These two viewpoints agree much more than they disagree. Both agree that the public sector cannot be ignored and both agree that there is a role for the private sector in improving the health of the world's poorest. The disagreement is about emphasis. Smith et al believe that many countries will benefit more from harnessing the energy of the private sector rather than continuing to invest solely or mainly in the public sector. The public sector, growing evidence of the effectiveness of the private sector, and energetic non-state organisations, are already working to harness the power of the private sector to achieve better health care for all. Evaluation will be crucial, but the most important research question is not ‘Can the private sector help?’ but ‘How can public–private partnerships be made most effective and equitable?’
Public-Private Mix
Is private health care the answer for the world's poor? This article’s starting point is that there are no strong grounds for assuming the superiority of either public or private health care. Theory dictates that it is not whether a health facility is publicly or privately owned that determines health provider performance. Instead, what influences performance is the nature of incentives that providers face and the quality of management and oversight. Theory does, however, suggest that the profit-making incentive dominant in much of the private sector is likely to be problematic for health care. Is there then scope for private providers to be paid through public financing? Past experiences all point to the significant transactions costs of such arrangements and the need for strong and capable contracting units within health ministries.
This article argues that, with a complicated problem such as improving health care under constrained resources, two heads are better than one. The public and private sectors have different strengths and weaknesses, and a judicious blending of the two can produce optimal results. Indeed, there is no health system that is entirely public or private. The reality is that, in most low-income countries, most people receive most of their care from the broadly defined private sector. About 60% of the US$16.7 billion spent on health in sub-Saharan Africa in 2005 was private, most of it out-of-pocket spending by individuals, and about half of this went to private providers. Some countries are now exploring pluralistic models that partner with the private sector to serve public policy goals. These models should be encouraged and supported.
On paper, South Africa has some of the world's best HIV workplace programmes, but on the ground they just aren't adding up. Diamond mining giant De Beers has long boasted that 86% of employees at its six mines have been tested by its voluntary counselling and testing (VCT) programme. The company estimates that 10% of its workforce is HIV-positive, but markedly fewer access the antiretroviral (ARV) treatment programme. Workers' fears about confidentiality, a preference for traditional medicine and poor patient-doctor communication were all cited as challenges to raising treatment numbers, according to an ongoing study by De Beers. The research was presented by the company and the University of KwaZulu-Natal (UKZN) on 6 November at the Private Sector Conference on HIV and AIDS, hosted by the South African Business Coalition on HIV and AIDS (SABCOHA).
This article reviews Klarman’s classic article ‘The case for public intervention in financing health and medical services’. Government intervention still plays an essential role in most public health actions but the links between public health expenditure and health improvement are tenuous and econometric analyses have yielded widely divergent results, leading us to the highly consensual formula that ‘it is not enough merely to increase expenditure on health’. Contemporary analyses agree that efforts to strengthen health systems or to control neglected diseases are underfunded. Increased expenditure on health will be a source of employment for the surplus workforce of the manufacturing sector and the health industry will be the driving force of tomorrow’s economy.
Diseases that dominate the health of most African populations, such as AIDS, malaria, and tuberculosis, have always received a small proportion of the global financial support available for medical science and health interventions. Of the 1393 new drugs approved in the 25 years before 2000, only 13 were specifically indicated for tropical diseases. Health-related public-private partnership organisations have been supported for decades by the traditional public-sector research funding bodies. These major public-sector funding bodies are located in developed countries and, although the situation is changing, direct access to funding has historically been very difficult (or legally impossible) for researchers from developing countries. As a result, even where developing-country researchers have received research funds from such agencies, most of the funding has been channeled through host country institutions. This creates a dependency relationship, as well as multiple bureaucratic hierarchies in administering such grants.
It is a myth that health in Africa is financed primarily by the public sector. About 36% of funding in Africa is from out-of-pocket payments, with 7% from other private sources and 27% from donors. Only 30% of African health care funding is public funding. In addition, 32% of healthcare access for rural Africans comes from the private sector, and 46% of doctors in sub-Saharan Africa work in the private sector. The for-profit private sector provides significant care for sub-Saharan Africans, across income groups, and this is expected to double by 2016. Since there are not enough resources in the public sector and governments cannot rely forever on development partners (donors) funds, Public/private partnership can help expand the pool of human resources.
Pharmaceutical pricing policies are designed with national objectives in mind, but are the transnational implications always taken into account? This study notes that specific characteristics of the pharmaceutical market have given rise to current pharmaceutical prices. Market-based or ‘free’ pricing is common for products not subsidised by coverage schemes. Price regulation exists in most countries but does not necessarily result in lower prices because prices are determined by the respective market powers of the parties involved. Many other types of policies, other than those directly related to pricing, affect the pharmaceutical market and even if policy makers hold common objectives, they may weight them differently when trade-offs are required. More investment incentives for research and development are needed.
This Guidance Note is based on the proceedings of the meeting and offers policymakers and researchers the latest evidence on private-provider networks and franchises, lessons learned in the field, and policy recommendations on how to mobilise private-provider networks and health franchises to help address reproductive health care needs in developing countries. Recent evidence from sub-Saharan Africa indicates that about a third of all family planning methods are obtained through the private sector. For the poor, these expenses can be substantial, even catastrophic. Although specific public policy efforts regarding the private sector largely depend on individual country context, three broad approaches may be useful in guiding discussions: (i) Expanding healthcare access by engaging a range of private sector providers; (ii) Harnessing and organising existing private sector providers into a cohesive network to improve quality and ensure equity; (iii) Shifting the burden of public financing of private healthcare sector among those able to pay for its services.
The UN Secretary-General’s report ‘Delivering on the Global Partnerships for Achieving the Millennium Development Goals’ highlights large gaps in the availability of medicines in the public and private sectors, as well as a wide variation in prices which render essential medicines unaffordable to poor people. The report describes progress towards achieving MDG8 (develop a global partnership for development) and its related targets in the areas of essential medicines, official development assistance, trade, external debt and technology. In cooperation with pharmaceutical companies, access to affordable essential medicines in developing countries was measured using nine indicators and data collected by WHO and its partners. The report found that, in the public sector, generic medicines are only available in 34.9% of facilities, at on average cost 250% more than the international reference price. In the private sector, those same medicines are available in 63.2% of facilities, but cost about 650% more than the international reference price. While policies that promote access such as generic substitution are in place in many countries, more national and international effort is needed to improve the availability and affordability of medicines.