Private sector health services
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Private Sector Health Services. Nabil M Kronfol MD, DrPH Alexandria June 10 th 2008. Outline. Introduction Definitions Observations Prerequisites Getting more from the Private sector Government tools with the PS Factors affecting the size of the PS Resource Creation Lessons Learned

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Private sector health services l.jpg

Private Sector Health Services

Nabil M Kronfol MD, DrPH

Alexandria June 10th 2008

Outline l.jpg

  • Introduction

  • Definitions

  • Observations

  • Prerequisites

  • Getting more from the Private sector

  • Government tools with the PS

  • Factors affecting the size of the PS

  • Resource Creation

  • Lessons Learned

  • Summary

The who paradigm of hcs l.jpg

The building blocks

Service Delivery

Health Workforce


Medical products and technologies


Leadership and Governance






Goals and Outcomes

Improved Health (Level an Equity)


Social and Financial Risk Protection

Improved Efficiency

The WHO Paradigm of HCS

Introduction l.jpg

  • The Public sector in most countries of the region has been dominant (“Paternalistic vision”)

  • Countries are studying the role of the PS in the context of health reforms.

  • Issues faced in Reforms include cost effectiveness, cost containment, responsiveness, efficiency, quality, equity.

  • Often, interest in PS has been kindled by International Organizations and by Globalization

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Introduction II

  • There is a need to define the private sector (Components, behavior, impact..)

  • Too little evidence on the PS

  • Ideology often confuses the debate

  • Most countries rely on a mix of public and private sector stakeholders

  • Out of pocket expenditures are dominant in the Region (Sabri)

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Introduction III

  • The “Purchaser-Provider” split has led to changes. (Figueras).

  • A “melting of public-private boundaries” is observed (Saltman)

  • The private provision of care has increased in social and home care recently

  • Privatization is not an end by itself; It is being promoted as one of the means to achieve societal goals & values

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  • “Privatization is the transfer of public assets to private ownership”

  • Privatization need not be equated with markets and competition (Monopoly exists)

  • Independent management such as autonomy, “hospital trusts” need not be in PS

Observations l.jpg

  • Private providers capture a significant and growing share of the HCS, even in LDC.

  • In rural areas, NGO are main providers

  • Overall, PS is mainly in ambulatory and dental care, less in inpatient and almost absent in Public Health.

  • Private practice is often unregulated

  • Scanty information on PS (tax, disrespect to Gvt, lack on information system)

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Observations II

  • Perception of greater privacy, speed of service, quality of care promote the PS (Paler, Mills)

  • Private funding include private health insurance, out-of-pocket payments, direct and informal payments and formal cost-sharing

  • Dual practice is rampant (Abdel Latif)

Prerequisites l.jpg

  • Attitudes towards PS is changing (Harding)

  • The Notion of “buyability”: Gvt should contract for goods and services that it can buy; Gvt should focus on goods that are not “buyable” (Preker and Harding)

  • Basic prerequisites: Knowledge about the PS; Dialogue with PS; Institutionalized policy making including finance and regulation

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Prerequisites II

  • Knowledge: Accurate information on the capabilities and resources of the PS

  • Unfortunately many countries and international organizations do not report

  • Dialogue: Policy making and regulation

  • Policy instruments: include insurance, licensing, certification, regulation

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Getting more from the PS

I - Contracting

  • Powerful tool to harness the resources of the PS to achieve society’s goals

  • Providers are assured revenue streams

  • Contractors can influence behavior through the contract

  • Contracting requires financial resources

  • Contracting requires substantial government capacity to lead the process

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Contracting II

  • Contracting requires a mind shift from Government

  • Clinical services: Usually Primary and Tertiary Care are contracted for

  • Educational services and campaigns

  • Auxiliary services: Catering, cleaning

  • Purchase services rather than assets (Jordan)

  • Contracting in EMRO (Siddiqui and Sabri)

Ii regulation l.jpg
II - Regulation

  • Considered as a means to improve quality, reduce inequality and disparities in access, improve efficiency, reduce waste and contain cost (Market failures)

  • Types of Regulation: Legislation, Price, Market entry, Licensing, Accreditation, Credentialing, Utilization Reviews, Audit, Guidelines, Protocols

  • Incentives: More complex but effective. Can be economic and non-economic;

  • Intent is to alter the market structure usually through the regulation of Insurance

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Regulation II

  • Regulatory Agents: Government, Professional Orders, Civil Society lately

  • Regulatory institutions are of many types and complexity

  • Scope of regulation can be very vast

  • Regulation is political and can be costly

  • Can bring up unintended consequences

  • Is dynamic. Needs constant changes.

  • A study is being finalized in EMRO (Egypt, IR Iran, Jordan, Lebanon, Pakistan, Sudan, Syria, Tunisia)

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III - Outreach

  • Third set of instruments along with Contracting and Regulation.

  • Outreach mechanisms include information dissemination, education and persuation

  • Information to patients: Raise awareness of quality (MD and hospital profiles, Internet) and consumer rights. Publish information on maximum permitted prices

  • Empower the public. Role for the media

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Outreach II

  • Education: Alter demand by educating users (Sex workers); Increase demand through community education (Immunization campaigns, screening); Train providers (Continuing education)

  • Persuation: Face-to-face interaction with providers (Model of pharmaceutical agents), Negotiation

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IV - Subsidies

  • Common with NFP and NGOs (Lebanon)

  • Subsidies to serve public interest, seed money for start up operations.

  • Subsidies may include tax exemption

  • Subsidies may be in kind (Training, Medications, IT packages)

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V - Conversion

  • Consists in turning over public services to the PS

  • Existing public facilities: Sell outright, Lease, operate under a management contract.

  • Capital investment required: For expansion or Rehabilitation. (Lease-Build-Operate)

  • Construction of new facilities: Build-Transfer-Operate contract; Build-Operate-Transfer. (Private Finance Initiative in the UK)

  • Divesture: Government ceases operations in case of excess capacity in certain localities

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VI - Public Private Initiatives (PPP)

  • Refers to virtually any relationship between the public and the private sector

  • Involves PS in the delivery of public services

  • Need for Purchasing tools and contracts, Regulation and Financial allotments

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VII - Private Health Insurance

  • When private insurance is voluntary and without adequate regulation, it will fail to meet societal objectives, whether in terms of equity, access, efficiency or cost containment (Maynard and Dixon)

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VIII - Provision of Public Health Services

  • Community-Based services such as water chlorination, salt iodization

  • Individual preventive services such as Immunizations

  • Promotion activities such as information on screening (Breast cancer, Prostate, Tobacco, Nutrition, Breastfeeding,

  • Special priority campaigns: HIV/AIDS, Substance abuse, Malaria, Tuberculosis

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Summing up Government Tools with PS

Most Intrusive:

  • Direct Provision of rural public hospitals and clinics, preventive services, sanitation

  • Financing: Budgetary support, Subsidies, Concessions, Contracting

  • Regulation and Mandates: Taxation, Licensure, Accreditation, Employee health insurance, Required immunization

    Least Intrusive

  • Information: Research, product testing, treatment protocols, recommended medicines, consumer information on quality, comparisons, consumer rights, education of public on health issues (Musgrove 1966)

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Factors affecting the size of the PS

  • Income: A 10% increase in income is associated with a 16.4% increase in the number of private physicians per million pop versus only 9% in public sector MDs

  • A 10% increase in income leads to only 11% increase in FP private beds and 5% of public beds (“an inferior good”)

  • At income levels of $ 7,500, private physicians exceed public physicians

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Factors affecting the size of the PS II

  • While spending may become more socialized with rising income, the provision of care becomes more privatized.

  • The level of urbanization, secondary school enrollment, the older population all correlate with increase in private physicians.

  • The higher the level of health expenditures irrespective of source is positively correlated with private providers

Resource creation l.jpg
Resource Creation

  • Development of Human Resources: Physicians, Nurses, Technical and Administrative Staff

  • Development of Facilities: Private clinics, hospitals, diagnostic centers, imaging centers, physiotherapy centers, home care

  • Technology: Medical Equipment, Pharmaceutical Plants, Telemedicine

  • Research, Legislation, Education: Academia, Civil Society, Research Institutions.

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Lessons Learned

  • Reforms that increase the role of the PS in financing health care will increase expenditures

  • Systems that rely heavily on private finance for health care tend to be less progressive (Carole Propper)

  • Increase in private finance need not lead to the evolution of the public sector into a “poor service for the poor”. Public expenditures may continue to increase

  • Competition in the delivery of health services is not always guaranteed

  • Evidence is needed for better decision making

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Lessons Learned II

  • Policy makers should cease to ignore private health providers. They should pursue options for working with the PS in order to achieve sector objectives

  • The negative impact of the PS has its origins in the absence or ineffective financing and regulatory mechanisms not the ownership of the service delivery itself.

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In Summary

  • Decision makers should look at the resource mix and its impact on societal goals

  • Disentangle values and ideology and assess evidence on the impact of PS on society’s goals (incl. values)

  • Privatization of funding (OOP, Pvt insurance, illegal payments) has a negative impact on solidarity, decreases access and worsens outcomes

  • HS with mixed delivery systems enabled by strong Government funding have better performance

  • Privatization can only succeed in meeting society’s goals when the State exercises strong stewardship.

References l.jpg

  • EURO Regional Committee, 2002

  • MAYNARD, A. & DIXON, A. Private health insurance and medical savings accounts: theory and experience. In: Funding health care: options for Europe. Buckingham, Open University Press, 2002 (European Observatory on Health Care Systems series).

  • MOSSIALOS, E. & THOMPSON, S.M.S. Voluntary health insurance in the European Union. (a policy brief)

  • FIGUERAS, J. ET AL. Purchasing for health gain. Buckingham, Open University Press (European Observatory on Health Care Systems series) (in print).

  • SALTMAN, R.B. Melting public-private boundaries in European health systems. European journal of public health [in press].

  • SALTMAN, R.B. Regulating the private sector. Copenhagen, European Observatory on Health Care Systems [in press]. (European Observatory on Health Care Systems policy brief)

  • Paulo Ferrinho, Wim Van Lerberghe, Inês Fronteira, Fátima Hipólito and André Biscaia; “Dual practice in the health sector: review of the evidence” Human Resources for Health

  • Hanson K, Berman P: Private health care provision in developing countries: a preliminary analysis of levels and composition. Health Policy Plan 1998, 13(3):195-211.

  • Natasha Palmer, Anne Mills, Haroon Wadee, Lucy Gilson & Helen Schneider; “A new face for private providers in developing countries: what implications for public health? Bulletin of the World Health Organization 2002;80:292-297

  • Carol Propper; “A LARGER ROLE FOR THE PRIVATE SECTOR IN HEALTH CARE? A REVIEW OF THE ARGUMENTS”, Centre for Market and Public Organization, April 1999- CMPO Working Paper No. 99/009