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February 12, 2009

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February 12, 2009

Medical myth-busting: Why public beats private on health care provision

February 12, 2009
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Today Oxfam publishes Blind Optimism: Challenging the myths about private health care in poor countries, written by my colleague Anna Marriott. She summed up the arguments in this op-ed on the Guardian’s Comment is Free website, and was in Washington this week driving the message home to the World Bank, whose default position of ‘private good, public bad’ has so far proved remarkably impervious to reason or evidence.

The heyday of ‘markets good, state bad’ may be long gone in the North, but it lives on in the blinkered advice still being handed out to poor countries by aid donors.

Despite the strikingly poor performance of private sector-led solutions in filling the health care gap in the developing world, a growing number of international donors are pushing for an expansion of private health care at the expense of public provision.

In ‘Blind Optimism’, Oxfam takes a look at the evidence, debunking six of the most common arguments made in support of private sector health services.

1. ‘The private sector is already a significant provider of services in the poorest countries, so must therefore be central to any scaling-up’ .

It depends what you mean by health services. When we looked at the data from a recent World Bank Group report making this argument, it turned out that nearly 40% of the ‘private provision’ it identified was made up of small shops selling drugs of unknown quality. Take these shops out of the equation, and the private sector share of what most people would consider to be ‘health services’  – clinics staffed by trained health workers – falls dramatically, especially for poor people.

Meanwhile, a comparison of data across 15 sub-Saharan African countries reveals that only 3% of the poorest fifth of the population who sought care when sick actually saw a private doctor. Among poor people in Malawi, more people see traditional healers than visit private pharmacies, health facilities and doctors combined.

2. ‘The private sector can provide additional investment to cash starved public health systems’.

Actually, private providers lure away trained health workers. And attracting private providers to risky low-income health markets requires significant public subsidy. In South Africa the majority of private medical scheme members receive a higher subsidy from the government through tax exemption than is spent per person dependent on publicly provided health services.

3. ‘The private sector can achieve better results at lower costs.’

Not so. Private participation in health care is associated with higher (not lower) expenditure. Lebanon has one of the most privatised health systems in the developing world. It spends more than twice as much as Sri Lanka on health care yet its infant and maternal mortality rates are two and a half and three times higher respectively.

Costs increase because private providers often pursue profitable treatments rather than those dictated by medical need. Chile’s health-care system has wide-scale private-sector participation and, as a result, has one of the world’s highest rates of births by more costly and often unnecessary Caesarean sections.

4. ‘Private health care is better quality.’

Little evidence to back this up. In fact, World Bank researchers found that the private sector generally performs worse on technical quality than the public sector. In Lesotho, only 37% of sexually transmissible infections were treated correctly by contracted private providers compared with 57% and 96% of cases treated in ‘large’ and ‘small’ public health facilities respectively.

5. ‘The private sector can help reduce health iniquity and reach the poor.’

Instead of helping to reach the poor, private provision can in fact increase inequity of access because it naturally favours those who can afford treatment. Data from 44 middle- and low-income countries suggests that higher levels of private-sector participation in primary health care are associated with higher overall levels of exclusion of poor people from treatment and care. Women and girls suffer most. In contrast, government health spending was found to have reduced inequality in 30 studies of developing countries.

6. ‘The private sector improves accountability.’

There is no evidence that private health-care providers are any more responsive or any less corrupt than the public sector. Regulating private providers is exceptionally difficult even in rich countries. Fraud in the US health-care system is estimated to cost between $12 and $23 billion per year.

So how have aid donors reacted to the mounting evidence that ‘market good, state bad’ makes no sense in health? The World Bank has acknowledged the key role of the state, but largely as a regulator and ‘steward’ rather than as a provider of services. In recent months, a number of donors and influential organisations have continued to argue (and back it with their cash) that those who can afford it should buy their own health care in the private sector and governments should contract private providers to serve those who can’t.

We’re not against private providers, nor are we arguing that the public sector is a panacea, but as our new report concludes: ‘the evidence is indisputable that to achieve universal and equitable access to health care, the public sector must be made to work as the majority provider. Governments and rich country donors must act now to bring real change and prioritise the rapid scaling-up of free public health care for all.’

Is anyone listening?



  1. I’m listening! The problem is that People With Money are not interested in listening, because public sector spending is most of all associated with lower earnings potential for private sector companies.

    I believe, though, you might have an ally in Norwegian aid authorities.

  2. I grew up in the Philippines and whenever possible, we always went to a private hospital when we needed care.

    I don’t know if the reputation of public health care in other 3rd world countries are the same. But when I was growing up, going to a public hospital, even though it cost next to nothing, was equivalent to being treated like a “second class citizen”, to very long queues, to dirty facilities.

    So anyway, my point is, I do hope that governments will be encouraged to spend more in their public health care, as this report reveals. Any civilized society should be able to take care of the sick/health of their people whether they are rich or poor. I’m all for free public health care. That’s what the norm should be.

  3. To me the OXFAM argument is correct but the wrong argument. It does not address how to make public sector health provision work. Buy Acai Berry’s comment can be replicated around the world. So many public health facilities are dirty, inefficient with staff missing or unpaid or facing other disincentives. The answer is not privatisation – which has all the consequences your report describes. But why not try a hybrid? In a 1999 article I pointed out that for the state to recognise and regularise the petty payments that many public sector professionals demand (currently seen as corrupt) would solve both funding and motivational problems; though it does not fit current orthodoxies (‘The State as Retainer: a basis for partnerships with civil institutions’ The Asian Journal of Public Administration, Vol. 21 No 2 179-194).

  4. Hi Mogha

    Thank you for sending this very interesting email, I tend to agree with the basic concepts of Blind Optimism.

    Herewith my comments:

    The potential of the private sector to improve access to health care in low-income countries is a far fectched reality, even more so with the current financial crisis. I very much doubt the ability of the private sector to roll out access to health to the general population, but I believe that the private sector can do this for their targetted communities directly linked to benefit their operations, e.g. copper mines in Zambia provide very good health service to miners (with support from Global Fund). However, the degree to which this is sustainable is highly questionable, for instance when the mine closes/changes hands/ etc. The extent to which they are willing to eat into their profits is questionable hence their application for Global Funds.

    I agree that publicly delivered services are at the heart of health services in poor countries. These public institutions however, need massive overhaul and strengthened capacity and efficiency. The central point is that they are accessible to all citizens even when a small user fee is charged, for patients who cannot afford this small fee, there is usually provison for waiver of this fee after vetting by social workers in hospitals.

    Also in my view public institutions that deliver health services can be held accountable, this is supported by appropriate legislation in most countries e.g. there is no provision for audit of private health care providers. The auditors they have are for their own tax purpose or business requirements but cannot be subjected to public scrutiny in the way public health (government institutions) can be called to account.

    In this discussion I recognise the potential of governments to scale up quality care to all citizens but also have to say that governments must show commitment to this and allocate significant budgetary allocations to health. This is the only way countries can gradually scale up and sustain quality care to its citizens as well as attract international funding. I think this is the role of Governments with the International community supporting the strengthening of health care delivery.

    I also must emphasize that there is a role for the private sector in providing health care but really basically the significant contribution can only be to communities that directly impact on their business. They cannot be held responsible for scaling up services to areas that they do not derive a business interest because they are primarily in the business of making profit their responsibility/accountability is to their Board and not the general citizenry. Governments are mandated to provide health services as one of the tenets of human rights to citizens.

    Best regards

    Elizabeth N Mataka

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