Key questions and structure of the hook
This book is structured around three complementary parts. The first relates to the debate about whether public or private sectors are more efficient and/or provide higher-quality care. The studies in this part examine evidence on the behaviour and performance of private providers. The second part further develops the analysis by taking into consideration the market context within which health-care providers operate and how this affects their behaviour. The third part considers direct contracting out by government to private providers as one of the most common of the ‘privatization’ options.
Historically, much of the intense debate about the role of gov-ernment vis-à-vis that of the private sector in health care has been ideologically driven and centred round the question of the degree to which health care is like any other good. However, it is increasingly acknowledged that there is no single ‘correct’ mix of public and private roles. Hildebrand and Grindle (1994) suggest that the appropriate role of the state depends on historical experience, cultural expectations and the relative strengths of governments and markets. Van der Gaag (1995) states that: ‘The only reliable way to arrive at an appropriate solution is to rely on what has worked in the past and adjust it to meet the specifics of each new or changing situation/ Any analysis of appropriate roles for public and private sectors in health care is therefore inevitably country-specific and moreover should be fairly product- or service-specific.
The studies presented in this volume respond to the problems of very different contexts. In Uganda, for example, private provision has subtly replaced public provision as public-sector health staff have responded to low and irregular pay by developing their own private activities. In Thailand, in contrast, there has been a big and highly visible boom in purely private health-care provision stimulated by the rapid income growth in the country. Despite the great differences in context it is possible to identify a number of common concerns threaded through the different chapters of the book. These common concerns and the chapters which address them are discussed here.
In the literature on the role of the private sector in health care a number of alternative scenarios are presented for the way in which the public sector might work together with the private sector. For example, sometimes public and private sectors are seen as competitors and it is suggested that efficiency will be enhanced by promoting competition between providers, be they publicly or privately owned. However, much of the public health literature emphasizes the role of private providers as collaborators in the endeavour to improve coverage by public health services (Swan and Zwi 1997). The World Development Report 1993 placed considerable emphasis on the idea of public and private sectors offering complementary services; while the public sector provides the core cost-effective services, provision of less cost-effective services could be left to the private sector (World Bank 1993). Despite the great heterogeneity in the private sector there are potential incompatibilities between these roles (competitor, collaborator and complementary service provider) which need to be thought through.
In chapter 3 Syed Aljunid presents results from a study of public and private practitioners in a rural district of Malaysia which suggests that the practitioners are involved in providing complementary services, and questions whether this is an appropriate organizing principle for the health sector. Inayat H. Thaver in chapter 5 considers a rather different scenario, where private practitioners effectively expand access to basic services by offering care to slum populations. In chapter 7 Sara Bennett focuses on competitiveness and how, if at all, public and private hospitals compete.
The form and nature of competition is a key question arising from the literature. According to neo-classical economic theory, competition is the main factor which will lead to efficiency gains. However, in the health-care sector we need to question not only the extent of competition but also the form which it takes. Chapter 7 addresses precisely these questions for the hospital sector in Bangkok. Vinay R. Kamat and Mark Nichter in chapter 8 approach the question from a different angle: using anthropological techniques to explore the nature of competition between different pharmaceutical companies in Bombay, and focusing upon the central role of medical representatives (medreps) in promoting sales.
The new institutional economics suggests that private ownership and the incentives associated with it may act as a stimulus to competition. However, this is dependent upon private-sector owners creating appropriate incentives for staff. Currently very little information is available about the internal organization and management structures of private facilities. In chapter 13, Jonathan Broomberg et al. provide interesting evidence on the ability of private hospital contractors to contain costs and obtain high staff productivity. Delius Asiimwe et al. (chapter 9) consider some of these issues from a public-sector perspective, examining the incentives which public-sector health workers face and how this has contributed to the informal privatization of their activities.
A considerable amount of the existing literature, which Barbara McPake reviews in more detail in chapter 2, is concerned with the I quality of care provided by the private sector. This continues to be I key focus of interest as there is such heterogeneity of services in the I private sector and our understanding of why service quality differs i$ I still so limited. Several of the studies presented here consider quality of I care in the private sector, and in so doing help expand the range of I techniques which can be used to explore it.
The private sector is a broad church including a wide range of I different types of provider. Many have seen non-profit providers as I offering certain benefits over both the public sector and private for-profit providers; while being free from the bureaucratic regulations of I the public sector, non-profit providers are more likely to be welfare-oriented. Effectiveness, innovativeness and sensitivity to grass-root needs I are often characteristics associated with NGOs though these assump-tions are increasingly being questioned, both in the broader develop-ment literature (Edwards and Hulme 1995) and in health-sector-specific studies (Green and Matthias 1995). Two chapters here consider the scope I and role of NGOs. In chapter n Teresita Ramirez et al. consider the question of sustainability and look at the market position of an NGO maternity facility in Mexico City. Lucy Gilson et al. in chapter 17 look at the relationship between NGOs, particularly mission hospitals, and government. In particular the chapter addresses the role of contractual arrangements between government and NGOs and the impact they have on performance and accountability.
The whole of the final section is devoted to the issue of contracting out. Although contracting has been fairly widely advocated there has! been virtually no evaluation of its effectiveness in developing country contexts. In this section one substantial study of contracting for district hospital services in South Africa by Broomberg et al. and several smaller studies considering both clinical and non-clinical services offer substantial new evidence on this topic.
The discussion in this chapter has stressed the need for effective regulation and improvement of government capacity to manage relationships with the private sector. Many of the studies presented have significant implications for government’s regulatory role, particularly with respect to controlling quality of care in the private sector. In addition Alex van den Heever in chapter 10 considers regulation of the private health insurance sector in South Africa and how government intervention may ameliorate problems of inequities in access and cost escalation.
1. Baumol (1982) introduced the notion of a perfectly contestable market, i.e. one where although there are only a few firms they are prevented from making abnormal profits by the threat of entry by another firm. However, this result is dependent upon there being no barriers to entry or exit. If any such barriers exist then the efficient equilibrium of a contestable market will not materialize and an inefficient, potential monopoly, solution will arise (Shy 1995).
2. A fuller explanation of the problems created by asymmetric information is given in chapter 6.
3. For user fees a small-scale study by Litvack and Bodart (1993) found that when user fees were accompanied by a quality of improvement at public facilities, utilization by the poor increased, suggesting that there was a positive effect on equity.
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