Public-Private Mix

Rising Healthcare Costs in South Africa
Chowles T: EHealth News, South Africa, September 2016

The funding of healthcare in South Africa is a highly contentious issue, involving a variety of stakeholders. Royal Philips released the South Africa results of the first edition of its Future Health Index (FHI) in July 2016. The FHI is an extensive international study which explores how countries around the world are positioned to meet long-term global health challenges through integration of health systems and adoption of connected care technologies. The report revealed that cost is a significant barrier to healthcare in South Africa and that HCPs and patients indicate improving access to healthcare services as a core priority for local government. Health status indicators in South Africa as a whole are reported to be worse than that in other upper middle income countries. Privately insured people though have outcomes comparable to best in world. However, this comes at a high cost. People in South Africa who cannot afford private medical insurance have some of the worst outcomes in terms of healthcare. The report identifies that approximately 40% of total healthcare funds in South Africa flow via public sector financing intermediaries (primarily the national, provincial and local Departments of Health), while 60% flow via private intermediaries.

Commission hears data on WHO report on high price of hospital care in SA
Pitso R: BusinessDay, August 2016

The South African Competition Commission’s healthcare market enquiry on Tuesday convened a special session in Pretoria, at which stakeholders were due to give oral presentations in response to a report by the World Health Organisation (WHO). The report, contested by the private actors, concluded that the cost of hospital care in SA was high when measured against GDP per capita and that the driving forces were in-house hospital and specialist fees. The Organisation for Economic Co-operation and Development (OECD) collected the data and conducted the study, which compared the prices of South African private hospitals to those of 20 OECD countries. The health market inquiry was established to determine why medical inflation has historically risen faster than consumer price inflation, and whether there are barriers to effective competition in the private healthcare sector. The public hearings aim to explore the relationships among different players.

Indian Private Sector Investments in African Healthcare
Ngangom T; Aneja U: ORF Issue Brief 145, 2016

This paper examines India's partnership with Africa in four sectors – medical tourism, tele-health, frugal innovations, and the pharmaceutical industry. It examines the nature of Indian private sector investments in African healthcare. It analyses their effectiveness in dealing with the issues around equity of access, the establishment of comprehensive 'prevention- based' health systems, and the creation of mutual benefit. The author reports that there is significant Indian commercial presence in Africa's health systems but the engagement needs a broader conception of the 'private sector' to include traditional healers and social entrepreneurs engaged in innovation for healthcare. Given their common health challenges, the authors argue that India and African countries must work towards crafting innovative low-cost healthcare models, and invest in the production and research of pharmaceutical products, especially for neglected diseases.

Helpdesk report: Comparative advantage of the private sector in delivery of health services
Browne E: Health and Education Advice and Resource Team, June 2016

This report explores evidence on the private sector in delivery of health care services for public health goals particularly in the areas of MNCH and SRH. It finds that there is a considerable body of evidence on the private provision of healthcare in low- and middle-income countries, often focusing on SSA, but that the evidence base is not robust. The arguments in favour of private healthcare suggest it is more responsive and efficient, while arguments in favour of public services suggest they are more equitable and better equipped than the market to respond to health needs. Some studies find that the private sector is unregulated, has financial incentives for inappropriate healthcare, and is expensive. There is very little evidence on the comparative cost-effectiveness of the private sector. This varies considerably across country contexts and types of services. There is no conclusive evidence that the private sector is more cost-effective or more efficient than the public sector. The literature warns that increased use of private services may crowd out or decrease the funding available to the public sector. The major criticism of private sector services is that their higher user fees create inequality of access, limiting their use by the poor. The literature is quite clear that private for-profit health services create inequality. Private non-profit, or services run by NGOs, appear to mitigate some of the inequality effects. In practice, boundaries can be blurred between public and private; both formal and informal cost recovery schemes operate at public facilities. NGOs providing healthcare are generally seen as private, although they may not charge for their services. The difference between free-at-the-point-of-use NGOs and out-of-pocket-expenditure on private doctors can be enormous, and it is important to differentiate between the types of providers when reviewing the evidence on private services.

Managing the public-private mix to achieve universal health coverage
Hanson K; McPake B: The Lancet, June 2016, doi: http://dx.doi.org/10.1016/S0140-6736(16)00344-5

The private sector has a large and growing role in health systems in low-income and middle-income countries. The goal of universal health coverage provides a renewed focus on taking a system perspective in designing policies to manage the private sector. This perspective requires choosing policies that will contribute to the performance of the system as a whole, rather than of any sector individually. This paper draws and extrapolates main messages from the papers in the Lancet series and additional sources to inform policy and research agendas in the context of global and country level efforts to secure universal health coverage in low-income and middle-income countries. Recognising that private providers are highly heterogeneous in terms of their size, objectives, and quality, the authors explore the types of policy that might respond appropriately to the challenges and opportunities created by four stylised private provider types: the low-quality, underqualified sector that serves poor people in many countries; not-for-profit providers that operate on a range of scales; formally registered small-to-medium private practices; and the corporate commercial hospital sector, which is growing rapidly and about which little is known.

Performance of private sector health care: implications for universal health coverage
Morgan R; Ensor T; Waters H: The Lancet, June 2016, doi: http://dx.doi.org/10.1016/S0140-6736(16)00343-3

Although the private sector is an important health-care provider in many low-income and middle-income countries, its role in progress towards universal health coverage varies. Studies of the performance of the private sector have focused on three main dimensions: quality, equity of access, and efficiency. The characteristics of patients, the structures of both the public and private sectors, and the regulation of the sector influence the types of health services delivered, and outcomes. Combined with characteristics of private providers—including their size, objectives, and technical competence—the interaction of these factors affects how the sector performs in different contexts. Changing the performance of the private sector will require interventions that target the sector as a whole, rather than individual providers alone. In particular, the performance of the private sector seems to be intrinsically linked to the structure and performance of the public sector, which suggests that deriving population benefit from the private health-care sector requires a regulatory response focused on the health-care sector as a whole.

Private sector, for-profit health providers in low and middle income countries: can they reach the poor at scale?
E Tung; S Bennett: Globalization and Health 10(52), 2014

This paper analyses private for-profit (PFP) providers currently offering services to the poor on a large scale, and assesses the future prospects of bottom of the pyramid models in health. The authors searched published and grey literature and databases to identify PFP companies that provided more than 40,000 outpatient visits per year, or who covered 15% or more of a particular type of service in their country. For each included provider, the authors searched for additional information on location, target market, business model and performance, including quality of care. Only 10 large scale PFP providers were identified. The majority of these were in South Asia and most provided specialised services such as eye care. The characteristics of the business models of these firms were found to be similar to non-profit providers studied by other analysts. They pursued social rather than traditional marketing, partnerships with government, low cost/high volume services and cross-subsidization between different market segments. There was a lack of reliable data concerning these providers. The authors observe that there is very limited evidence to support the notion that large scale bottom of the pyramid PFP models in health offer good prospects for extending services to the poor in the future, while successful PFP providers often require partnerships with government or support from public funding.

Prohibit, constrain, encourage, or purchase: how should we engage with the private health-care sector?
Montagu D; Goodman C: The Lancet, June 2016, doi: http://dx.doi.org/10.1016/S0140-6736(16)30242-2

The private for-profit sector's prominence in health-care delivery, and concern about its failures to deliver social benefit, has driven a search for interventions to improve the sector's functioning. The authors review evidence for the effectiveness and limitations of such private sector interventions in low-income and middle-income countries. Few robust assessments are available, but some conclusions are argued to be possible. Prohibiting the private sector is said by the authors to be unlikely to succeed, and regulatory approaches face persistent challenges in many low-income and middle-income countries. Attention is therefore turning to interventions that encourage private providers to improve quality and coverage such as social marketing, social franchising, vouchers, and contracting. However, evidence about the effect on clinical quality, coverage, equity, and cost-effectiveness is inadequate. Other challenges concern scalability and scope. This indicates the limitations of such interventions as a basis for universal health coverage, though they can address focused problems on a restricted scale.

Regulating the for-profit private health sector: lessons from East and Southern Africa
Doherty J: Health Policy and Planning 30(suppl 1), i93-i102, 2014

This article explores the areas of likely comparative advantage of the private sector in delivery of health care services for public health goals. It finds that there is a considerable body of evidence on the private provision of healthcare in low- and middle-income countries, often focusing on SSA. However, the evidence base is not robust. Evidence is often mixed and sometimes conflicting and policy implications are unclear. The arguments in favour of private healthcare suggest it is more responsive and efficient, while arguments in favour of public services suggest they are more equitable and better equipped than the market to respond to health needs. Some studies find that the private sector is unregulated, has financial incentives for inappropriate healthcare, and is expensive. There is very little evidence on the comparative cost-effectiveness of the private sector. This varies considerably across country contexts and types of services. There is no conclusive evidence that the private sector is more cost-effective or more efficient than the public sector. The literature warns that increased use of private services may crowd out or decrease the funding available to the public sector. The major criticism of private sector services is that their higher user fees create inequality of access, limiting their use by the poor. The author suggests that the literature is quite clear that private for-profit health services create inequality. Private non-profit, or services run by NGOs, appear to mitigate some of the inequality effects. In practice, boundaries can be blurred between public and private; both formal and informal cost recovery schemes operate at public facilities. NGOs providing healthcare are generally seen as private, although they may not charge for their services. It is observed that the difference between free-at-the-point-of-use NGOs and out-of-pocket-expenditure on private doctors can be enormous, and that it is important to differentiate between the types of providers when reviewing the evidence on private health care.

What is the private sector? Understanding private provision in the health systems of low-income and middle-income countries
Mackintosh M; Channon A; Karan A; Selvaraj S; Cavagnero E; Zhao H: The Lancet, June 2016, doi: http://dx.doi.org/10.1016/S0140-6736(16)00342-1

Private health care in low-income and middle-income countries is noted to be extensive and heterogeneous, ranging from medicine sellers, through millions of independent practitioners—both unlicensed and licensed—to corporate hospital chains and large private insurers. Policies for universal health coverage (UHC) must address this complex private sector. However, no agreed measures exist to assess the scale and scope of the private health sector in these countries, and policy makers tasked with managing and regulating mixed health systems struggle to identify the key features of their private sectors. In this paper, the authors propose a set of metrics, drawn from existing data that can form a starting point for policy makers to identify the structure and dynamics of private provision in their particular mixed health systems; that is, to identify the consequences of specific structures, the drivers of change, and levers available to improve efficiency and outcomes. The central message is that private sectors cannot be understood except within their context of mixed health systems since private and public sectors interact. The authors develop an illustrative and partial country typology, using the metrics and other country information, to illustrate how the scale and operation of the public sector can shape the private sector's structure and behaviour, and vice versa.

Pages