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.
Civil society groups at the recent World Health Assembly criticized the continued focus on insurance schemes in the push for Universal Health Coverage (UHC), which all too often includes significant private sector participation. Evidence to support the claim for private sector involvement of this kind remains extremely thin and a new study by the Municipal Services Project shows it could jeopardize public health in the South.
The study compares health outcomes in Chile and Costa Rica, two countries that have come to epitomize contrasting approaches to ‘Universal Health Coverage’ in Latin America. Chile’s focus has been on insurance-based UHC while Costa Rica has built a single public health system. The research provides strong evidence to show that there are widespread and consistent advantages to promoting UHC through a strong public system that funds and provides all medical and preventive services to citizens rather than through a fragmented public-private mix.
It is important to note that both countries have achieved the lowest infant mortality rates and the highest life expectancies in the region thanks to major advances in primary care. But Chile’s health ‘market’ has led to inefficient use of resources, with higher administrative costs and more irrational medical procedures (e.g. caesareans) resulting from oligopolies and collusion among private providers.
One of the major goals of UHC is financial protection for poor households when they face illness. Yet Chileans systematically need to make higher out-of-pocket payments to get medical care in comparison with Costa Ricans. This situation is produced in part by the fact that Chileans pay for health conditions, services or products that are not covered by their insurance (e.g. prescription drugs).
In contrast, Costa Rica’s public health care system remains relatively affordable and more efficient, with total per capita health expenditure standing at US$811 compared to US$947 in Chile. Importantly, Costa Rica has also consistently prioritized preventive health care. Expenditure on prevention and public health services from 2002-2006 in Costa Rica is more than double that of Chile (6-7% vs 2-3%). This focus on prevention is more cost-effective and can yield greater public health impacts in the long term.
Using comparable data (Latinobarómetro), the Municipal Services Project study shows that twice as many people reported facing access barriers to health care in Chile compared to Costa Rica, citing distance to hospital, time to obtain an appointment, and cost of seeing a doctor as the major reasons. In addition, lack of access to health services as a result of financial barriers in Chile still stands at 4.2% compared to 0.8% in Costa Rica.
Costa Ricans continue to be largely satisfied with the quality of their healthcare services, more so than Chileans. Interestingly, LAPOP 2012 results show that most people in both countries think that government, rather than the private sector, should be responsible for health care (71.1% in Chile and 67.5% in Costa Rica).
According to the notions of “active purchasing” and “managed competition” – frequently used to promote insurance schemes – the existence of different providers competing for resources should have produced higher levels of quality at lower costs in Chile. The evidence presented in this report shows that such assumptions are not always true.
The Chilean health system is an example of how segmentation produced by the coexistence of private and public insurances is detrimental to efficiency and equity. Collusion among private providers and oligopolies are realities that are ignored in the competition argument.
Debates over the best institutional arrangements to organize universal health care are far from over, but this case study demonstrates that insurance schemes as promoted by some proponents of the UHC agenda are neither the only nor the best option.
Luis Ortiz Hernández is Professor in the Health Care Department, Universidad Autónoma Metropolitana Xochimilco, Mexico and visiting professor at Queen’s University, Canada. His most recent publication, “Chile and Costa Rica: Different roads to universal health in Latin America,” is available here.
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.