Do investments in private hospitals and clinics catering to the wealthy strengthen primary health care systems in poor countries?
At a recent roundtable discussion in New York City, a representative of a private equity group presented plans to build private hospitals in emerging markets, such as Kenya, as one of the best ways to strengthen primary health care delivery. For most of us who have worked on strengthening health systems, investing in hospitals that cater to the well-off doesn’t sound like the best way to meet the health needs of the poor.
Ever since the 1978 Alma-Ata Declaration on Primary Health Care, there has been a strong consensus to promote policies aimed at allocating resources away from expensive curative care to preventive and primary care delivered at the community level. Has an emerging middle class, population growth, the increasing prevalence of noncommunicable diseases, and the advance of medical technology over the last 40 years turned this reasoning on its head?
The private equity fund manager’s argument is this: The only way to create local capacity for a fully functioning health care system is to start at the top and cascade best practices and standards to lower levels of the system. Building capacity requires experienced local specialists — doctors, nurses, administrators and technicians — who can serve as mentors and trainers to disseminate knowledge and skills through the system.
Only tertiary level institutions have the wherewithal to attract and retain high-caliber personnel to play these roles. Additionally, modern private hospitals provide the platform for importing and developing modern technologies and methods that can then spread down through the system to regional and community levels.
In this particular case, the investment plan was to build and equip modern facilities in partnership with an Indian health care company that would provide visiting medical personnel to jump-start the training and mentoring of local staff in specialist skills, introduce or reinforce good medical practice and administrative and management systems, and help assure quality.
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This approach raises a related question: Is there a difference between this approach and the traditional technical assistance model — so often criticized as undercutting local capacity and being ineffective?
The vision is for private capital to fill the gap left by the public sector’s inability to meet demand for high-quality tertiary care and, in so doing, provide the foundation for a self-sustaining system. That stronger ecosystem can propagate skills, standards and systems throughout health care delivery. In other words, trickle-down health care.
Thailand provides an example where a profitable private hospital system emerged as gross domestic product increased. This was accompanied by a universal coverage scheme that has, since 2002, guaranteed all Thais access to a comprehensive package of health services. Importantly, the universal coverage scheme eliminated the rich-poor gap in out-of-pocket expenditure.
In contrast, few African countries have comprehensive national health insurance schemes. For example, in 2012 Kenya’s National Health Insurance Scheme reached 4.5 million people, only 11 percent of the population. While this included 98 percent of those working in the formal sector — who comprise the middle and upper classes — only 16 percent of people working in the informal sector — which accounts for more than 80 percent of Kenya’s workforce — were covered.
Although universal health coverage has gained currency as a policy objective, the vast majority of people living in sub-Saharan Africa still lack it.
There is no denying the need for private investment in developing country health systems. Private hospitals that cater to the well-off and the emerging middle class not only fill a gap; they also provide critical infrastructure needed to attract and retain skilled professionals of all types. There is absolutely a legitimate role for high-quality hospitals that serve those who can afford to pay and who otherwise would leave their country to seek care elsewhere. If private investors see an opportunity in high-end health care in developing countries, more power to them.
My problem is representing services for those who are most well off as “social impact” investments that will benefit the poor. The argument that investing in expensive, curative tertiary care benefits the poor is too far of a stretch for me. Of more concern is whether those investments are being subsidized by governments or donors and are exacerbating the growing problem of inequality. I suspect that, like other businesses that offer to bring foreign direct investment, these investors also seek nonmonetary public subsidies in the form of tax breaks, land grants and other preferential treatment.
I don’t expect trickle-down health care will be any more effective than trickle-down economics at meeting the needs of the poor. While there is a case that growing economies offering universal health coverage such as Thailand create opportunities for synergy between the public and private sectors, it is not as clear that high-end private care in the absence of universal health coverage will create downstream benefits for the poor.
I only hope that in our enthusiasm for public-private partnerships, we don’t wind up inadvertently reversing a decades-old consensus that the best way to improve the health status of the poor is to finance programs that directly benefit them. We need to keep the focus on preventive and primary care and not allow expensive curative systems from consuming the lion’s share of public health budgets for the benefit of a small minority of the population.
Patrick Fine is the chief executive officer of FHI 360. Prior to joining the organization, he served as the vice president for compact operations at the Millennium Challenge Corp. He was also the senior vice president of the Global Learning Group at the Academy for Educational Development from 2006 to 2010.
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