IFC to push private health care in Africa

18 January 2008

Concerns abound about vague promises to exempt the impoverished from payment, while debate continues over whether public institutions should allocate resources to private providers at the expense of the public health sector.

The International Finance Corporation (IFC), the private sector arm of the World Bank, announced last month that it would coordinate some $1 billion in equity investments and loans to finance private sector health provision in sub-Saharan Africa. The program was explicitly linked to the results of an IFC study, financed by the Bill and Melinda Gates Foundation, which found that the private sector already provides about half of the health care in the region, and that impoverished people are just as likely as the better-off to use private providers.

As a result of the proliferation of “user fees” geared toward cost recovery at public clinics - measures often introduced at the instigation of the World Bank - the difference in cost between public and private services is often limited, and many feel that private providers are better equipped and staffed than their public counterparts, and have shorter waiting times.

However, there remains a longstanding debate about whether institutions such as the World Bank Group should allocate public resources to revitalizing government health sectors, or to encouraging private companies to increase their involvement, with the promise of eventual profits. The intention would be to attract more total resources, and possibly more efficient services, for more people.

But in many cases of privatization of public services, companies have focused their efforts on serving those most able to pay and ended up neglecting the impoverished majority – a phenomenon known as “cherry-picking” (a term also applied to health insurance companies in the U.S.). The IFC, echoing the Gates-funded study, emphasizes the need for strong regulations to safeguard the interests of less wealthy populations. However, few specifics about how such regulatory systems would work are provided. Given the failure of many systems promising to exempt the impoverished from payment, and even the cancellation of privatization contracts (see “Tanzania is awarded nearly $8 million in dispute over failed water privatization”), many observers are wary of entrusting health care to the good intentions of private companies.

These points are articulated by Barbara Stocking, Director of Oxfam GB, in a letter to the Financial Times. She points to Oxfam’s experience and research and maintains that “profits cannot be made in serving people this poor without some form of public subsidy. Without this, poor people either will not get healthcare at all or will have to pay fees they can ill afford.” Malawi, says Stocking, is an example of one country that has used aid money to hire more health care workers, pay them better, and eliminate user fees. The key, argues Stocking, is to mobilize civil society in developing countries to demand high-quality government regulation and service delivery, and for donor countries to keep their promises to provide more aid.

Resources

• IFC to help Africa build private health by Andrew Jack, Financial Times, December 16, 2007 (FT website)
• No short cut to effective healthcare for those in the poorest countries by Barbara Stocking (letter to the editor), Financial Times, December 20, 2007 (FT website)
• Of markets and medicines, The Economist, December 19, 2007 (Economist website)
• IFC after $1bn to boost African health care by Tamar Khan, Business Day (South Africa), December 24, 2007
• The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives, International Finance Corporation (IFC website)