Free and Public

Achieving universal health coverage in Africa: is there a role for formal for-profit providers? By Jane Doherty, School of Public Health, University of the Witwatersrand, South Africa

There is increasing consensus that public financing is required to achieve the financial protection from the costs of using health care that is an essential component of the concept of universal health coverage. However, the other dimension of universal health coverage is access for all to health care services that are both needed and of sufficient quality to be effective (World Health Organisation 2010).

Some donors and international agencies, such as the International Finance Corporation, argue that private, formal, for-profit providers should play some role in extending access to quality care (International Finance Corporation 2007). There are initiatives by international agencies, donors, African governments and others to expand the for-profit private sector in Africa. These include efforts to attract new local and international investors, encourage bank loans to private practitioners, and subsidise for-profit health care businesses (Doherty 2011).

Can this expansion support the principles of universal health coverage? In low- and middle-income countries, for-profit private providers, especially private hospitals, are often costly and located in more urbanised areas. For-profit services are seldom comprehensive and, while they are often perceived to offer superior and more convenient care, there is minimal public monitoring of their quality (Doherty 2015).

There is also evidence that private care is subject to incentives that distort treatment decisions (Berer 2011, Ravindran and de Pinho 2005, Hanson, Gilson et al. 2008, Doherty and McIntyre 2013). The existence of private facilities contributes to the brain drain from the public sector and aggravates the fragmentation of the health system. Further, fair competition is obstructed through unfair practices (such as collusion) as well as unregulated practices such as the ownership by single companies of health insurance companies, health care providers and pharmacies (which makes patients vulnerable to exploitation) (Shamu et al. 2010).

Lastly, powerful private sector alliances compromise governments’ ability to regulate the sector in the interests of national health objectives.

This is not to argue against the fact that some for-profit private providers make very particular contributions to the health systems in which they are located. Some patients prefer some forms of private provision, so private provision should remain an option to complement strengthened public services (Balabanova, McKee et al. 2011). However, in most health systems in developing countries, the private sector is poorly regulated and monitored. Therefore, the perceived benefits of private provision are often offset by the distortions that are introduced by the private sector overall. In particular, for-profit private provision is simply unaffordable for the vast majority of the populations in developing countries.

In the current environment of donors pushing for a strong role for the private sector, policy-makers in Africa (and in other low- and middle-income countries) need to embark on a programme of action to strengthen regulatory frameworks. Such a programme includes policies, legislation and reimbursement mechanisms that incentivize appropriate behaviours by for-profit providers (Hongoro and Kumaranayake 2000, Doherty 2015). Without these actions, investment by donors and funders in the expansion of the private sector will only serve to increase inequality in health care.

The range of actions should address the failings of the health insurance and health provision industries in tandem, as well as the interplay between them. They should include:

  1. developing a sound evidence base on the nature and extent of the private sector, differentiating clearly between different components of the sector and their existing or potential impacts
  1. assembling country-based evidence on where particular arrangements have allowed private provision to be incorporated successfully in universal health coverage strategies (together with the factors explaining the strengths and weaknesses of these arrangements);
  1. exercising greater stewardship over the for-profit private sector by demonstrating the political will and leadership to regulate effectively and in the interests of national health objectives;
  1. developing an over-arching policy on the private sector’s roles and responsibilities in support of the achievement of universal health coverage;
  1. raising the awareness of Competition Commissions regarding the reasons why some behaviours of the private health sector can have an adverse impact on the health system, and necessary strategies to protect national health objectives;
  1. conscientising Ministries of Trade and Development regarding the damaging impact on public health and health systems strengthening of some of their policies that seek to attract investment into the private health sector and stimulate private health businesses;
  1. strengthening government capacity to develop, implement and monitor legislation and other regulations;
  1. making efforts to rationalise, harmonise and strengthen existing regulators;
  1. addressing important gaps in the legislation (including that relevant to health insurers, health providers, health professionals, fair competition and consumer protection);
  1. building strategic alliances with key stakeholders to counteract regulatory capture by groups with vested interests;
  1. introducing a range of price controls for services;
  1. strengthening sanctions against non-compliance with regulations;
  1. ensuring greater transparency on the part of private providers with respect to their underlying costs and quality; and
  1. monitoring and evaluating the impact of the private health sector and its regulation on the health system, including on equitable access, affordability, quality of care and efficiency.

The length of this list underlines the extent to which extensive interventions are required to ensure that the for-profit private sector meets, rather than undermines, national health objectives, including equitable universal coverage and access to quality services. It also underlines the current weaknesses of governments in developing countries in exercising oversight of the private sector.

Accordingly, extreme caution should be exercised, by both governments and development agencies, with respect to promoting further expansion of private provision or health insurance, until solid strategies such as those proposed above can be put in place. Given the capacity constraints facing governments in Africa and other developing countries, it can be expected that progress on these interventions will be slow.

A greater priority than expanding the private sector is surely the strengthening of public sector provision, not only to meet the needs of the majority but also to provide stiffer competition with private providers. Public provision must remain the core function of the public sector.

Equally importantly, it is a priority for governments in Africa to strengthen mandatory prepayment for health care, especially through general taxation but also, where appropriate, through earmarked taxes, including payroll-based payments. The leverage provided by this instrument in incentivizing providers to comply with quality controls and contain costs is arguably far greater than through legislation alone.

References

Balabanova D, McKee M, Mills A (eds). 2011. ‘Good health at low cost’ 25 years on: what makes a successful health system? London: London School of Hygiene and Tropical Medicine.

Berer M. 2011. Privatisation in health systems in developing countries: what’s in a name? Reprod Health Matters; 19(37): 4-9.

Doherty J. 2011. Expansion of the private health sector in East and Southern Africa. EQUINET Discussion Paper 87. Harare: EQUINET.

Doherty J, McIntyre D. 2013. Addressing the failings of public health systems: should the private sector be an instrument of choice? In: Surender D, Walker R. Social policy in a developing world. Cheltenham, UK: Edward Elgar: 101-124.

Doherty J. 2015. Regulating the for-profit private health sector: lessons from East and Southern Africa. Health Policy and Planning; 30: i93-i102.

Hanson K, Gilson L, Goodman C, Mills A, Smith R, Feachem R, Feachem N, Koehlmoos T, Kinlaw H. 2008. Is private health care the answer to the health problems of the world’s poor? PLOS Medicine; 5(11): e233

Hongoro C, Kumaranayake L. 2000. Do they work? Regulating for-profit providers in Zimbabwe. Health Policy and Planning; 15(4): 368-377.

International Finance Corporation. 2007. The business of health in Africa:  partnering with the private sector to improve people’s lives. Washington, D.C.: International Finance Corporation, the World Bank Group.

Marriott A. 2009. Blind Optimism:  Challenging the myths about private health care in poor countries. Briefing Paper 125. Oxfam International.

Ravindran T, de Pinho H. 2005. The Right Reforms? Health Sector Reforms and Sexual and Reproductive Health. Johannesburg: Women’s Health Project, School of Public Health, University of the Witwatersrand.

Shamu S, Loewenson R, Machemedze R, Mabika A. 2010. Capital flows through medical aid societies in Zimbabwe’s health sector. EQUINET Discussion Paper 82 Serie. Harare: Training and Research Support Centre, SEATINI, Rhodes University, EQUINET.

World Health Organisation. 2010. World Health Report. Health systems financing: the path to universal coverage. Geneva: World Health Organisation.

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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.