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Health care for the poor, or profit opportunity?

March 3, 2009

Health activists are facing issues of privatization and commercialization of medical care and other essential services like water and sanitation everywhere around the world. In places where there is not universal access to care, including the United States, the question for debate is: What role(s) should private entities – meaning businesses and non-profits of various kinds – play in scaling up coverage? Where countries have achieved universal coverage, they face constant pressure to make their systems “more efficient” through increased private sector involvement through contracting and other means.

This past week, the People’s Health Movement and Oxfam International participated in two Washington, DC events focusing on how beltway institutions like the World Bank, the International Finance Corporation (IFC, the private sector arm of the World Bank), USAID, etc., promote involvement of the private sector as the key to scaling up health care. The occasion was the release of the Oxfam briefing paper Blind Optimism: Challenging the myths about private health care in poor countries and PHM’s Global Health Watch 2.  Oxfam’s paper and “Health and Education for All” campaign are part of what PHM’s Francoise Barten calls “a radical new approach to global health”.

Despite major advances in knowledge and unprecedented gains in global wealth, health inequities between the rich and poor are increasing, both within and among countries. Poverty, poor living and working conditions and the inability to influence these conditions are directly related to poor health. The 2008 report of the World Health Organization’s (WHO) Commission on Social Determinants of Health observes that ‘social injustice is killing people on a grand scale’.

The WHO report is one of three recent publications [the Commission on Social Determinants of Health report, the World Health Report 2008 and Global HealthWatch 2] that highlight the urgent need to improve universal access to healthcare by means of a new approach to health. This approach, which is gaining momentum among specialists worldwide, involves addressing health issues in a comprehensive way – with a focus on systems instead of sectors – and tackling head-on the socio-economic causes of poor health and health inequity.

While many people would say that this approach is not actually new, one of its tenets is that it is the role and responsibility the public sector – government – to ensure that people have the basic services needed to maintain health, and to promote economic policies that benefit everyone and decrease poverty. This contrasts with the mainstream mantra that government is inherently incompetent and inefficient, while business and “the market” are inherently efficient and effective. This questionable notion has become dominant over the past 30 years despite the fact that no country has achieved universal health care without government playing the principal role in funding and a major role in provision of care and regulation of both for-profit and non-profit participation in the system.


This contrast was evident at the first of the two DC events, a debate at the World Bank between (left to right in photo):

Guy Ellena, Director, Health and Education, International Finance Corporation
Anna Marriot, Health Policy Advisor, Oxfam GB
Dr. Mukesh Chawla, Health Economist and Sector Manager, Health, Nutrition, and Population Department, World Bank
Stephan Nachuk of the Rockefeller Foundation (moderator)
Gina Lagomarsino, ManagingDirector, Results for Development Institute
Dr. Ravi P. Rannan-Eliya, Director, Institute for Health Policy, Sri Lanka
Dr. David McCoy, People’s Health Movement

The Oxfam paper was released in part to respond to an IFC report, The Business of Health in Africa:Partnering with the Private Sector to Improve People’s Lives. Sponsored by the Bill and Melinda Gates Foundation and researched by McKinsey& Co., the report came with the announcement that the IFC will mobilise $1 billion in equity investments and loans to finance the growth of private-sector participation in health care in sub-Saharan Africa. About half of the report’s 109 pages are a series of annexes giving examples of successful business models and a methodology for market sizing. If you don’t bother to read them, then you get the idea that the report is promoting all non-state actors, including non-profits and social enterprises. But the annexes clearly show where the profit potential exists.

The essence of the arguments presented by the pro-private side at the debate were the following:

  • We need to take a pragmatic approach (as opposed to an ideological approach) and do whatever works to scale up health care services.
  • The private sector (including all non-government actors)  already plays a major role in health care financing and delivery in Low and Middle Income Countries (LMICs), and already serves the poor, so it makes sense to focus on it in the scale up process.
  • “While not seeking to detract from the role of national governments in delivering health care, the health of the region’s inhabitants would be improved through a more formalized, integrated, regulated, and better capitalized private sector.” (The Business of Health in Africa)
  • Governments are asking for help in developing the private health care industry, we don’t promote it.

The pro-public sector arguments were:

  • Most private sector provision of care in LMICs, especially that accessible to the poor, is through unregulated, informal for-profit shops and providers with little potential to provide a substantial amount of quality care. Oxfam has produced a short video about these services.
  • No countries have achieved universal access to care without government being the principal funder and provider, and without strict regulation of the private sector. There is no evidence that even the “responsible” private sector reaches the poor – only governments have done this.
  • Regulation of the private sector requires the same strengthening of governmental capacity as providing medical and other services. Development agencies should focus on increasing government capacity as funders, providers and regulators of health care.
  • Despite statements to the contrary, the real goal of the IFC and its paper, and the push for “public-private partnerships” in general, is not to promote health for all though expanding the private health care sector, but to promote business opportunities and profit generation in the health care sector.

The private sector promoters have repeatedly mischaracterized the Oxfam position during the debate and in follow-up blogs as saying that development organizations should ignore the unregulated private sector. Anna Marriott addressed this specifically in her presentation and follow-up remarks. “Our … conclusion, again based on current evidence that no developing country has achieved universal access with predominantly private provision, is NOT that the private sector doesn’t have a role to play.  Again I have to challenge the characterization of Oxfam’s position on that.  But that the priority, majority focus of donors and developing governments efforts and resources should be dedicated to rapidly expanding and strengthening free government health care as the most cost effective and sustainable strategy.”


Ravi Rannan-Eliya bolstered the pro-public argument with data comparing countries that have expanded coverage and improved health indicators with     those that have not. He showed that the private sector did not play a role in raising access for the poorest. The slide shown here, for example, shows that   publicly employed skilled birth attendants (blue columns) make the difference in serving the poorest women. The pro-private side presented no evidence other than a few pilot projects, yet claimed that a “formalized, integrated, regulated, and better capitalized private sector” improves the poorest people’s health. As Ravi concluded, “There is no historical evidence that you can scale up in the poorest countries and achieve universal coverage with private provision – even publicly financed.”

This is the main point, and even Guy Ellena from the IFC admitted it:

“Well, Anna, come on. You’re showing us great hospitals and then people basically barefoot selling most likely counterfeit drugs. You know, you separate the world into a kind of world of opulence and a world of total misery. It is not the world we are living in. And not, the African world is not like that. You have very poor people that neither the public nor the private sector is reaching, that have no revenues, are not integrated into economic activities, have no jobs and are very, very difficult to reach whether it is public or private. And nobody is saying that, ok, this is going to be solved by the private sector.”

He then went on to say how “a lot of solutions are offered” to the rest of the population above the very poor. This is an expression of the “bottom of the pyramid” strategy that corporations must employ in order to continue to increase their rate of return now that they have hit their limit in the richer countries. If you can get each of the 4 billion people living onless than $5 a day to spend $1 a year on your “solution,” that’s 4 billion dollars in revenues. Of course, we are not after a few random solutions. We need comprehensive primary health care based health systems.

The discussion was hindered by rhetorical arguments, such as: “We’re for doing what works, but you’re being ideological,” and the use of imprecise terms like “private sector” to include a wide range of actors with different goals and varied access to power. Dave McCoy from PHM tried to clarify this by distinguishing the impacts of different private health sector actors, and by placing the current popularity of “public-private partnerships” in the historical context of 30 years of neoliberal economic dominance. When he identified as an unproven assumption the idea that government is inherently inefficient and incompetent, this led to more accusations of “ideology.”  In addition to critiquing much of the research done on this question (and one thing everyone seemed to agree on was the need for more, better research on the private sector, although I believe we’ve known enough to provide health for all since at least 1978), Dave McCoy also recognized the need for discussion to go beyond the research and examine the normative values underlying the various points of view: What is an acceptable vision for what good health systems look like, and what role should government take? Which health activities should be profit generating which not? Are health services goods that should be marketed or human rights?

The next day, PHM and Oxfam hosted a meeting of NGOs to discuss the Oxfam paper, the vision for public health systems strengthening, and what Washington, DC-based NGOs can do to advocate for the “new approach to global health.” For several years, PHM-US has recognized the need to build an advocacy circle of progressive health NGOs in the DC area. This group would coordinate resources and advocacy efforts directed toward beltway institutions like World Bank, USAID, US government, and others with large health impacts internationally. This meeting will hopefully be a first step toward its creation.

Wendy Johnson from Health Alliance International chaired and presented the NGO Code of Conduct for Health System Strengthening.

“… a response to the recent growth in the number of international non-governmental organizations (NGOs) associated with increase in aid flows to the health sector. (…) The code serves as a guide to encourage NGO practices that contribute to building public health systems and discourage those that are harmful. The document was drafted by a coalition of activist or service delivery organizations, including Health Alliance International, Partners In Health, Health GAP, and Action Aid International.

After active discussion, several avenues for future action emerged:

1.    Engage in advocacy with donors, international institutions and US policy makers (perhaps especially important in light of the upcoming revision of the 1961 Foreign Assistance Act).

2.    Support civil society in developing countries to engage in country-based advocacy with their own governments and donors.

3.    Help Oxfam and others better understand how donors are supporting private and public sector actors on the ground by gathering stories/information.

4.    Conduct or support academic research to better understand donor preference for private sector health initiatives, and to compare private and public sector health performance regarding access, equity, cost, efficiency, scalability, etc.

5.    Join the host organizations’ efforts and endorse the Code of Conduct.

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