Public Stewardship to Optimize Private Sector Participation in Health

Deus Bazira MubangiziResults For Development/University of Maryland

Baltimore

IAS Meeting: Bridging the Divide: Inter-Disciplinary Partnerships for HIV and Health Systems Strengthening

Vienna, July 16, 2010

Presentation Outline

• What makes up the private sector• Evidence of significant private sector

involvement in health• Private sector negative outcomes• Public stewardship innovative models• Private sector and HIV interventions• Key questions and way forward

Differences Between Types of Private Sector Entity

Primary Financial Goal Financing/CapitalCharge for Services/Products

Commercial for -ProfitGenerating a return on investment Market-rate Market-rate

Social Enterprise

Entrepreneurial, income-focused strategies with a minimum expectation of financial return

Range of market-rate capital, below-market capital, or mix of donations and market rate capital

Range of market-rate prices, subsidized rates, or mix of full payers and those who pay nothing

Non-profit/NGO/Faith-based organization

Rely on donor support to carry out social missions

Donations and grants

Beneficiaries make minimal or no payments

Adapted from The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives (2007). International Finance Corporation, Washington, DC.

Why Leverage the Private Sector• Constrained public resources resulting in limited reach/access• Magnitude of health challenges far outweigh public and

philanthropic investments• Private sector can increase access to needed services for varied

population groups• Private sector involvement has a synergistic effect on improving

quality of care even in the public sector• Rising health care costs are driving more people into poverty • Less efficient and poorly mobilized significant private sector

resources (approximately 50% of expenditure on health care is through the private sector and is financed out-of-pocket)

• Need to monitor quality of care and services delivered• Critical for improving referral between the public and private sector

Private Sector Use by Income Quintiles

Country Assessment of the Private Health Sector in Ghana (Source: Makinen, M (2010): Results for Development,

Washington DC)DHS 2003: Decision to seek care for children with fever or cough, by wealth quintile

DHS 2008: Decision to seek care for children with fever or cough, by wealth quintile

Child Care Provider Classification in Select Countries

Source: Lagomarsino et al (2009). Public stewardship of private providers in mixed health systems. Results for Development Institute. Washington, DC.

Countries with Out-of-pocket Expenditure more than 50%

Private Sector Involvement in HIV/AIDS

Source: Center for Health Market Initiatives (2010) Results for Development Institute. Washington, DC.

A Case of HIV Services Delivery through the Private Sector

• Over 228 sites involved in prevention, care and treatment delivery in 8 countries (Guyana, Haiti, Ethiopia, Kenya, Nigeria, Rwanda, Tanzania, Uganda and Zambia)

• Of which over 161 are private (90% private-not-for profit; 10% private-for-profit)

• More than 180,000 clients receiving treatment of which 80% are from private facilities and over 400,000 enrolled in care

• Average virologic suppression rate over 87% (48 months+) and lost to follow-up at about 7% (48 months+)

Source: AIDSRelief Program, 2010

Potential Negative Outcomes of Private Sector Activity

• Uneven quality including sub-optimal diagnosis and treatment

• Unethical business practices including unfair pricing • Unchecked inefficiency that leads to increased

consumer costs• Atomized providers that negate economies of scale

and undermine sustainability and increase cost of regulation

Challenges to Public Stewardship

• Lack of adequate knowledge on private sector (formal and informal) functioning

• Limited technical skills in the public sector to supervise private sector activities

• Atomized/fragmented private sector makes it near impossible for government to engage

• Public stewardship is not viewed as a priority

Harnessing the Private Sector – Improving Public Stewardship

• Regulation – enforce quality standards• Educate and empower consumers to demand quality services• Financing – promotion of risk pooling schemes• Use technology to expand access and improve quality• Change provider incentives and increase monitoring• Strategic purchasing mechanisms for private sector delivery –

through targeted subsidies for the poor• Improve access to private capital

– International financing back-up– Equity-focused financing– Local financial institutions education on health care risk profiles

Health Market Innovations – Type and Potential Outcomes

Conclusion –Way Forward The public sector needs to consider innovative mechanisms even

when not ideal to begin effective private sector regulation The private sector requires better organization and coordination in

order to benefit from public sector action Philanthropic and donor investment should also be targeted at the

private sector to stimulate growth that will eventually attract private capital

The negative consequences of unregulated private sector call for immediate action

The reality is that the private sector is significant and serves some of the poorest of the poor.

CMHI at R4D is building a data base that identifies and tracks programs designed to better harness the private sector ( http://healthmarketinnovations.org )