The existing roles of public and private sectors in the “developing world”
Without space to discuss the meaning of ‘development’, or to justify the choice of countries included in the group ‘developing countries’, this chapter is confronted by the need to describe and categorize a wide range of health-sector scenarios with highly divergent degrees and types of private-sector involvement in order that some level of generalization about issues and strategies can be reached. In the light of the characteristics of private-sector involvement in the range of countries which are usually included in this group, where information has been made available, a categorization which identifies three patterns of ‘public-private mix’ is suggested.
A common pattern of provision among the poorest of countries is low or moderate involvement of the formal private for-profit sector, especially in medical service (in comparison to drug) provision but more substantial involvement of the NGO (not-for-profit) sector. The size of the NGO sector substantially depends on historical accident since the largest part of the NGO sector is the mission sector whose activities usually originated in colonial or pre-colonial times and whose geographical patterns of provision are still strongly influenced by patterns established then. The proportionate contribution of the public sector is partly determined by the level of NGO provision. Major involvement of the informal private sector – both unregistered allopathic providers and drug-sellers, and traditional practitioners – is demonstrated in all such countries where the phenomenon is studied. This, in addition to the greater importance of the private for-profit sector in drug sales, means there is usually substantial divergence between evidence of die extent of the private for-profit sector when measured through registered facilities, in comparison with evidence from household expenditure surveys.
Examples of countries which broadly fit the pattern described above include Nepal where only 3 per cent of hospital beds are in the private for-profit sector, 26 per cent of beds are in the mission sector and the remaining 71 per cent are in the public sector. However, 90 per cent of expenditure on drugs is private (Olsen and Gurung 1993). Similarly, in Zambia, only 0.2 per cent of beds are in the private for-profit sector while 25 per cent are in the not-for-profit sector; 22 per cent of total health expenditure is private, and 73 per cent of private expenditure is on drugs (Berman et al. 1995a). In Tanzania, expenditure on private for-profit facilities was 6-8 per cent of the total, mission expenditure 12-20 per cent and public expenditure 40-63 per cent (Mujinja et al. 1993). These data were taken from a 1976 study, before legalization of private practice. In Papua New Guinea, the contribution of the mission sector is much more limited (2 per cent of total expenditure), the private for-profit sector is also very small (7 per cent) leaving the public sector an 88 per cent share of expenditure (Thomason 1993). The importance of informal private-sector activity in Bangladesh is underlined by the data of Claquin (1981). Unqualified (and presumably therefore unregistered) practitioners constituted 93 per cent of allopathic practitioners operating in the villages studied.
However, the formal private for-profit sector plays a much more important role in some of the poorest countries which constitute a second pattern of provision. In Pakistan, the private sector dominates all types of health provision. There are 12,000 private practitioners and 26,000 government doctors who also operate their own clinics, and 70 per cent of health-service provision is private (Mohammad et al. 1993). Similarly, in Bombay, 88 per cent of hospitals, 40 per cent of beds and 70 per cent of doctors are in the private sector (Yesudian 1993)- In India as a whole, 40-70 per cent of doctors were in the private sector in the 1970s, and private hospital bed numbers grew at a much faster rate than public between 1970 and 1988 (Barn 1995)- Large and concentrated populations would seem to explain the difference from the countries fitting pattern one. In Africa, two countries which also seem closer to this pattern are Kenya, where 23 per cent of health facilities are private for-profit (Berman et al. 1995b), and Ghana, where 40 per cent of facilities, and 52 per cent of expenditure are in the private for-profit sector (Adusei and Dakpallah 1993)- These are also relatively high population and densely populated countries by African standards. Nevertheless, in these countries, private provision and expenditure are still concentrated at lower levels of the system. For example, in Pakistan, only 14 to 15 per cent of overall health-service utilization is in the public sector but there is extreme pressure on public tertiary services, evidenced by over-crowding at public teaching hospitals while lower-level services go under-used (Mohammad et al. 1993). In Kenya, 94 per cent of private for-profit facilities are below health-centre level compared with 79 per cent in the mission sector, and 60 per cent in the public sector. Much of the high expenditure on private health care is still in the informal sector and on self-prescribed drugs. For example, the private sector (overall) explains 80 per cent of total drug expenditure, and unlicensed drug-sellers form an important part of the market! (Berman et al. 1995b).
A third pattern of provision seems to pertain in countries with higher levels of GNP per capita. It usually incorporates a major role for an insurance sector including a social security sector with mixed public and private characteristics. In these countries, the pure private for-profit sector depends on the arrangements made by the social security system to cover its enrolees, and the relative importance of social security and private insurance. In Mexico, social security institutions provide care through their own facilities but the prevalence of private insurance and extent of out-of-pocket payments have been growing, leading to a substantial share of care being offered in private for-profit facilities. The public sector which caters for informal workers and the unemployed accounts for 15 per cent of total expenditure while private and social security sectors account for 37 and 40 per cent respectively (Cruz and Zurita 1993). In South Africa, 59 per cent of doctors, 67 per cent of specialists, 49 per cent of hospitals, 29 per cent of hospital beds and 28 per cent of hospital bed-days are provided by the private sector. Most of the expenditure which pays for this is channelled through ‘medical aid schemes’ (not-for-profit insurance institutions), although these sometimes have co-payment rates of up to 30 per cent, and do not cover over-the-counter’ drugs which are purchased by the insured (Price et al. 1993). In Thailand, however, insurance (including public employee medical benefits) accounted for only about 6 per cent of total health expenditure in 1987, and private out-of-pocket expenditures for 73 per cent. This is partly the result of significant user fees in the public sector. As the private sector has developed, the proportionate share of out-of-pocket drug expenditures has tended to decline. Total private expenditure increases have been wholly accounted for by increases in medical-care expenditures with self-medication expenditure static (Nitayarumphong and Tangcharoensathien 1994)- hi all these countries, the private sector plays an increasingly important role in secondary- and tertiary-level provision.
This categorization is put forward only tentatively, recognizing that there remains considerable divergence within each group, and that at least a few countries fit very uneasily in any of the three. All patterns described are explained in part by weak public-sector performance, and the few countries where this has not been the case (Malaysia may provide an example; Hammer and Berman 1995) require a fourth pattern to be described. Published information seems to be available for an insufficient number of such countries for this to be done. A more sophisticated approach might sub-divide countries into their urban and rural areas (and perhaps also their more and less remote rural areas), and find different patterns in each, although such an approach would have to take into account mobility of people between the areas. It is also quite likely that the three scenarios represent stages in the growth of the private sector, with the first group of countries representing a very early stage where private for-profit sector activity has mainly not been formalized; the second group, a set of countries in which the size of the market has reached the point where, at primary level, it is worth investing more substantial capital amounts, necessary for the formal recognition of providers; and the third group, where formal private for-profit providers have extended to all levels of the health system and informal providers have been marginalized. Nevertheless, these three types (henceforth “pattern 1” ‘pattern 2’ and ‘pattern 3’ respectively, as presented above) will be used as a means of categorizing some of the evidence to be presented below, where it seems separate conclusions regarding the strategic options open to countries might be reached.
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