Universal Health Coverage has risen quickly to the top of the global health policy agenda, yet debates around how best to deliver healthcare to achieve UHC – and the role of the private sector -are often unhelpfully polarised.
This blog attempts at ‘setting the scene’ as discussed in a joint session by Oxfam and the Global Public Health Unit of the University of Edinburgh last year in the International Conference on Public Policy in Milan. The blog introduces key concept of Public Private Partnerships (PPP), its rising salience and the basic premise it rests on, and discusses the nature of private sector and issues relevant to achieving the UHC goals.
The rhetoric of public private mix:
Public private partnership has emerged as key priority within the framework of Universal Health Coverage (UHC), as a gateway to improved access to services -even if in its most narrow sense of expanding coverage. There has been a sharp rise in partnerships with the private sector – not only in Europe and other high income countries, but increasingly in Low and Middle income countries (LMIC) – to deliver health care infrastructure, clinical and non-clinical services, technology systems, and manage facilities.
Interactions between the public and the private sector are not new, especially in LMICs where health systems are historically characterised as pluralist and hybrid. However the ascendency of private sector in the last two decades can be attributed to the rise of the Public Private Partnerships paradigm; a post 1990s development. Such paradigm proposes a re-evaluation of the structure and function of government in relation to delivery of public services based on the assumption that hierarchical bureaucracy- the organisational form of the public delivery system is inefficient and that introduction of market mechanisms can substantially enhance its efficiency (Osborne 2000, Mills 1995).
Broadly guided by the theoretical foundations of ‘new public management’, such paradigm is concerned with injecting ‘business like practices’ into public sector agencies (Shaw 1999, 2004). Advocates for this model also argue that by increased diversity of provision, partnership initiatives secure better quality infrastructure and services at ‘optimal’ cost and risk allocation (Kwak et al 2009, Roehrich et al 2014). Overall, the literature often portrays PPPs as win-win arrangements in weak, under-resourced and deficient public systems.
However, while the partnership agenda gains currency in health (and other public) policy debates, important gaps remain in its understandings, both conceptual and empirical, and practitioner comprehension of what constitutes the private sector.
First, there is ambiguity in defining the ‘private’. Without adequate differentiation of the nature, scale and scope of the private sector engaged, evidence from one experiment involving a certain private entity on a particular health problem is used selectively to justify and legitimise involvement of ‘private’ sector at large. This is clear in the mix-up between profit making private sector and non-profit organisations.
Non-profit, non-governmental and faith based organisations including networks of people affected by particular health problems, mainly HIV, are gaining prominence. Their role in health care, especially service delivery, has significantly diversified in recent years and is no longer restricted to undertaking outreach work in family planning and reproductive health services for governments. Partnering with well-established faith based organisations in Africa or NGO managing primary health centres in India have distinct implications for health systems and governance than posed by engaging for-profit private sector such as health insurance companies.
The commercial sector on the other hand is very diverse and heterogeneous: including practitioners (of mainstream and traditional medicine), pharmacies, hospitals, pharma and medical devices companies, products manufacturers, suppliers and retailers, as well as other actors in the non-health sector such as insurance companies. On one end of the spectrum, there are informal sector, often under qualified providers offering the only source of care (or drugs) available to certain populations. On the other end there are large corporate (national or multinational) hospitals at the receiving end of substantial investments from international agencies such as the International Finance Corporation, multinational companies as well as State subsidies through arrangements involving their empanelment in national and state health insurance schemes. In the middle are small scale private enterprises such as clinics, nursing homes, drug vendors and pharmacies or larger non-health sector corporations, e.g. cement, automobile companies establishing/running anti-retroviral treatment centres (and other facilities) through partnerships with public sector under national disease control programmes.
Subsuming such widely differing arrangements under a common label of ‘public private partnerships’ obscures important distinctions between interactions and creates a false sense of novelty of the PPP approach. Engaging these diverse actors has distinct implications (and raises different concerns) for achievement of UHC goals. Distinguishing these will allow for a better assessment of their real scope and ability (or inability) to contribute to UHC goals, and explain variation in practice based on separation of ownership and risk bearing between the public and private.
Second, there is significant variation in the meaning and practice of partnerships. The term is used loosely to refer to almost any kind of arrangement (including ‘contracting in’) between the ‘private’ and the ‘public’. Partnering has extended to describe a wide range of activities involving an ever-expanding web of relationships between donors, governments, NGOs, community members, and corporate and business houses and their representatives (Kapilashrami 2010). Further, while there is a reasonably sized body of literature (empirical and conceptual) describing and evaluating global health PPPs (likes of the Global Fund to fight AIDS TB and Malaria, Roll back malaria, GAIN) and their country level interactions, a huge gap exists in understandings of PPPs at national and sub-national level.
Third, there are significant gaps in understanding the dynamics of PPP arrangements: these are not discrete models of interaction between one public, one defined private entity for example insurance companies or pharmacies. These are often complex incremental in nature and need to be seen in the changing political economy of health systems. This is evident from state partnerships that engage insurance companies and other private entities as third party administrators managing purchasing of care through provisions that engage private facilities to provide services at primary, secondary, tertiary level.
Subject to the nature of private sector agency partnered with and the design/ nature of partnership, important questions arise for achieving the goals of UHC.
Partnership with private sector is portrayed as win-win arrangements (Sanbrailo 2013). However, such projections disregard the heterogeneity in the private sector, and lack any systematic assessments of their effects, pathways through which health sector goals are influenced, and any uncertainties and in-coherences arising from their operations. Thus, careful and comprehensive assessment of the nature, scale and scope of these initiatives, alongside their underlying assumptions is an undeniable necessity for progressing the UHC agenda.
Kapilashrami A. and McPake B. (2012). Editor’s Choice:Transforming governance or reinforcing hierarchies and competition: examining the public and hidden transcripts of the Global Health initiatives and HIV in India. Health Policy Plan. 28(6):626-635
Kapilashrami A. (2010) Public private partnerships: The discourse, the practice and the system-wide effects of the Global Fund to fight AIDS, TB and Malaria. A case of HIV management in India. PhD Thesis. Queen Margaret University, UK
Kwak, Y. H., Chih, Y., & Ibbs, C. W. (2009). Towards a comprehensive understanding of public private partnerships for infrastructure development. California Management Review, 51(2), 51-78
Osborne SP (ed). 2000. Public-Private Partnerships: Theory and Practice in International Perspective. Routledge: London
Roehrich, J., Lewis, M. K., & George, G. (2014). Are Public-Private Partnerships a Healthy Option? A Systematic Literature Review of “Constructive” Partnerships between Public and Private Actors
Oxfam (2013) Universal health Coverage: Why health insurance schemes are leaving the poor behind
Sanbrailo, J. (2013). Public-Private Partnerships: A Win-Win Solution. Blog on Huffington Post. 09/25/2013
Shaw, R. P. (2004). New Trends in Public Sector Management in Health: applications in developed and developing countries
Private for profit and UHC: a panel discussion at the International Conference on Public Policy, Milan 1-3 July 2015
In 2012, the UN General Assembly unanimously adopted a resolution to encourage governments to transition towards universal access to affordable and quality health-care services. In 2013, the WHO Director-General described UHC as “the single most powerful concept that public health has to offer”.
A range of financing and delivery mechanisms have since been implemented in diverse international contexts, with limited empirical evaluation of their potential to achieve equitable access to universal health coverage. Financing health care will be negotiated as part of the Financing for Development conference in Addis Ababa in July 2015.
There is strong evidence that no country has achieved or made big strides towards achieving UHC without a strong public health system, yet the position of the private-for-profit sector in UHC reforms remains a subject of wide debate.
At the International Conference on Public Policy in Milan (1-4 July 2015), Oxfam and the University of Edinburgh are co-hosting panel discussion that seeks to examine new and existing evidence on the role of the private sector in health – and the paradigm of public- private partnerships. The session aims to enhance understanding and knowledge of the nature and scope of public-private interactions in health, and to critically evaluate the role of the private for-profit sector in health in the context of achieving UHC in low- and middle-income countries. The session will do this by:
The session will have a strong focus on low- and middle-income country experiences, perspectives and debates, but will also welcome relevant evidence and experience from high-income countries.
Five papers will be presented covering the following:
The papers will be discussed by Dr. Mark Hellowell, University of Edinburgh and Professor Rama Baru from Jawaharlal Nehru University.
The session will be co-chaired by Anuj Kapilashrami from the University of Edinburgh and Mohga Kamal-Yanni from Oxfam. Chairs and discussants will also engage the audience through ‘question and answer sessions where panellists will reflect on substantive issues raised by the presentations, panellists’ own research and interjection from the audience.
Readers are invited to participate in the session via sending comments and questions via twitter. Please follow @MohgaKamalYanni @Akapilashrami
Look out for a follow up blog on the conclusions of the session and links to the presentations.
The research papers are available here.
In recent weeks, two separate reports have been released which critique the trend by DFID to increasingly involve the private sector in development, including the provision of health and education.
The first report by Global Justice Now maps a variety of initiatives supported by DFID to open up health and education markets to private firms – from a £25 million project with Adam Smith International aiming to enrol 50,000 more children in private schools in Kenya, to a £7million partnership with Coca-Cola on girls’ education and training in Nigeria. This latter scheme is part of a broader DFID-Coca-Cola collaboration which openly benefits the company’s sales plans, the report reveals. DFID’s support of HANSHEP – or ‘Harnessing Non State Actors for Better Health for the Poor’ – gets a particular profile too, including through their £35 million contribution to a Public-Private Partnerships advisory facility. DFID’s influence is shown to extend beyond the financial commitments it makes, through its advice to governments as they develop private sector-friendly policies for the delivery of services.
The second report by the UK Government’s aid watchdog, Independent Commission for Aid Impact (ICAI), reviews how DFID is working with the private sector to achieve its mandate to tackle poverty around the world. Worryingly it states that ‘DFID should reassess how it appraises, monitors and evaluates its engagements with business to ensure fitness for purpose and a sharper focus on the poor’ and that ‘In some cases… we are not confident that DFID’s support is additional to what businesses would have done anyway’.
For Oxfam, the dangers of the promotion of privatisation of health and education services, especially in relation to the rising tide of global inequality, are clear. Private services benefit the richest first and foremost, leaving people in poverty behind[i]. When health care is sold through the private sector for example, quality care and medicines are often available only to those who can afford it, while poor people may be forced to rely on low-quality or unqualified care like drug hawkers and grocery shops selling medicines[ii].
Indeed ICAI’s report notes that a survey undertaken of a HANSHEP programme operating in Ghana, Kenya and Nigeria – the African Health Markets for Equity – found ‘that less than 1% of people using facilities supported by AHME were from the bottom income quintile in Ghana and other participating countries’.
Prioritising the private sector can see public services eroded as scarce financial and human resources are diverted from the public to the private system, through an internal ‘brain drain’ and expensive public-private contracts. Oxfam’s exposé of a Public-Private Partnership (PPP) hospital in Lesotho, found that the hospital was costing at least three times the amount of the old public hospital it was built to replace for example, amounting to 51% of the total health budget for the entire country[iii]. The International Finance Corporation (IFC) – manager of the DFID-supported PPP advisory facility mentioned above – advised on this PPP arrangement, reaping a $720,000 ‘success fee’ for its work[iv].
When richer people opt out of public systems for health care and education, they also have minimal interest in promoting spending on public services or demanding better quality, as well as less incentive to pay taxes. Thus a downward spiral of deteriorating quality can be set in motion[v]. The result is a 3 tiered system of five star services for the richest people, and a mixture of deteriorated public and unqualified private providers for the poorest. Inequality and poverty thrive.
The same tiered system also develops in education, where children of rich families often attend elite private schools and universities, while poor and lower-middle class children may have a choice between poor quality private education or deteriorating public schools. DFID, as well as other donors such as the World Bank, has been heavily promoting for-profit “low-cost private schools” for delivering better learning outcomes. However, the evidence on quality in these schools is weak. They rely on untrained teachers, standardization and scripted lessons to keep costs down. Moreover, we know that any kind of school fees – as well as other related costs like uniforms and transportation – will block access to schooling for children from the poorest families. Relying on fee-charging schools to deliver education will mean that too many of the world’s future Einsteins and Beethovens will be lost – shut out from accessing a quality education because of their poverty.
Profit-making companies also have clear interests in pushing for their own increased role in social sectors. In South Africa, private health insurance firms have been accused of lobbying against a new National Health Insurance Scheme that promises to provide essential health care for all.[vi] In the USA alone, the pharmaceutical and healthcare sectors spent more than $487m on lobbying in 2013, more than was spent by any other sector[vii].
Debates on the role of public and private actors in health and education are increasingly relevant as the development community prepares for this summer’s Financing for Development (FFD) summit, where mechanisms for financing the new post-2015 development goals will be discussed. A submission led by the International Chamber of Commerce (ICC) responding to the draft negotiating text for the Summit, pushes the insertion of new language to promote ‘blended finance’ (public and private) and a bigger role for private finance, including ‘using limited public finance to mobilize private’. In one shocking suggestion, the submission also advocates for the commitment to ‘move away from harmful, unsustainable [private sector investments]’ to be deleted too.
It is critical that any public funds used to leverage private investment, and private finance generally, comply with development effectiveness principles and be subject to robust environmental and social safeguards, be fully transparent and accountable, and be equitable in risk and benefit sharing between governments, donors and private investors. Public Private Partnerships (PPPs) should be considered only where evidence of effectiveness is abundant and where alternative delivery options are not. Sustainable development criteria for PPPs should be adopted and endorsed by the private sector and by governments. Such criteria should also include the PPP design and implementation process being fully owned by the ostensible beneficiaries, full transparency of contracts and terms, and assessment in terms of equitable and affordable access to infrastructure and services. Oxfam, together with other agencies, have developed a series of sustainable development principles to guide how public-backed private finance is used.
DFID should learn from past experiences and revise its support for private sector financing and delivery of these critical services, prioritising instead investments in strong public services that can deliver universal health coverage and education for all.
[i] Basu et al found that the private sector in health care tends to serve higher socio-economic groups for example. Basu et al (2012) ‘Comparative Performance of Private and Public Healthcare Systems in Low- and Middle-Income Countries: A Systematic Review’, PLoS Medicine, Vol. 9., Issue 6. http://www.plosmedicine.org/article/fetchObject.action?uri=info:doi/10.1371/journal.pmed.1001244&representation=PDF
[ii] Oxfam (2009) ‘Blind Optimism. Challenging the myths about private health care in poor countries’, pp.10-12, http://policy-practice.oxfam.org.uk/publications/blind-optimism-challenging-the-myths-about-private-health-care-in-poor-countries-114093
[iii] Oxfam (2014) ‘A Dangerous Diversion. Will the IFC’s flagship health PPP bankrupt Lesotho’s Ministry of Health?’ http://policy-practice.oxfam.org.uk/publications/a-dangerous-diversion-will-the-ifcs-flagship-health-ppp-bankrupt-lesothos-minis-315183
[v] T. Smeeding (2005) ‘Public Policy, Economic Inequality, and Poverty: The United States in Comparative Perspective’, Social Science Quarterly, Vol. 86 (suppl): 955-83.
[vii] Oxfam (2015) ‘Wealth: Having It All and Wanting More’. https://www.oxfam.org/en/research/wealth-having-it-all-and-wanting-more
Question: What do the following have in common?
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.
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.