PRIVATE SECTOR SHOULD BE IN CHARGE OF HEALTHCARE

NEW VISION
KAMPALA, UGANDA
26th February, 2009
By Philip Stevens

THE pressure group, Oxfam, does not like the growing trend of aid donors using the private sector to deliver healthcare efficiently to the poorest parts of the world. According to its new report: “Blind Optimism,” state-provided healthcare is more efficient, more equitable and less corrupt than private healthcare.

The blind optimism, however, is Oxfam’s: Governments have been responsible for providing healthcare in most of Africa since independence and, despite being showered with aid for the last 50 years, the quality is still atrocious.

The current system in which rich governments hand over large sums of money to poor governments in the hope they will spend the money on health (instead of limousines and guns) has run its course. Aid for health has ballooned from S$2.5b in 2000 to $14b in 2006. In 12 sub-Saharan countries, more than 30% of total health expenditure comes from aid.

Despite this assistance, hospitals and clinics are dilapidated, medical staff are demoralised and about 60% of Africans have to pay for healthcare themselves. The majority of African countries are unlikely to meet the health-related Millennium Development Goals and many are going backwards.

As former World Bank official Prof. William Easterly put it in The White Man’s Burden: “The status quo — large international bureaucracies giving aid to large national government bureaucracies—is not getting money to the poor.” If anything was ever based on blind optimism, it is the current aid model.

This is especially true of health. Quality healthcare relies on specialised personnel, complicated technology and good logistics. Even a rich country like Britain fails to manage state health services efficiently. Most African health ministries struggle to provide enough computers for their staff.
Once donor money comes in, health ministries have trouble with the basics.

According to the World Health Organisation, most ministries lack even rudimentary data about how this money is spent, making management impossible.
This breeds corruption, from ministerial embezzlement to officials selling drugs. In December, The Lancet medical journal reported how dozens of less-developed countries lied about their vaccination rates to extract more funds from the UN. The kids did not get their shots but someone was getting rich.

A study by Maureen Lewis of the World Bank shows how corruption in the health sector of developing countries is so bad that it is severely undermining the effectiveness of aid.

For the time being, wealthy governments have committed themselves to keeping the aid taps open but the financial crisis means aid is unlikely to continue at these levels. We, therefore, need to rethink completely how this money is spent if we hope to help millions of people improve their lives.

According to International Finance Corporation and World Bank figures, between a third and half of the $16.7 b spent on health in sub-Saharan Africa in 2005 was spent in the private sector, often by the poorest people who cannot get government services. This huge capacity is ignored by donors, who for ideological reasons prefer to work directly with governments.

Donors should be embracing this massive capacity, offering competitive contracts for health services. Non-profit groups, government and, crucially, the private sector should all be competing. This competitive stimulus would give a powerful incentive to improve standards — as it has in a host of other vital sectors, from clothes to food.

This has already happened in Cambodia, where NGOs have competed since 1999 to provide health services to the rural poor. Coverage and standards improved so rapidly the government widened the programme to cover one in 10 Cambodians.

In 2005, The Lancet compared 10 different contracting programmes around the world and found the majority out-performed the government in cost, quality and coverage, finding “improvements can be rapid” in countries as diverse as Bangladesh, Guatemala, Haiti, India, Bolivia, Madagascar and Senegal.

This process works particularly well for the rural poor, who are frequently neglected by governments. Where they were once a headache for bureaucrats in health ministries, they can suddenly become a business opportunity.

These are times of great financial uncertainty. It is no longer an option for wealthier countries to chuck ever-increasing amounts of money at dysfunctional developing-country health ministries, in the hope that some of it will eventually end up in rural clinics and surgeries. We need to abandon Oxfam’s outdated ideology and do what works.

Philip Stevens is the director of policy at the International Policy Network, a development think-tank based in London