Info Service on Health Issues (March 09/01)
17 March 2009
Third World Network
Privatised Care More Placebo Than Panacea
privatization of the health care sector in developing countries is an
approach that is extremely unlikely to deliver health for poor people,
is reproduced with permission from IPS and South-North Development Monitor
(SUNS) #6639, 13 February 2009.
care more placebo than panacea
By Marina Litvinsky, IPS, Washington,
11 February 2009
and the World Bank should stop pushing privatised health care in poor
countries, Oxfam International said Wednesday.
The new report by the development charity, "Blind Optimism: Challenging
the myths about private health care in poor countries," provides
considerable evidence of the poor performance of private sector-led
health care initiatives globally, which the World Bank and donor countries
have advocated for years.
"Donors' romantic views of private sector health providers are
completely divorced from the facts," said Anna Marriott, author
of the 52-page report. "The Bank and other donors need to put their
blind optimism about the market behind them. Universal health care is
only achievable with government intervention to provide services."
Decrying the failure of public-health services in poor countries - failure
in which the World Bank-administered loans conditioned on public-sector
spending cuts and wide-scale restructuring have played a significant
role - the argument was that the private sector could do a better job.
For over two decades, the Bank advocated a solution based on investment
and growth of the private health care sector.
Through conditions on their loans to poor countries, the World Bank,
backed by Western donors, insisted on extensive changes in their health
systems. The approach they advocated is known as "New Public Management"
NPM attempts to introduce market mechanisms into public services, recasting
the role of government from provider to one of regulator and purchaser
The Bank's 2004 World Development Report, "Making Services Work
for Poor People," laid out the basic approach: governments should
encourage private health-care providers to serve those who can afford
to purchase their services, and contract with for-profit and not-for-profit
private providers to deliver on the governments' behalf for those who
The Oxfam report states that there is an urgent need to reassess the
arguments used in favour of scaling up private-sector provision in poor
countries. The evidence shows that prioritising this approach is extremely
unlikely to deliver health for poor people.
Competition between providers for government contracts and the financial
rewards of attracting paying customers were thought by the Bank to drive
up efficiency, quality, and overall access. However, according to Oxfam,
the pursuit of profits means that private providers have no incentive
to serve those unable to pay.
Oxfam refutes the claim that the private sector can provide additional
investment to cash-starved public health systems. It argues that attracting
private providers to risky, low-income health markets requires significant
public subsidy. In South
Africa, for example, 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.
A growing body of international research reaffirms that despite their
serious problems in many countries, publicly financed and delivered
services continue to dominate in higher performing, more equitable health
systems, according to the report.
"Thanks to increased state spending on health in Sri Lanka, for
instance, women can now expect to live almost as long as those in Germany,
despite an income 10 times smaller," Marriott said.
The World Bank and donor countries believe that since the private sector
is already a significant provider of services in the poorest countries,
it must be central to any scaling-up strategy.
A recent report by the International Finance Corporation (IFC), the
private-sector investment arm of the World Bank, claims that over half
the health care provision in Africa
comes from the private sector.
However, Oxfam argues that the IFC's claim is flawed. It its own analysis
of the same data, Oxfam found that nearly 40% of the "private provision"
the IFC identifies is just small shops selling drugs of unknown quality.
Proponents of private-sector health-care argue that the private sector
can achieve better results at lower costs. But the report cites examples
to show that private participation in health-care actually costs more.
Lebanon, for example,
has one of the most privatised health systems in the developing world
and spends more than twice as much as Sri Lanka on health
care. Its infant and maternal mortality rates, however, are two and
a half and three times higher, respectively.
Moreover, costs increase as private providers pursue profitable treatments
rather than those based solely on medical need. According to the report,
care system has wide-scale private-sector participation and as a result,
has one of the world's highest rates of births by Caesarean sections,
which are more costly than natural births and often unnecessary.
The report also disputes that private health-care offers superior quality.
The World Bank itself reports that the private sector generally performs
worse on technical quality than the public sector, according to its
2004 World Development report. In Lesotho,
for example, 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
Because private-sector services are often too expensive for the majority
of people, subsidising them with tax or aid dollars comes at a direct
cost to public health systems and undermines their capacity to help
those most in need.
"If the past few months have taught us anything, it is that the
market has its limitations and that governments need to take a lead,"
said Oxfam's Marriott.
"World Bank President Zoellick has rightly called for a fiscal
stimulus to assist poor countries. This should be spent in part on a
rapid scaling up of government-provided health care - it will save lives
and get economies going again."
Oxfam urged developing countries to resist donor pressure to implement
unproven and unworkable market reforms to public-health systems and
an expansion of private-sector health-service delivery.
It also said that health care should be excluded from bilateral, regional
or international trade and investment agreements, including the General
Agreement on Trade in Services negotiations in the World Trade Organisation
Phil Hay, World Bank spokesman, said Oxfam's report "is more idealism
and ideology than science".
"We are glad they started the conversation, but we don't accept
their view that it's either public or private, and you have to make
a choice," he told IPS.
"Countries all around world have made the choice and it's both."
Dr. Peter Berman, a World Bank Lead Economist, said, "The key thing
is that Oxfam has a strong point of view that primarily-government provision
of health services is the way to advance health in poor countries."
He added that the World Bank supports government provisions, but does
not want to "impose a monolithic approach".
The Bank supports a "pragmatic approach," he added. "We
want to work with our clients (governments) to strengthen their capacity
to deliver services.
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