Public Stewardship to Optimize Private Sector Participation in

Public Stewardship to Optimize Private Sector Participation in Health Deus Bazira Mubangizi Results For Development/University of Maryland Baltimore IAS Meeting: Bridging the Divide: Inter-Disciplinary Partnerships for HIV and Health Systems Strengthening Vienna, July 16, 2010

Presentation Outline • What makes up the private sector • Evidence of significant private sector involvement in health • Private sector negative outcomes • Public stewardship innovative models • Private sector and HIV interventions • Key questions and way forward

Differences Between Types of Private Sector Entity Charge for Primary Financial Goal Financing/Capital Services/Products Generating a return on Commercial for -Profit investment Social Enterprise Entrepreneurial, incomefocused strategies with a minimum expectation of financial return Market-rate Range of market-rate capital, belowprices, subsidized market capital, or rates, or mix of full mix of donations and payers and those market rate capital who pay nothing Beneficiaries make Non-profit/NGO/Faith- Rely on donor support to minimal or no based organization carry out social missions Donations and grants payments Adapted from The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives (2007). International Finance Corporation, Washington, DC.

Why Leverage the Private Sector • Constrained public resources resulting in limited reach/access • Magnitude of health challenges far outweigh public and philanthropic investments • Private sector can increase access to needed services for varied population groups • Private sector involvement has a synergistic effect on improving quality of care even in the public sector • Rising health care costs are driving more people into poverty • Less efficient and poorly mobilized significant private sector resources (approximately 50% of expenditure on health care is through the private sector and is financed out-of-pocket) • Need to monitor quality of care and services delivered • Critical for improving referral between the public and private sector

Private Sector Use by Income Quintiles

Country Assessment of the Private Health Sector in Ghana (Source: Makinen, M (2010): Results for Development, Washington DC) DHS 2003: Decision to seek care for children with fever or cough, by wealth quintile DHS 2008: Decision to seek care for children with fever or cough, by wealth quintile DHS 2003 DHS 2008 100% 80% None 60% 40% Other 60% Private sector 40% Public sector 20% 0% 80% None Other Private sector Public sector 20% es Po t or e M r id dl e Ri ch e Ri r ch es t To ta l or Po r ch es t To ta l Ri ch e Ri dl e id er M or Po Po or es t 0%

Child Care Provider Classification in Select Countries § Source: Lagomarsino et al (2009). Public stewardship of private providers in mixed health systems. Results for Development Institute. Washington, DC.

Countries with Out-of-pocket Expenditure more than 50%

Private Sector Involvement in HIV/AIDS 90 82 80 70 60 60 50 40 36 30 20 10 4 4 Financing Care Series 1 Regulating Performance 0 Organizing Delivery Changing Behaviors Enhancing Processes Source: Center for Health Market Initiatives (2010) Results for Development Institute. Washington, DC.

A Case of HIV Services Delivery through the Private Sector • Over 228 sites involved in prevention, care and treatment delivery in 8 countries (Guyana, Haiti, Ethiopia, Kenya, Nigeria, Rwanda, Tanzania, Uganda and Zambia) • Of which over 161 are private (90% private-not-for profit; 10% private-for-profit) • More than 180, 000 clients receiving treatment of which 80% are from private facilities and over 400, 000 enrolled in care • Average virologic suppression rate over 87% (48 months+) and lost to follow-up at about 7% (48 months+) Source: AIDSRelief Program, 2010

Potential Negative Outcomes of Private Sector Activity • Uneven quality including sub-optimal diagnosis and treatment • Unethical business practices including unfair pricing • Unchecked inefficiency that leads to increased consumer costs • Atomized providers that negate economies of scale and undermine sustainability and increase cost of regulation

Challenges to Public Stewardship • Lack of adequate knowledge on private sector (formal and informal) functioning • Limited technical skills in the public sector to supervise private sector activities • Atomized/fragmented private sector makes it near impossible for government to engage • Public stewardship is not viewed as a priority

Harnessing the Private Sector – Improving Public Stewardship Regulation – enforce quality standards Educate and empower consumers to demand quality services Financing – promotion of risk pooling schemes Use technology to expand access and improve quality Change provider incentives and increase monitoring Strategic purchasing mechanisms for private sector delivery – through targeted subsidies for the poor • Improve access to private capital • • • – International financing back-up – Equity-focused financing – Local financial institutions education on health care risk profiles

Health Market Innovations – Type and Potential Outcomes

Conclusion –Way Forward § The public sector needs to consider innovative mechanisms even when not ideal to begin effective private sector regulation § The private sector requires better organization and coordination in order to benefit from public sector action § Philanthropic and donor investment should also be targeted at the private sector to stimulate growth that will eventually attract private capital § The negative consequences of unregulated private sector call for immediate action § The reality is that the private sector is significant and serves some of the poorest of the poor. § CMHI at R 4 D is building a data base that identifies and tracks programs designed to better harness the private sector ( http: //healthmarketinnovations. org )