that the project is ‘cost neutral’. This is at a time of sharply falling government revenues and after the government has already invested $62m ($51m in capital up front and another $11m in infrastructure costs).

The Queen ‘Mamohato Memorial Hospital is “to treat all patients who present at the hospital” – up to “a maximum of 20,000 in-patient admissions and 310,000 outpatient attendances annually”. This seems a very low cap for the country’s main hospital when official figures show a national hospitalisation rate of 3.2% of the population each year, equivalent to 64,000 patients. Patients treated above this agreed maximum will presumably have to be paid for either by the government or patients themselves thus further adding to the cost of the deal. The annual charge for the hospital, soaking up a third of Lesotho’s recurrent health budget[1], also threatens to distort national health spending and likely put desperately needed expansion of primary health care for Lesotho’s majority rural population beyond reach.

The unfavourable terms of the contract can be traced back to a lack of relevant expertise among those in Lesotho negotiating the contract terms and an apparent failure of the IFC, who acted as consultants on the project, to provide sound advice. A “Baseline study” by the Lesotho-Boston Health Alliance warned in 2009 that: “At present, sufficient expertise in hospital operations, financial oversight and analysis and systems analysis to manage the PPP contract in the interests of the Government and people of Lesotho does not exist.”

This was very much to Netcare’s advantage and under the existing agreement its consortium members can profit in several ways:

  • a guaranteed profit on the capital investment,
  • plus a very healthy 10% guaranteed return on its operating budget,
  • plus payment for any additional patients treated above the contract maximum (with no information available to the fees Netcare will be able to charge).
  • an effective government subsidy for the building of a 35-bed private wing at the hospital – with all profits kept by the consortium.
  • Netcare as the largest operator of private hospitals in South Africa can make more money by sending patients for specialist treatment not covered by the PPIP contract, including  radiotherapy to its hospital in Bloemfontein or elsewhere. There appears to be no limit on numbers, or the prices that can be charged for these externally treated patients, and no incentive for Netcare to reduce referrals[2] 

The problems with the PPIP deal are not unique to Lesotho. In the UK, where 100 hospitals have been built through various “private finance initiatives”, £11 billion worth of new hospitals are set to cost UK taxpayers £65 billion – far more than just borrowing the capital. In August this year a UK House of Commons Select Committee report concluded that private financing is an ‘extremely inefficient method of financing projects’.

The new referral hospital is a good deal for Netcare but less good for Lesotho. It also appears inconsistent with the IFC’s commitment, as part of the World Bank Group, to wider values of equity and calls into question whether the World Bank really works in the interest of efficient and equitable public spending for health.

There is no question that a new hospital was urgently needed to replace the QEII. However, did anyone ask whether this could have been better financed through a low interest World Bank loan? The details of the Lesotho PPIP contract have so far been shrouded in secrecy but given that this is the first major hospital built in Africa through a “Public-Private Investment Partnership” a rigorous evaluation of the initiative – including complete transparency about the costs – will be essential.

As it stands it seems a sizeable and growing share of Lesotho’s health budget will be locked in to a scheme that guarantees payments and profits to Netcare and other shareholders at the expense of Basotho patients and taxpayers.

John Lister is a freelance journalist with over 27 years’ experience in analysing health policy for pressure group London Health Emergency, and now senior lecturer in Health Journalism at Coventry University. His PhD is in global health policy, and his books include Health Policy Reform, Driving the Wrong Way? (2005) and The NHS After 60, for patients or profits? (2008).

[1] The recurrent health sector budget in 2010/11 was just over $100 million. Budget Speech to Parliament for the 2010/11 fiscal year.
[2] In 2006/07 FY $24.8 million was spent on 3,281 external referrals, of which 55% were oncology cases. Lesotho Health Systems Assessment 2010, p.22

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Global Health Check is edited by Anna Marriott, Health Policy Advisor for Oxfam GB, and welcomes contributions from different authors. If you would like to write an article for this site or if you have any queries please contact: amarriott@oxfam.org.uk.