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

February 12, 2009

     By Duncan Green     

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?


February 12, 2009
Duncan Green