Social services


World Bank under fire over support for private sector health care

17 April 2009

The debate over the World Bank’s support for private sector investment in health care provision in developing countries is in the limelight again.

A new report by Oxfam entitled Blind Optimism, asserts that while the private sector can play a role in health care, evidence shows that only scaling up of public sector provision of services is likely to deliver health benefits for poor people.

At the heart of the report is a critique of the World Bank, which over the past two decades has decried the failure of public health systems. The Bank has used this failure to argue for increased investment and growth in the private sector to address ever growing health care needs. Oxfam points out that in recent years the Bank has acknowledged the role of government in health care, however more "as a steward or regulator than a provider of services". Oxfam says, the Bank has contributed to weakening health systems through enforced public sector spending cuts and wide scale restructuring of the sector.

In the face of recent donor-led calls for encouraging and funding the expansion of private sector health care provision, Blind Optimism draws on international research showing serious failings in private sector health care. It argues that publicly financed and delivered services lead to higher performing, more equitable health systems.

Higher private participation in health care is associated with higher costs, according to Oxfam’s research, rebutting the argument that the private sector can provide better results at lower cost. Part of this is attributed to private providers pursuing profitable treatments rather than those dictated by medical need.

Oxfam points out that data from 44 middle-income countries suggests that higher levels of private sector participation in primary health care are associated with higher overall levels of exclusion of poor people from treatment and care. Women and girls suffer most. To make a return on services to the poor, according to Oxfam, the International Finance Corporation (IFC), the World Bank’s private lending arm, recommends that doctors see over 100 patients a day, or 1 patient every four minutes. Those that can afford it, can therefore attain much higher standards of care.

On the other hand, in 30 case studies of developing countries reviewed by the International Monetary Fund (IMF), the government health spending was found to have reduced inequality.

Research generated by the Bank itself supports the importance of public health care. In 2004, the World Bank’s World Development Report (WDR) (see Update 37) pointed out that individual health providers cannot be relied upon to provide the services they collectively desire. In practice no country has achieved significant improvement in child mortality without government involvement. According to the WDR, "Private sector or NGO participation in health, education, and infrastructure is not without problems – especially in reaching poor people." The report shows that government services generally perform far better than the private sector for rich and poor women alike with respect to childbirth.

Drawing on various sources, including the Bank, Oxfam concludes that the private sector generally performs worse on technical quality than the public sector. For example, in Lesotho only 37 per cent of sexually transmitted infections were treated correctly by contracted private providers compared with 57 and 96 per cent of cases treated in large and small public health facilities, respectively.

Bank disputes Oxfam claims

The launch of the Oxfam report has provoked response from the World Bank and agencies like the World Health Organisation (WHO). In a point by point rebuttal, the Bank asserted that the research and policies of the Bank and other donors had been misrepresented by Oxfam. It emphasised that its lending focuses on governments. However, it feels that more should be done to leverage non-state actors in health given their already large presence in the health sector. According to the Bank, this does not necessarily mean growth of the private health care system.

The Bank has further stated that in many countries it is possible that the private sector is too large and that parts of it provide poor quality care and in some cases may impose too high a burden on the poor via payment for services. The Bank also argues that good governance may be more of a key factor than having tax-funded public delivery of health care.

Oxfam responded rapidly, pointing out areas of agreement with the Bank but concluding again that Bank policy and loans, while directed at governments, are often channelled into private services via the government and that issues of good governance alone do not account for the high performance of some developing countries in health. "The specific policies they have chosen to pursue in health also make a major difference" Oxfam said.

The Oxfam report also provoked a response from medical practitioners in the British Medical Journal. A group of doctors some of whom work in private health care globally, led by Richard Smith of the private sector UnitedHealth Group, accused Oxfam of using “data that are thin, selective, and distorted.” They also wrote “the data do not indicate causality, but Oxfam fail to acknowledge this.” This accusations are reminiscent of the IMF’s response to a report linking IMF programmes to worse health outcomes (see Update 62), as it appears the doctors failed to read the Oxfam study carefully. Oxfam’s director Barbara Stockking replied to the doctors point-by-point, including noting: “We do say there is a correlation but we do not claim causality. In fact we state clearly in the paper that: ‘… although this correlation does not clarify whether high levels of private participation cause exclusion, it at least suggests that the private sector does not in general reduce it …'” The debate will continue as more evidence comes in about the effect of the private sector on health outcomes, but the Oxfam paper prompts renewed questioing of the Bank’s push for private provision.