PRIVATE HEALTH CARE
Item
- Title
- PRIVATE HEALTH CARE
- extracted text
-
Ge mH- & I ■
RF_COM_H_61_SUDHA
Asystematicreviewandmetaa n a 1 ysiso fst u d iescompari ng
in o r ta I i ty ra tes o fp riva te for- pro fi t
andprivatenot-for-profithospitals
Research
Recherche
P.|. Devereaux/ Peter T.L. Choi/* Christina Lacchetli/
Bruce Weaver/ Holger J. Schiinemann/' Ted Haines/
John N. Lavis/’’Brydon J.B. Grant/***** David R.S. Haslam/6
Mohit Bhandari/* Terrence Sullivan/" Deborah J. Cook/*
Stephen D. Waller/Maureen Meade/* Humaira Khan/
Neera Bhatnagar/** Cordon H. Cuyatt'*
Background: Canadians are engaged in an intense debate about the relative merits
ol private tor-profil versus private not-for-profit health care delivery. To inform
this debate, we underlook a systematic review and meta analysis of studies
< onipanng the mortalilx rates ol private for-profit hospitals and those ol private
not-for-profit hospitals.
Methods: We identified studies through an electronic search of I I bibliographical
databases, our own files, consultation with experts, reference lists, PttbMed and
SciSearch. We masked the study results before determining study eligibility. Our
eligibility criteria included observational studies or randomized controlled trials
that compared private for-profit and private not-for-profit hospitals. We ex
cluded studies that evaluated mortality rates in hospitals with a particular profit
status that subsequently converted to the other profit status. For each study, we
calculated a relative risk of modality for private for-profit hospitals relative to
private not-for-profit hospitals and pooled the studies of adult populations that
included adjustment for potential confounders (e.g., teaching status, severity of
illness; using a random effects model.
Results: Fifteen observational studies, involving more than 26 000 hospitals and
58 million patients, fulfilled the eligibility criteria. In the studies of adult popttlatii >ns, with adjustment lor piilenlial confounders, private for-profit hospitals were
a-.si it i.iled with an im le.isi'd i tsk ol death (relative risk |RR| 1.020, 95% confi
j
dem e interval K H I 00 1 1.0 58;/; = 0.02) The one perinatal study with adjust
ment lor potential confounders also showed an increased risk of death in private
for-profit hospitals (RR 1.095, 95% Cl 1.050-1.141; p< 0.000.1).
Interpretation: Our meta-analysis suggests that private for-profit ownership of hos
pitals, in comparison with private not-for-profit ownership, results in a higher
risk of death for patients
ITomrhe Department sol
‘Medicine, t Anesthesia,
-f Clinicn I Epidemiology;! nd
Biost a list its,§§ Psych iarrv
and Behavioral
Neuroscietu cs,and
‘11‘llSurgcryandihe
I f f I lealrhSciencesI ibrary,
McMasteiLlniversity,
I lamillon.t )n Ihe
Depart men I sol'§Mcdici ne,
’ItSocialandPrevenrivc
Aledicine.andttl’hi siology
■andBiopliysics-L'niversiryat
But f a Io,andthet f Veterans
A ffairsAlcdiealCenter,
Buffalo,NYtthc** Institute
forWorkandHcalthandrhe
PopularionllcalthProg ram,
Canadian Insri rutefor
AdvancedRcsearch.Toronro,
andthe*“Dcpartmentof
HcaldiPolicyAIanagement
andEvaluarion.Ltniversiryof
Toron to.Toronro,Ont.
/ /ils.ii tn /<‘/i,rs/>cenpcerm ieivi 'll
< MAI _>t)02. U,(,l I II I 1*1'1 -11)1.
15 See related attic les pages 1-11 <>
anil I t III
anadian health policy-makers are considering an expansion of private forprofit health care delivery, including private for-profit hospitals.' Most of
the debate has focused on whether private for-profit health care facilities
can contain costs more effectively,avoid differential access to health services (i.e„
rwo-ticr medicine)' and avoid letting foreign investors influence Canadian health
care policy through the North American I'Tee Trade Agreement. (NAI'TA). What
has been missing from this debate is consideration of the potential health outcomes
of the proposed expansion of private for-profit health services.
I lealth care can lie separated into 2 essential and distinct components: binding
C
C.MAJ » MAY >», 2002; 1 b G (II)
<.iy20()2CAn<}(li.inXtc(lic;ilAssoci.itioiu>rit\lic ensors
1399
I )<*\ vrr.Hix ('I ,d
(i.c.. who p.iys for health care) and delivery (i.e., who owns
and atlnnnisleis the institutions or services that provide the
care). Both funding and delivery can be public or private.
Public funding means paid for by government (e.g., through
the use of tax dollars); public delivery means government
ownership and administration of health care facilities. Pri
vate funding and private delivery can both be for-profit or
not-for-profit. On the funding side, insurance companies
that channel premiums to pay lor health care can be private
for-profit or private not-for-profit. On the delivery side,
hospitals and other health care delivery institutions that arc
private for-profit corporations arc owned by shareholders or
investors. Private hospitals can also be not-for-profit institu
tions that are owned by religious organizations, communi
ties. regional health authorities or the hospital boards.
Public funding is the main method by which Canadian
hospitals obtain revenue. I lowcver, 95% of Canadian hos
pitals arc private not-for-profit institutions.’' Because Cana
full-text publications identified by one or both of die individuals
in each team for full review (big. I}.
We masked the results (i.e., obscured them with a black
marker from the tables and text) of all publications selected for
full review. Teams of 2 individuals independently evaluated each
masked article to determine eligibility ()ur agreement on studies
evaluated within teams was excellent (k 0.83. 95% confidence in
terval [CI] 0.73-0.93). All disagreements were resolved by consen
sus. 'The consensus process required individuals to discuss the rea
soning for their decisions. If one individual realized that she or he
had made an error, then the process was complete 'This occurred
in all cases, and therefore an independent third adjudicator was
dians commonly use the term “public hospitals” to refer to
private not-for-profit hospitals, many arc unaware of the
private ownership and administration of our hospitals."
1 his study addresses issues of health care delivery, rather
than health care funding. We undertook a systematic review
and a mcta-analysis to address the following question: What
is the relative effect of private for-profit versus private notfor-profit delivery' of hospital care on patient mortality?
Methods
W’c evaluated hospital mortality rales as a component of a
larger systematic review that we are undertaking to compare
health outcomes, quality' and appropriateness of care, and cost in
private for-profit versus private not-for-profit health care delivery
systems. This publication presents the results of the hospital mor
tality review. The study process is outlined in big. I.
We used 6 strategies to identify studies: an electronic search of
I I bibliographical databases, our own files; consultation with expens
from several continents; a review of reference lists from articles that
fulfilled our eligibility criteria; PubMed, using the "related articles”
Icaiiirc lor all studies meeting our entry criteria; and SciScarch, for
publh aiions dial < ilvd any Mudirs dial lullillriI our entry criteria.
Wr used all die Mudies dial wc were initially aware ol lo iden
tify medical subject heading terms and key words for the search. A
librarian (N.B.) undertook an iterative process, for each database,
to refine the search strategy through testing of several search
terms and incorporation of new search terms as new relevant cita
tions were identified. The search included the following data
bases; EMBASE (1980-2001), MEDLINE (1966-2001),
1IEALTIISTAR (197 5-2001), CINA1IL (1982-2001),
BlOb.'l II1CSLINE (1973-2000), Wilson Business Abstracts
(1997-2001), EconLit (1969-2001), Cochrane Library (2001, is
sue 3), Dissertation Abstracts Ondisc (1861-2001), ABI/
INFORM (1970-2001) and NTIS (196+-2002). Complete list
ings of die database search strategies are available from the authors.
Our 6 strategies identified 8665 unique citations. 'Teams con
sisting of 2-individuals independently screened the tides and ab
stracts of each citation and identified all citarions for full review
when there was any possibility that the study contained a compar
ison we were interested in. 'This screening process yielded 805
1400
JAMC • 20 MAI 2002. 166 (I II
Fig. 1: Study process.
Comp.I ring piiv,u<» for-profit and private nol-l'oi-piofrl hospitals
ncvi i leqmied to resolve disagreements. I cams reviewed masked
aniules that they had not assessed during the screening process.
W e included observational studies or randomized controlled tri
als (RC Is) that compared patient mortality in private for-profit and
private not-for-profit hospitals. Wc excluded studies that evaluated
health care delivery systems with a particular profit status (e.g., pri
vate not-for-profit) diac subsequently converted to anodier profit
status (e.g.. private for-profit), because the comparisons are con
founded by potential differences in patient populations and medical
interventions over time and uncertainty regarding the lime required
to create functional change alter an alteration in ownership status.
W'e assessed the following characteristics in all the observa
tional studies that met the eligibility criteria: sampling method,
type of hospitals evaluated (e.g., general medical and surgical hos
pitals, hospitals with maternity services), date when data collection
was initiated and completed, duration of patient follow-up,
source(s) of health care financing (e.g., public, private insurance),
case mix of patients (e.g., medical disorders, surgical disorders),
source of data (e.g , administrative database, paticqt chart), number
of hospitals and patients evaluated, mortality results anti whether
there was adjustment for potential confounders in the analyses.
I (jins ol 2 individuals independently abstracted data from all the
studies ili.it fulfilled our eligibility criteria. Disagreements were re
solved by consensus using the same process discussed earlier Our
overall agreement was 93% lor the data abstraction. W'e attempted
io contact all authors when data writ missing
lo eliminate hospital teaching status as a potential conloundcr,
we included the results from private for-profit nonceaching and
private not-for-profit nonteaching hospitals when these data were
available. If a study reported 2 .separate adjusted analyses, we in
cluded the results from the analysis with the most appropriate ad
justment. Wc considered it appropriate to adjust for patients'
severity of illness and socioeconomic starus, hospital teaching sta
tus and other variables that could confound die comparison of in
terest. Where possible, we avoided adjustment for variables diat
arc under the control of hospital administrators, which may be in
fluenced by profit status and may affect mortality. These variables
include hospital staffing levels (e.g., the number of registered
nurses per bed, registered pharmacists per bed) after adjustment
for patients’ severity of illness has already been undertaken.
Before carrying out the analysis, we specified several hypotheses
io irsi p.ueniial explanations lor variability (i.e., heterogeneity) in
the direction and magnitude ol effect among studies. Wc hypothe
sized that the effect size may differ based on whether the analysis
adjusted for potential confounders; whether we incorporated an es
timate of the sample size into the calculation to determine the effect
size; the duration of patient follow-up (i.e., in hospital, or for
30 days or 90 days after admission); the source of health care fund
ing, the data source; whether the hospitals belonged to a chain or
were free-standing organizations; whether the patient population
was adult or pediatric, and, lor studies involving US Medicare pa
tients, whether the data collection occurred before |9X-| (when I S
Medicare switched from a cost-based reimbursement scheme,
whereby hospitals were reimbursed for the costs associated with a
patient’s care, to a prospective payment system whereby hospitals
arc reimbursed based on (he patient’s designated diagnosis).
I’br each study, wc computed the relative risk of mortality in
private for-profit hospitals relative to private not-for-profit hospi
tals (sec the .Appendix on the GW. (7 Web site lor details). Wc
pooled these relative risks using a random effects model' and
tested lor heterogeneity using a y test. \ meta-analvsis program
written by one of the authors (B.W ) was used. Wc evaluated a
funnel plot for evidence of publication bias.'
The Hamilton Health Sciences Research l-.thics Board in
I lamilton, Ont., approved this stink protocol
Results
W'e identified 13 publications that reported 15 observa
tional studies that met our eligibility criteria '
Three
publications identified as fulfilling our eligibility criteria
were subsequently excluded, because 2 were duplicate pub
lications of included studies, and in one publication rhe pa
tient population was a subset of a larger population from an
included study.-5'*’7 We also identified 19 publications that
we felt might be eligible bur required further information
or data, or both, from the authors. After contacting au
thors, we confirmed that these studies cither did not ad
dress our study question or the authors could not provide
the necessary data. Studies that did address our question
but did not contain data that we could use all suggested an
advantage for private not-for-profit hospitals (Table I). ' *'
I able I; Publications excluded from the mcta-analysis after further information was obtained from authors
Problems lli.il precluded sludy inc fusion
Efforts lo resolve problems
Seven studies evaluated hospital mortality rales and
included PFP and PNFP hospitals but did not provide data
to compare the PFP and PNFP hospitals.'" "
All 7 authors were contacted, but they were unable lo provide data
Three studies compared mortality rales in PFP and PNFP
hospitals. However, we were unable lb incorporate their
data as presented into our review." *’
Two authors were unable to provide the data," and wc were unable to conlai I
one author.1 The data presented suggested a trend favouring lower mortality rates
in PNFP hospitals in all 3 studies.
Six studies evaluated hospital mortality rales in PFP and
NFP hospitals The NFP hospitals were a mixture of public
NFP and PNFP hospitals.1'1"
The authors were unable to provide the data to compare lhe PFP and PNFP
hospital mortality rates directly. Two publications reported a statistic all v
significant lower adjusted mortality rale in the NFP hospitals,.... and 2
publications reported a trend favouring lower mortality rales in the NFP
hospitals.1"" One sludy did not provide information lo compare lhe PFP with the
NFP hospitals,’ and one study was a duplicate publication."
For 3 studies, we wondered whether lhe authors had data
on PFP and PNFP hospital mortality."
We were able lo determine that 2 of lhe studies did not include any PI I’
hospitals/1** and one did not include any PNFP hospitals."’
Noir PIP = private tor-profit. PNFP = private not-lor-prolil, NFP ■ not tor-profit.
(.MAJ • MAY 28, 2002; !(>(> ill)
1-401
I
(Meaux
,il
1 aides 2 and 3 (Table 3 is available in electronic format
on the C’A/.T/ Web site) present the study characteristics
and rhe study methodology respectively for the 1 5 observa
tional studies included in our systematic review. These
studies were all conducted in the United States, and in
most studies patient health care was publicly funded
through Medicare. Most studies included general acute
care, medical and surgical patients, and one study specifi
c-ally examined maternit)' services.'' Data in these studies
came from about 38 million patients admitted from 1982 to
1995 to 26 000 hospitals, and the most frequent patient fol
low-up period was 30 days after admission to hospital. All
studies used administrative data.
Of the 14 studies that evaluated adult populations and
adjusted lor potential con founders, 6 had a statistically sig
nificant lower relative risk of death in the private not-forprofit hoxpn a Is."I(’ and one had a statistically signifi
cant lower relative risk ol death in the private for-profit
hospitals (l;ig. 2)?“ Mcla-analysis ol these 14 studies
demonstrated th.it private for-profit hospitals were associ
ated with an increased risk ol death (relative risk (RR]
decrease from 1.03 to 1.01, in the analysis that adjusted lor
variables under the control of hospital administrators.“
We explored potential sources of variability in the study
results based on our predefined hypotheses. We found dif
ferent summary estimates for the studies that evaluated
adult populations compared with the study that evaluated a
perinatal population (p = 0.002); the impact of the private
not-for-profit hospitals in lowering mortality was larger in
the perinatal study. Because of these findings, we did not
include the study that evaluated a perinatal population in
the pooled analysis. I he p values for the difference in sum
mary estimates in each pair ol subgroups defined in our
other hypotheses were all greater than 0.10, indicating no
significant difference in subgroup summary estimates. Our
pooled estimate of the adult population studies with adjust
ment for confounding had heterogeneity (/> = 0.02) that we
could not explain. The funnel plot did noi suggest publica
tion bias (Fig. 3).
1020, 95% ( .I I 003-1.038;/) = 0.02).
One study ol perinatal mortality that evaluated
1 642 002 patients in 243 hospitals and adjusted tor poten
tial confounders also demonstrated an increased risk of
death in private for-profit hospitals (RR 1.095, 95% (J
Our systematic review identified 15 observational studies
that compared private for-profit with private not-for-profit
hospital mortality. These studies uniformly met quality cri
teria regarding adjustment lor potential conloundeis. in
particular, patients’ .severity ol illness or surrogate markers
of severity' of illness, and complete accounting of deaths.
Our pooled analysis of the adult population studies demon
strated that private for-profit hospitals were associated with
a statistically significant increase in the risk of death.
We arc aware of 2 earlier reviews in this area. The \cw
York Academy of Medicine has reported a qualitative re
view that compared access, costs, quality ol caic, education
and research in for-profit and not-for-profit hospitals.,
managed care organizations and nursing homes? This re
view only included -I ol the 15 studies we identified and
1.050-1.141;/) < 0.0001).,M
Two studies reported analyses that appropriately adjusted
tor patients’ severity' of illness and separate analyses that also
adjusted for staffing levels (c.g., registered nurses as a pro
portion of all nurses, board-certified specialists as a propor
tion of all physicians, registered pharmacists per occupied
bed)." ’" In both studies, the risk of higher mortality associ
ated with private for-profit hospitals decreased in the latter
analysis. I larrz anti colleagues reported a decrease in relative
risk from 1.06 to 1.04, and Bond and coworkers reported a
Interpretation
Tabic 2: Characteristics of studies included In the mcla-analysis
Dale when data
collection was
begun in lhe hospital
Dale when data
collection was completed
in lhe hospital
Medicare
01/07/1983
30/06/1984
Medicare
01/07/1985
30/06/1981)
10 d
Ac ule care
Medicare
11/12/1986
30 cl
Manheim el al""
Acute care
Medicare
01/01/1986
01/01/1987
31/12/1987
.10 d
Kuhn el al"'
Ac ule care
Medicare
01/01/1988
31/12/1988
Pilterle el al
Acule care
Medicare
01/01/1988
31/12/1988
30 d
In hospital
Williams"1
Maternity
Public and private
01/01/1986
31/12/1990
28 d post delivery
Mukamel el al"
Acule care
01/01/1990
.31/12/1990
Bond el al "’
Yuan el al1’
Acule care
Ac ule c.ire
Medicare
Medicare
Medicare
01/01/1992
01/01/198-1
11/12/1992
11/12/1991
30 d
In hospital
10 d
Lanska and Kryscio
Mt Clellan and Staiger ‘
Community
Public and private
Medicare
Medicare
01/01/199.1
01/01/1994
01/01/1982
.11/12/1991
31/12/1994
11/12/1995
90 d
.10 d
Study
1 ype ol
hospital
Shortell and Hughes1'
Community
Keeler el al '
Ai ule c.ire
1 l.irlz el .11 ’
Sloan cl al
Acule care
At ulf c.ire
I’alleni
funding
•[.ih.nn.iinm i- ihi* i.inu* lor both sluilii1* by M.inlx-nn el >il and by Yuan el al.
1402
JAMC • 20 MAI 2002; 166 (I II
Follow-up period for
individual patients
In hospital
In hospital
Compiling piivale for-profit and private nol-for-piolii hospitals
reached the general conclusion that the studies evaluated
provided no clear indication as to the superiority of either
hospital system regarding the quality of care and health
outcomes/ 1 he second review focused on the public pur
chasing of private surgical services.’* This qualitative review
identified 7 of the 15 studies we included and reached the
general conclusion that more research was needed.
W c undertook multiple strategies to identify studies, in
cluding searching 1 1 bibliographical databases, and found a
number of studies not included in earlier reviews (sec pre
ceding paragraph). We masked study results before deter
mining snuly eligibility. Our agreement on study inclusion
was high as was our agreement during data abstraction. We
were also successful in confirming and obtaining informa
tion horn authors (see Appendix4’). We were able to iden
tify 15 studies with ven- large sample sizes that adjusted for
potential confounders.
Our systematic review has several limitations. I he most
important is that we were unable to identify any RGTs. It is
unlikely (hat RCTs will ever be undertaken to study this
question, thus the strongest feasible design for addressing
our question is observational. However, .ill 15 studies we
No. ol
Study
hospitals
No. of
patients
Shortell1
653
144 159
1.43
220
4937
0.04
.3 107 616
1 537 660
1 1.38
9 78
2 168
1252
less siik? Most of the studies considered here used the
Health Care financing Adminisirmon (IICI A) database
that includes data on all US hospitals that serve Medicare
patients and generates risk-adjusted mortality rales that arc
highly correlated with detailed clinical risk -adjusted mor
tality rates.” Moreover, in the studies that reported both
Manheim 1 S'1
1 (»I 7
2 228 593
2.59
Kuhn"*
2580
.3 353 676
12.3-1
Pillerlc'7
1-182
IG5 1
4 529 206
5 29g HI2
1-1.11
Mukamel1’’
Iloud
1 *21
•I 2 10 *168
1 2 66
> ii.iii Mi dit al'1
1 1 II.
7 186 000
1 1.90
Yu.m Surgical''
MIG
-I 396 000
5.05
1 anska"
799
16 983
0.00
McClellan-’1
2875
181 369
1.48
Sloan-''1
2.360
7079
0.0.3
Totals
26 199
.36 402 558
100 00
Favours
private not-for-profit
hospitals
Favours
private for-profit
hospitals
% weight
Keeler* ’•
Hartz14
Manheim MH1'
identified did adjust for potential confounders, including
teaching hospital status and markers of patients’ severity of
illness.
A major threat to the validity ol observational studies is
residual confounding. Is it possible that there are factors
other than private not-for-profit hospital status that explain
such institutions’ lower mortality rales? One such factor
could be teaching status, because a much higher proportion
of private not-for-profit than private for-profit hospitals arc
teaching hospitals I lowcver, f of rhe studies conducted
analyses that excluded teaching hospitals altogether and
found a statistically significant increase in moriaht) in the
private for-profit hospitals (1\1\ 1 .01, 1.05 and I 05).''’’
Inevitably, large adminisiialive databases have a limited
ability to adjust for disease severity, is it possible that pa
tients in private not-for-profit hospitals were, on average,
—------------------------
...
17.21
—
— -----------------------------------►
.—.—.
-------------- -------------
—
Random effects pooled estimate
0.7
0.8
0.9
1 0
l.l
1.2
1.3
Relative risk and 95% Cl
Fig. 2: Relative risk of hospital mortality for adult patients in private for-profit hospitals relative to private not-for-profit hospi
tals. Cl = confidence intervals.
(MAI • MAY 211. 2002; !(.(> 11 I <
I-10 I
Dcvriv.mx cl .11
unadjusted and adjusted results lor disease severity, the ad
justed analysis consistently led to effect estimates that were
more favourable to the private not-for-profit institutions,
suggesting that private not-for-profit hospitals serve a pop
ulation ol patients with greater disease severity.""1'’” Un
der these circumstances, we would anticipate that residual
confounding would make the private not-for-profit institu
tions look worse, rather than belter, than the private forprofit institutions. These considerations suggest that, if
anything, our results may represent an underestimate of the
potential increase in mortality associated with private forprofit hospital care
Ideally, studies would have adjusted lor, or considered as
explanatory factors, other variables for which data were not
available. These variables include whether the physicians
wre hospital employees or corporate employees, or inde
pendent contractors, ami their relationships with local
health maintenance organizations. Tinally, studies have
done linlc to adjust for the proportion ol Medicare patients
versus privately insured patients in the institutions being
analyzed. W ith respect to this last variable, however, it is
likely that for-profit hospitals attracted a larger proportion
ol privatclv insured individuals. II this is the case, private
lor-proln providers would have more resources available,
and one might expect a “spillover” cllcct ol improved care
co Medicare patients. 'To the extent that this is the case, our
pooled estimate again biases the results against the private
not-for-profit institutions.
When studies show important differences in results, rig
orous systematic reviewers explore the data to see if they can
identify cogent explanations for rhe differences, blow they
should proceed it they fail to find an explanation for the dif
ferences remains controversial. Some argue that under these
circumstances, pooling is inappropriate, Others argue that
clinicians, and in this case health policy-makers, must still
make decisions, and their decisions should he driven by the
best available estimate ol treatment cllcct.'" In the presence
of unexplained heterogeneity, while inferences associated
with pooled estimates arc weaker, these estimates neverthe
less provide the best estimate ol the average cllcct. and thus
constitute useful information for decision-makers
The studies we pooled used similar methods to examine
similar populations. Moreover, one does not require a
pooled analysis to generate concern about the impact ol lorprofit status on hospital mortality: 7 studies provided statis
tically significant results that favoured lowei mortality in
piivate not-for-profit hospitals. where.is only one study had
a statistically significant finding in the opposite direction.
We have no satisfactory explanation lor the one stud\
that demonstrated a statistically significant lowei risk of
death in private for-profit hospitals/ Other large studies
that used data from the same database before and liter this
study reached the opposite conclusion."1'1...... .
We con
tacted the authors ol this study and asked them to under
take further analyses to determine what may have ac
counted for this discrepant finding.’ I he aulhois declined
our request.
W hy is there an increase in mortality in lor-jirolit insti
tutions? Typically, investors expect a I()%-I5% return on
their investment. Administrative officers of private forprofit institutions receive rewards lor achieving or exceed
ing the anticipated profit margin. In addition to generating
profits, private for-profit institutions must jiay raxes and
may contend with cost pressures associated with large re
imbursement packages for senior administrators that pri
vate not-for-profit institutions do not face. As a result,
when dealing with populations in which reimbursement is
similar (such as Medicare patients), private for-profit insti-
Comparing private for-profil ,ind private nol-lor-piolil hospitals
unions lace a daunting task. They must achieve the same
outcomes as private not-for-profit institutions while devot
ing fewer resources to patient care.
Considering these issues one might feel concern that the
profit motive of private for-profit hospitals may result in
limitations of care that adversely affect patient outcomes.
Our results suggest that this concern is justified. Studies in
cluded in our review that conducted an initial analysis ad
justing for disease severity, and another analysis with fur
ther adjustment for staffing levels, support this explanation
lor our results. The private for-profit hospitals employed
fewer highly skilled personnel per risk-adjusted bed.14 '"
The number of highly skilled personnel per hospital bed is
strongly associated with hospital mortality rates,14*7’" and
differences in mortality between private for-profit and pri
vate not-for-profit institutions predictably decreased when
investigators adjusted for staffing levels. Therefore, lower
staffing levels of highly skilled personnel are probably one
factor responsible for the higher risk-adjusted mortality
rates in private for-profit hospitals.
Given the differences in the organization of the (Cana
dian and US health care systems, one might question
whether our results can be applied to Canada. The struc
ture of US health care has, however, shifted dramatically
over time. With the exception of a single study, the results
arc remarkably consistent over time, suggesting that the
adverse effect of private for-profit hospitals is manifest
within a variety of health care contexts. Furthermore, what
ever the context within which they function, for-profit care
providers face the problem of holding down costs while de
livering a profit. One would, therefore, expect the resulting
problems in health care delivery to emerge whatever the
setting. Finally, should Canada open its doors to private
for-profit hospitals, it is the very same large US hospital
chains that have generated the data included in this study
that will soon be purchasing Canadian private for-profit
hospitals. In summan’, wc think it plausible, indeed likely,
that our results arc generalizable to the Canadian context.
The Canadian health care system is at a crucial juncture
with many individuals suggesting that we would be better
served by private for-prolil health care deliver)’. Our sys
tematic review raises concerns about the potential negative
health outcomes associated with private for-profit hospital
care Canadian policy-makers, the stakeholders who seek
to influence them and the public whose health will be af
fected by their decisions should take this research evidence
into account
Siiphm W.illri, Humana Khan. Xni.i llli.iiii.i|*.ii ,m-l ( mido.i (.min ».n m
tokcd in the study design, data acquisition and inti i pi t laiinn. and pun uh I ■ tun al
revisions to the manuscript. Stephen I aylm also undciiook d.»i ■ .malt sis (...idui
Gtiyatt also provided supervisory siippott ihi<iiigh<iin the simh John I it is. In
rente Sullivan. Deborah Conk, Maureen Xlcadc were involved in rhe stnd\ design.
interpretation of data and provided critic.il revisions to the mamist ript
Acknowli’tltfenH’ntt ■ We want to acknowledge tin outstanding work ol Dr-bur.ih
Maddock who coordinated this study.
I
his study was supported by an Xtkin.son I oundahon Resi.iuh (ii ani .in.I .■
I l.nnilton I Icalih Sciences Research Dm clopmi -m (,’i.mi. Di l)<>ir<.im is sup
purled by a I lean and Stroke I'oimdaiiun ol t i.m.nla/( '..iiiadian Instniiii-,
I le.ilih
Research Fellowship •\wai<I. Or. I..ms holds .» < ..madn Ruse-inch ( h ■■■ m Know!
edge Transfer and Uptake lie also receives partial salan support as I dicru
Health Scholar, Canadian instituu lor Athanrcd Research Dr. Conk is a (hair >>l
the Canadian Institutes for Health Reseaith. Dr. Xlcadc is an \IR( 7( 'll IR/I’< i»-i
Loughccd Scholar.
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12()()MninSLW.I kimillonC )<\f I
;/S;
/jx9().75.?■/-.Hid Iiphilipj^iiK m.olri.t j
CMAJ Essay Prize
Deadline: Dec. 15, 2002
CAM/ is offering a single open-category prize of $1000 for the best piece of writing submitted Io tire 2002
CAM/ Essay Prize contest We welcome entries from physicians, students, residents and nonphysicians. We are
looking for reflective essays of up Io 2000 words on topics of interest to a general medic al readership
The winner will be selected by a committee appointed from CMA/'s Editorial Board. The judges will make their
decision on the basis of originality of thought and quality of writing. The winning manuscript must be suitable for
publication in CA-M/. All papers submitted will be considered for publication. The journal reserves the- right not Io
award a prize. Prospective entrants are encouraged to read the description of the selec lion of winners loi the 200(1
Essay Prize in our June 26, 2001, issue (available al www.cmaj ca/cgi/contenl/full/l (>4/1 t/l tt.59).
Authois should submit their papers with a cover letter slating that they would like then nianusc ript Io be < on
sidered for the 2002 CA-IA/ Essay Prize. We welcome submissions by mail (CA-M/, 1867 Alla Vista Drive, Ottawa
ON KI Ci 1Y6), fax (61! 561-54711 or email (pubs@cma.ca) until the deadline of Dec. I 5. 2002.
Association
mEdicale
CANADIENNE
i 4 o<>
JAXH
♦ .'H M \l .’(>()?
E
Canadian
Medical
Association
Co^ H 6\-
HEALTH POLICY AND PLANNING; 12(4): 296-311
© Oxford University Press 1997
Reform follows failure:
I. Unregulated private care in Lebanon
W VAN LERBERGHE,1 w AMMAR,2 R EL RASHIDI,3 A SALES,3 AND A MECHBAL4
'■Department of Public Health, Institute for Tropica! Medicine, Antwerp, Belgium, 2Ministry of Health,
Republic of Lebanon, 3The World Bank, Washington DC, and 4Worid Health Organization, Beirut,
L^^on
i his first of two papers on the health sector in Lebanon describes how unregulated development of
private care quickly led to a crisis situation. Following the civil war the health care sector in Lebanon
is characterized by (i) ambulatory care provided by private practitioners working as individual entre
preneurs, and, to a small extent, by NGO health centres; and (ii) by a fast increase in hi-tech private
hospitals. The latter is fuelled by unregulated purchase of hospital care by the Ministry of Health and
public insurance schemes. Health expenditure and financing patterns are described. The position of
the public sector in this context is analyzed. In Lebanon unregulated private care has resulted in major
inefficiencies, distortion of the health care system, the creation of a culture that is oriented to secondary
care and technology, and a non-sustainable cost explosion. Between 1991 and 1995 this led to a financ
ing and organizational crisis that is the background for growing pressure for reform.
introduction
Many European countries have been or are presently
going through a process of reform of the health care
sector. The impetus for such reform comes from the
inability to control costs, criticism of bureaucratic
rifjj^y', and the impression of getting poor value for
(Dekker 1994). Most attention goes to the
supply side, and the reform debate is dominated by
a focus on administrative/financial and organizational
issues (Oevretveit 1994). There is a characteristic
shin towards market-derived incentives in pursuit of
micro-economic efficiency (Saltman 1994) and con
trol of expenditure.
Developing countries are increasingly interested in
following similar approaches in order to control costs.
but also, and this is much more a central issue than
in Europe, in order to correct obvious government
failures in financing and provision of health care
(World Bank 1993). As in Europe, reliance on the
private sector and managed markets is supposed to
enhance provider efficiency through competition and
the substitution of direct management with contrac
tual relationships.
A growing number of developing countries are now
embarking on reforms in which contracting out
clinical services - and specifically hospital care - is
a key element. The speed with which these ap
proaches have been endorsed in development circles
is in sharp contrast with the lack of actual experience
and empirical evidence for success (Carr-Hill 1994).
The do’s and don’ts, the approaches that work and
those that do not, have not been clearly identified in
the industrialized world (Petchey 1995; Saltman
1994), let alone in developing countries. What little
evidence there is to date indicates that in developing
countries the conditions for successful introduction
of such reforms are often not in place (Broomberg
1994). Appropriate regulation technologies and
capacities need to be developed. Reforming the health
care sector in developing countries is indeed subject
to specific constraints that centre around the govern
ment’s regulatory capacity and the strength of its
Health sector reform in Lebanon, I.
barsaining position (McPake and Hongoro 1995). If
ultimately reform has to be evidence-based, documen
tation of present pragmatic efforts is essential.
In most developing countries the original impetus for
health care reform comes from a reaction to the
government’s failure to deliver health care, combined
with a crisis in the financing of the health sector.
Scaling down public delivery of services and the
introduction of private sector competition in the pro
vision of health care with retention of public financ
ing is usually seen as the way to address public sector
inefficiencies whilst retaining a tool for ensuring
equity (Birdsall and James 1992). Privatization is fur
ther to be seen in an ideological context of shift from
welfarism to monetarist macro-economics (Price
1989) but, as in the industrialized world, the debate
is now moving from ideological positioning to opera
tional questions (Belmartino 1994). In practice,
reform mainly addresses urban health care systems
where it focuses on introducing purchaser-provider
splits so as to induce supply-side efficiency through
competition, whilst keeping the State in a monopsonistic power position.
Ln Lebanon the impetus for health care reform also
starts from the recognition of an unchecked growth
of expenses for medical care. In contrast with many
developing countries, however, it is not a reaction
against the government’s inefficiency in delivering
services. In Lebanon, indeed, the State has only a
marginal role in delivering health care, and a
purchaser-provider split exists de facto. Both am
bulatory and hospital care are almost exclusively
private. Ambulatory care is essentially provided
through private clinics financed through out-of-pocket
payments. Hospital care is provided through (small)
private (for-profit and not-for-profit) hospitals. For
about half of the population, hospital care is covered
by private or public insurance schemes. For the rest
of the population, it is purchased by the State. Private
hospitals are thus heavily dependent on public fund
ing. This arrangement has proven highly inefficient.
the absence of self-regulation of the private system
being compounded by the absence of adequate public
sector regulatory mechanisms and capacities.
inis first paper documents how, in a very short
time-span, unregulated privatization has created an
inefficient and distorted health care system, and a
non-sustainable cost explosion. The Lebanese case
illustrates the strategic importance of the regulation.
planning and policy setting functions of the public
297
sector. It shows that public financing per se, without
the institutional capacity and proper attention for the
mechanics of regulation, does not provide sufficient
leverage to avoid predictable market failures.
Although the starting point for the Lebanese health
care reform is different from most other developing
countries engaging in reform (down-scaling public
care provision is not an issue), the question of the
regulation of a partly publicly financed private sec
tor is of wider relevance.
Lacking regulatory authority - and essential reliah^
information - the Ministry of Health (MOH)
forced to adopt a reform strategy wherein the prob
lems of financing of the health sector are not dealt
with head-on. Tackling the organizational problems
of health care delivery first provided an opportunity
for building up alliances and pressure that should
allow it to tackle finance at a later stage. A second
paper documents the way pressure for reform has
built up, and identifies the key elements on the reform
agenda (Van Lerberghe et al. 1997).
Health care delivery and the civil war
Once a prosperous, upper-middle-income country,
Lebanon declined during the war of 1975-1990.
About one-quarter of the population emigrated dur
ing these 15 years. A 1992 study, two years after the
end of the war, classified 450 000 individuals as
displaced (Feghali 1992). This is a very large number
considering the relatively small population of the
country-approximately 3 million. Reliable demo
graphic figures are politically sensitive and hard to
come by: the last population census in Lebanon dates
back to 1932. Furthermore there are some 900 000-1
200 000 unregistered foreign workers (mainly fron^.
Syria), and some 400 000 Palestinian refugee^J
Economic activity is picking up fast agam following
the cessation of internal fighting, and GDP increased
from around USS 1500 in 1992 to around USS2300
in 1994 (different sources mention different figures).
In real terms, however, the per capita income is still
below the pre-war level.
The war was a period of an accelerated urbanization:
85% of the population now lives in towns. It was also
a period of demographic and epidemiological transi
tion Only 9.6% of the population is younger than
five years, as opposed to the 12-13% that is com
mon in the region. Infant mortality increased from
48 per 1000 in 1975 to 57 in the middle of the war.
but then dropped to 44 in 1990. By 1992 it was down
298
W Van Lerberghe et al.
io 34. concentrated in a limited number of areas.
Preliminary results of the 1996 PAP-Child survey
show an infant mortality rate (IMR) of 28 per 1000.
Infectious and parasitic diseases are on the decline.
The pattern of demand for care is now dominated by
chronic diseases and problems related to the urban
environment. For example, the most consistent find
ing in an analysis of the reasons for encounter in
health centres in Lebanon was the high frequency of
diagnosis and treatment of hypertension and diabetes
(Adib 1994).
culture 0T" trade and commerce, and delicate
re^^us and denominational balancing acts that
determine politics and administration, Lebanon has
a strong tradition of individualism, self-reliance and
private initiative. The private sector - with privatefor-profit (PFP) and community-linked not-for-profit
non-governmental organizations (NFP-NGO) dominates in most fields, including health and educa
tion. .Although traditionally considered reasonably
competent, effective and even an attractive career
possibility, public administration in Lebanon has
never played a dominant role in the health sector.
Public services in Lebanon were severely affected and
weakened by the war (Kronfol and Bashshur 1989).
Buildings and equipment were destroyed, looted or
damaged. Trained and capable people left the country
(Kronfol et al. 1992), whilst those who stayed had
to struggle to survive on inadequate salaries. There
has been little opportunity for modemizadon of ideas,
skills or style of work. For all practical purposes, the
MOH disintegrated during the war. There was no
clear policy, no means to implement it, no informa
tion to work on The public health programmes that
were active during the war period were donor driven
- ^^h major roles for WHO and UNICEF - and
cl Ollied through NGOs of various denominations.
Considering the circumstances, this proved highly ef
fective; NGOs proved to be highly flexible and able
to deliver results - 89% vaccination coverage with
an ongoing civil war. The MOH, however, had only
a marginal role in all this.
The MOH activities were limited to contracting with
private hospitals in order to deal with emergencies.
This was in fact a continuation of the policy of
contracting-out that already existed before the war
when the government paid the bill for some 40 000
acute care hospitalizations per year in the private sec
tor. During the war, direct involvement of the MOH
in direct provision of hospital care became marginal.
By the mid-1980s, seven of the public sector hospitals
had been destroyed. At some point the public sector
could avail of only 200 beds in Beirut. The share of
the. public sector in national hospital bed capacity thus
fell to less than 10% by 1984 (Anonymous 1987).
By the end of the war public hospitals had only 700
partly operational beds left of the 1870 they had in
the early 1970s.
In contrast, the private sector remained very dynamic
throughout the war. For example. 56% of the present
private hospital capacity was created during the war
years. iMost of this represented development of
business opportunities by private entrepreneurs for
whom the war provided fresh investment capital.
But the war was also a period of major expansion for
NFP-NGOs. These set up a network of health centres
and dispensaries, and carried out public health pro
grammes. Lebanese and international NGOs under
took emergency programmes with the support of
donors through financial grants designated for short
term emergency aid. International NGOs expanded
from 28 to 171 services. There was also an exponen
tial growth of national NFP-NGOs. These were
mainly small-scale organizations, working in under
served rural and urban poverty pockets, with em
phasis on Beirut and Mount Lebanon. They focused
on emergency relief and humanitarian assistance,
rarely on community development work. For
example, in the mid-1980s, 43% of their clients were
health service and 47 % relief assistance beneficiaries
(Ministry of Labour and Social Affairs and
Norwegian People’s Aid 1985). Most NFP-NGOs
depended on donations from foreign NGOs and sup
port from political parties and factions. During the
war these NGOs gained high visibility and credibility,
although many were mere propaganda machines or
even fronts for commercial organizations. After the
war, however, this credibility was not translated into
involvement in planning or policy discussions.
In summary, over the last 20 years the Lebanese
health care system has developed in a largely
unregulated way. following private initiative and in
vestment. Tne public sector has been absent, but the
country has a NFP-NGO health care delivery network
with a public sector logic that has been developed on
the basis of the relief operations during the war.
Ambulatory care in private clinics
Private practice has been the main source for
ambulatoiy medical care for the Lebanese. Roughly
Health sector reform in Lebanon. I.
I
•
I
I
299
Formerly ♦
socialist
economies
Established
■
..........market ♦______ ........................
economies
■
•
Middle East
Turkey^
Latin America
Lebanon
Jordan i
Syria*
°0
Israel^;
1
2
3
4
5
Doctors /1000 inhabitants
• Lebanon ratios are given as a range to take into account uncertainties in the data
Figure 1.
Doctor and hospital bed per population ratios in Lebanon and selected other countries*
Figure 2.
Sources of ambulatory care
one out of five households identifies with one medical
practitioner as its "family physician’, very much in
a West-European fashion though with less reliance
on house calls - less than 5 % of contacts are house
calls (Abyad 1994; Kronfol et al. 1985).
There is an ample supply of physicians: some 8-9000,
i.e. a ratio that comes close to three doctors per 1000
inhabitants. This is higher chan most of the rest of
the world outside the formerly socialist economies
of Europe (Figure 1). The doctor/bed ratio of 0.88
is also among the highest in the world, almost three
times that of OECD countries. This relative over
supply of doctors makes ambulatory care a natural
career perspective.
Most ambulatory' care is provided in private clinics
(Figure 2). Hospital outpatient departments capture
8% and health centres, whose number increased spec
tacularly during the war, have expanded their share
to 10%. Most of these health centres are run by NFPNGOs; the few public health centres and dispensaries
offer services of poor quality and are barely used.
Health care delivery by NFP-NGOs is strategically
important since in many cases their health centres are
the only accessible option for the poor. Also, they
300
W Van Lerberghe et al.
Figure 3.
The expansion of hospital bed capacity in Lebanon
remain a key vehicle for programme activities such
as vaccination. The set-up of these health centres is
very varied and flexible. There are major institutions
with lots of staff, various specialities and extensive
equipment; others operate out of a rented apartment
and offer only essential amenities. Some of these
health centres function poorly; others offer services
of a better quality level than the average private prac
titioner - at a lower price to the patient.
is rented out to private practitioners who carry out
the NFP-NGO’s mission, but at the same time use
the infrastructure to build up a private clientele. This
phenomenon has now become so extensive - also in
the government health centres - that some of the
NGOs are looking for ways to limit the fragmenta
tion of care that is the result of the multiplication of
doctors who use the health centres as a recruitment
basis.
On the whole, however, the profile of care offered
by NFP-NGO health centres increasingly looks like
that of private clinics. This is a consequence of the
chutes in the environment in which the NFP-NGOs
Since the end of the war they have been ex
periencing growing difficulties in securing funds. In
puts from foreign donors to Lebanon have diminished
and the trend has been to redirect funds towards the
government. Furthermore, political funding related
to the various factions in the war dwindled. Conse
quently, the importance of ensuring cost recovery
became paramount. Since there is an amply supply
of physicians, the NFP-NGO health centres can
afford to rely more and more on non-salaried parttime physicians: an average of 8.4 per centre. Pro
ceeds of fee-for-service payments are split between
the physician and the NGO, for example on a 50/50
or 75/25 basis. The NFP-NGO health centres are thus
progressively transforming into an infrastructure that
When not working in a NFP-NGO setting, private
practitioners function essentially as individual private
entrepreneurs, most often with some specialist label,
but without accreditation, control or regulations.
There is thus a continuum between health centres and
private practice that affects the way both function:
practice in most NFP-NGO health centres becomes
more ‘commercial’, while the PFP sector cannot
ignore the de facto quality standards some of these
NFP-NGO health centres are setting.
Hospital care in subsidized private
hospitals
There are at present approximately 3.4 beds per 1000
inhabitants in Lebanon (Figure 1), more than in the
rest of the region but less than in other countries with
similar doctor/population ratios. The number of beds
increased both during and after the war (Figure 3).
Health sector reform in Lebanon. I.
Figure 4.
301
Most acute care beds are in small hospitals: bed share of hospitals of various sizes
More than half of the private hospitals became opera
tional during this period. At the same time the number
of public beds shrunk, both in absolute and in relative
terms.
The long stay hospitals belong to the NFP-NGO sec
tor. The short stay hospitals belong either to the public
sector (6% of the total number of beds), NFP-NGOs
(22%) or for-profit (FP) private organizations: in
dividual doctors or groups of businessmen that in
clude doctors. Most of the expansion over the last
15 years took place in the form of small-scale private
acute care hospitals: 87 out of 140 have less than 50
beds. Almost one-third of all acute beds are in
hospitals of 50 beds or less (Figure 4). On the
average, FP-NGO hospitals are smaller than those
owned by NFP-NGOs or universities.
In the 1980s, 61 % of patients were admitted to volun
tary and teaching NFP private hospitals, 37% to other
private hospitals and less than 2 % to public hospitals
(Kronfol et al. 1985). The latter have now become
even more marginal; since 1992 the numbers of
hospitalizations, outpatient consultations, x-rays,
laboratory examinations, etc. have declined by
10-20% each year. Many of these public hospitals
now have bed-occupation ratios of less than 5-10%.
In the meantime, the smaller PFP hospitals seem to
increase their market share. This evolution is linked
to the way health care is financed in Lebanon.
Health expenditures in the 1990s
It is extremely difficult to know who spends how
much on health care in Lebanon. Data are incomplete
and contradictory. The 1992 estimate is of USS 301
million, i.e. about USS 100 per person per yeaj’^
(Posarac 1994). Triangulation of information fro ™
various sources on 1995 yields a range of between
USS 600-862 million (Table 1): USS 200-300 per
person. Around 60% of expenditures is private
money in the strict sense of the word (out-of-pocket
and private insurance), while one-third is paid for
from public sources (MOH and public insurance
schemes, i.e. the National Social Security Fund
(NSSF), the army and the Civil Services Cooperative
(CSC)).
Obviously the situation is changing very fast, not only
in absolute terms (doubling in less than three years),
but also as a percentage of GDP. Table 2 shows that
in 1992 private health expenditures were at the same
level, in terms of GDP, as in established market
W Van Lerberghe et al.
302
Table 1.
Who pays the health bill?’
1992
1993
Public insurance schemes
49 0 (16%)
71 0
Public funding. MOH
45.1 (15%)
62.8
Lebanese N'GOs and international donors
29.0 (10%)
Private insurance
41.6 (14%)
151-207 (24-25%)
Out-of-pocket
136.4 (45%)
179-381 (30-44%)
Total
301
601-859
1994
1995
72.1
98.2 (11-16%)
130.8 (15-22%)
41.6 (5-7%)
million; estimates adapted from Posarac 199— and other sources
Table 2.
Public and private expenditures for health (excluding donor assistance), as percentage of GDP
Public
(% of GDP)
Private
(% of GDP)
4.8
1.6
3.2
6.4-9.1
2.4
3.9-6 6
Syrian Arab Republic
2.0
0.4
1.6
Jordan
3.8
1.8
2.0
Turkey
4.0
1.5
2.5
China
3.5
2.1
1.4
Middle East Crescent (weighted)
4.1
2.4
1.7
Latin America (weighted)
4.0
2.4
1.6
Sub-Saharan Africa (weighted)
4.5
2.5
2.0
Asia (weighted)
4.5
1.8
2.7
India
6.0
1.3
4.7
Established market economies (weighted)
9.1
5.6
3,5
Area
Total
(% of GDP)
Lebanon (1992 estimate)
Lebanon (1995 estimated range)
e^^mies, and higher than in most of the rest of the
w«7. Public expenditures, on the other hand, were
among the lowest. By 1995, overall health expen
diture in GDP terms in Lebanon appears to close the
gap with the established market economies; mainly
through an increase in private expenditures but also
by catching up in public.
Not all these resources are uniformly distributed.
Figure 5 shows who paid for whom in 1992 and 1995.
NFP-NGO and donor expenditures were assigned to
the whole population. MOH expenditures were allot
ted to the uninsured population, except for the
disbursements for cardiac surgery, kidney dialysis
and cancer treatment, which benefit the entire popula
tion (see below). Expenditures of the various public
insurance systems were aliened to the beneficiaries
of these systems and their dependants. The same goes
for the expenditures of private insurance schemes.
No account is taken of the possibility that some may
benefit from a number of insurance schemes at the
same time. Nevertheless, in Figure 5,25% of private
insurance expenditures are arbitrarily distributed over
both privately and publicly insured, to take account
of the increasingly common practice of subscribing
to complementary insurance. Both expenditure and
coverage data are rough estimations, with a con
siderable amount of uncertainty, indicated by the
arrows in Figure 5. This makes a precise interpreta
tion of expenditure levels difficult. With this caveat,
the figure nevertheless illustrates present trends in
financing.
Health sector reform in Lebanon. I.
covered
covered
uninsured
by private by public
insurance insurance
Distribution of the population by insurance status
303
Distribution of the population by insurance status
' Abscissa: proportional to number of population covered; ordinate. USS per inhabitant per year within the coverage group
NB: The arrows indicate the range of uncertainty on expenditures and proportion of population covered. Where relevant,
the averaae of various estimates of expenditure or population coverage has been used.
Figure 5.
Non-out-of-pocket expenditures on health per person in Lebanon in 1992 and 1995, according to type of coverage’
Between 5% and 17% of the Lebanese population
have private insurance coverage - estimates range
widely but there is a consensus that the sector is ex
panding. If one assumes that private insurance
coverage has gone up from 8% in 1992 to 11% in
1995, average non-out-of-pocket expenditure for this
pan of the population in 1995 was around USS 460
per person (but may be as high as USS 950 accor
ding to some estimations). Of this, USS 13.8 was
donor money or NFP-NGO expenditure, and the
MOH paid between USS 10-14 (a conservative
estimate: the real figure may be significantly higher)
in hospitalization costs for cardiac surgery, kidney
dialysis and a number of other specific conditions.
The rest, over USS 430 per person in 1995. nearly
three times as much as in 1992, was accounted for
by private insurance. The latter mainly covers
hospitalization, but not exclusively.
Nearly half of the population is covered by one of
the three public insurance systems: army, public ser
vice (CSC), and employees (NSSF). These insurance
systems were created in the 1960s following Euro
pean models (Kronfol and Bashshur 1989). They
more than doubled their expenditures between 1992
and 1995 (Table 1), and now reach around USS 74
per person per year. About 40% of their expenditures
are for inpatient care. People in a public insurance
scheme also may carry a complementary (private) in
surance (estimated here, rather arbitrarily, to con
tribute USS 29 per person), and benefit from MOI0
(low-end estimate between USS 10-14) and donorNGO inputs (USS 13.8). Total expenditure would
then be around USS 129 per person (with a range of
USS 112-168).
The rest of the population is uninsured. The MCH
spent around USS 55 per person in reimbursements
to private hospitals for inpatient care for the unin
sured. It does not reimburse them for outpatient care.
The only other non-out-of-pocket contribution to
financing health care for this part of the population
is that of donors and NGOs. Overall non-out-ofpocket expenditures for the uninsured were around
USS 69 (range USS 58-89) in 1995: more than double
the ngure for 1992. Setting aside the de facto, but
304
W Van Lerberghe et al.
Adapted from Firkh et al. 1996
Figure 6.
How people pay for ambulatory care
limited, subsidies by NFP-NGOs, the uninsured have
to pay out-of-pocket for all of their ambulatory care.
The overall impression is one of an explosion of ex
penditures that is most marked for the population with
private insurance, but touches the rest of the popula
tion as well. If coverage for ambulatory care was
elizraated, very similar expenditure levels would be
e.Le$ed for both the uninsured and those with public
insurance, roughly between USS 50-70 per person
per year; for the privately insured, non-out-of-pocket
expenditures are probably well above USS 300.
Financing
Only one-fifth of the population relies mainly on third
party payment for its ambulatory care: 16% through
public insurance and 4 % through private insurance
(Figure 6) (Firkh et al. 1996). Ambulatoiy care is
essentially paid out-of-pocket by 77% of the users.
Ten per cent of the population rely on NFP-NGO run
health centres where financial banners can easily be
overcome Cow fees, possibility of free care); the
rest of the population uses the services of (expensive)
private practitioners. Out-of-pocket payment is the
source of 74% of expenditures on laboratory services,
79% of those on drugs and 92% of those on dentistry.
Ambulatoiy care (slightly over half of total non-donor
funded expenditure in 1992-93) is therefore fairly
independent from public funding. Public insurance
schemes contributed around USS 40 million to non
hospital care in 1993. The rest was made up by
private insurance, NGOs (whose contribution was
estimated at USS 6 million, probably targeting mainly
the uninsured) and out-of-pocket payments. The latter
have increased with the expansion of the supply of
doctors, whereas the MOH was nearly completely
absent (Figure 7).
The situation was very different for hospital care. The
share of the public sector in directly providing
hospital care is marginal. The State, however, makes
use of non-public hospitals through three
mechanisms. The first is the various public insurance
schemes. These have arrangements ro reimburse
Health sector reform in Lebanon. 1.
305
E3OOP
EZ3 NGOs and donations
Private insurance
?77a Public insurance
^■■■•1MOH
•Estimations based on aggregate 1993 data; OOP: out-of-pocket; NGO: private non-for-profit only
Figure 7.
How hospital and ambulatory care are paid for*
itemized expenses made ar outpatient consultations
and for hospitalizations in private hospitals. They are
independent from the MOH.
Secondly, the MOH pays, through its budget, for par
ticular. categories of treatment (cardiac surgery,
kidney dialysis and cancer treatment). A political
decision in 1990 led the MOH to pay for such inter
ventions in the private sector for all Lebanese
citizens. This now mobilizes between one-third and
half of MOH expenditure for reimbursement of in
patient care: low-end estimates range between USS
10—14 for 1995, up from USS 8.5 in 1992. It is not
known whether beneficiaries of this MOH financing
are concentrated among a particular class, or equally
distributed.
The final mechanism is contracting with private
hospitals that provide for reimbursement of
hospitalization costs of the uninsured population.
Such treatment in the private sector, paid for by the
government, concerned around 40 000 patients per
year during the war, and rapidly increased after
wards: 64 200 patients in 1990, 65 800 in 1991,
80 000 in 1992, 90 000 in 1995. The MOH earmarks
a number of beds for subsidized patients. Each
hospital is graded, and a room rate and tariffs of
charges for tests, drugs, use of the operating theatre,
etc. are agreed. The MOH has to give authorization
for admission - based on a very cursory referral note.
After hospitalization of an authorized patient, the
MOH will receive an extremely detailed bill, which
it has to pay without being able to exercise any con
trol (up to 1993—95) over the justification of the cost
items. There are probably no or very few countries
in the world that have a billing system that is both
as complicated and as uncontrollable as the Lebanese
system. Misuse is rife, but although public insurance
has in two instances cancelled contract arrangements
with hospitals, the MOH has never been in a posi
tion to do so.
Almost half of non-donor-funded expenditure is fc| ■
hospital care. The public sector provides some USS
12 per person per year for the (affluent) privately
insured through reimbursement of heart surgery,
kidney dialysis and cancer treatment. It spends USS
50-60 per person per year for the publicly insured
(employees and military with their dependants), and
around USS 55 per person per year for the uninsured.
All in all, public insurance and the MOH paid about
USS 80 million for hospital care provided in private
hospitals in 1992, and almost twice as much in
1995. The rest came from private insurance and from
the users through out-of-pocket payments. In
1992-93, 65% of private hospitals’ income came
from MOH and public insurance, 18% from four
private health insurance schemes and only 15 % frorn
306
Table 3.
W Van Lerberghe et al.
Sources of income of four hospitals in 1995
iMOH and public
insurance schemes
Private
insurance
Out-of-pocket
payments
82 hospitals in 1994
67 1%
17 6%
15.3%
Hospital I. 1995
88.4%
6.1%
5.5%
Hospital 2, 1995
76.1%
16.9%
6.9%
Hospital 3, 1995
46.0%
25.0%
20.0%
Hospital 4. 1995
51.0%
30.8%
18.2%
out-of-pocket payments. Donations account for 3%
of their income (Figure 7) (Posarac 1994). A study
of 82 hospitals in 1994 (Juijus 1994) and detailed data
on four hospitals in 1995 (Ramaddan 1996) confirm
this pattern (Table 3)
Health care delivery, both hospital based and am
bulatory, is thus essentially private and unregulated.
Ambulatory care has developed outside public financ
ing considerations. Hospitals, on the other hand,
depend very much on public financing. Reimburse
ment of hospitalization expenses by public and private
insurance schemes, and by the MOH, has been the
motor of the expansion of the private hospitals.
Without it, the survival of the smaller hospitals would
probably be immediately endangered.
Institutional bargaining capacity
The dependency of private hospitals, and especially
of the smaller ones, on public funding should put the
MOH in a strong bargaining position. Nevertheless,
the MOH has been unable to restrain the growth of
thegSlf of the hospital care it contracts for in the
prii?*?sector. Hospital care is putting an increasing
strain on its budget, as it does on public insurance
(Abyad 1994). Before the war, payment of hospital
care accounted for roughly one-third of the MOH
budget. This then increased considerably, and since
the end of the war hospital care has consistently
mobilized more than three-quarters of the budget, in
cluding salaries. That is considerably higher than the
OECD mean share for hospitals, excluding
ambulatory care, in total public recurrent health ex
penditure (54% in the 1980s). Out of 60 low, mid
dle and high income countries (Barnum and Kutzin
1993), only Malawi allocates as high a proponion of
recurrent public spending to hospitals. The MOH’s
reimbursement to hospitals has tended to grow over
the years, both in absolute and relative terms (Figure
8). In the 1970s this made up one-third of the MOH
budget. Since 1991 hospitals have absorbed over 80%
of the budget, peaking at 86% in 1994 - rising from
USS 18.6 million in 1990 to USS 62.5 million in 1994
and USS 82.4 in million in 1995. The scope for
developing the other activities of the MOH within this
budget frame is limited and shrinking.
The MOH is having increasing problems in obtain
ing the budgets to keep up with the growing requests
for reimbursement of private hospital care. Public in
surance schemes are also, experiencing problems in
securing the required government contributions. On
the other hand, the MOH is unable to exert the
necessary pressure to control the amounts paid to
private hospitals, neither through rationing nor
through the pricing mechanisms.
In theory Lebanon’s MOH could have leverage over
what happens in the field of hospital care, through
its crucial role in the financing of hospital income
(Figure 7). This leverage is, however, limited by the
fact that the MOH has no authority over public in
surance. It can only use its own inputs and technical
authority as a basis for influencing hospital care in
the private sector. In practice it has very little effec
tive influence, for technical, administrative and
political reasons, and coordination in this matter only
started timidly in 1996.
Technically, the asymmetry of information available
to the purchaser (MOH and public insurance) and the
provider (the private hospitals) makes it difficult for
competition, in the form of preferred contracting, to
occur. Lebanon's MOH has no inside knowledge on
the functioning of the hospital sector. The complexity
of the payment mechanism and the absence of
adequate technology and trained personnel make it
Health sector reform in Lebanon. I.
307
"1991 expenditures include catch-up expenditures for under-budgeting in 1990; figures for 1996 are budgeted expenditures
Figure 8.
Ministry of Health expenditure, in USS millions, for reimbursement of hospital care in private hospitals, as pan of
overall MOH budget*
impossible even to identify blatant misuse or inap
propriate billing (Kronfol and Bashshur 1989), let
alone issue guidelines for standard treatment pro
tocols or costing norms. This deprives the MOH of
control over the pricing mechanism, which, as Euro
pean experience shows, is a critical tool for balanc
ing supply and demand in regulated markets (von
Oner and Saltrnan 1992).
The MOH thus has little information on which to base
a regulation or control function. This is compound
ed by the fact that the MOH budget offers little scope
for a personnel policy that would increase its capacity.
In terms of purchasing power, the 1994 personnel
budget is only 67.5% of the 1990 level This also
represents a shrinkage in relative terms: from 15.3%
of the budget down to only 8.9%. With such a budget
(an overall average of about USS 3600 per employee
for 1994), it is obviously difficult to retain, and near
impossible to attract new. qualified staff, let alone
maintain any illusion of setting up a health care pro
vision system based on public sector employed staff.
As such, the budget for personnel would be sufficient
to hire staff to fulfil a regulatory role. However, this__
would require the MOH to rid itself of excess sta) iipresently assigned to health care delivery, which is
politically difficult. A 50% increase (in USS terms)
in the budget for salaries in 1995 brought purchas
ing power back to 1990 levels. This, however, does
not fundamentally alter the situation, given the ad
ministrative constraints on hiring personnel in the
public service.
Politically, the MOH is being urged to further pro
mote expansion of hospital capacity rather than
regulate it. and to refrain from showing preferences
between potential provider-hospitals. The choice or
hospitals to be contracted is basically a question oi
denominational and political considerations. The
MOH thus cannot restrict market entry on technical
308
W Van Lerberghe et al.
grounds. When a new small hospital starts activity,
it is near impossible for the MOH co impede this.
especially since it cannot provide alternative public
hospital care possibilities.
Furthermore, non-market pressures and concerns
with continuity of care and accessibility prevent
hospital closure or stopping of reimbursement ar
rangements, even when market conditions suggest
otherwise. Only once has the NSSF, over which the
MOH has no control, had the political clout to stop
purchasing care in a hospital for reasons of persisten* false billings. In the Lebanese context, where
de. ^national and political balances are allimportant, the MOH itself has never been in a
position to do this. Even a hospital ±at constantly
overcharges by 60% or more remains contracted by
the MOH. Theoretically the MOH has the admini
strative authority to intervene, but it does not have
the technical means or information to make a case.
The lack of technical prestige and credibility of a
public service that has been absent from health care
delivery and policy making for the last decade or
more, further weakens its capacity to resist pressure
on techmeal grounds. Both participation in and
exclusion from the health care market are thus
politically constrained. In such circumstances, it is
unavoidable that there is little control over the size
of costs, over their justification and over quality of
care (Maynard 1991).
Without financial leverage, Lebanon’s MOH has even
less control over what happens in the field of
ambulatory care. Even though there has been a slight
improvement over the last five years, the MOH still
spends less than 4% of its budget for technical
activities and programmes. Primary health care
accgi^ited for only USS 21 000 in 1991. Their share
of no>$udget has since increased to USS 1 500 000
in 19v5, but this remains a marginal amount com
pared to the bill for hospital treatment. As is the case
in the field of hospital care, the MOH does not have
technical authority since it has not been a significant
actor in health care delivery over the last decades.
| And its administrative authority is extremely limited
and almost impossible to carry through in a context
| of political interference and delicate denominational
balances.
The xMOH is thus left with (i) a budget that does not
provide enough funds to ensure its own activities.
including competitive payment of its personnel;
(ii) a growing demand for reimbursement of care
provided by private hospitals.: and (iii) limited scope
for increasing the total budget, or for further cuts in
budget lines other than those for reimbursement of
private hospital care. In the meantime, the economic
and cultural effects of the unregulated expansion of
the private sector are becoming apparent.
Incentives for inefficiency and distortion
In the aftermath of the war, the switch from emer
gency relief to health care delivery was to be based
on a self-regulated system of private care providers,
fuelled by public funds, where competition would en
sure quality of care and affordability. Within five
years the assumption that the sector would self
regulate (provide good quality care m an affordable
and efficient way) proved false. There is ample anec
dotal evidence that technical quality of care is want
ing, especially in many of the smaller hospitals. There
is no real evidence of growing consumer dissatisfac
tion as yet, but this can be expected as soon as pro
blems with sustainability become more evident.
Indeed, the mechanisms for regulation of the health
sector (or rather their absence) act as incentives
towards inefficiency and distort rational organization
of health care delivery. They promote, and are
reinforced by, a specialist-centred and secondary care
oriented culture among both professionals and the
public.
There are no incentives to expand the private pro
vider’s or health centre’s responsibility for care
beyond that of responding to immediate demand.
Continuity of care is absent; for example, less than
2% of the contracts with private practitioners are
revisits. Many health centres offer specialist consulta
tions, but. in contrast, leave prenatal care to hospitals.
This implies a tendency to medicalize, irrational use
of drugs, and reliance on technology' at the expense
of communication. Hospital pharmacies have an
average of 514 different items, up to 8000 in one
hospital. Public funds pay for half of the 1.5 million
x-ray acts made in Lebanon every year (Juijus 1994).
There are more health centres or private clinics with
ECG services than with family planning activities.
Little or no work is done in the field of health pro
motion, such as prevention of smoking. The priority
given to kidney dialysis is in contrast with the absence
of diabetes programmes (diabetes being the underly
ing aetiology' for over one-quarter of kidney failure
patients); the priority given to open heart surgery con
trasts with the lack of primary preventions.
Health sector reform in Lebanon. I.
NFP-NGOs are presently offering an alternative of
reasonably cheap and. in cases of need, free access
to care for the poor. They, rather than government
services, make up the social safety net for the poor
in Lebanon. Their way of operating has led them to
accept comprehensive responsibility for the care of
certain population groups. This situation is now
changing. Since their traditional sources of funding
are withering, NGOs increasingly copy the work
style of private practice: exclusive focus on those ac
tivities that have immediate income generating poten
tial. The financial predicament of NGOs, combined
with a de facto restriction of their mission, results
in erosion of the social safety net as well as in gradual
elimination of examples and models of better prac
tice at primary’ care level.
These changes are clearly dependent on the absence
of public funding to sustain structures accessible to
the poor, and on the inability of government to in
fluence or rationalise the way the private practitioners
operate. The lack of guidelines and regulation is fuel
ling prescription patterns that merely respond to
demand, without elements of rationalization or con
straints other than the patient’s ability to pay. This
is preoccupying, for example, in the field of treat
ment of hypertension and diabetes, which was donorsponsored for the last few years. The government is
now contributing USS 1.5 million per year to this pro
gramme, but still without treatment policy guidelines
that would make it possible to control rising costs.
The lack of tools or levers for rationalizing am
bulatory care is compounded by the type of political
and financial incentives for hospital care. Hospitals
and first level care in Lebanon are completely
unrelated subsystems, both operationally and in the
way they are financed. Since quality or cost
effectiveness are not determinants for purchase of
hospital care, there is no real competition among
hospitals. On the other hand, public subsidy for
hospitalization, but not for ambulatory care, results
in a de facto competition for patients between
hospitals and first line services. This distortion carries
an opportunity cost in terms of missed possibilities
for efficiency gains through a division of labour
between complementary' first, second and tertiary
care levels.
The expansion of the hospital network has taken place
m an inefficient way. sacrificing overall sustainability
for short-term return on singular investments. The
creation of a large number of small private hospitals
309
has resulted in an excess bed capacity in relation to
the level of demand, as evidenced by a low bed oc
cupancy (56%. compared to an OECD average of
81%), a short average length hospitalization stav of
4.8 days (less than half of that of OECD countries)
(Juijus 1994) and a hospitalization rate of 13.9 that
approaches the OECD median of 16.1. A large pro
ponion of hospitalizations in the small hospitals have
no medical justification.
Lebanon now has three times more physicians per
inhabitant than the average for the other countries*^
the Middle East. This can be expected to further L
the growth of expenditure and the increase in hospital
beds: new hospitals are already under construction.
Most are so small that economies of scale are dif
ficult. This results, for example, in under-utilization
of equipment: CT scans in the smaller hospitals per
form only between three and eight (often un
necessary) examinations per day. Kidney dialysis
facilities could handle double the present patient load
(Juijus 1994), though the 400 dialysis patients per
million inhabitants is already above the OECD
median of 360.
Although manpower imbalances (e.g. only 2000
qualified nurses compared to 8-9000 doctors) will
make it difficult to sustain proper functioning.
hospitals aim for a level of technology that is way
above that of many developed countries. The finan
cing structure provides an incentive for the private
hospitals to invest in heavy technology, since its
operation will be preferentially subsidized by public
funds. This has led to very rapid expansion, with lit
tle technical or economic justification. There are now
five MRI in Lebanon, all located within a few
kilometres from each other. At 240 cases per weeV^
the total cost can be estimated at USS 4 400 000 pc
year: the equivalent of 5 % of the MOH budget. There
are 27 CT scans, six centres for in-vitro fertilization,
and ten centres for litotripsy (Jurjus 1994). The fastest
expansion is in cardiac surgery and cardiac
catheterization, techniques that are automatically
reimbursed by the MOH. Heavy medical technology
is now more available in Lebanon than in many in
dustrialized countries (Figure 9). Apart from the ex
pected iatrogenic effects, this expansion of technology
will further reinforce a culture of hospitalocentrism
and fuel the cost explosion.
These considerable investments gamble on a con
tinued growth of the health care market to ensure
returns. Even compared to established market
310
W Van Lerberghe et al.
: I Lebanon
Figure 9.
Canada
Germany
Selected medical technology: availablity tn Lebanon as compared to Canada and Germany
economies, however, private expenditures are already
high in terms of GDP (Table 2), and public expen
diture is growing too fast for the government to sus
tain. The present predicament is that without proper
regulating mechanisms, an unbearable strain will be
put on the MOH and social security schemes, whereas
rationing or regulating mechanisms would endanger
returns on private investment.
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An^zgan University of Beirut; pp.1-20.
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tion and development. Beirut: Harin Foundation; pp.182.
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Johns Hopkins University Press.
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Health Maintenance Organisation Survey. MOH-WHO un
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a case study in the evolution of a health system under stress.
J Public Health Policy 10: 377-96.
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American University of Beirut; pp. 119-56.
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bances on the migration of physicians: the case of Lebanon. Med
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McPake B. Hongoro C. 1995. Contracting out of clinical services
in Zimbabwe. Soc Sci Med 41: 13-24.
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Posarac A. 1994 Health Sector Financing in Lebanon. Washington
DC: World Bank; pp.1-48.
Price M. 1989. Explaining trends in the privatization of health
services in South Africa. Health Pol Plann 4: 121-30.
Ramaddan S. 1996. Sources of funds for four private hospitals
in 1995. Personal communication.
Saltman RB. 1994 a conceptual overview of recent health care
reforms Eur J Public Health 4: 287-93.
Van Lerberghe W, Ammar W, El Rashidi R. Awar M. Sales A.
Mechbal A. 1997. Reform follows failure H. Pressure for
change in the Lebanese health sector. Health Pol Plann
12(4): 312-319
Health sector reform in Lebanon. I.
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von Otter C. Saltmxn RB. 1992. Planned markers and public com
panion. Strategic reform in Northern European health sy stems.
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Lebanon he directed a Social Security Fund and worked as a
hospital director. Since 1993 he has been Director General of the
Ministry of Health in Beirut. He lectures at the National Institute
of Administration and Development and at the School of Public
Health of the Lebanese University.
Acknowledgement
Randa El Rashidi is a Human Resource specialist at the World
Bank. Her field of interest covers social funds and the role ofNGOs
in social development in various Middle-Eastern countries.
Part of this research was supported by a grant of the European
Union. General Directorate XII (Avicenne Project), contract
ERBAVI" CT93-OOI2
Biographies
Wim Van Lerberghe, MD. PhD, is currently chairman of the
Department of Public Health of the Institute of Tropical Medicine
in Antwerp. Belgium. His field of interest is the interface between
health care organization and health care reform m Africa, the Mid
dle East xnd South-East Asia.
Ward Ammar, MD. MPH. graduated from the Universite' Libre
de Bruxelles. After working as a GP in a community hospital in
.Albert Sales. MD. MPH. started working in West Africa for the
Belgian Cooperation and WHO. He then joined the Asian Develop
ment Bxnk and is currently a Public Health Specialist with the
World Bank.
Abdelhai Mechbal. MD. was trained in Health Planning in Mex
ico. He is a former Technical Director of the Ministry of Health
in Morocco, and currently WHO representative in Lebanon.
Correspondence: Dr W Van Lerberghe. Dept of Public Health.
Institute of Tropical Medicine, Nationalestraat 155, B-2000
Antwerpen. Belgium.
Av
HEALTH POLICY AND PLANNING; 12(4): 312-319
© Oxford University Press 1997
Reform follows failure:
il. Pressure for change in the Lebanese health sector
W VAN LERBERGHE,1 W AMMAR,3 R EL RASHIDI,3 M AWAR,2 A SALES,1 AND A MECHBAL4
’Department of Public Health, Institute for Tropical Medicine, Antwerp, Belgium, !Ministry of Health,
Republic of Lebanon, 3The World Bank, Washington DC, and “World Health Organization, Beirut,
Lebanon
paper describes how, against a background of growing financial crisis, pressure for reform is
building up in the Lebanese health care system. It describes the various agendas and influences that
played a role. The Ministry of Health, backed by some international organizations, has started taking
the lead in a reform that addresses both the way care is delivered and the way it is financed. The
paper describes the interventions made to prepare reform. The experience in Lebanon shows that
this preparation is a process of muddling through, experimentation and alliance building, rather than
the marketing of an overall coherent blueprint.
Introduction
In the aftermath of the civil war in Lebanon, the
health care system was characterized by a very rapid
expansion of private health care provision. In the
absence of any regulation, this has led to a crisis situa
tion. Private expenditures on health care are already
high in terms of GDP (Van Lerberghe et al. 1997),
and public expenditure is growing too fast for the
government to sustain. Rationing or regulating
mechanisms would endanger returns on private in
vestment, and generate strong opposition from in
terest groups. On the other hand, the strain on the
MijQry of Health (MOH) and social security
schSes is rapidly becoming unbearable. The MOH
is faced with (i) a budget that does not leave enough
funds to ensure its own activities, including com
petitive payment of its personnel; (ii) a growing de
mand for reimbursement of care provided by private
hospitals; and (iii) limited scope for increasing the
total budget, or for further cuts in budget lines other
than those for reimbursement of private hospital care.
In the meantime, the economic and cultural effects
of the unregulated expansion of the private sector are
becoming apparent.
A first paper (Van Lerberghe et al. 1997) has
described how this crisis developed between 1991 and
1995. This second paper documents how pressure for
reform built up between 1994 and 1996, and iden
tifies the key issues that, for better or worse, are on
the reform agenda today. It is a reconstruction of
events and positions in a rapidly changing environ
ment, based on a reconstruction of the sequence of
events, document analysis and their (often contradic
tory) interpretation in discussions with key players.
It suffers from the biases of participant observation.
Putting reform on the policy agenda
Recognition of the need for reform usually emerges
gradually among various actors with different and
often contradictory agendas. It is the work of coali
tions, by no means always led by the same groups.
The MOH in Lebanon, which initially had a marginal
role, has come to have a central position in the health
reforms, using an alliance with some of the interna
tional organizations present in Lebanon. This is
unusual since reform is usually put on the agenda by
politicians (Hunter and Stockford 1996), profes
sionals (von Otter and Saltman 1991) or, in develop
ing countries, by the international development
agencies, often in the wake of structural adjustment
programmes (Okuonzi and Macrae 1995).
This central role for the MOH was possible because
the ministry filled a policy vacuum. There is no easily
Health sector reform in Lebanon. II
identifiable leadership in the sector. The actors are
extremely diverse and fragmented, and none em
erges with recognized authority. Whereas NGOs had
prestige and authority during the war, both opera
tionally and in the eyes of the public, this diminished
afterwards. Professional organizations play only a
limited role, and each private hospital looks after its
own immediate interests. Lay politicians in Lebanon
are rather indifferent to the organizational structure
of health care delivery, or to proposals for change.
They look at the health care system basically as one
of the tools to help ensure political equilibrium.
Ideologically biased in favour of hospitals, technology
and private enterprise, they seem unaware of the
financial predicament of the health care sector - con
sidered a marginal problem compared to the political
and economical challenges of reconstruction. Dis
satisfaction with health care delivery is interpreted
as an expression of the need for expansion of health
care supply (physicians and hospitals), rather than as
a need for rationalization and a change in policy and
the health care provision model.
The ideological climate in Lebanon clearly favours
private sector development, making it difficult to
restrain expansion of the private sector hospital
capacity or equipment. At the same time, the strategy
for economic reconstruction is to be driven by public
works. In the case of the health sector this means that
the major focus is on hospital construction. Saudi,
Kuwaiti and OPEC grant and soft-loan money is
presently being used for the construction of seven,
and possibly more, new public hospitals. This is
clearly done more with a view to creating oppor
tunities for public works than with a health sector
development rationale.
Managers within the MOH view the prospect of hav
ing to operate these hospitals as a future budgetary
and manpower nightmare. They find it difficult to en
visage how they will recruit the necessary staff and
liberate the operating funds, given (i) the MOH’s
track record in the operation of existing public
hospitals; (ii) the restricted margin for reallocation
of binds in a budget tied up by the present system
of care purchasing in private hospitals; (iii) the
scarcity of nursing staff; and (iv) the already existing
hospital over-capacity in the private sector. On the
other hand, they see the political necessity to (i) main
tain some negotiation power by offering an alternative
to the private sector; (ii) be able to deal with emer
gencies in case of armed conflict; and (iii) be able
to refer patients that need secondary level care.
313
Conflicting agendas within the MOH
The current predicament of the health care sector
within the MOH is by no means universally agreed.
The main lines of thinking and the influences are
schematized in Figure 1.
A first agenda is that of transforming Lebanon into
a ‘hospital for the Middle East’. In line with the
private sector ideology that fuels the reconstruction
policies in Lebanon today, this is an agenda that those
in the MOH with a political constituency share with
lay politicians. It receives support from differ*)
groups: political parties, the majority of the private
sector medical establishment, interest groups within
the MOH and, given the prevailing specialist and
secondary care oriented ideology, the public as well.
This agenda results in policy options favouring ex
pansion of hospitals and a status quo in matters of
regulation and financing mechanisms. It is made
possible by the easy availability of both Lebanese and
donor capital for heavy investments, and is fuelled
by the high short-term returns on investment. A major
advantage is that it responds to the political constraints
typical for Lebanon. Decisions on hospitals and
financing can be used as ways to obtain short-term
political goals of maintaining or shifting equilibria
within an extremely heterogeneous ‘house of many
mansions’ (Salibi 1993).
The same group also has an agenda of reorientation
towards PHC in response to pressure from their con
stituencies, e.g. for care for chronic patients. On this
agenda they are in concordance with those within the
MOH who have a more technocratic and managerial
outlook. This agenda is supported by part of the
medical establishment and academia: family medici''
concepts are not dominant but do exist (Abyad et al.
1992). Reorientation towards PHC is also advocated
by the NFP-NGOs (not-for-profit non-governmental
organizations), and those within the MOH who pro
mote it found allies in agencies like the World Health
Organization (WHO) and, at a later stage, the World
Bank.
The third agenda is that of control of the financing
crisis. For the managers within the MOH the main
impetus for reform has come from the budgetary
predicament. As of 1992 the consequences of the
political decision of unlimited reimbursement of cer
tain types of care had become apparent.
W Van Lerberghe et al.
314
Positions
within MOH
Figure 1.
Agendas
Influences
& Support
Enabling
Conditions
Policy
Options
Agendas and conflicting policy directions with the Ministry of Health
This was not, however, the only element. The MOH
also wanted to find a new and more rational equili
brium between primary, secondary and tertiary care,
and co address the challenges of the epidemiological
transition. Furthermore, some of these managers have
a strong ideological tradition of public service, rein
forced through their links with the NFP-NGOs dur
ing the war period. This makes the MOH one of the
only organized groups concerned with equity and accesstf£k concern reinforced through its links with
WlJ^gEnd academia.
The fusion of the second and third agenda items,
reorientation towards PHC and control of the financ
ing crisis, led to increasing pressure for reform and
regulation. The challenge is to do this in a political
environment with little awareness of the need and the
stakes of reform, and with powerful interests pushing
towards the status quo. Part of the private sector, for
example, would like to get managerial control of the
public insurance funds, as a way of streamlining
bureaucracy and guaranteeing subsidies to hospitals.
The major constraint was the MOH’s lack of
recognized leadership, institutional capacity and
authority to put the need for reform on the political
agenda and to shape the orientation of the reform
(Kronfol and Bashshur 1989). The MOH itself had
little technical authority, limited political weight and
few qualified professionals. Only a handful had an
overview of the problems of the sector and a vision
of possible ways out. Much of this had to do with
the absence of information on what went on. It is
revealing that even senior public insurance manage
ment staff are unable to provide a clear image of
money-flows, and that the MOH has no updated in
ventory of health centres or hospitals in the country.
Despite its political and institutional fragility, the
MOH has been taking the lead, being the body most
immediately confronted with the financial conse
quences of the evolution of the last five years. For
the MOH, both the way health care is delivered (with
issues such as the equilibrium between hospital and
community care, quality of care, access and equity)
and the administrative-financial aspects of regulation,
cost-containment and efficiency, were at stake. Very
early on its priority option was one of regulation,
rather than direct involvement in health care provi
sion. This evolution was made possible by the fact
Health sector reform in Lebanon. 11.
that the MOH had a better insight into the problems
of the sector, which accelerated during the prepara
tion of a World Bank loan for the reform of the health
sector.
The need for information and alliances
In the first phase of putting health care reform on the
agenda, research and information gathering have
played a crucial role. This consisted essentially of
documenting the extent of the cost explosion; the ef
ficiencies and contradictions the health care system was
heading for; and the extent of the problem of chronic
diseases and ill health related to the urban environ
ment. A flurry of research activities, funded through
WHO, were contracted out to academic circles, but
in close collaboration with the MOH. Besides provid
ing information and evidence for the double agenda
of organizational and financial reform, this research
phase has had several important spin-offs.
First, knowledge provided the MOH with new
leverage..It allowed the MOH administration to make
the case for reform and, by the mere fact of knowing
the sector, to progressively gain the authority to take
a leadership position. Second, it fostered alliances out
side the MOH and, within the ministry, a new sense
of purpose. Third, this phase - with all the discus
sions with academia. NGOs and the international scene
- allowed the MOH to make a basic strategic choice:
it would aim to strengthen its policy-making and
regulation functions rather than try to build a public
sector delivery system.
This phase of awareness creation went on into 1994
and beyond. From 1994 onwards the MOH used the
preparation of a World Bank loan as an opportunity
to launch the process of reform. The aim was two
fold: reorient the way health care is provided and rec
tify the financing structure. In order to do that the
MOH had to improve its bargaining position and its
policy leadership.
In current health sector reforms in industrialized
countries the focus is on the pursuit of microeconomic efficiency on the production side, and on
the allocation mechanisms that link finance to pro
duction (Saltman 1994). Most attempts start by con
centrating on economic incentives and the financial
operation of the health care system (Oevretveit 1994)
in order to respond to fiscal pressure (Beaglehole and
Davis 1992). Characteristic of the reform agenda
in Lebanon is the sequencing of health care organiza
315
tion and health financing reform. Both are obviously
interrelated, but the accent was put on health care
reform first (with actual interventions), whilst in the
field of financing, actions were limited to the prepara
tion of future macro-level reform proposals.
Hospitals and the way they are financed are clearly
at the heart of the problems of cost explosion and
distortion of the Lebanese health system. This does
not mean, however, that these problems can be
tackled head on. The strategic role of public funding
provides the MOH, a priori, with a good bargai^^
position towards the hospitals, and should allox. .
to eliminate major inefficiencies, control costs, and
provide incentives for quality assurance. In particular,
the smaller, inefficient private hospitals would be
very vulnerable to financial incentives and disincen
tives. But the MOH controls only its own inputs, not
those of public insurance, and moreover, although
potential and willingness are there, it is too weak
technically and politically to enforce changes in the
financing structure on its own. There is some margin
for controlling costs, and some steps have been taken
in 1994-96, but a thorough restructuring requires
stronger pressure and alliances.
Such pressure does not come from ambulatory private
practice as it functions now. Lebanon has some tradi
tion of family medicine (Abyad et al. 1992) that has
been built up in academic circles, but over the last
year hospitalocentrism, reduction of ambulatory care
and technology consumption have become dominant.
Public sector health centres are not a credible alter
native, and few or no officials believe that they have
the potential to become so rapidly, even with major
resource inputs. One of the major impediments to im
proving quality of care at first contact level, and V)
using first contact level care as a lever to rationale.
ing hospital care, is the absence of an organizational
model as an alternative to the present situation. For
family doctors or general practitioners to put pressure
on hospitals, they need first to start working in a dif
ferent way themselves.
Currently, it appears that influencing the private
sector will not be possible through mere financial
mechanisms, certainly not in the short term. This
would require massive state intervention, which is
unrealistic given the budgetary situation and the
weakness and lack of authority of the MOH. It will
therefore be possible only to work through forms of
pressure that are not exclusively dependent on MOH
w Van Lerberghe et al.
316
Table 1.
___________ _______—•
Interventions to prepare reform
Expected medium
Expected shon-term
results
results
1994 onwards: Control billing
Hospital care:
cost and
quality
and change price structure
_
1995: Autonomous public hospitals
1995: Feasibility study HMO
-♦Cost containment
-♦Regain credibility for
public hospitals
-►Get more options
—♦Create demand for quality
FirjQKitact
Ic'V>e:
quaCryand
access
1993: WHO PHC Report
1995 onwards: Formulate
programmes for control of chronic
diseases
1995-6 onwards: Contracting
NFP-NGO health centres: support
in exchange for registration,
minimum package and quality care
care
-►Accessible quality care
-Capacity to manage
responsibility for a defined
Negotiated contracting
conditions: gains in
quality and efficiency
Ability to negotiate with
private sector
Pressure on private
practitioners to improve
quality
Social safety net
Fundholding type pressure in
negotiations with hospitals
population
Regulation
capacity
Preparation of
financial
reform
Pressure for
sector reform
1992 onwards: Studies and research
1994 onwards: Control billing
and change price structure
1995 onwards: Institutional
strengthening
1996 onwards: Infrastructure
coverage planning
1996 onwards: focus of studies
and research on problems of
financing
Capacity building (human resources
documentation, information)
administrative mechanisms: pressure from the
medical community and pressure from user demand
for accessible quality care.
Interventions to build pressure for reform
Pressure for reform in Lebanon built up through a
series of parallel and phased interventions rather than
through the marketing of an overall plan. A number
of interventions were put in place in order to build
a capacity, in terms of personnel and knowledge of
the system, that would make it possible to create a
-►Alliances (especially with
with social security system)
and expertise
Ability to lead
financing reform
-♦Tools for regulation
-♦Recognition of
leadership and authority
Better control over system
Ability to negotiate with
private sector
-♦Recognition of
leadership and authority
Ability to market reform
proposals
-♦Knowledge on the
functioning of the system
Ability to formulate a
reform proposal
Favourable environment
and increased control
Ability to formulate,
to lead and to negotiate
favourable environment and gain some degree of con
trol over the system. The aim is to provide the MOH
with the ability to formulate, lead and negotiate
overall proposals for reform. These different inter
ventions are presented in Table 1.
In the field of hospital care, public hospitals became
autonomous, and attempts are being made to improve
their management. A major stumbling block is the
absence of any links with the health centres. A
feasibility study on establishing an HMO (health
maintenance organization) in a Beirut suburb (Firkh
Health sector reform in Lebanon. II.
Figure 2.
317
The strategy followed to control billing and pricing of purchased hospital care
et al. 1996) contributed in broadening the range of
options that can be considered.
The key intervention, however, was the attempt at
controlling the billing and pricing structure of pur
chased hospital care (Figure 2). Initially, this was a
technical response to the budgetary emergency caused
by increasing costs of purchasing care in private
hospitals. A computerized system was created to
allow identification of abuse and misappropriation,
to get a thorough knowledge of the cost structure of
hospital expenditure, and to transform the principles
of reimbursement from an item-by-item to a case-mix
basis. This, in turn, must make it possible to introduce
elements of rationalization into hospital care (e.g. in
troduction of day-care) and to improve micro-level
efficiency.
Transforming the pricing system requires techno
logies and capacities that were not available in
Lebanon a few years ago but that are now being in
troduced gradually. It also requires the authority to
follow-up on decisions made possible through this
regulation technology, and to re-negotiate conditi^ft
of purchase of care in rational treatment norms despite its lack of authority, the MOH was able to
negotiate a 13% rebate on the bills submitted for
1995. This new strategy has been crucial in creating
an alliance with the NSSF, over which the MOH has
no formal control, for a common position in the
negotiation of prices with private hospitals.
A second area of intervention concerns ambulatory
health care. The beginning of the 1990s saw the first
studies on the health sector and initial attempts to for
mulate disease control programmes. A further, more
radical step was taken in 1995-96, when the MOH
negotiated contracts with NFP-NGO health centres.
In exchange for logistic support (drugs, training.
318
W Van Lerberghe et al.
equipment etc.) NFP-NGOs are supposed to provide
an agreed package of care for their population
(Bobadilla et al. 1994). and to introduce quality
assurance in a planned way.
With these contractual arrangements the MOH hopes
for a tnple effect. First, accessible quality care would
be assured for the health centre’s population. This
answers the MOH’s preoccupation with maintaining
a social safety net for the poorest. Second, providing
quality care is expected to enhance demand for quality
care^utting consumer pressure on private care provi' A A climate of changed consumer-provider ex
pectations would be the best bet for rationalizing
health care provided by individual private practi
tioners. Third, gradual introduction of registration
combined with support on a capitation basis would
give the possibility of enabling health centres to make
contractual arrangements for hospital care for their
registered population. These health centres would
then have a role similar to that of general practitioner
fundholders in the UK or primary care gatekeepers
as used by some health maintenance organizations in
the USA (Enthoven 1991). Pressure for a rationaliza
tion of hospital care would then come not only from
the MOH, but also from part of the health care com
munity in the capacity of patient advocates.
et al. 1997). a certain degree of proletarization, or
possibly even pauperization, of doctors is likely. This
would create a pool of doctors among which the MOH
could find candidates for collaboration in a supponin-exchange-for-quality scheme.
The major bottleneck in creating a regulatory capacity
and preparing the reform of health sector financing
is the lack of institutional capacity and system intelli
gence. Drastic change is unlikely in a fragmented
society such as in Lebanon, where everything is linked;
incremental change, on the other hand, would not pro
duce results without a strong sense of direction. The
MOH has had to develop and provide that sense of
direction.
The interventions concerning hospital and ambulatory
care have provided the MOH with a first set of in
struments to initiate sector regulation. In order to
capitalize on the first successes, the MOH has had
to recruit new, technically qualified staff, mainly with
an NGO or academic background. These new recruits
have brought technical expertise and a new man
agerial culture. There has been visible progress in
streamlining MOH administration and in its perfor
mance m monitoring, evaluation and planning. Com
bined with the alliances the MOH has created during
the research and documentation efforts of the first half
of the 1990s, this accelerated modernization is start
ing to pay off. The MOH now has the best, if still
very inadequate, knowledge of the situation. It is now
technically capable of commissioning and leading
studies that give an insight into the national health
accounts, health expenditure and provider patterns.
This increased system intelligence does not mean that
the MOH has the capacity to plan and implement a
comprehensive reform, but it is now in a position to
mobilize pressure for reform and to push its own
public sector agenda.
With this strategy towards NFP-NGOs, the MOH has
a first entry pomt in the ambulatory care market. An
overall strategy towards regulating and rationalizing
private ambulatory care is still missing, At this stage
it is very much an approach of seizing opportunities
and creating a favourable environment. As a strategy,
however, starting with the NFP-NGO health centres
offers only limited perspectives. NFP-NGO health
centres only cater for some 10% of the first level contac' ■‘Mundholding in the UK, however, only covered
3 %n’^>ractices three years after its introduction, and
major expansion was decided when only 15 % of prac
tices were enrolled (Petchey 1995). Thus, going by
this example, even with a small section of the market
it should be possible to wield significant influence.
Seizing opportunities to prepare for
reform
LL17.6Registration of the population and capitation
payment are likely to meet with considerable resistance
(Blecher et al. 1995). The technical aspects of the con
tractual arrangements are crucial to the success of the
strategy, and still need to be tested. Politically it will
probably be difficult to introduce and enforce perfor
mance-linked incentives. Nevertheless, the plethora of
doctors is a favourable factor. With the high doctor
population ratio (close to 3:1000; Van Lerberghe
The strategy of the MOH is not merely one of mud
dling through (Bennet and Holland 1977; Lindblom
1959), but rather of seizing opportunities to make
headway where progress or experimentation is pos
sible. The major weaknesses of this approach are that
there is as yet no clear view on the future of health
sector financing and no vision of how to restructure
ambulatory care. Delay in tackling the financing
issues is also the major criticism made by the inter
national community. This weakness, however, may
Health sector reform in Lebanon. II.
be the strength of the MOH strategy: the groundwork
is being done, and there is tune for experimentation
and analysis. There will thus be less risk of import
ing ready-made solutions which are not adapted to
the Lebanese situation. This is turn will increase
chances that reforming health sector financing will
not merely aim at cost containment, but will actually
improve health care delivery. More important still,
especially in Lebanon’s fragmented society, there is
time for creating the necessary alliances. By the time
there is an overall vision of reform, not only of health
care but also of the sector’s financing, the balance
of power will have changed.
The key issue in the Lebanese health crisis is that of
the role of the public sector. Before the war this was
limited to purchase of hospital care and lip-service
to providing universal access (Hayek 1980). With the
war, there has been the implosion of the MOH and
the expansion of the private sector, presenting a situa
tion which is becoming untenable: the extent of the
problem in financing the present system is now such
that it is increasingly difficult to justify further ex
pansion for mere reasons of political equilibrium. It
seems clear now that the public sector in Lebanon
will remain a marginal health care provider but that
there is some scope to redefine its role in financing
and regulating the sector. There is thus hope that
elements of public sector rationality will be injected
into what is now, still, essentially a seller’s market.
References
Abyad A. Zoorob R. Sidani S. 1992. Family medicine in Lebanon:
the IOth anniversary. Fam Med 24: 575-9.
Beaglehole R, Davis P. 1992. Setting national health goals and
targets in the context of a fiscal crisis: the politics of social choice
in New Zealand. Int J Health Serv 22: 417-28.
Bennet AE, Holland WW. 1977. Rational planning or muddling
through. The Lancer. 464—6.
Blecher MS, Bachman MO. McIntyre D. 1995. Acceptability to
general practitioners of national health insurance and capitation
as a reimbursement mechanism. S Afr Med J 85: 847-51.
Bobadilla JL. Cowley P. Musgrove P, Saxenian H. 1994. Design,
content and financing of an essential national package of health
services. Bull World Health Organ 72: 653-62.
Enthoven AC. 1991. Internal market reform of the British National
_ Health Service. Health Affairs 10: 60-70.
Firkh M, Sinno Z, Ziade F. 1996. Makassed Health Programme
Health Maintenance Organisation Survey. Unpublished report
Beirut: pp. 1-33.
Hunter D. Stockford D. 1996. Health care reform in the United
Kingdom. International Workshop on Health Care Reform at
the Frontier of Research and Policy Decisions. MOH. Bangkok
pp. 1-41.
Hayek EF. 1980. Notre chaos medical. Essai sur le Svsteme de
Same du Uban. Publications de I’Universite Libanaise. Libraire
Orientale. Beirouth.
319
Krontol NM, Bashshur R 1989. Lebanon’s health care policya case study in the evolution of a health system under str«<?
J Public Health Policy 10: 377-96.
Lindblom CE. 1959. The science of‘muddling through’ Puhiaa
min Rex- 19: 79-88.
Oevretveit J 1994. Values in European health care markets: choice
equity and competition. Eur J Public Health 4: 294-300
Okuonzi SA, Macrae J. 1995. Whose policy is it anyway’ Inter
national and national influences on health policy development
in Uganda. Health Pol Plann 10: 122-32.
Petchey R. 1995 General practitioner fundholding: weighing the
evidence. The Lancet 346: 1139-42.
Salibi K. 1993. A House of Many Mansions. The History of
Lebanon Reconsidered London: I B Taurus & Co.
Salcman RB. 1994. A conceptual overview of recent health Jbf
reforms. Eur J Public Health 4: 287-93.
Van Lerberghe W. Ammar W, El Rashidi R, Sales A, Mechbal
A 1997. Reform follows failure. I. Unregulated private health
care in Lebanon Health Pol Plann 12(4): 296-311.
von Otter C. Saltman RB. 1991. Towards a Swedish health policy
for the 1990s: planned markets and public firms. Soc Sei Med
32: 473-81.
Acknowledgement
Pan of this research was supported by a grant of the European
Union, General Directorate XU (Avicenne Project), contract
ERBAV1-CT93-0012.
Biographies
Wim Van Lerberghe. MD, PhD, is currently chairman of the
Department of Public Health of the Institute of Tropical Medicine
in Antwerp, Belgium. His field of interest is the interface between
health care organization and health care reform in Africa, the Mid
dle East and South-East Asia.
Walid Ammar, MD, MPH, graduated from the Universite Libre
de Bruxelles. After working as a GP in a community hospital in
Lebanon he directed a Social Security Fund and worked as a
hospital director. Since 1993 he has been Director General of the
Ministry of Health in Beirut. He lectures at the National Institute
of Administration and Development and at the School of Public
Health of the Lebanese University.
Randa El Rashidi is a Human Resource specialist at the
Bank. Her field of interest covers social funds and the role of NGOs
in social development in various Middle-Eastern countries.
May A war holds a Masters in Public Administration, from the
American University of Beirut. She works as an executive assis
tant in the Ministy of Health, Beirut, where she deals with the health
sector rehabilitation project.
Albert Sales, MD. MPH. juried working in West Africa for ihe
Belgian Cooperation and WHO. He then joined the Asian Develop
ment Bank and is currently a Public Health Specialist with the
World Bank.
Abdelhai Mechbal. MD, was trained in Health Planning in Mexico. He is a former Technical Director of the Ministry of H
in Morocco, and currently WHO representative in Lebanon.
Correspondence: Dr W Van Lerberghe. Dept of Public
statute of Tropical Medicine. Narionalestraat 155. B-2000 Antwerpen.
Belgium.
\
HEALTH POLICY AND PLANNING; 12(3): 193-198
Co
I (.
Viewpoint: Public versus private health care delivery:
beyond the slogans
DANIELE GIUSTI,1 BART CRIEL2 AND XAVIER DE BETHUNE2
'Comboni Fathers, Matany Hospital, Moroto District, Uganda, and 2Department of Public Health,
Institute of Tropical Medicine, Antwerp, Belgium
In most settings, a 'public' health service refers to a service which belongs to the state. The term
'private' is used when health care is delivered by individuals and/or institutions not administered by
the state. In this paper it is argued that such a distinction, which is based on the institutional or adinistrative identity of the health care provider, is not adequate because it takes for granted that the
ture of this identity automatically determines the nature of the service delivered to the population.
A different frame of classification between public and private health services is proposed: one which
is based on the purpose the health service pursues and on the outputs it yields. A set of five opera
tional criteria to distinguish between health services guided by a public or private purpose is presented.
This alternative classification is discussed in relation to a variety of existing situations in sub-Saharan
Africa (Mali, Uganda, Zimbabwe). It is hoped that it can be used as a tool in the hands of the health
planner in order to bring more rationality in the current altercation between the public and the private
health care sector.
K
Introduction
There is a growing interest in increasing and improv
ing co-operation between the public and private sec
tors in the field of health care delivery, particularly
in the developing world. A range of different explana
tions for this boost in interest can readily be iden
tified. For a start, the already scarce resources for
health care are dwindling yet further and linkages
with the private sector may raise additional resources.
There also is the gradual acknowledgement of the
need to develop a systemic approach to health care
dejj^y. The private sector is an important actor in
thiW^stem, and can, under certain circumstances,
substantially contribute to a consistent development
of health systems.
health managers towards matters outside their con
trol. The private health sector has often grown in
dependently from the public health sector and is rarely
taken into account in health planning scenarios.
This has been the case in Uganda where the non
governmental sector, which generally has been in the
forefront of the development of primary health care
initiatives and which accounts for about 65% of the
current primary health care delivery in the country,
is rarely taken into account by the District Health
Teams in their planning exercises. On the other hand,
there is often in the private sector an excessive
jealousy for its own independence, with a disregard
of policy guidelines, aversion to evaluation, and
hostility towards regulative measures.
Our field experience in sub-Saharan Africa con
fronted us with the rigidity, and even the strong
emotions, that often tend to colour this debate on
co-operation between the public and private sectors.
The relative lack of rationality and objectivity in these
discussions has contributed to a state of affairs where
the concerned interlocutors clutch at their respective
positions. It is common, and even natural, to notice
a certain diffidence among civil servants and public
It is increasingly evident that co-operation between
the public and private sectors is a must in a systemic
view of health service provision and in order to avoid
expensive and useless duplications. In this perspec
tive, it becomes important to move towards an ever
progressive integration into the health system of all
elements accepting a ‘public’ rationale of operation.
But the definition of ‘public’ is. at present, somewhat
hazy and needs focusing. The purpose of this paper
194
Daniele Giusti et al.
is to contribute to a proper definition and understand
ing of the terminology. We acknowledge the limit
ation of this paper to the specific context of
sub-Saharan Africa. We intended it to be this way,
since we believe the misconception to be stronger in
that pan of the world than elsewhere.
The confusion: what is the meaning of
public and private!
In our view, one of the major stumbling-blocks in
the process of understanding is the lack of consistent
use and interpretation of the terminology public and
private, be it conscious or not. We think attempts
merely to answer the questions ‘what is a public
health service?' or ‘what is a private health service?’
would reveal the heterogeneity of views on the mat
ter. The purpose of this paper is precisely to present
some thoughts on how these very words ‘public’ and
‘private’ are used and to attempt to clarify what con
tent they should refer to. We think that the develop
ment of a more coherent vocabulary is a necessary
step in the broader process of co-operation between
public and private sectors in the field of health care,
or in any other social field for that matter.
In the majority of situations, the definition - both im
plicit and explicit - of a public health service refers
to health care institutions belonging to the state. In
sub-Saharan Africa, health care delivery is often sup
plied by private individuals and/or institutions whose
ownership and/or administrative guardianship is not
the state. In that case, the term private is used. It is
generally understood that the public health sector
should be supported by public money and protected
by a series of privileges regulated by law, while the
private health sector should operate on private fund
ing, obtained through fees, donations or other means
in the arena of a market oriented provision of service
and of competition. This understanding is based on
the assumption that the private sector is homogeneous
and financially self-sustaining whereas, in reality,
a remarkable heterogeneity exists in the private/
non-govemment sector (DeJong 1991; Green 1992;
Zwarenstein and Price 1990; Smith 1989).
Generally, when the service is rendered without
lucrative purposes the specification ‘not-for-profit’
is added. The term ‘non-governmental’ is used to in
dicate organizations offering services without profitmaking purposes, and whose ownership and/or
administrative guardianship is not the state. We think
that a distinction between public and private based
on the institutional or administrative identity is not
always adequate in dealing properly with the variety
of existing situations.
The limits of this classification can be exemplified by
the mushrooming number of non-governmental organ
izations operating for outright or hidden lucrative pur
poses. At the same time, there are public services
which operate, to varying extent, on a lucrative basis,
even if the intensity and the sometimes radical
character of this shift in rationale within public
facilities has not necessarily been the result of the
planned choice of policy-makers. Examples of such
shifts are the situations of some government hospitals
in Zimbabwe and Uganda. In both countries A"Xiical
officers are allowed to develop private prS.ce in
tandem with their responsibilities and tasks in the
hospitals. In the case of Zimbabwe, this measure is
part of a broader effort aiming to attract national
medical officers into the public sector in a context of
massive brain-drain to neighbouring countries or to
the private sector. In the case of Uganda, it grew out
of a legitimate concern to increase the revenue of
national doctors beyond the extremely low level of
government salaries. In both countries, government
officers are allowed to use the hospital infrastructure
and hospital resources for treatment of private patients
who pay them a fee. but without recompense to the
hospital.
The gloomy prospect is one of governments ending
up subsidizing - with tax-payer money - a private
lucrative sector where basic measures of quality con
trol are lacking and with a poor accessibility for lower
income population groups. A ‘two speed’ health care
system becomes a real threat - the same government
would instead deny subsidies to private institutions
striving, but finding it increasingly difficult, to offer
financially accessible services, often at lowA^asts
than those observed in public institutions.
The core of the matter really is that the adjectives
private and public refer to the institutional or ad
ministrative identity of a given health service, taking
for granted that the nature of this administrative iden
tity automatically determines the nature of the service
that is actually offered to people. In a time of reform
of many health systems, with decentralization as a key
element, this assumption can no longer be justified.
If a distinction between public and private needs to
be made, we think it cannot be based exclusively on
the institutional set-up of a given service, but rather
on the objectives and the output of that sendee.
Public vs. private health care delivery
Maintaining a distinction between public and private
on the grounds of the administrative identity will only
perpetuate confusion, prejudices and discrimination
(positive or negative but, in either case, inadequate
to the changing context). In Uganda for instance, the
non-govemment sector (mainly Church-related notfor-profit organizations) has been able to achieve ac
ceptable levels of health care delivery in some very
remote and insecure areas of the country and in en
vironments characterized by important social and
political unrest with a de facto absence of the state.
Nevertheless, the posting of national doctors to these
institutions has become very difficult because of uncer
tain career and training perspectives for those who
choose to work in them; nurses trained in NGO
sc®,. which are-formally recognized by the national
Nursing Council and the final examinations of which
are supervised by government officials, can make their
way to the government service only with great
difficulty; no or very little government subsidies are
being allocated to NGO facilities which are considered
by District Health Teams as falling outside their scope
of responsibility, even when their importance for the
system is openly recognized. The (private) status of
these NGO not-for-profit hospitals, and the consequent
refusal of support for them from government sources,
clearly has hindered long-term development efforts,
both for the NGO and for the state.
Such a distinction will hinder the dialogue between
the different components of the health system at a time
when each one’s contribution and co-operation is
necessary. Indeed, in the light of decentralization
policies implemented in many developing countries,
the institutional set-up of many decentralized ‘public’
health services is far less clear-cut. In the past all public
health services, with few exceptions, belonged to and
were financed by the state, represented by the Ministry
of W^’h. Today, there is a trend towards decentralizeiW.Vnership and management by local communi
ties, co-operatives, administrative districts etc.
Such a trend can be exemplified by the case of the
network of community health centres (‘centres de santd
communautaires’) gradually put in place in Bamako
(Mali) from 1989 on. Former rural community-based
experiences in the public sector served as an inspira
tional basis for young medical doctors who could not
be hired by the government and who remained,
jobless, in the capital of the country. With some initial
external help, three or four health centres were
organized so as to offer basic curative, preventive and
promotional services. The owners of the facilities were
195
members of community associations created for the
purpose and the aim of these health centres was to pro
vide health care to the subscribing members through
a system of cost-recovery. Later, a 'second' genera
tion of centres was put in place with virtually no ex
ternal help other than small in-kind loans by existing
centres. These new centres built up their revolving
drug fund through the initial voluntary work of their
employees. Several of them acquired grants from
different donors, but only at a later stage.
The government played a promotional and regulatory
role by considering these centres as active partners in
its health development efforts. The existing centres
constituted the starting point for geographical health
coverage maps drawn up by the urban district teams.
They also received small subsidies in kind from the
government, especially for immunizations and family
planning services. Their revenue was tax exempted
and they were granted a special license to sell generic
essential drugs. This support was provided in the
understanding that the health centres themselves would
not generate profits.
The debate on the status of these institutions is still
ongoing. Legal texts have defined both the govern
ment’s and the health centres’ responsibilities, but the
way the centres were put in place and the pressure
from unemployed health workers in Bamako indicate
that some of the attention has been diverted from the
equitable provision of health care to the raising of
revenue, mainly to hire additional staff.
An alternative classification?
What really matters to the health planner and to the
public, are the contents, the quality and the costs of
the package of services offered. For planning and
evaluation purposes, and for the allocation of the
meagre resources available, it is important that a clear
and explicit declaration of intent, or mission statement,
of the health care institution exists, so that the output
and accessibility of these services can be evaluated.
In an era of rapid change, it is also necessary to
evaluate over time how, and to what extent, the per
formance of each health care institution fits the mis
sion statement. Hence, we propose a different frame
for the classification of health services based on their
declared objectives and on their outputs. From
thereon, a dichotomous classification in health services
with respectively a public or private purpose can
be proposed. More specifically, we propose a set of
Daniele Giusti et al.
196
administrative guardianship and/or
institutional identity of the
health service
purpose the
health service
pursues
Figure 1.
public
private
public
a
b
private
c
d
Classification of health services according to their purpose and their administrative status
criteria for the classification of a health institution in
the category of ‘public’:
• A social perspective: a concern to enhance people’s
well-being and autonomy in a perspective of human
promotion. In the case of health services this more
specifically means contributing to people’s realiza
tion of a socially productive life, in a climate of
dialogue between all implicated partners and in har
mony with the prevailing overall socioeconomic
development.
• Non-discrimination: a concern to offer people
accessible and quality health care without
discrimination whatsoever with regard to race, sex,
religion, political affiliation, social status, income
level etc. This is not in contradiction with a positive
discrimination of specified population groups,
deemed to be in particular need of health care (e.g.
women, children, disabled people etc), or with a
focus on specific health problems in the frame of
vertically organized health programmes (e.g.
trypanosomiasias control programme, family plan
ning services etc).
• Population-based: a concern to take responsibility
for, and to be accountable to, a well-defined
population for its health care delivery. This
accountability could be based on a contract with
the population, specifying the mission statement of
the service or institution.
* Government policy guided: a concern to comply
with government health policies for the level of care
provided and to fit in a broader masterplan. Should
any different views arise with regard to official
policy, then it is necessary that they be argued,
discussed and, when possible, formalized in official
agreements between the health institution and the
national health authorities.
• Non-lucrative goals: a concern not to reduce the
purpose of the service to profit making. This does
not, of course, mean that good working and living
conditions would not be a right for staff, nor that
the service must be run at a loss. On the contrary,
it is desirable that any service be self-sustained (this
is not always possible; it is even virtually impossi
ble in the case of district hospitals) and that its staff
can work in acceptable conditions. In any event,
in order to preserve the public purpose of the ser
vice, profits made should be reinvested in the same
service or in other activities of social interest in
agreement with the concerned population.
These criteria, which are currently being testetfi^he
context of district health care delivery in Uganda, do
not exhaust the variety of possible criteria identifiable
in other contexts. Nonetheless, they provide an
instrumental framework which could be used to assess
the purpose of health services rather than the
administrative/institutional set-up only. Both perspec
tives can be represented in a simple two by two table
(Figure 1).
The four cells of this table can be exemplified as
follows: a corresponds to National Health Service
(NHS) hospitals in the United Kingdom (although the
current reforms of the NHS represent a gradual shift
from a to b); b corresponds to most church-related
Public vs. private health care delivery
hospitals in Uganda; a shift from a to c is taking place
in many government hospitals in Uganda and in some
government hospitals in Zimbabwe; and d corresponds
to the situation of many hospitals in the USA. The
relative strengths of the actors involved in the environ
ment of the health centre of Bamako will determine
whether these centres end up in categories b or d, or
remain somewhere in between.
It is clear that the variable ‘purpose’ does not com
pletely fit the nature of a dichotomous variable: indeed
it covers a range of intermediate situations in the wide
spectrum from public to private. The same comment
holds for the administrative guardianship as well.
r'^ure 1 is thus an oversimplification of reality. We
"ertheless think that it is useful to illustrate our point.
If governments agree and accept the rationale of this
classification according to the very purpose of the ser
vice, then it would allow them to achieve more
accuracy in targeting their support to health care in
stitutions and organizations - both government and
non-govemment - who serve a public purpose. The
case of designated district hospitals in Tanzania or
Ghana illustrates that it is possible to define consis
tent policies. In the case of Uganda, it appears that
many (but by no means all) of the non-governmental
and church-related organizations would sufficiendy fit
the criteria defining a ‘public’ service. This classifica
tion could also be helpful to distinguish organizations
in the present mushrooming of private practices
throughout the developing world: it may help to
separate the com from the wheat. A consistent policy
would then be to support those organizations and in
dividuals that pursue a public mission, and not only
those that fit a given administrative status.
Conclusion
V^have argued that a distinction between private and
public based on the institutional set-up of a given ser
vice is not always adequate in defining the very nature
of the service offered, the latter being of paramount
importance to the health planner at any level of the
health system. For example, many private hospitals
and health centres in developing countries operate
according to a rationale which could be defined as
public; at the same time, lucrative goals are being
introduced into public health services which,
eventually, endanger their adequacy, relevancy and
accessibility. An operational definition of what could
be considered to be a public health service is still lack
ing. This is not without consequence at a time when,
197
on the one hand, most governments are (or have
become) unable to respond in a satisfactory way to
the health needs of people, and where, on the other
hand, the contribution of the private sector is called
upon more and more.
This paper attempts to identify some operational
criteria which would enable services to be distin
guished according to their public or private rationale.
These criteria do not necessarily fit each situation, but
they can open up debate among health planners aiming
to bring more rationality into the current altercation
between public and private. They may also bring the
various actors beyond the slogans and to a constructive
dialogue.
What could this classification be used for? In opera
tional settings public administrations could use these
criteria to identify elements in the health system which
need to fit the rationale of public-oriented health ser
vice provision. It should not be impossible to develop
from these criteria some simple indicators, both quan
titative and qualitative. In Uganda, for example, the
criteria ‘population based’ and ‘non-lucrative goals’
are progressively being used to identify those elements
of the health system eligible for integration and,
sometimes, for partial financial support. But there is
definitely a need for further research: the set of criteria
need to be tested in a variety of different situations
and precise indicators need to be designed so as to
render the whole process less of a theoretical exercise.
References
Dejong J. 1991. Non Governmental Organisations and Health
Delivery in Sub-Saharan Africa. Working Paper. Population and
Human Resources Department. The World Bank.
Green A. 1992. Planning for Health. In: An Introduction to Health
Planning in Developing Countries. Oxford Medical Publications;
p. 77.
Smith K. 1989. Non Governmental Organisations tn the health field:
collaboration, integration and contrasting aims. Social Science and
Medicine 29(3): 395-402.
Zwarenstein M, Price MR. 1990. The 1983 distribution of hospitals
and hospital beds in the Republic of South Africa. South African
Medical Journal 77: 448-52.
Biographies
Daniele Giusti. MD. DTM&H, MPH. has worked in Uganda from
1978 to 1982 as a Medical Officer and later as Superintendent of
Kitgum Government Hospital. From 1983 to 1986 he specialized
in infectious diseases at the University of Milan. In 1987, he was
198
Daniele Giusti et al.
appointed Medial Superintendent of Matany Hospital, a private notfor-profit hospital in rural Uganda. In 1993 he was apppointed Ad
ministrator of the same hospital. He currently maintains this post
and is also involved in the establishment of policy guide
lines for the integration of different health care providers at district
level.
Bart Criel. MD. DTM&H. MPH, has worked for 7 years in Zaire
in the Kasongo and Bwamanda health districts as a Medical Officer
and District Medial Officer. He is currently a staff member of the
Department of Public Health (DPH) of the Institute of Tropica]
Medicine in Antwerp, Belgium. His research field is
mainly the organization of district health services in sub-Saharan
Africa with a special focus on health financing issues.
Xavier de Bethune, MD, DTM&H. MPH. has overseas experience
in Primary Health Care projects in Zaire, Guinea-Conakry and Mali.
For almost four years he was PHC-Adviser to the regional Medial
Officer of the city of Bamako. He presently does research and training
in the Department of Public Health (DPH) of the Institute of Tropical
Medicine in Antwerp. Belgium, mainly on the development of PHD
systems in urban settings.
Correspondence: Dr B Criel. DPH. Institute of Tropical Medicine,
Nationalcstraat 155, 2000 Anrwerpen, Belgium.
HEALTH POLICY AND PLANNING; 9(1): 72-80
© Oxford University Press 1994
The private sector in Bombay
Table 1.
Behaviour of the private sector in the health
market of Bombay
C A K YESUDIAN
Department of Health Services Studies, Tata Institute of Social Sciences, Deonar, Bombay, India
In Bombay, the private sector plays a major role in providing medical care to all strata of society and these
services are well utilized by everyone. Of late there have been criticisms about the quality of private
medical care and there is a need for a proper policy on the development and regulation of private sector
health services. This paper contributes to this by unravelling the inadequacies in the medical infrastructure
and manpower, and highlighting the unethical medical practice rampant in private practice. The paper also
assesses the existing regulatory mechanisms and their inability to control the quality of private sector
medical care. After exposing the behaviour of the private sector, the paper suggests a holistic policy ap
proach to increase and strengthen the public sector health services in poor areas, to develop norms to
maintain quality in medical infrastructure and manpower, and to discipline unethical professional
behaviour.
Introduction
It is commonly said that the private sector is
more efficient, provides better quality services,
meets the demands of the consumer promptly
and that its services are more personal than the
public sector. National, state and local govern
ments are hard pressed for resources and would
like the private sector to finance and provide
good quality health services to relieve the burden
of government. However, in reality, this does not
seem to happen. The WHO Study Group on
Evaluation of Recent Changes in the Financing
of Health Services reveals that ‘the promotion of
the role of the private for-profit sector may result
in unforeseen and negative consequences for the
health system’ (WHO 1992, p47).
The behaviour of the private health market is im
perfect in terms of developing health. Providers
decide which services to deliver based on the
consumer’s willingness to pay rather than on
broader health needs. Often the superior quality
of private sector health services is limited to nonclinical aspects like accommodation facilities. In
terms of efficiency the same WHO Study Group
concludes that ‘although economic theory would
suggest that private providers are more efficient
technically, tendency to over-provide services,
combined with higher prices, may mean that
fewer people are adequately treated’ (1992, p47).
Equity is also of concern because access to
private health services would depend on ability to
pay.
Availability
Private sector health services have grown tremen
dously in India, especially in metropolitan cities
like Bombay. As the income level of the city
dweller goes up, his demand for health services
increases in terms of both quantity and quality.
Due to a resource crunch, the government cannot
meet this growing demand. In addition, the
geographical boundaries of Bombay have ex
panded rapidly over a period of time, and several
slums have mushroomed in the suburbs. The
Municipal Corporation has not been able to ex
pand its medical infrastructure adequately to
cover the suburbs. Therefore, private health care
facilities have expanded to fill the gap left by the
public sector. Another reason for the increasing
availability of private sector health services is the
tendency of doctors to stay in bigger cities like
Bombay, leading to an oversupply of providers.
This not only tends to lower prices but services
are also delivered closer to consumers, further
cutting indirect costs like transport costs.
Social class, type of illness and source of treatment
Seif carc/indigenous
medical care
Public sector
Private sector
Total
Minor illness
Lower class
Middle class
Upper class
Total
13 (9.9)
15 (6.2)
3 (3.4)
31 (6.7)
20 (15 2)
44 (18 3)
9 (10.1)
73 (15.9)
98 (74.9)
181 (75.5)
77 (86.5)
356 (77.4)
131 (100)
240 (100)
89 (100)
460 (100)
Chronic illness
Lower class
Middle class
Upper class
Total
6(7.1)
19 (14.6)
6 (9.7)
31 (11.2)
19 (22.4)
44 (33 9)
18 (29 0)
81 (29.2)
60 (70.5)
67 (51.5)
38 (61.3)
165 (59.6)
85 (100)
130 (100)
62 (100)
277 (100)
Acute illness
Lower class
Middle class
Upper class
Total
2 (3.0)
2(2.1)
4(2.1)
40 (58.3)
49 (51.0)
2(7.1)
91 (47 4)
26 (38.2)
45 (46.9)
26 (92.9)
97 (50.5)
68 (100)
96 (100)
28 (100)
192 (100)
In Bombay, the above-mentioned factors have
led to a situation whereby private sector health
services have overtaken public sector health ser
vices. In the year 1990, the private sector ran
87.9970 of the total 602 hospitals in Bombay pro
viding 39.8% of the total hospital beds (Public
Health Department 1991). Other facilities like
clinics and maternity facilities are overwhelm
ingly more numerous in the private sector than in
the public sector. It was estimated that there are
about 20 000 qualified doctors in Bombay of
whom 14 000 are in private practice (Medico
Friends Circle pamphlet, 1991).
Utilization
In terms of utilization of health services, the
private sector is widely used by all strata of
society in Bombay. A study conducted by Yesudian (1989) demonstrates this point. The sample
survey, cutting across all socioeconomic groups
(upper, middle and lower), showed that a good
majority of households from all such groups
used the private sector for minor and chronic
ailments. Public and private sector health ser
vices were roughly equally used for treating acute
illness. However, the level of utilization of pri
vate health services for acute illness increased con
comitantly with socioeconomic status (Table 1).
The above study also showed that irrespective of
socioeconomic status, people are willing to pay
for health services (Yesudian 1989). Table 2 gives
details of the mean medical expenditure incurred
by the three socioeconomic groups for treating
minor, chronic and acute illnesses. The findings
show that all the socioeconomic groups spent
money for treating these illnesses, though the
sums varied between groups.
Table 2. Social class and mean medical expenditure
Mean medical expenditure
Social class
Short-term
illness
(Rs.)
Chronic
illness
(Rs.)
Acute
illness
(Rs.)
Lower class
Middle class
Upper class
59.30
85.20
139.90
564.70
497.50
752.60
1433.30
1466.10
3284.60
Total
91.70
598.70
1643.60
Approximately Rs.30 = USS I
,
Note:
1) For short-term illness, expenses were calculated for one
episode for a period of two weeks.
2) For chronic illness, expenses were calculated for one
episode for a period of one year.
3) For acute illness, expenses were calculated for one episode
that happened within a year.
4) Items of expenditure include drugs, fees, investigation,
bed charges, travel, diet and other miscellaneous items.
Cs
0
"5
3
74
The private sector in Bombay
C A K Yesudian
The study
The above information reveals that the private
sector not only provides health services for the
affluent classes but also for the poorer sections
of society. People are willing to pay for health
services, and so the private sector is going to ex
pand further in the near future. This process will
be speeded up by resource scarcity in the public
sector. However, so far, there is no policy to
decide the direction of private sector expansion.
As a result, the private sector is proliferating
and is the most disorganized sector of service
delivery.
d)
Consider the policy options available to
regulate the private sector.
Methodology
The study obtained its information mainly from
secondary sources and from 15 informants who
hold key positions in the health sector. Their
characteristics are given in Table 3. The key in
formants included hospital administrators,
senior clinicians and members of social action
groups interested in the health sector.
Critical analysis of the private sector
The private facilities in Bombay range from
modern sophisticated hospitals serving the needs
of affluent classes to clinics operating in
dilapidated rooms in slums run by semi-qualified
people. Private sector health services can be
broadly classified into three categories: hos
pitals, nursing homes, and clinics. Nursing
homes can be maternity homes, small medical
facilities, or both medical and surgical facilities.
Types of nursing homes and clinics vary widely
in terms of services offered, type of ownership
and charges. Some clinics dispense medicines,
while others issue only prescriptions. Consider
ing the varied nature of the nursing homes and
clinics, it is difficult to draw their profile.
Of late, there have been several complaints
against the private sector. Some of the private
doctors and institutions have been taken to law
and consumer courts. In two such cases, com
pensation has been awarded to the patients. This
has led to closer scrutiny of the private sector by
the media and public interest groups. Though a
need is felt to regulate the private sector and to
have a definite policy on its development, there is
virtually no information available about the
behaviour of the sector. Even a description
of the complexity of the private sector is not
available.
Objectives
This paper represents a first exploration of the
complex behaviour of health service providers in
the private sector. The paper aims to:
Several articles have been published recently
criticizing the private facilities in Bombay.
Newspaper headings like ‘Private hospitals in
a) Understand the different forms of the private morbid state’ (The Times of India, August 10,
sector operating in the city of Bombay:
1992), ‘Shrines to Mammon, private hospitals
b) Critically analyse the delivery of health ser offer no solution’, and ‘Unregistered nursing
vices in the private sector;
homes thrive in city’ (The Times of India,
c) Assess
the existing control/regulation August 10, 1992) reflect the situation of the
mechanisms;
private sector health services.
Table 3. Characteristics of respondents
Age group
Frequency
35-44
5
45-54
7
55 and above 3
—
Total
15
Education
Frequency
Occupation
Frequency
Postgraduate medical deg.
Postgraduate medical dip
Other postgraduate deg
—
8
6
1
6
4
2
Total
15
Senior hosp. executive
Senior med. teacher (prof.)
Middle level hosp. manager
Senior private practitioner
Social activist
Total
15
1
In one of the medicolegal cases filed by a public
interest group in the High Court, the court in
structed the Deputy Municipal Commissioner in
charge of Health to form a committee to find out
the situation in private nursing homes. The
salient features of the committee’s findings are
given- below.
A majority of nursing homes are sub
standard, most of them being housed in tiny
flatlets (e.g. 200 sq.ft.);
b) One seventh of them are actually in sheds or
lofts in slums;
c) Seventy seven per cent do not have scrubbing
rooms;
d) Less than one third have qualified nurses;
e)
Some have operation theatres (OT) as
pathetically small as 48 sq.ft, or 6 x 8 ft.;
f) Some do not disinfect the OT more than once
a week, some do it once in three days and
hardly any after every operation;
g) None incinerate any infectious waste
material, but instead dump it in municipal
bins, from where scavengers are known to
pick out needles, syringes, etc. for recycling a horrendous health hazard;
h) A majority of them claim to be maternity
homes, but only a third have labour rooms;
i) Over a third of all wards and half of beds in
them are ‘dirty’ and mostly are poorly lit;
j) None of them keep records of notifiable
diseases; only 10% record births and deaths;
and hardly any display their licence pro
minently.
(The Times of India, 1992a)
a)
Further information was gathered from the key
informants. They provided information on
various problems related to physical location,
disposal of waste, equipment, manpower,
medical malpractice, and medical negligence.
The responses to the questions asked of the key
informants are divided into responses related to
big hospitals, responses related to nursing homes
and clinics in non-poor areas, and responses
related to clinics in poor areas.
Physical location
A majority of the respondents (9 out of 15) said
that private hospitals are situated away from
residential localities and are neither hazardous
nor a nuisance to the public. However, they felt
that nursing homes and clinics in both poor and
75
non-poor areas are situated closer to residential
buildings or are a part of the residential buildings
causing a nuisance and posing health hazards to
residents.
Probing further, the respondents said that the
presence of private nursing homes or clinics in
and around residential buildings led to an in
crease in noise, traffic jams and vendors. Admis
sion of patients with infectious diseases posed a
problem to the residents. Deaths and serious
accident cases created commotion in these
areas and psychologically affected the residents,
especially children.
Disposal of waste
According to the respondents, hospitals nor
mally have a proper system to dispose of waste.
On the other hand, nursing homes and clinics, in
both the poor and non-poor areas, do not have
incinerators. Lifts in the buildings are used to
carry infectious wastes causing health hazards
to residents. Waste, which includes surgical
materials, dressing materials, placenta and
disposables, is usually thrown in public dustbins.
Even if it is contained within plastic bags, rag
pickers open the bags and scatter the contents.
Occasionally amputated toes or limbs are found
in the garbage bins scaring the public.
Equipment
Most of the respondents felt that private
hospitals and nursing homes were well equipped.
They were asked whether modern equipment and
technology were necessary in these private sector
facilities. It is interesting to note that the
respondents justifed the use of modern tech
nology in the hospitals but did not approve its
use in private nursing homes and clinics.
Three major reasons were given to justify the use
of modern technology in private hospitals.
Firstly, the public sector hospitals are not able to
improve upon and update technology and hence
modern technology should be encouraged in
private hospitals. Secondly, if modern tech
nology is available in private hospitals, rich
patients will use them leaving the public facilities
for the poor. Finally, since the private sector
is highly commercialized and competitive, up
dating technology is very essential to attract
patients.
76
C A K Yesudian
Those who opposed modern technology in the
private sector gave the following reasons.
Patients are likely to undergo more investiga
tions, some of which may be unnecessary. This
will increase the cost of treatment for the patient.
The competitiveness among the private sector
facilities (hospitals, nursing homes and clinics) to
update technology will lead to unethical practices
and commercialization of the medical profession.
Proper maintenance of equipment in critical
areas such as ICU, ICCU, casualty and OT is
important for patient care. Almost all the
respondents felt that the private hospitals main
tained their equipment well in critical areas of
medical care. However, the private nursing
homes and clinics, it was agreed, do not: they
may use second-hand equipment which is
unreliable, poorly maintained and operated by
untrained personnel.
Manpower
Less than half of the respondents felt that private
hospitals have the skilled manpower to operate
modern equipment. In the case of nursing homes
and clinics, almost all respondents felt that
they do not have trained manpower and the qua
lity of medical care will thus suffer, leading to
complications.
Some hospitals and many nursing homes appoint
non-allopathic doctors, i.e. doctors trained in
ayurveda, unani and homeopathy, as resident
doctors. The respondents felt that these doctors
cannot handle emergency situations. Mishaps
can occur in administering drugs and transfu
sion of blood. One case was reported in which
wrongly matched blood was given resulting in the
death of the patient.
The respondents said that there was an acute
shortage of qualified nurses in private nursing
homes and clinics. Half of the respondents felt
there was a shortage of nursing staff in hospitals.
All the respondents agreed that patient care
would suffer badly if qualified nurses were not
employed. Unqualified nurses would be unable
to recognize emergencies and to cope with such
situations until the arrival of a doctor. There is
also the possibility of administration of the
wrong drug. The respondents were highly critical
of nursing homes and clinics, many of which
used illiterate or poorly educated women as
nurses. One respondent estimated that two-thirds
of private nursing homes employed such persons
for providing nursing care. These nurses can
neither monitor the condition of the patients nor
can they handle special equipment in areas like
the OT and the ICU.
Misuse of privileges
Since private doctors play an important role in
providing specialized care in public sector
hospitals as honorary staff members, an attempt
was made to find out whether they misuse the
privileges that they receive in public hospitals for
personal gain. Most respondents acknowledged
that this happens.
Honorary consultants working in public sector
facilities as honoraries admit their private
patients to public hospitals, especially to
teaching hospitals, and provide treatment. If the
consultant’s private facility does not have a par
ticular piece of equipment for diagnosis or treat
ment, he makes use of such a facility in the
public hospital and charges the patients for it.
Also, if patients in the public hospital can afford
to pay, such patients are diverted to private
clinics. Normally, patients believe that an
honorary consultant will offer better service in
his private clinic or nursing home. It was also
alleged that if a piece of equipment was available
both in the public hospital and in the clinic or
nursing home, some honorary consultants would
ensure that the public hospital equipment broke
down, so that the patient could be moved to the
private facility for investigation or treatment.
Medical malpractice
Due to the proliferation of the private sector in
Bombay and the competition arising out of it,
there is a possibility of professionals indulging in
medical malpractice to survive the competitive
environment. Most of the respondents (12 out of
15) agreed that medical malpractice was rampant
in the private sector. They also listed the kind of
malpractice prevalent in the city.
‘Cut practice’ is one such malpractice, where the
general practitioner, consultant, nursing home
owner and investigation centres (e.g. private
laboratories and X-ray centres) collude with one
another to squeeze the patient. Whenever a refer
ral is made, the referring doctor receives a por
tion of the fee charged to the patient by the
The private sector in Bombay
receiving person. FoTexample, if a general prac
titioner (GP) refers a patient to a consultant,
the consultant will pay the GP up to even 40% of
the fee he charges the referred patient. Often, the
patient is referred to several consultants and in
vestigation centres unnecessarily. The patient not
only-incurs unnecessary expenses but his treat
ment gets delayed. Unnecessary and costly in
vestigations are carried out and even unnecessary
surgery.
Another area of malpractice is issuing false cer
tificates and medical bills. Some private doctors
earn money by issuing medical certificates to
healthy individuals. These doctors also give fic
titious medical bills to individuals, who were
neither sick nor have undergone treatment in
their clinics, charging a fee for this dubious ser
vice. This helps the individual to claim medical
benefits, even though he was not ill.
Medical negligence
Poor sterilization of instruments has been
observed in private hospitals, which can cause
Hepatitis-B or even HIV infection. Many
respondents complained about negligence in
post-operative care in private hospitals. Often,
the surgeon who performed the surgery was not
available to take care of post-operative complica
tions, even in big private hospitals. In the recent
past, two such cases in two leading private
hospitals resulted in deaths. The hospitals and
the surgeons were sued in the consumer court
and asked to pay huge compensation.
Often intravenous fluid administration and
monitoring are carelessly done, leading to com
plications. Improper and wrong administration
of drugs are observed in private sector facilities;
such negligence can be due to the employment
of unqualified nurses. Specialists often neglect
patients in the lower grade beds, especially
those in the general ward. Similarly substandard
materials and services may be provided depend
ing on the person and situation. The lack
of coordination between investigation and
diagnosis habitually leads to delayed treatment.
Referring to private medical practice in slums
one respondent remarked, ‘slum practice is an
entity in itself and medical ethics are not known
to the practitioners or best ignored by them’.
77
Regulation of the private sector
The above section has highlighted all the negative
aspects of the private health sector. During the
last year, there has been increasing pressure for
the regulation of this sector and dialogue is con
tinuing at various levels to work out an appro
priate mechanism. The media is playing a key
role in exposing medical negligence and medico
legal cases. Activist organizations like Medico
Friends Circle (MFC) and the Association
for Consumer Action on Safety and Health
(ACASH) are spearheading the cause of the
patients. These organizations consist of socially
conscious doctors, lawyers, social workers and
others.
Existing regulations
The Bombay Nursing Home Registration Act
(1949) is a major act regulating private hospitals
and nursing homes. Local bodies like the
Municipal Corporation are supposed to imple
ment the Act and registration should be renewed
every year. The Act has a provision for inspec
tion, Private hospitals and nursing homes have
to provide information in terms of staff, equip
ment, floor space, accommodation facilities, and
sanitary conditions.
In spile of this Act, over one hundred nursing
homes in the city are not registered. The Public
Health Department staff of the Municipal Cor
poration seldom visit private hospitals and nurs
ing homes. Though the Act states that local
bodies should formulate by-laws suitable to their
situation, the Municipal Corporation of Greater
Bombay (MCGB) has not formulated any
specific standards or norms for establishing
private facilities. Standards are very vague and
use the term ‘adequate’ in most places.
In a recent judgement of a medical negligence
case (December 4, 1991), the Maharashtra High
Court judges remarked ‘The Court notices that
the implementation of the Bombay Nursing
Home Registration Act, 1949, in Greater Bom
bay has not been satisfactory’ (Desai and Sawant
1990: App. 56 of 1991 in W.P. No. 2269 of
1990). The Court has directed the formation of
one Apex Committee and three Zonal Commit
tees consisting of municipal officials, represen
tatives of the Maharashtra Medical Council
(MMC), senior doctors employed by the public
sector and social workers. The Committees were
78
CAK Yesudian
given ‘the power to oversee and supervise the im
plementation of the Act and to make appropriate
suggestions and recommendations in that regard
to the competent authority’ (App. 56 of 1991 in
W.P. No. 2269 of 1990).
The Maharashtra Medical Council (MMC) and
Indian Medical Association (IMA) also regulate
medical practice through the investigation of
complaints regarding the individual doctor’s pro
fessional behaviour. However, over a period of
time, people’s confidence in them has decreased.
Narrating his experience with the IMA and the
MMC, Raghunath Raheja, whose wife died
allegedly due to medical negligence, states that
when a complaint was made to these bodies, they
did not reply. He then went to court to force the
MMC to take up his case. Again he had to go to
court to force the MMC to give their decision,
which took six months. As for the nature of the
hearing of the case by the MMC, Raheja states ‘it
was just a farce. Statements blatantly changed to
favour doctors, papers lost, officials lying in
court. You can’t expect justice from them, one
has to go to court, which takes years to decide a
case.’ (Iyer 1992) This reflects the people’s lack
of confidence and frustration in dealing with
professional bodies.
The National Consumer Grievance Redressal
Commission under the Consumer Protection
Act, 1986, takes care of the grievances of con
sumers and is quick to respond to complaints.
Recently, and for the first time, a medical
negligence case was brought to the Commission
and the aggrieved party was awarded compensa
tion of Rs.700 000. However, the private
hospital refused to appear before the Commis
sion and challenged the jurisdiction of the Com
mission in judging hospital services. The IMA
has also supported this stand. Doctors argue that
medical service is not a consumer item, the
doctor-patient relationship is based on trust, and
patients should not question their decisions or
seek to penalize them for untoward outcomes
(Iyer 1992).
Conclusions
Private sector medical facilities have proliferated
tremendously in Bombay. All levels of curative
care are available to each strata of the population
including the pWr. These medical services are
well utilized by all sections of the community.
However, after analysing the opinions of experts
(key informants), we have found that the private
sector provided substandard medical services in
every respect. Private nursing homes and clinics
are widely spread all over Bombay but they lack
proper physical infrastructure and manpower.
Medical malpractice and medical negligence
seem to be rampant in the private sector.
Therefore, we conclude that more and more
people in Bombay are using more and more sub
standard health services. This is so especially in
slum areas, where people are exposed to
unethical and unhygienic medical practice en
dangering the health of the poor.
Policy directions
Policy related to the private sector in Bombay
should be directed towards two major issues: (i)
direction of expansion of the private sector vis-avis the development and strengthening of muni
cipal health services and (ii) measures to control/regulate the behaviour of the private sector
in such a way that it contributes to health
development. These two policy areas are not in
dependent of each other but are related. The
policy related to the regulation of the private sec
tor will surely affect the extent and direction of
expansion of the private sector. It should be the
intent of the policy to make use of regulatory
mechanisms to guide the growth of the private
sector in the right direction.
Improvement of the health of the poor depends
mainly on preventing diseases and providing
maternal and child health services. The private
sector does not take much interest in this area of
health services, preferring to concentrate on
curative services. The Municipal Corporation
should therefore create more health centres-and
strengthen the existing ones in slum areas.
According to a study conducted by Yesudian
(1988) in a slum situated on the periphery of the
city, slum dwellers do not use municipal services
because of long waiting hours, long distances (in
curring transport cost) and brief contact with the
doctor. Therefore, there is a need not only to in
crease municipal health care facilities in slum
areas but also to increase the services available
within each municipal health facility, to reduce
waiting time and increase contact time with the
doctor.
The private sector in Bombay
The private sector stWild be given incentives, e.g.
tax benefits, to start more secondary and tertiary
level facilities in the city. Today, all the major
health care facilities are run by the Municipal
Corporation. Private participation in some of
the major municipal facilities situated in non
poor-areas should be encouraged. This policy ap
proach will relieve municipal resources, currently
spent on their major facilities, to be utilized in
smaller primary level facilities situated closer to
the slum areas. Strengthening of municipal faci
lities in slum areas will force/encourage the
private facilities in slums to improve their quality
of service.
Developing an appropriate regulatory mechan
ism for the private sector is an arduous task.
Some efforts have been made in the recent past
to describe certain norms for different types of
medical facilities, and some senior medical pro
fessionals and doctors belonging to certain social
action groups have suggested such norms (The
Times of India 1992b). But the Private Hospital
Owners Association found these norms unreason
able (Kerkar 1992). Moreover, these efforts were
intended to streamline the functioning of private
nursing homes operating in middle-class areas.
The policy should focus its attention more
towards private practice in slum areas, if it wants
to improve the health status of the people.
Norms should initially concentrate on the
physical environment, physical structure and the
kind of manpower used in private sector health
care facilities. If norms ensure minimum stan
dards of a hygienic environment, adequate and
clean space and qualified manpower, the quality
of the private health services will improve,
especially in slum areas. Other norms related to
oxygen facilities, blood transfusion, laboratory,
operating theatre and equipment should be taken
up as the second level of regulation. These norms
will be mainly applicable to bigger nursing homes
operating in non-poor areas. The present defunct
Bombay Nursing Home Regulation Act (1949)
should be replaced by a new Act incorporating
the above aspects.
Implementation of the regulation is more impor
tant than formulating the norms. The Public
Health Department of the Municipal Corpora
tion should undertake this responsibility, vesting
79
it exclusively in a Deputy Executive Health Of
ficer with an adequate number of field staff. If
they can monitor and take action on the physical
environment, physical structure and manpower
in private facilities, a tremendous quality
improvement can be achieved.
With regard to the unethical behaviour of
medical professionals, the MMC still has a major
role in disciplining its professionals. However,
the Deputy Executive Health Officer should be
given the power to identify unethical practices
and report them to the MMC for action.
This paper has revealed that, at least in the con
text of Bombay, unregulated expansion of the
private sector will do more harm than good for
the health sector and the people. Further, no
policy can address separately the issues related to
the public and the private sectors. A holistic
approach is needed to direct and regulate the
growth of the private sector in Bombay. On the
whole, a regulated private sector and a strong
public sector will benefit its population.
References
Desai PD and Sawant VA. 1990. Maharashtra High Court
Judgement, 1990 App. 56 of 1991 in W.P. No. 2269, of
1990.
Government of Maharashtra. 1949. The Bombay Nurs
ing Homes Registration Act, 1949. Government of
Maharashtra, Bombay.
Iyer. 1992. Doctors divided over accountability. The Times
of India. June 15. Bombay.
Kerkar AV. 1992. Hospital care (Letter to the editor). The
Times of India. April 21. Bombay.
Medico Friends Circle. 1991. What ails private medical care.
Need to regulate and how. (pamphlet) Medico Friends
Circle, Bombay.
Public Health Department 1991. Public Health Department
Report. (Unpublished) Municipal Corporation of Greater
Bombay, Bombay
The Times of India. 1992a. Unregulated nursing homes
thrive in city. Special Correspondent. August 10. Bombay.
The Times of India. 1992b. Medical care norms pro
posed. Special Correspondent. April 9. Bombay.
World Health Organization. 1992. Evaluation of recent
change in the financing of health services. World Health
Organization, Geneva.
Yesudian CAK. 1988. Utilization of health services by the
urban poor - A study of the Deonar Maternity Home
Health Post Area, (monograph). Tata Institute of Social
Sciences, Bombay
Yesudian CAK. 1989. Health services utilization and expen
diture. (monograph). Tata Institute of Social Sciences,
Bombay.
78
C A K Yesudian
given ‘the power to oversee and supervise the im
plementation of the Act and to make appropriate
suggestions and recommendations in that regard
to the competent authority’ (App. 56 of 1991 in
W.P. No. 2269 of 1990).
The Maharashtra Medical Council (MMC) and
Indian Medical Association (IMA) also regulate
medical practice through the investigation of
complaints regarding the individual doctor’s pro
fessional behaviour. However, over a period of
time, people’s confidence in them has decreased.
Narrating his experience with the IMA and the
MMC, Raghunath Raheja, whose wife died
allegedly due to medical negligence, states that
when a complaint was made to these bodies, they
did not reply. He then went to court to force the
MMC to take up his case. Again he had to go to
court to force the MMC to give their decision,
which took six months. As for the nature of the
hearing of the case by the MMC, Raheja states ‘it
was just a farce. Statements blatantly changed to
favour doctors, papers lost, officials lying in
court. You can’t expect justice from them, one
has to go to court, which takes years to decide a
case.’ (Iyer 1992) This reflects the people’s lack
of confidence and frustration in dealing with
professional bodies.
The National Consumer Grievance Redressal
Commission under the Consumer Protection
Act, 1986, takes care of the grievances of con
sumers and is quick to respond to complaints.
Recently, and for the first time, a medical
negligence case was brought to the Commission
and the aggrieved party was awarded compensa
tion of Rs.700 000. However, the private
hospital refused to appear before the Commis
sion and challenged the jurisdiction of the Com
mission in judging hospital services. The IMA
has also supported this stand. Doctors argue that
medical service is not a consumer item, the
doctor-patient relationship is based on trust, and
patients should not question their decisions or
seek to penalize them for untoward outcomes
(Iyer 1992).
Conclusions
Private sector medical facilities have proliferated
tremendously in Bombay. All levels of curative
care are available to each strata of the population
including the poor. These medical services are
well utilized by all sections of the community.
However, after analysing the opinions of experts
(key informants), we have found that the private
sector provided substandard medical services in
every respect. Private nursing homes and clinics
are widely spread all over Bombay but they lack
proper physical infrastructure and manpower.
Medical malpractice and medical negligence
seem to be rampant in the private sector.
Therefore, we conclude that more and more
people in Bombay are using more and more sub
standard health services. This is so especially in
slum areas, where people are exposed to
unethical and unhygienic medical practice en
dangering the health of the poor.
Policy directions
Policy related to the private sector in Bombay
should be directed towards two major issues: (i)
direction of expansion of the private sector vis-avis rhe development and strengthening of muni
cipal health services and (ii) measures to control/regulate the behaviour of the private sector
in such a way that it contributes to health
development. These two policy areas are not in
dependent of each other but are related. The
policy related to the regulation of the private sec
tor will surely affect the extent and direction of
expansion of the private sector. It should be the
intent of the policy to make use of regulatory
mechanisms to guide the growth of the private
sector in the right direction.
Improvement of the health of the poor depends
mainly on preventing diseases and providing
maternal and child health services. The private
sector does not take much interest in this area of
health services, preferring to concentrate on
curative services. The Municipal Corporation
should therefore create more health centres -and
strengthen the existing ones in slum areas.
According to a study conducted by Yesudian
(1988) in a slum situated on the periphery of the
city, slum dwellers do not use municipal services
because of long waiting hours, long distances (in
curring transport cost) and brief contact with the
doctor. Therefore, there is a need not only to in
crease municipal health care facilities in slum
areas but also to increase the services available
within each municipal health facility, to reduce
waiting time and increase contact time with the
doctor.
The private sector in Bombay
The private sector should be given incentives, e.g.
tax benefits, to start more secondary and tertiary
level facilities in the city. Today, all the major
health care facilities are run by the Municipal
Corporation. Private participation in some of
the major municipal facilities situated in non
poof areas should be encouraged. This policy ap
proach will relieve municipal resources, currently
spent on their major facilities, to be utilized in
smaller primary level facilities situated closer to
the slum areas. Strengthening of municipal faci
lities in slum areas will force/encourage the
private facilities in slums to improve their quality
of service.
Developing an appropriate regulatory mechan
ism for the private sector is an arduous task.
Some efforts have been made in the recent past
to describe certain norms for different types of
medical facilities, and some senior medical pro
fessionals and doctors belonging to certain social
action groups have suggested such norms (The
Times of India 1992b). But the Private Hospital
Owners Association found these norms unreason
able (Kerkar 1992). Moreover, these efforts were
intended to streamline the functioning of private
nursing homes operating in middle-class areas.
The policy should focus its attention more
towards private practice in slum areas, if it wants
to improve the health status of the people.
Norms should initially concentrate on the
physical environment, physical structure and the
kind of manpower used in private sector health
care facilities. If norms ensure minimum stan
dards of a hygienic environment, adequate and
clean space and qualified manpower, the quality
of the private health services will improve,
especially in slum areas. Other norms related to
oxygen facilities, blood transfusion, laboratory,
operating theatre and equipment should be taken
up as the second level of regulation. These norms
will be mainly applicable to bigger nursing homes
operating in non-poor areas. The present defunct
Bombay Nursing Home Regulation Act (1949)
should be replaced by a new Act incorporating
the above aspects.
Implementation of the regulation is more impor
tant than formulating the norms. The Public
Health Department of the Municipal Corpora
tion should undertake this responsibility, vesting
79
it exclusively in a Deputy Executive Health Of
ficer with an adequate number of field staff. If
they can monitor and take action on the physical
environment, physical structure and manpower
in private facilities, a tremendous quality
improvement can be achieved.
With regard to the unethical behaviour of
medical professionals, the MMC still has a major
role in disciplining its professionals. However,
the Deputy Executive Health Officer should be
given the power to identify unethical practices
and report them to the MMC for action.
This paper has revealed that, at least in the con
text of Bombay, unregulated expansion of the
private sector will do more harm than good for
the health sector and the people. Further, no
policy can address separately the issues related to
the public and the private sectors. A holistic
approach is needed to direct and regulate the
growth of the private sector in Bombay. On the
whole, a regulated private sector and a strong
public sector will benefit its population.
References
Desai PD and Sawant VA. 1990. Maharashtra High Court
Judgement. 1990 App. 56 of 1991 in W.P. No. 2269, of
1990.
Government of Maharashtra. 1949. The Bombay Nurs
ing Homes Registration Act, 1949. Government of
Maharashtra, Bombay.
Iyer. 1992. Doctors divided over accountability. The Times
of India, June 15. Bombay.
Kerkar AV. 1992. Hospital care (Letter to the editor). The
Times of India. April 21. Bombay.
Medico Friends Circle. 1991. What ails private medical care.
Need to regulate and how. (pamphlet) Medico Friends
Circle, Bombay.
Public Health Department. 1991. Public Health Department
Report. (Unpublished) Municipal Corporation of Greater
Bombay, Bombay.
The Times of India. 1992a. Unregulated nursing homes
thrive in city. Special Correspondent. August 10. Bombay
The Times of India. 1992b. Medical care norms pro
posed. Special Correspondent. April 9. Bombay.
World Health Organization. 1992. Evaluation of recent
change in the financing of health services. World Health
Organization, Geneva.
Yesudian CAK. 1988. Utilization of health services by the
urban poor - A study of the Deonar Maternity Home
Health Post Area, (monograph). Tata Institute of Social
Sciences, Bombay.
Yesudian CAK. 1989. Health services utilization and expen
diture. (monograph). Tata Institute of Social Sciences,
Bombay.
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HEALTH POLICY AND PLANNING; 9(1): 1-13
© Oxford University Press 1994
Carrot and stick: state mechanisms to influence
private provider behaviour
SARA BENNETT,' GEORGE DAKPALLAH,’ PAUL GARNER,’ LUCY GILSON,' SANGUAN
NITTAYARAMPHONG,4 BEATRIZ ZURITA’AND ANTHONY ZWI’
'Health Economics and Financing Programme and 3Urban Health Programme, Health Policy Unit,
Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, UK,
JMinistry of Health, Accra, Ghana, 4Ministry of Public Health, Bangkok, Thailand and 5National
Institute of Public Health, Mexico
The behaviour of private sector health care providers will depend critically on the environment within
which they operate. A bewildering array of possible regulatory and incentive setting structures exist. Most
developing countries have the basic legislation for regulation, but there are frequently difficulties in enforc
ing such controls. While process aspects of quality of care regulation are often the responsibility of profes
sional organizations, these organizations may have limited incentives to be active in ensuring high quality
medical care. There has been less experience with the use of incentives to encourage appropriate
behaviour amongst private providers: this appears a promising area for further work. Above all, adequate
information is essential both for the enforcement of regulations and the application of incentive
mechanisms.
Introduction
While policy analysts continue to debate the
comparative efficiency of public and private
health care providers (Bennett 1991; Institute of
Medicine 1986; McLachlan and Maynard 1982),
it is becoming evident that neither provider is in
herently more efficient. Their performance is
contingent on factors external to the provider,
and factors dependent on the internal organiza
tion of the provider. The external environment
includes public demand for services, societal ex
pectations of providers, and the regulatory
framework within which minimal standards for
the provision of services are laid down. Internal
factors include the organization’s or individual
provider’s objectives, and its management struc
ture and culture. As the state has a clear role in
ensuring safe and appropriate health service
provision for the population, it must have
mechanisms through which to liaise with private
health care providers. This paper is concerned
with aspects of this relationship, between private
for-profit providers and the state.
Areas of concern in this relationship become ap
parent if it is viewed as a ‘principal-agent pro
blem’ (Gravelie and Rees 1992; McGuire et al.
1989). This theory is based on a relationship
where a principal (the state) authorizes an agent
(the private provider) to make decisions on his or
her behalf. Theory tells us that when the objec
tives of the principal do not coincide with those
of the agent, conflict will arise in their relation
ship. This is further exacerbated if the principal
has limited information about the agent’s deci
sions.
Given that the state has a responsibility to ensure
health services are available to all the population,
a divergence of objectives between the state and
the private for-profit sector can be anticipated.
The state aims towards equitable service provi
sion and the private sector is driven by the desire
to maximize profits. For example, a physician
may over-provide care in order to generate
higher levels of income. This is costly to both the
individual and society and may compete with ob
jectives of the stale, such as increasing access to
care. As health care is a complicated and highly
differentiated product, information about
medical decision-making usually resides in the
hands of a limited number of professionals. This
further exacerbates problems for the state in
keeping its role as principal. Principal-agent pro
blems also occur in countries which require the
medical profession to be self-regulating through
a professional body: the professional body’s ob
jectives are likely to differ from those of the
state.
2
The state and private provider behaviour
Sara Bennett et al.
Theory predicts that principal-agent problems
will be reduced as the objectives of principal
and agent approximate, and as more informa
tion becomes available about the agent’s deci
sions and the objectives of the principal. The
challenge for policy makers is, therefore, to
identify mechanisms and structures to bring
about these changes in the health sector. Rele
vant mechanisms which include regulation, ad
vocacy, incentives, and monitoring systems,
must be shown to work, to be manageable
without overburdening the agent or principal
with administration, and to be achievable at
limited cost.
This paper begins by exploring the problems
associated with the private sector, and then
moves on to the various strategies that have
evolved to deal with the principal-agent (stale
provider) problems. The complex institutional
structures that have developed (which include
government regulation, professional body self
regulation, purchasers of health care and con
sumer organizations) arc brought together in a
conceptual framework. Experiences with regula
tion are considered, using examples drawn from
country case studies presented at a recent
workshop on the public/private mix in health
care (Bennett and Mills 1993). This article is one
of the outcomes of this workshop, and the
authors are indebted to the workshop par
ticipants for their contribution to the thinking
and examples summarized here.
In discussing the private sector it is useful to
distinguish between finance and provision of
care. Our focus is on provision, but in many
developing countries most private care is paid for
out-of-pocket; so there is both private provision
and private finance.
Private sector behaviour
Private for-profit providers are primarily
motivated by making money. It has been argued
that this orientation means private providers are
unlikely ever to perform for the good of people,
and can never contribute to the public health
goals of the state (Roemer 1984). The dominance
of this argument led some countries to ban the
private for-profit sector, whilst others simply
ignored it. Yet bans on private care have had
negative consequences for the whole health
system: the 1977 Tanzanian Act banning private
practice led to the emigration to other countries
of an estimated 200 physicians (Mujinja et al.
1993). It is also inappropriate to ignore such pro
viders as they may provide a large proportion of
the total care delivered within a country, par
ticularly at primary level (Table I). In particular,
private providers may be the only sources of care
in slum areas (Garner and Th aver 1993) and
other under-served localities.
Table 1. Number of private for-profit practitioners in
selected countries
Private
doctors/all
registered
practitioners
(ro)
Country
Number of Number of
private
private
general
doctors
practitioners
Bombay
20 000
14 000
n/a
61
61
25
11 650
8 000
59
Pakistan
n/a
38 000
n/a
Zimbabwe
833
n/a
66
0
35
16
Papua New Guinea
South Africa
Malawi
Source: Country background papers for 1993 LSHTM
workshop
In general, five main problems are associated
with private for-profit provision: objectives
geared to maximize profits; failure to address
public health: lack of integration with govern
ment health services; attraction of professionals
out of the public sector; and provision of poor
quality or inappropriate services.
Concern for profits
The profit motive is often regarded as beneficial
to the customer as it is assumed that the supplier
will be made sensitive to the preferences of the
consumer, and so provide a better product. In
health care, the situation is complicated as the
health professional temporarily holds the
knowledge, power and responsibility for the
patient’s health. The private provider may use
this power to maximize profits: this may be done
at the patient’s expense, through, for example,
excessive investigations or promoting more ex
pensive treatments and procedures even in the
absence of evidence of their effectiveness. The
profit-motive may over-ride good clinical prac-
lice: this is exacerbated by the patient’s limited
ability to evaluate care received.
Profits are the difference between revenue re
ceived and the cost of the care. A provider can
increase his/her profit by raising prices, in
creasing the quantity of care, or lowering costs.
All of these strategies arc observed in private
health care markets in the developing world. In
Bombay, researchers observed both overcharg
ing and over-provision of care (Yesudian 1993).
In Uganda, new small private clinics and com
mercial pharmacies have created a culture in
which patients associate good care with the
availability of injections and other drugs,
regardless of medical appropriateness (Asiimwe
and Lule 1993). In India, unsafe drugs such as
steroids may be given for minor illnesses
(Greenhalgh 1987) and sedatives used in
appropriately. High technology equipment may
be bought to attract patients and then over-used
to cover the costs of acquisition, as in Thai
land (Nitlayaramphong and Tangcharoensathien
1993). Over-provision and cost-escalation may
be exacerbated in countries with health in
surance. For example, rapid growth in health
care expenditure in South Africa has been
partly attributed to an increase in the number of
people covered by health insurance (Price, this
issue).
Private sector providers, particularly in poorer
areas, may cut costs by providing low quality
care. Private hospitals may rely on unqualified,
less costly, staff (Yesudian 1993; Nittayaramphong and Tangcharoensathien 1993). Standard
hygienic practices may be ignored. For example,
a recent government committee set up to in
vestigate private nursing homes in Bombay
found that none incinerated infectious waste
materials (Yesudian 1993).
Concern with profit-making may lead private
providers to behave in ways which are considered
ethically unacceptable. In Bangkok a woman
who severed one of her fingers in a domestic acci
dent was asked to make a deposit of Baht 30 000
(approximately £700) before a private hospital
would treat her {The Nation 1992).
Ignoring public health
Public health is concerned with preventing
isease and promoting health; improving
3
medical care; promoting health-related be
haviour; and controlling the environment (Detels
and Breslow 1991). Public health activities within
a country often operate through strategies which
are likely to affect whole segments of the popula
tion, such as community water and sanitation
improvement schemes and increasing available
information on health promotion. Such ‘public
goods’ are available even to those who have not
paid for them. Thus, they undermine market ap
proaches to the provision of goods and services
and, possibly, reduce the likelihood of private
sector involvement in such activities.
Other aspects of public health include the
preventive aspects of medical care, where some
of the benefits associated with services (such
as whooping cough immunization in children)
accrue to individuals other than those receiving
the service (as the likelihood of developing the
disease is reduced for all infants in the commu
nity). If left to the market such services may be
provided at a level below that which is socially
optimal. Concern for profits, for example, may
lead private practitioners to fail to promote
preventive practices, which reduce morbidity and
the resultant number of consultations.
Nonetheless, private providers in countries such
as Pakistan, Malaysia, India and Papua New
Guinea are providing aspects of preventive
medical care, particularly immunization for
children. These activities depend on the con
sumer perceiving the product to be of value and
therefore worth paying for. It has been proposed
that the state should provide incentives for
private practitioners to carry out medical preven
tive care for the public good. In Malaysia, the
Ministry of Health promoted Hepatitis B im
munization for children under one year by pro
viding the vaccine at a fixed, subsidized rate to
private providers, then allowing them to charge a
fee through which they made a profit. The
scheme was undermined, however, when a new
vaccine became available which was cheaper than
that provided by the state.
Private practitioners might also have a key role
in the early detection of disease, if they can be
encouraged to use screening procedures for
groups at risk of specific diseases where screen
ing efficacy has been demonstrated. Private
hospitals in India are now promoting ‘preventive
4
Sara Bennett et al.
packages’ of care including complete health
‘check-ups’ and screening. However, the impact
on health of such packages are by no means
proven. Problems are particularly likely to arise
when the screening process, which may involve
expensive diagnostic tests, is used for individuals
or in circumstances where the benefit has not
been demonstrated, or where the interval be
tween screening episodes is inappropriately
shortened. Such problems may arise where, as in
Bombay, private providers run diagnostic centres
more because they create profits than because of
their public health contribution (Yesudian 1993).
Poor integration with government services
The private sector tends to be atomistic and scat
tered in contrast to the, generally, monolithic
and centrally planned public sector. Public sector
organizations have the capacity to be standard
ized with respect to activities, staffing and pro
cedures; however, they may be slow to respond
to localized needs or preferences. On the other
hand, private providers may be more sensitive to
local demand, but may fit poorly into referral
mechanisms. They are unlikely to be integrated
into Ministry of Health (MOH) information
systems and are often unevenly distributed,
locating where there is willingness and ability to
pay rather than need.
Lack of information about the number and type
of cases treated in the private sector can make
health sector planning extremely difficult, par
ticularly when forming public health strategies.
Public health specialists may not have access to
the epidemiological information necessary for
planning. Such data are particularly important
when patients seek private sector care for some
symptoms and public sector care for others. For
example, patients with sexually transmitted
diseases or women who have suffered domestic
violence, may be more likely to seek private sec
tor care. Quantifying and delineating the public
health problem and forming an appropriate
strategy then becomes problematic.
Exodus of staff from the public sector
Large differences in income between public and
private workers are common and may lead to a
‘brain drain’. Trained personnel may leave the
public service to work full time in the private sec
tor. so creating skilled personnel shortages in
government facilities. In Zimbabwe, two thirds
of the physicians and state registered nurses work
in the private sector. Alternatively, personnel
may undertake activities in the private sector in
addition to public sector work, possibly resulting
in the neglect of public sector duties. Many coun
tries perceive this to be one of the key problems
associated with private sector growth.
Poor quality of medical practice
Private for-profit providers often work under
isolated conditions without peer review (formal
or informal) of their work. Such isolation may
contribute to a decay in medical skills and en
danger professional ethics. The effects on clinical
practice of this isolation combined with the need
to make a profit has been little studied. One
evaluation of prescription patterns in Bombay
showed that few private practitioners knew the
World Health Organization recommended drug
therapies for tuberculosis and leprosy (Uplckar
1989a and b).
Framework for analysis
For planners in countries considering ways to im
prove service provision to the whole population,
careful analysis of the existing relationship be
tween the state and the private sector is required.
A short checklist of questions can help to
elucidate these relationships, to be used in con
sidering actual and potential mechanisms for im
proving the relationship between the state and
private providers within a particular country
(Table 2).
The state and private provider behaviour
Yet state/private provider relationships can
rarely be reduced to a simple test. Planners need
to understand the politics, organizational rela
tionships, and power balance between various
players. To assist in this process, a conceptual
framework has developed (Figure I). It depicts
the main agencies in the health care system in
terms of quality assurance, regulation and incen
tive setting, and the key relationships between
them. It is discussed in detail below.
Frequently there is a difference between the in
tended and actual operation of the various
legislative, financial and regulatory measures
operating at the interface of the state and private
practitioners. What can be achieved will vary in
part according to the level of economic develop
ment in the country, the strength of professional
ethics, and the relative power of different interest
groups.
The state
The state’s influence is related to its power bases:
Legislative power - the state is able to lay down
binding rules and regulations, and to enforce
Power over resources - the state usually has
significant influence over the allocation of scarce
goods, such as access to training and foreign ex
change, although this influence does not reflect a
monopoly. It may create financial incentives for
providers to behave in certain ways, for example,
by offering small payments for public health ac
tivities. The slate may also be a significant third
party payer and thus able to structure incentives
through its purchasing power.
Power over information and accountability information gives actors in the system a rationale
for action. The slate may provide information
itself or alternatively use its powers to enforce
providers to be accountable to other agents.
Table 2. Checklist for planners delineating the relationship
between the state and private providers
• What are the objectives of existing regulation: do they seek
to limit itemized fecs-for-scrvicc, stop excess provision.
prevent poor practice, or a combination of these?
• Is the regulation concerned with basic infrastructure
characteristics, the training and accreditation of staff, or
does it actually consider the outcome of care?
• What is the balance between incentive options (the
’carrot') and regulation (the ‘stick’)?
• Who arc the agents responsible for setting rules and
incentives, monitoring implementation, and enforcing
sanctions if rules arc transgressed?
• Are the regulatory approaches active, seeking out low
quality providers, or arc they passive, awaiting
presentation of complaints?
Figure 1.
5
such legislation with sanctions. Rules may cover
levels of taxation in the private sector, standards
of care to be met and registration procedures.
Although government may choose to delegate
some of its authority to another body, such as a
professional organization, such power is still
sanctioned by the state.
Players in (he regulatory process
6
Sara Bennett el al
The state is likely to have extensive interactions
with different agents in the health care system. It
may act directly to regulate providers, or in
directly through professional bodies and by
strengthening accountability to consumers.
The state, however, is far from being a
homogenous single-purposed body. At the cen
tral level different ministries may effect
regulatory control. For example, the Ministry of
Finance has power over taxation. The Ministry
of Health may be responsible for registering
providers. Different levels of the state (central
government, provincial, district, municipal
authorities) may each have different roles to play
in the regulatory process. Competing priorities
between different sectors of the state may reduce
the effectiveness of proposed regulatory
mechanisms as well as of incentives to provide
certain services.
Purchasing agents
These agents may be small private insurance
schemes, large compulsory health insurance,
medical benefits schemes or the state itself. Such
agents may have a key role in affecting process
aspects of the quality of care, and are frequently
the only agents with sufficiently detailed infor
mation (e.g. about drug prescription and treat
ment procedure patterns) and expertise to use
this information.
Purchasing agents may use monopoly power to
negotiate prices with private providers. The adop
tion of different payment mechanisms may also
have a direct effect upon provider behaviour.
Professional bodies
These include both state-sanctioned medical,
nursing and other professional councils, whose
principal purpose is to act as regulator, and
Medical Associations which are essentially
voluntary representative organizations. In some
countries, such as the USA, the regulatory func
tion of the professional organization is not sup
ported by law and the Medical Association car
ries out both regulatory and representative func
tions. Even where there are two separate bodies
the dividing line is not always clear. Professional
bodies are likely to be involved in setting training
curricula, qualification levels, medical discipline,
controlling advertising, conditions of employ
ment and pay.
Consumers
Individual consumers have a direct control over
providers through their purchasing power. By
shifting demand between providers where they
find care to be of an unacceptably low standard
(or too expensive) they may affect provider
behaviour. However, limited information may
restrict the consumer’s role in the health care
sector.
In addition, consumer complaints may lead to
disciplinary action, consumers may succeed in in
fluencing policy decisions through the political
process and consumer organizations may act as
effective lobbyists for the concerns of in
dividuals.
Community representation
A variety of forms of community organization
may be active in the health sphere, reflecting the
interests of groups of consumers as well as the
wider community. Such organizations include
hospital boards, family practitioner committees,
consumer groups, advocacy and lobby groups,
and residents’ associations. As Figure 1 suggests,
these institutions may channel information and
thus affect power relations between three dif
ferent agents: the state, consumers and pro
viders. For example:
• hospital boards and family practitioner com
mittees may present community perspectives and
community needs to providers;
• consumer organizations and the media may
provide information about different providers to
consumers thus assisting them to exercise their
purchasing power;
• community health committees may present
community needs to government, for example,
over the location of new private services.
The state may encourage the development of
such organizations through financial and/or
technical support.
Provider of care
The ‘providers’ box of Figure 1, the object of
regulation, includes a diverse range of individual
private providers, private midwives, dentists,
doctors, nurses, as well as the institutions with
which they are associated, pharmacies, clinics,
hospitals and nursing homes.
The state and private provider behaviour
Suppliers
Suppliers of inputs such as drugs and equipment
may have considerable influence over providers,
particularly private sector providers. For ex
ample, drug company advertising often has a
strong influence on prescribing practice and may
be complemented by financial and in-kind incen
tives directed at private practitioners, chemists
and drug sellers (Kamat 1993).
The political environment is an important deter
minant of how these agents interact. Whilst the
medical profession is renowned for protecting its
members and their interests, at least in a
democracy with a free press there is the potential
for making the profession more accountable to
the public. The media may encourage a flow of
information between different agents and thus,
for example, help inform consumers of their
rights, or convince government of priority com
munity concerns. In most countries prosecution
as a way of controlling private sector behaviour
is a last resort. The United States is an exception.
Expensive litigation is frequent, so health care
professionals insure themselves against prosecu
tion (al great expense) and may undertake tests
and procedures which are not strictly necessary
but protect them against potential medical
malpractice litigation (so-called defensive
medicine). Extensive litigation may undermine
the development of trusting relationships.
Experience with regulation and
Incentives
Basic legislation concerning practitioner registra
tion, training and dangerous or unethical clinical
practice is present in many countries. Currently,
donors emphasize strategies that include state in
centives to modify private care provision (en
couraging good clinical practice, appropriate
care, provision of services for the public good,
and more equitable geographical service provision). However, experience with this method of
modifying provider behaviour has little history
and is limited. So far little proper evaluation of
,ls impact has been undertaken.
direct state regulation
The state may intervene in a variety of ways: by
1 s*cr*ng practitioners; by specifying minimum
n ards for premises; by setting price ceilings
7
for items of service; by controlling location of
premises; and by specifying a mandatory period
of government service after training.
Minimum standards of care set by the state
usually concern the structural aspects of care.
Basic service configurations, minimum facilities
required to operate as a clinic or hospital, and
standard training curricula are all often defined
by thestate. In Thailand the Medical License Divi
sion of the Ministry of Public Health has two
arms: one is responsible for the annual registra
tion of facilities, the other, the Inspection unit, is
responsible for surveying private facilities and
ensuring that they meet specified standards, such
as minimum space for beds and availability of
toilets. In Malaysia there are similar regulations
regarding the premises of private practitioners.
Price regulation by government appears rare.
Key informants in a survey in Bombay felt that it
would be beneficial, but would have to vary ac
cording to the standard of care offered (Yesudian 1993). Providers may also structure fee
schedules in different ways. Unless the pricing
mechanism used by private providers is well
understood, it may be difficult to make any
definite regulation.
Direct government control over the quantity of
care provided also appears uncommon. In
Thailand there has been some discussion of the
potential for ‘Certificate of Need’ regulation for
controlling new Investments - however, the suc
cess of such legislation in the US has been mixed.
Too often the criteria determining which in
vestments should and should not be allowed are
insufficiently clear. Secondly, if hospitals are
banned from investing in one type of equipment
then there may be a ‘squeezed balloon’ effect
with resources flowing into other types of capital
items.
Several countries have attempted to influence the
location of private providers as a way of improv
ing the integration of private providers into the
national health care system. In Tanzania applica
tions to open a private practice or hospital must
state the location, size of population served,
distance from the nearest health facility and staff
to be employed. This is to avoid the duplication
of facilities, although apparently the location
criteria are applied more strictly in rural than ur
8
Sara Bennett et al.
ban areas (Mujinja et al. 1993). In Pakistan the
government provides tax exemptions for private
practitioners setting up practices in rural areas
(Aga Khan 1993).
Governments seem to have used a considerable
range of mechanisms to counteract the problem
of ‘brain drain’. Many stipulate that doctors,
nurses and paramedics trained at the expense of
the state must complete a certain period of public
sector service before transferring to the private
sector. Specific financial incentives may also be
offered in order to retain public sector staff.
Nepal, Pakistan and Thailand all have a ‘non
private practice' allowance, although in the
former two countries it appears that many practi
tioners engage in private practice and still receive
the allowance. In Thailand special incentive
payments are shortly to be introduced so that
public sector doctors receive extra payment ac
cording to the number of patients seen - an im
itation of prix ate sector payment mechanisms.
Finally, non-financial incentives, such as training
prospects and promotion structures, may also be
important in retaining staff.
Efforts to overcome the isolation that private
providers may feel, and thus raise standards of
care, may include training. In Nepal a pro
gramme to train private pharmacists appears to
have been quite successful (Kafle et al. 1992).
Less formal ‘training’ initiatives, such as inviting
private sector participation at MOH conferences,
may also improve skills and generate incentives
for appropriate practice. The MOH in Zim
babwe is promoting the idea of peripheral
hospitals being 'adopted’ by private health care
practitioners. In Malaysia private consultants are
being ‘contracted in’ to supply specialist services
in three districts on a trial basis (R Bharathanlingam, personal comment). Such schemes
should provide extra manpower for public
hospitals whilst also serving to keep private pro
viders in touch with MOH treatment guidelines
and policy.
Governments tend to be active in the area of
public health, but the approach here often seems
to be one of incentive setting rather than regula
tion. Incentive payments or the provision of free
supplies may be used to encourage private pro
viders to offer preventive services. Several coun
tries such as Malaysia, Nigeria and Iran have
pursued this strategy (WHO 1991).
The state and private provider behaviour
Regulation through professional bodies
It is common for the state to give authority to a
parastatal or professional organization to
monitor and enforce standards of care in the
private sector. In many industrialized countries
these state-sanctioned arrangements have
developed from previous, informal arrangements
(Moran and Wood 1993). In developing coun
tries the institutions have often been especially
established. In Ghana the range of such institu
tions established by statute includes:
pie, may consider diagnostic, investigation and
prescription patterns, length of hospital stay and
treatments given. Some review processes focus
on identifying, and then inxestigating, providers/institutions with the highest costs of drug
prescription or diagnostics. Monitoring outcome
measures is probably both more difficult and less
common. Nevertheless, exploration of basic
rales such as hospital wound infection rates and
case-fatality rates may be worthwhile, as well as
the institution of routine audit for adverse out
comes such as maternal and perinatal death.
• the Private Hospitals and Maternity Homes
Board, established (1958) io inspect and super
vise private hospitals and maternity homes and
to register their names;
• the Pharmacy Board (1961) to regulate the
pharmacy profession and to control the supply,
manufacture, storage and transportation of
drugs;
• the Medical and Dental Council, and the
Nurses and Midwives Board (1972) set up to (i)
prescribe standards of professional conduct, (ii)
uphold and enforce such standards by the
disciplinary powers conferred upon it by decree,
and (iii) keep registers of duly qualified practi
tioners (Asamoa-Baah et al. 1993).
Many of the review processes depend upon the
willingness of private providers to collaborate
and to provide the information necessary to
judge services. Establishing incentives for col
laboration may assist such review. One incentive
currently being explored in Mexico is the use of
accreditation schemes. This was promoted by the
National Secretary of Health and was agreed
upon through two national conferences. Ac
creditation is to be carried out by a national,
non-governmental, non-profit institution. Par
ticipation is voluntary but it is hoped that
hospitals will join the scheme in order to gain ac
creditation (Garner and Lorenz 1992).
Professional organizations are generally run by
members of the profession and are responsible
for monitoring medical standards. This monitor
ing often concerns aspects of accreditation, pro
fessional training and examinations, and
disciplining members for poor professional con
duct. In most developing countries professional
organizations tend to take a passive role in set
ting minimum standards, and simply react to
complaints brought to them. Their effectiveness
in performing this task is very variable. In India
there are reports that people have lost confidence
in at least one Medical Council as it has been
slow to investigate allegations of medical
negligence and has even been accused of
manipulating the facts. Increasingly com
plainants are seeking redress in the courts under
the Consumer Protection Act, rather than from
the professional organization (Yesudian 1993).
There are many ways in which professional
organizations could adopt a more active role:
they could institute medical audit techniques,
establish regulatory review bodies or introduce
accreditation schemes. Medical audit, for exam
Professional organizations may also be involved
in fee setting. In Malaysia professional organiza
tions set fees as guidelines for private doctors,
but it is difficult to ensure that they are adhered
to (R Bharathanlingam, personal comment). In
forming consumer organizations and publicizing
such information may be of value.
The role of consumers and community
organizations
With the increasing, worldwide emphasis on
democracy and on the importance of accoun
tability within organizations responsible to the
Public, the role of consumers and their organi
zations is becoming more formalized. The
establishment of hospital boards is one example:
such boards often include community represenatives who arc supposed to both strengthen the
management of hospitals and represent commun.ty preferences. Hospital boards at private
° 'fo.r"Profit hospitals in Uganda have been
abhshed for a long time, but this idea is now
*ng extended to the public sector (Asiimwe and
c 1993). Similar moves are under way in
ana (Asamoa-Baah et al. 1993).
9
Patients’ charters are also proving popular; both
the UK and Malaysia have recently established
such charters. The nine point charter drawn up
by non-government organizations in Malaysia is
designed to protect patients’ rights, such as the
right to safe health care, and the right to a choice
of care. It is planned to cover both public and
private providers (The Strait Times 1993).
For consumers and the wider community to play
an active role they must be aware of their rights,
and clear complaints procedures must be
established and publicized. The media and com
munity organizations are critical in developing
this role. In Bombay the media has exposed
episodes of medical negligence (Times of India
1992) and activist organizations such as Medico
Friends Circle (MFC) and the Association for
Consumer Action jsn Safety and Health
(ACASH) have provided financial and technical
support to complainants.
Consumer activism may also be encouraged
through information, education and com
munication campaigns. For example, current
campaigns in Thailand aim to educate workers
under the Social Security Scheme, so that they no
longer associate high quality care with multiple
drug prescription.
The limitations of consumer and community
organization activity need to be recognized.
Although consumers may prove to be good
judges of certain characteristics of health care
they are probably unable to judge clinical qual
ity. Even if consumers can evaluate care received
they are frequently unwilling to complain.
Ministry of Health officials in Ghana suggest
that the social distance between Western trained
physicians and much of the population would
prevent complaints from surfacing. In many of
the poorer developing countries consumers are
unlikely to be supported by consumer organiza
tions as these are little developed.
Major problems of regulation
Professional self-interest
The experiences of many developing countries
suggest variable success in using incentives and
regulatory mechanisms to structure private sec
10
Sara Bennett et al.
tor behaviour. Major problems with implemen
tation of legal and regulatory frameworks are
evident. In Bombay, a High Court Justice hear
ing a medical malpractice case commented that
the implementation of the Bombay Nursing
Home Registration Act 1949 in Greater Bombay
had not been satisfactory (Yesudian 1993). In
terestingly, many industrialized countries have
also recently acknowledged problems of
regulatory failure (e.g. Stacey 1992, Rosenthal
1992).
Many of the regulatory problems centre around
the role of professional organizations or
parastatal regulatory bodies which are run by
professionals. It is often not clear who is respon
sible for professional behaviour, how behaviour
is monitored, and what penalties exist. The
political power of the medical profession, its
tendency to protect its members, and the ethos of
clinical freedom makes regulation, both by the
profession itself and by external bodies, pro
blematic. Professional organizations may have
relatively easy access to information about pro
vider behaviour and have the professional
knowledge enabling them to regulate. Their ob
jectives may, however, be too similar to those of
the providers they are supposed to be regulating
for them to play an independent monitoring role.
Nevertheless, it is in the interest of the profes
sional organization to identify imposters and
those who may bring the medical profession into
disrepute. As McGuire et al. (1989) observed ‘To
secure the agency relationship the medical pro
fession has recognized that certain expectations
are imposed about its behaviour’. In order to
secure monopoly power, professional bodies
have attempted to prevent the commercialization
of the relationship between provider and patient.
Advertising is a good example: banning advertis
ing reduces the commercial element in the
physician-patient relationship, but at the same
time reduces the information available to con
sumers, perhaps making it more difficult for
them to make a rational choice of provider.
Most of the medical malpractice cases heard by
professional organizations in developing coun
tries concern blatant negligence or unethical con
duct rather than ineffective medical practice.
This may be because in many parts of the
developing world physicians do not have a
monopoly on medical care: there arc manv
substitutes for the Western qualified doctor. For
example, in Ghana the government agreed that
non-qualified drug-sellers could sell drugs, in
order to redress the urban-rural imbalance in
drug availability. But now there may be little in
centive for the trained pharmacist to act properly
or for the self-regulatory mechanism to ensure
that they do. On the one hand, the availability of
substitutes creates greater competition, on the
other, it increases commercial tendencies and
may destroy trust in the patient-provider rela
tionship.
The inherent difficulties of government monitor
ing of private providers suggests that there is a
need to build a trusting relationship between
government, professional organizations and the
private sector. Training in a public health and
population-based approach, increasing awareness
of professional ethics and improving clinical
standards, including audit procedures, may play
a critical role by bringing the objectives of pro
fessionals and their organizations closer to that
of government. During initial training an em
phasis upon public health may orient providers
for life. This in turn suggests that providers’
training should remain the responsibility of the
public sector (or a conscientious private not-forprofit sector). In Mexico it has been noted that
private training schools are much more focused
upon curative personal care and neglect public
health, despite the fact that the government
ultimately controls the curriculum (WHO 1991).
Lack of information
Both regulation and incentive setting require in
formation to operate. At the most basic level
there needs to be a list of all private providers so
that government and other regulatory bodies
know whom they are regulating. This is often
achieved through compulsory registration. In
some countries, such as Thailand, registration is
carried out on an annual basis. In this case it
would be possible to make re-registration condi
tional upon the provision of certain information
concerning provider behaviour. In other coun
tries, such as Mexico, private providers are not
required to re-register. This creates problems,
with defunct providers remaining on the list.
Although the government or a parastatal body
may be responsible for registering private institu-
The state and private provider behaviour
lions it >s normally a professional body which
registers the practitioners themselves.
In many developing countries, little information
about the private sector and its activities is
available. In others, at least some data are col
lected, for example on the incidence of new cases
of communicable diseases seen by private pro
viders. In Malawi all private practitioners are re
quired to submit monthly reports detailing the
number of patients seen and their diagnostic
groups; the limited number of private providers
makes this a relatively easy task (Ngalande
Banda and Simukonda 1993). A key problem of
information collected from private providers is
its validity. In Thailand the MOH carries out an
Annual Health Resources Survey requesting data
both on the structural characteristics of private
providers (particularly human resources) and
data on activity. Within the Bangkok metropolis
(he response rate is extremely low (approximately
3O°7o) and throughput data are thought to be con
sistently under-estimated in an attempt to avoid
taxes.
Government also requires information from pro
fessional organizations in order to ensure that
they arc acting as effective regulatory agents.
Medical Councils, for example, could be re
quired to report the number of cases heard each
year, how quickly cases were heard, and what the
outcomes were. If certain patterns of negligence,
abuse, or low standards become apparent, they
could be required to indicate what action they in
tend to take and how the intervention will be
monitored. In order to counter charges of ‘ex
cessive medicalization’ more lay people or con
sumer representatives could be put on Council
boards.
Information also appears to be the critical issue
in terms of direct regulation by government.
Monitoring is crucial both to the implementation
of incentive mechanisms and regulatory controls.
Government must be able to check whether or
not providers are falsifying data in order to gain
more under the incentive mechanisms, and
government must be able to monitor private prov>ders so it can take action when providers violate
regulations.
Government organizational structure
Regulatory capacity requires a considerable
cRree of decentralization, and local responsibi
11
lity and authority. Private sector interests are
often powerful and local (district, provincial or
regional) health managers may have difficulty in
asserting authority over private providers. In
Malaysia, it is recognized that the international
companies which own plantations do not always
fully meet their statutory requirements in terms
of health care provision for the workers, but
local health staff rarely feel in a position to pur
sue this with the companies (R Bharathanlingam,
personal comment).
Lack of funding and resources may also prove a
substantial obstacle to successful regulation.
Local health managers are short of the time,
transport and skills to be able to effectively
monitor and regulate private sector behaviour.
The various regulatory boards established by
statute in Ghana (Asamoa-Baah et al. 1993) only
recently started to receive funding from the state.
Previously they were so poorly staffed that they
did not exercise any regulatory power at all.
Government in the developing world is likely to
be less ‘entrenched’ than that in the industria
lized countries, and there are rarely sophisticated
computerized national insurance or tax systems
making it easier to identify and penalize un
licensed practitioners.
Sadly, it is not only markets that fail, but also
governments. Governments must be sure that
they will actually improve on the market failure
before intervening (Stiglitz 1989). Government
failure may be more or less benign. At the less
benign end of the scale are problems of corrup
tion. There is a very real danger that inspection
agencies such as the environmental health
department and the private sector registration
department seek illicit rents rather than enforc
ing regulations. Bureaucrats may seek to expand
the size of their own agency rather than effec
tively carry out their job. For example, public
insurance organizations may be resistant to com
puterization which w-ould allow them to monitor
provider behaviour much better, but simul
taneously could reduce employment.
Conclusions
It is clear that the institutional structures which
have developed in the health care sector, osten
sibly to protect patients, are complex. Their
evolution has been strongly influenced by profes
12
Sara Bennett et al.
sionals: il may be more accurate io view regula
tion as a mechanism to protect the professional
and preserve the income of health care providers.
Regulatory responsibility should, therefore, not
be left to professional organizations alone.
Change is necessary, with careful monitoring of
its effects. One hypothesis that needs testing
comes from the principal agent model: incentives
need to be structured in such a way that it is in
the interests of professional organizations to
regulate and private providers to offer good
quality care. In this process it is important that
research examines the information needs of
regulation and incentive setting. The more
limited experience with incentive setting,
especially in promoting public health, needs to be
extended. Incentives may be used to encourage
provision of services in areas of greatest need; to
provide immunization and family planning; to
ensure appropriate management of com
municable diseases: and to provide useful infor
mation on the health priorities in populations.
Priorities for action will depend on the
sophistication of a country’s health care system,
the size of the private sector, and the level of
economic development. Governments should
focus first on those areas where private practice
is actually causing harm; inadequate sterilization
procedures, unskilled staff giving sophisticated
treatments, refusal to treat emergency patients
and extreme cases of dangerous or unnecessary
medical intervention. Government action can
then be extended to review whether ineffective or
unnecessary care is being provided. As the
private sector expands in middle-income coun
tries. there is a need to shift from structureoriented regulation to more sophisticated
practice-oriented regulation through quality
assu'ance programmes. However, these in
itial:-es cannot be developed without political
will or in the absence of government and profes
sional managerial capacity to carry them out.
Generating national debate about the role and
behaviour of private providers may also be an
important strategy. Such a debate may raise
consumer awareness about possible hazards of
seeking private sector care, stimulate the
development of non-government organizations
protecting consumer rights, encourage profes
sional organizations to be more active regulators
and perhaps limit the health care provider’s
abuse of power. The media can play a role in fur
thering these debates, providing information and
highlighting failure to fulfil ethical and statutory
obligations.
The potential for research to contribute to these
developments is large and under-explored. This
paper has attempted to consider the anatomy of
regulatory structures and incentive-setting
mechanisms but much more needs to be learned
from the experiences and developments within
countries. Immediate questions include the
potential benefits and dangers of using particular
forms of incentives, the value of accreditation
schemes combined with quality assurance pro
grammes, and the use of financial incentives to
stimulate better quality care.
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13
Acknowledgements
The authors wish to thank all the participants of the
Public/Private Mix Workshop held in London in January
1992, and to acknowledge the use made of country case
studies presented by workshop participants. The authors arc
all supported by ODA-fundcd research programmes.
Biographies
Sara Bennett works as a health economist within the Health
Economics and Financing Programme, funded by the
Overseas Development Administration (UK). She works
mainly in the area of health care financing and has particular
interest in (he role of the private sector and the nature of
health care markets in the developing world.
George Dakpallah holds a BSc (Hons) in Urban Planning and
an MSc in Epidemiology and Health Planning from the
University of Wales. He has spent eleven years in his current
post as head of the Budgct/Financial Analysis Unit of the
Ministry of Health, Ghana.
Paul Garner conducts research on urban health services,
evaluating effectiveness of care and health service manage
ment. He works within the Urban Health Programme funded
by the ODA (UK).
Lucy Gilson is a health economist working within the Health
Economics and Financing Programme funded by the ODA
(UK). She has particular interest in health care organization
and financing, and in the equity and efficiency of different
patterns of organization and financing.
Sanguan Niltayaramphong qualified in medicine and then
had 10 years of rural district health experience. He obtained
his MPH from Antwerp. He was the director of the Health
Planning Division before being appointed Assistant Perma
nent Secretary of the Ministry of Public Health in 1992
Bcatriz Zurita is the coordinator of the L nit for the Studies
of Quality and Costs of Health Care at the National Institute
of Public Health, Mexico. In 1986 she graduated as a medical
doctor from Univcrsidad Anahuac in Mexico, and later ob
tained a masters in Applied Economics and a doctorate from
the University of Michigan, USA.
Anthony Zwi is a public health practitioner and
epidemiologist working within the Health Economics and
Financing Programme funded by the ODA (UK). He has
particular interest in examining the interaction between
epidemiology, economics and health policy His other in
terests include injury control in developing countries. HIV
and AIDS, the political economy of health, and the impact of
political violence and human rights abuses on (he health
sector.
Correspondence: Sara Bennett, Health Policy Unit, Depart
ment of Public Health and Policy, London School of
Hygiene and Tropical Medicine, Keppel Street, London.
WC1E 7HT, UK
C. o «*> VA - 41 •
ASSAM HEALTH OHSTITUTE
987 MINAMIYAMA, NISSHIN CITY, AICHI 470-0111, JAPAN
Tel. 81-5617-3-1950 Fax 81-5617-3-1990
E-mail: ahi@jca.ax.apc.org
Newsletter No. 56
June 1998
What’s
happening
to
health care?
An Indian boy suffering from
stomach-ache
tries
moxibustion, a traditional Japa
nese treatment. Moxa, a com
mon herb, is burned at low
heat on the appropriate pres
sure point.
(c
. ...
.-----------
PRIVATEHEALTH CARE SERVICES ' A BOON OR A BANE?
By Dr. T. N. Manjunath (Manju), India, OMC 1987
Worldwide, many countries are now pursuing
privatization of health care services. Governments
are retreating from their previous commitments to
overall health care provision. But can privatized
health care really lead to better health for all? If
patients/customers have enough information and
power to choose the best services and to insist on
safe hospital management, privatization in the health
sector may offer better health care. However, in
many countries, the general public probably does
not have sufficient knowledge or power regarding
health to regulate private health practitioners This
article looks at some of the public health issues
involved in private health care, focusing on Mysore,
India. The author, OMC alumnus Dr Manjunath,
finds that more regulation and monitoring, by con
sumers and by government, is needed to protect
Mysore's health now that doctors are in business
for themselves.
Background to privatization Twenty years from Alma Ata
After the signing of the Alma Ala Declaration in
1978 by WHO and its member countries, the slogan
"Health for AH' started gaining ground. This goal was to
be achieved through community based Primary Health
Care (PHC) with an emphasis on improvement of ser
vices for the poor.
However, with the winds of globalization sweeping
developing countries, in the 80s and 90s many govern
ments were forced to accept structural adjustment
programmes (SAP) in return for International Monetary
Fund (IMF) loans. Financially-troubled governments were
forced to open up their markets and privatize previously
state-run enterprises and services, including the health
sector. While the private sector is now promoted as
creator of efficiency and growth, government action and
control is seen as the cause of inflation. If health sector
privatization is to benefit the Indian public, including the
poor, we must have decent standards of treatment and
mangement in both public and private health care institu
tions. debt and economic recession.
This credo has had serious consequences for the
health of the poor. Pursuing privatization, governments
reduccdspcndingonsocial sectors, includingpublichealth.
Preventive and promotional programs, traditionally the
domain of government sector because they do not offer
quick profits lor the service provider, have been hit hard.
(Continued on p.2)
(Continued from p.l)
The author at the ILDC evaluation workshop in
Deenabandu, India,January 1998.
Mother and child health care (MCH), immunization, safe
drinking water, sanitation, communicable disease control/
prevention and other pnmary health care services are all
adversely affected. These cuts have hurt the poor most.
lower socio economic classes, one third of episodes of
hospitalization use private facilities. For acute illness.
private practitioners provide the majority of treatment atall
economic levels. But private practitioners tend to concen
trate in wealthy urban areas where they can make an easy
living.
Further, without effective government regulation,
quality of service in the private health sector is unlikely to
be maintained by market forces alone. Some surveys show
that private health care workers are under qualified. The
problem is that ordinary heal th care consumers do not have
specialized knowledge of health care, and there is no
reliable information on which private practitioners offer
quality sen ices.
The social role of health care facilities is to restore
and maintain the health of the population. However, they
also have the capacity to damage local health, both through
poor treatment, and through careless handling of contami
nated hospital waste. Since private practititioners are pri
marily concerned with theirown patients and profits, they
may have less interest than government practitioners in
maintaining the health of local residents through safe
management and disposal of hospital waste. This issue,
too, shows the inherent dangers of privatization of health
care. It also underscores the need for appropriate govern
ment regulation and monitoringof private health facilities.
Privatization in India
In India as in many other countries, the health sector
is becoming privatized and commercialized, resulting in
worse health for the poor. Free curative care offered by the
government has become even less accessi ble due to budget
cuts. Perhaps even more worrying is the change in the
primary motivations of health care providers - privatized
services mean more health professionals are directed pri
marily by the profit motive. Private sector health care is
expensive - and a profitable business investment Pharma
ceutical giants, liquor companies, and big industries moti
vated solely by profits are now running 5-star hospitals.
Church hospitals, set up by missions to serve the poor, now
operate within this competitive system. Many such hospi
tals are pushed into getting expensive equipment to keep up
with the private sector. Making enough money to maintain
equipment and recover costs becomes the driving force of
practice. Doctors are forced to become business people.
Once a humanitarian service, health care is notv viewed as
acommercial sector with profits as the only motive behind
care, concern and service to the needy.
With the current
international support for
privatization, profit driven curative health care is taking
precedence over preventive community based health care.
Further, along with privatization and reductions in subsi
dies, the prices of essential life-saving drugs, are becoming
very high, as commercial pharmaceutical companies pusue
profits.
Another problem with privatization of the health
sector in India is that it worsens the regional inequality in
health care provision. Availability of hospital beds ranges
widely from the highest level in Kerala to the lowest in
Jammu&Kashmirand Orissa. Therearehigh rates of use
of private sector services in both urban and rural areas and
across all income groups. Nowadays, even among the
Privatization in Karnataka
Health care facilities in Karnataka were almost ex
clusively in the hands of government till twenty five years
back However, over the last few decades, the number of
private hospitals and nursing homes in Mysore city has
grown rapidly. With standards of health care at govern
ment hospitals declining steadily (in the eyes of public at
least), more and more people are going to these private
hospitals and nursing homes (Private Health Institutions or
PHI) whenever they fall sick or need surgery. Today,
privately owned health care facilities far exceed govern
ment owned ones, and most Mysoreans depend on the
nearly 50 PHIs that operate in our city.
But the average consumer does not know which
hospital or nursing home provides what kind of services
and facilities, nor what rates they charge. Without this
information, it is difficult for consumers to decide which
PHI to go to in any given situation to get the best value and
care for their money.
Survey of private health institutions in Mysore
To fill the information gap from the perspective of
health care consumers, Mysore Grahakara Parishat, a con
sumer awareness and guidance organization, conducted a
survey of all PHIs in Mysore city, focusing on services,
facilities, and fees. The survey had the following specific
objectives: 1) to document the type of health care facilities
offered by private health care institutions; and 2) to find
out how these hospitals dispose of waste.
A list of all the private health care institutions in
Mysore city was compiled from various sources including
the telephone Yellow' Pages. Omiting outpatient clinics,
we were left with a total of 44 institutions.
(Continued on p.3)
(Continued from p.2)
A 40-itcm questionnaire was carefully designed to
coverall types of PHIs, and was mailed to every institution
on our list. Unfortunately, most of the PHIs were very
apprehensive about answering our questionnaire. Even
after repeated phone calls, personal visits and explanations
as to the purpose and usefulness of the study, only 23 of the
44 PHIs agreed to participate. It isourhopc that when they
sec this report being widely used by potential customers,
they will realise that sharing information with the public is
beneficial to them in the long run and will participate in
future editions of this survey.
plaster casts, syringes and needles, and mutilated organs
arc simply thrown out on the pavements in front of the
hospitals. The hazardous waste is not separated and
incineratedasitshouldbe. Inafewcascs,thewasteisbumt
in the open air, which leads to emission of toxic gases into
the environment. Rag pickers (scavengers) are also com
monly said tocontract diseases by picking through hospital
waste. One wonders what sort of treatment they can
afford...
The need for government and consumer monitoring
of private health care
The implications of the rapid growth of private
health care institutions have been overlooked by the gov
ernment. There is no legislation or control over the rapid
growth of the private health care institutions. Al the mo
ment, it is difficult even for the wealthy to benefit from the
mushrooming of private facilities, as they have no reliable
information on which to choose a good doctor. For those
who have little money to pay for treatment, the situation is
worse. In order to make the private practitioners account
able to their customers/patients, there must be open infor
mation about the costs and effectiveness of services.
Meanwhile, these private practitioners, concerned
primarily with theirown profits, are posing a health risk to
the community at large by careless disposal of hazardous
waste. Both government and consumer groups must take
more active roles in regulating and monitoring such haz
ards to public health.
Findings - Lack of knowledge, lack of control
First, only 13 of the 23 PHIs arc registered. This
suggests that the government lacks basic information of
and control over private health practitioners.
Only 12 of the 23 PHIs provide emergency medical
care. Eleven common investigations (blood, biochemical,
microscopic, histopathological, X-ray, ECG, Immunoas
say, EchoCardiogram, Fibrillalor, Ultrasound and CT scan
and Ventilator) were listed in the questionnaire. Seven of
the 23 PHIs had the capacity to carry out more than half of
There was widespread reluctance todisclosc rates charged
for conducting investigation and other services. Only 4
PHIs provided this information. There was great variation
among the rates charged.
The PHIs gave little concern to hospital waste dis
posal. However, insanitary disposal of hospital waste
poses major hazards to public health. Used dressings,
Health sector reform case study:
Cost-recovery and equity in the health sector:
the experience of Zimbabwe
by Kevin Watkins
What effects will the current economic crisis
have on the health of Asia's people? As parts of
Asia brace for structural adjustment, now is a
good time to review recent experience with World
Bank-led health sector reform. The case here is
from Zimbabwe, Southern Africa.
However, over the past decade, in the face of economic
problems, the resurgence of poverty-related infectious
disease, and population growth, the poorest countries have
struggled to maintain the provision of basic health ser
vices. Various prescriptions have been advanced for
redressing the widening the widening gap between need
and financial resources. One such prescription is cost
recovery. Rooted in market-oriented approaches to health
finance, user-charges have been recommended by interna
tional agencies such as the World Bank and aid donors, to
mobilize new resources and rationalize sen ice delivery.
In addition toclosing the health financing gap, it is claimed
that cost-recovery programs, supported by targeted ex
emption systems, enhance equity (fairness to all) by in
creasing the quality and quantity of sen ices available to
the poor.
This article reviews the experience of Zimbabwe under
a cost-recovery program, introduced in the context of a
Introduction
Recent years have witnessed a marked shift in debates
on human development, there is now an overwhelming
consensus among donors, multilateral agencies and gov
ernments that access to basic social welfare provision is
central to human development Primary health care has
been identified as a priority area, since inadequate access
to basic preventative and curative provision carries a high
price for individuals and for society. Unhealthy children,
to take an obvious example, arc unable to benefit from the
opportunities created by primary education - and poor
educational achievement is a recipe for slow economic
growth, the loss of employment, and increased poverty.
(Continued on p.4)
3
(Continued from p.3)
structural adjustment program worked out between the
national government and the World Bank. It concludes
that the cost-recovery program has excluded vulnerable
populations from access to basic health provision. The
poorly-planned exemption system has generally failed to
protect the poor. Meanwhile, the national cost-recovery
scheme has failed to mobilize significant new resources.
Background to structural adjustment:
gains in human welfare, stagnant economy
In the decade after independence in 1980, Zimbabwe
achieved some of the most dramatic improvements in
human welfare in sub-Saharan Africa. Life expectancy,
one of the most sensitive indicators of general health
trends, increased from 55 to 64 years. Success in combat
ing pre ventable diseases halved the infant mortality rate to
50 deaths per 1000 live births (compared to 93 for subSaharan Africa), and the under-five mortality rate fell to
80 (compared to 170 for sub-Saharan Africa). Parallel
improvements were achieved in maternal mortality rates.
Cher the same period, primary-school enrolmentsdoubled
and the secondary-school population increased almost ten
fold, reducing illiteracy rates to less than 10 percent.
These gains reflect the Zimbabwe Government's ex
plicit policies of pursuing equity through increased public
investment in primary health care and basic education.
During the 1980s, health sector spending increased from
2 percent to 3 per cent of GDP, while the share of budget
spending on health doubled to 6.4 per cent.
However, these human welfare advances need to be
set in context Government of Zimbabwe estimates for
1990/1991 suggest that around one-quarter of the popula
tion lived below the poverty line, around one-quarter of
them unable to meet basic nutritional needs, while in rural
areas, one-third of all children exhibit malnutrition.
Moreover, since the late 1980s, there has been a worrying
reversal in human welfare gains, with maternal and child
mortality rates rising as a consequence of HIV/AIDs.
Meanwhile, in contrast to the experience of SouthEast Asian countries, Zimbabwe's achievements in hu
man development were not matched by economic perfor
mance. From 1980-1990, per capita incomes declined
marginally, as population growth outstripped economic
growth. By 1990, the economy seemed unable to shake
structural barriers to growth. Particularly, high structural
unemployment and a large budget deficit were already
threatening the social sector even before the adoption of
the 1990 adjustment program, and some form of adjust
ment was inevitable. It was against this background that
Zimbabwe embarked on a program of structural adjust
ment and radical health sector reforms under the guidance
of the IMF and the World Bank.
Zimbabwe Factfile
Area: 390,580 sq km
Climate: tropical
Population: 11,423,175 (1997 est)
GDP per capita (purchasing power parity):
$2,340 (1998 est)
Labor force: 70% in agriculture, 22% in trans
port and services, 8% In industry
Unemployment rate: at least 45% (1994 est)
Infant mortality rate:72.6/1000 live births
(1997 est)
Life expectancy: 49 (1996 est, UNICEF)
Source: 1997World Factbook, http7Avww.odci.govi
cia/publications/f actbook/
care, reports also recommended huge increases in outpa
tient fees al rural hospitals and increased charges for
maternity provision.
In order to maintain equity, the World Bank stressed
the need for exemption systems to be put in place. How
ever, there was no consideration of administrative capac
ity to operate such systems, and no costing of their
operations. The authors of the reports assumed that,
armed with documents and information such as patients'
income tax returns and land holdings, "admission clerks
could then interview patients upon arrival at the hospital"
and determine a fair rate of cost-recovery" (World Bank,
1992a). But from the colonial period to the present day,
entire revenue and tax departments in Zimbabwe have
failed to ascertain appropriate tax liability. It is almost
surreal how far the World Bank researchers were from life
in Zimbabwe. Their optimism is quite breathtaking.
Health sector reforms:
World Bank recommendations
... And government implementation
During the second half of the 1980s, the World Bank
became increasingly involved in debates on health sector
reform in Zimbabwe, publishing two reports on the sub
ject in 1992. While recommending particularly stringent
collection efforts in central hospitals offering tertiary
By contrast to the World Bank's approach, the Zimba
bwe Government had previously attached over-nding
importance to equity, attaching relatively little impor(Continued on p.5)
4
real wages fell, crops and livestock were lost due to
drought, and prices rose. Studies suggest that low-income
houses cut down on food consumption, with women and
children bearing the severest cuts. In the health sector, this
period also saw the dramatic spread of HIV/AIDS, with
HIV-related illness becoming the leading cause of death
in the 25-44 age group. This background is important to
any review of the social-sector reforms, as it made public
investment even more essential to protecting human wel
fare.
Unfortunately, in a gross oversight, the Zimbabwe
government and the World Bank did not include any
integrated large scale monitoring system to evaluate ef
fects of the policy reforms. However, a variety of other
sources indicate, following the stricter enforcement of fee
collections in 1991, low-income groups were forced ei
ther to delay or reduce health care. One early study by
Hongoro and Chandiwana found that outpatient atten
dances dropped by 18 percent by the end of 1991, while
inpatientadmissions wentupby 12percenL One possible
explanation is that patients started to seek health care only
when it w'as absolutely necessary.
The most comprehensive data comes from five
sentinel-site surveys carried out by UNICEF and the
Ministry of Public Service, Labor and Social Welfare
under their Social Dimensions of Adjustment Program.
Among the most relevant findings, the following suggest
particularly powerful causal links between cost-recovery
and exclusion from vital services:
The percentage of children whose diarrhea was not
treated at a clinic because parents regarded it as too
expensive increased from 9 per cent of the total in 1993 to
22 per cent in 1994. This shift coincided with a 117 per
cent increase in health fees at rural hospitals and health
centers. Similarly, in January 1993, cost-recovery' was
introduced for condoms. In the same month, the number
of condoms distributed by survey site health centers fell
from an average of 53,033 in 1992 to 28,988 in 1993.
Before-and-after studies at specific health facilities rein
force the broader survey evidence.
Other studies show, in Zimbabwe ante-natal registra
tion of pregnant mothers has greatly reduced both mater
nal death in childbirth and the perinatal mortality' rate.
Unregistered mothers are some four times more likely to
die in childbirth, and the perinatal mortality rate (total of
death rates of children during the period of 28 or more
weeks of pregnancy and one week after birth) for unreg
istered mothers (251 per 100,000 live births) is around
five times higher than for those who registered tor ante
natal care. But use of reproductive health services appear
to have been particularly sensitive to the effects of cost
recovery'. Ante-natal clinic registration also fell from
1990-92, whereas maternity admissions increased, along
with an increase in unbooked deliveries and increase in
babies bom-before-arrival (BBA).
By delaying or obstructing entry to the health system,
cost-recovery imposed enormously high human costs on
vulnerable people. It also caused extra costs tor the health
system in treating health problems which could have been
(Continued from p.4)
lance to cost-rccovcry. By 1990, however, when the
adjustment program was being negotiated, it was apparent
that the World Bank had com inccd the Zimbabwe gov
ernment of the merits of cost-recovery. This was espe
cially true in the Ministry of Finance, which was faced
with the challenge of closing the budget deficit while
maintaining political legitimacy. Under the 1991-95
Framework for economic reform, cost-recovery in health
was to be i ncrcascd from Z$ 15m i n 1989/90 to ZS60m by
the end of 1995. Health spending was to be maintained at
2.7 per cent of GDP.
Following adoption of the adjustment program, the
Ministry of Health issued a circular demanding more
ngorous enforcement of user-fee collection at all health
facilities, from rural clinics up to central hospitals. Atthe
start of 1994, a new fee structure was adopted for the first
time since independence. Even at the pnmary level, fees
increased fromZSl toZ56.50. Previously free, ante-natal
care costs increased to Z$10. District hospital fees also
rose sharply to encourage rural patients to go first to rural
health clinics.
The influence of the World Bank was crucial in
forcing the issue of cost-recovery on to the domestic
political agenda. However, the program which actually
emerged differed from the Bank's recommendations in a
number of important respects. Most importantly, the
Bank had stressed the importance of retaining fees at the
facility in which they were collected, to improve service
quality and protect equity. In the event, the Ministry of
Finance, which became the driving force in adopting cost
recovery', saw cost-recovery as a source of general rev
enue and as a means for meeting the IMFs targets for
budget stabilization. Another area in which the actual
program differed from the Bank's recommendations con
cerned exemption procedures. World Bank teams had
consistently argued that the ZSI50 exemption threshold
was too low to protect vulnerable populations. In the
event, that threshold was retained for over a year, before
being slightly raised.
At the same lime, there was an unprecedented decline
in priority social-sector spending. Between 1990/91 and
1995/6, health spending fell from 6.2 per cent to 4.2 per
cent of total government spending, and from 3 per cent to
2 per cent of GDP. In per capita terms, there was a decline
in health spending from ZS55 per capita in 1991 to Z$32
in 1995. Preventative care budgets, the most cost-effec
tive part of the system, have fallen by one quarter. Real
wages of health personnel have fallen by a third, fuelling
an exodus of staff and a loss of morale. According to a
1995 World Bank report, drug shortages have become
common and health service provision has deteriorated in
both qualitative and quantitative terms.
Counting the costs: the social effects of adjustment
It is probably impossible to pinpointcausc and effects
of adjustment programs. Nevertheless, there is a consen
sus that the post-1990 adjustment period was one of
severe hardship and deepening poverty, with two major
droughts reinlorcingcconomicprcssurcs. Simultaneously,
(Continued on p.6)
5
been adjusted upwards, further eroding the real value of
the index.
The result is that many poor people have been ex
cluded from claimingexemption. Using the World Bank’s
poverty line data, around 25 per cent of Zimbabwe's
national population, and 30 percent of the rural popula
tion. do not have sufficient income to purchase adequate
food, shelter, education, health, and transport. This entire
group merit exemption - an option which would mean an
enormous administrative burden, while at the same time
reducing revenues from cost-recovery.
(Continued from p.5)
solved more cheaply earlier. The following account.
taken from a 1992 study by A. Rcnfrc summarizes both
dimensions:
"In October 1993, a 23 year old woman was admitted
with a miscarriage which had resulted in infection in her
womb. She was taken to theatre where an operation to
clear away the remains of the pregnancy was performed
and she was given antibiotics to treat the infection. On
discharge from hospital, she was given a prescription for
antibiotics for a further week so that the infection would
be completely controlled. She could not pay for the tablets
so she went home without them. A few days later she was
re-admitted with further bleeding and evidence of con
tinuing infection. Again she was taken to theatre and
again she was given antibiotics and then discharged...
Again she could not afford the tablets so she did not take
them. About five weeks later she was yet again admitted,
this time with very severe infection, peritonitis and ane
mia. She died a few hours after admission."
Alternatives to cost-recovery: the challenge
Considering the high social costs associated with user
fees, the benefits in terms of resource mobilization have
been negligible. In fact, taking into account the costs of
collecting and accounting for fees collected, it is probable
that cost-recovery resul ted in a net loss of resources. Both
quality and quantity of sen ices deteriorated despite the
additional burden being placed on households.
To its credit, the World Bank has now acknowledged
the problems associated with cost-recovery. In 1995, a
Country Economic Memorandum conceded: “There is
evidence that the fee exemption system under which poor
people are entitled to claim free treatment has not worked
well, and that fees undermined access to health services
for vulnerable sections of the population.” The Memoran
dum went on to recommend the suspension of all fees for
ante-natal, maternity and child health sen ices, and free
sendees for basic preventative care, immunizations - and
treatment of infectious diseases. Reflection on the Zim
babwean experience also appears to have prompted a
review in some parts of the World Bank, w ith one recent
research report strongly recommending the withdrawal of
user-fees on basic sen ices except as a last resort. While
this is good news, viewed more critically, the outcome of
cost-recovery in Zimbabwe was entirely predictable; and
more effective monitoring of impact and consideration of
the eveidence provided by UNICEF would have led to an
earlier review of the policy advice which had been given.
In Zimbabwe the budgetsituation is still unsustainable,
and will get worse without action to reduce debt and
contain future borrowing. The question is, how can
priority social senices be protected during the budget
stabilization program? I suggest a three-pronged strategy
aimed at increasing revenues, reallocating resources in
the social sector, and making social sector spending a
priority in government budgets.
First, though it may be politically difficult, the govern
ment should move to increase taxes on high income
groups, in terms of income tax, land tax, and ending of tax
concessions aimed at high income groups.
Secondly, resources in the social sector should be
reallocated primary level facilities where social and eco
nomic returns will be the highest While Zimbabwe per
forms better than most African countries in allocating
resources to the primary level, the $6 per capita spending
at the primary level is below the $9 minimum recom
mended by the World Bank - and the share is declining.
Moreover, there is scope for increased cost-recovery' in
Failure of the exemption system
From the outset, the World Bank consistently stressed
the importance of developing an exemption system to
protect the poor. In practice, however, there was a
considerable ti me-lag between the more rigorous enforce
ment of cost-recovery in 1991, and the establishment of a
viable exemption system. This resulted in the partial or
total exclusion of vulnerable communities from the health
system at a time when both poverty and health needs were
growing.
In 1991, with the support of the World Bank and other
donors, the Zimbabwe Government introduced the Social
Development Fund (SDF), a welfare scheme including
food-money, and assistance with school fees and health
fees. Elaborate targeting mechanisms were established,
and yet no new budget was agreed until 1992, and no extra
staff were employed to implement the new system.
In 1993,anindependentreportbyKasekeandNdaradzi
into the operation of the Social Welfare Component of the
SDF concluded that the food-money scheme was reach
ing only about 3 per cent of the target population and the
school-fee scheme only 20 percent. The following were
among the most serious obstacles identified: 1) the high
cost of applying compared to the benefits received; 2)
time lag in benefit payments; 3) shortfalls in funding due
to poor planning; 4) stigma of accepting welfare; 5) fees
charged by local elders and teachers for application docu
ments. A Government of Zimbabwe-UNICEF sentinel
survey report also indicates there was also a lack of
information/publicity concerning the SDF. By 1995, still
only around one-third of the eligible population had
applied. The main reason given fornotapplying was "lack
of knowledge" of how to apply.
Furthermore, the threshold level for exemption was
fartoolow. In 1994, adjusted for inflation, the exemption
level was around 20 per cent below the rural poverty line
and 90 percent below the urban. Since 1994, inflation has
averaged over 20 per cent, but the exemption line has not
(Continued on p.7)
6
(Continued from p.6)
concentrated at upper lev els of the health system, and that
cost-recovery should be avoided, except al a last resort, at
the primary level. Cost-recovery must be seen as one
element in a wider strategy for publicly financing a basic
health care system available to all. There arc, however,
other equally important priorities: measures to increase
public revenues through progressive taxation, a shift in
allocation towards primary facilities, increased budget
priority for key sexual sectors, and donor support to reduce
debt and increase aid allocations for health and primary
education.
(Etcerpledfrom'Cost-recoverv and equity
in the health sector: issues for developing countries" by
Kevin Watkins. Oxfam UK & Ireland Policy Department.
For more information, contact OXFAM at 274 Banbury
Rd.. Oxford 0X2 7D7, UK. OXFAM also has a homepage
at www.oneworld.org/oxfaml))
the central teaching hospitals, and in charging private
users, such as insurance companies, full costs for public
services.
With regard to this third element of a budget stabiliza
tion strategy, there arc lough political choices to be made.
Subsidies to loss-making parastatal corporations consti
tute a major budgetary burden. In some cases, subsidies
arc justified by the need to maintain food-sccunty. But in
other cases, subsidies arc more related to ensunng politi
cal patronage than forcreating equity and national wealth.
Reallocating such subsidies to the social-sector would
mean far higher benefits in terms of social and economic
development. Defence spending, too is inflated in rela
tion to need. To achieve equity in health provision and to
enhance prospects for future growth, this spending, too,
should be reallocated to health and education.
Conclusion
Debates about cost-recovery tn health services raise
important questions about the future direction of health
policy reform. With financial constraints deepening in
many countries, it appears likely that there will be conUnued political pressure to charge users for services. The
challenge is to ensure that the interests of the poor are not
overlooked - and that the problems associated with cost
recovery are better understood.
The Zimbabwean case clearly illustrates the dangers
of introducing cost-recovery without careful consider
ation of appropriate timing and methods. Cost-recovery
at the primary level was introduced at a time when
communities were suffering extreme hardship as a result
of two droughts. The poorly-planned exemption system
failed comprehensively to protect the poor.
One further lesson from the Zimbabwean case is that
effective monitoring should be an integral part of cost
recovery reforms. The only systematic source of informa
tion on the effects of adjustment were provided by
UNICEF’s surveys. Unfortunately, the findings have not
informed policy choices.
Regarding participation, accountability, and the qual
ity of service provided at the community level, the claims
made for cost-recovery are not supported by evidence
from Zimbabwe. Hospital clerks and local social-welfare
offices are not accountable to communities in any mean
ingful way, and lack the capacity to decide which indi
viduals are able to pay.
The adjustment process in Zimbabwe clearly illus
trates how ideological influence, political decisions, and
economic crisis interact to shape policy outcomes in the
social sector. The World Bank and donors promoted their
own ideology - social sector reform models stressing
markets. Political decisions have been taken within a
largely unaccountable domestic political system in which
the interests of the poor are at best weakly defended, and
in which donor influence - both financial and intellectual
- is considerable.
At the national level, cost-recovery clearly has an
important role to play in resource mobilization. The
evidence from Zimbabwe suggests that efforts should be
Council for
Health and Development (CHD)
Statement on Privatization
V
-
■■
J
(The following is an excerpt from the March 1998 policy
statement of CHD. one of AHI's related Filipino organi
zations. The views expressed are those of CHD. not of
AHI. For a full statement. please contact CHD at P.O.
Box AM-463, Sta. Mesa. Manila. Philippines.)
EVERY CITIZEN DESERVES A HEALTHY LIFE.
THE GOVERNMENT IS RESPONSIBLE TO PRO
VIDE ITS CITIZENS WITH ACCESSIBLE AND AF
FORDABLE HEALTH CARE.
Why we oppose privatization of health services
Health is recognized as a basic human nght. This
right is enshnned in international covenants and in the
Philippine Constitution...
(Continued on p.8)
7
Effects of Privatization
When health sen ices arc privatized, health becomes
a business, and the first concern of ow ners is to cam profit.
Costs for health arc already increasing (30-40 percent just
in the past four months!) Health sen ices arc increasingly
being denied to those w ho need them most...
(Continued from p.7)
Privatization is a refusal by the government of its
responsibility to the people; it even places the burden on
others (like NGOs, churches and pnvatc groups) to do
what it docs not have the political will to do. The
Department of Health should ensure and promote public
health - the people’s health. Too often, the Department of
Health (DOH) instead encourages and assists private
enterpnse for profit at the expense of the Filipino people.
Conclusion
The Council for Health and Development, a na
tional organization of more than 50 community-based
health programs, strongly rejects the govermment’s move
to privatize health sen ices. Pm atization of healthcare is
the abandonment of the government’s responsiility to the
health of its people...
Privatization of health senices will bring more
death and disease instead of what it promises as“health for
all by the year 2000..."
Hope (for heal th) lies in the people who are aware of
their rights, vigilant to protect them, and organized to
work together for the common good.
Why privatization?
Government officials claim that the privatization of
health services is intended to improve the quality of care.
But the real purpose is to “save money” - to repay unjust
loans, and for projects that benefit the local elite and
foreign investors.
And at the same time, the national budget allowed
for health continues to get smaller. Less than 2.5 percent
of the budget is spent for health, while 10 percent is spent
on militarization. Privatization of health services is being
done to cut the health budget even more!
INSIDE JAPAN
New NPO Law Promises
Legal Status for
Citizens' Groups
The NPO Act
will support
citizen'3
groups like
Happy Map,
pictured
here,which
works in
Nisshin to
make the city
accessible
to people in
wheelchairs.
March 1998 marked a turning point for civil soci
ety organization in Japan. After a threc-year struggle in
parliament, the Non Profit Organizations (NPO) Act was
passed.
Up to now, Japanese voluntary organizations har e
had few choices for legal status. Most of them are not large
or established enough to pass the government’s stiff
requirements for recognition as legal entities. (AHI has
been offially recognized as a juridical foundation since
1980.) As a result, most small NGOs have operated under
the personal name of their leader, without any indepen
dent legal status. Now, the NPO Act will allow small
voluntary organizations to register as independent legal
entities. Thus, the law recognizes the importance of the
"third sector” in society, with values and abilities separate
from both the for-profit sector and govemmenL
Prospective NPOs will now be evaluated mainly
on the basis of application documents. They must also
meet a number of basic requirements, such as having a
full-time staff of at least ten workers. Overall, these
requirements are far less stringent than the previous ones.
Nevertheless, some sticking points remain to promote the
full participation of voluntary organizations in Japanese
society.
First, local authorities still have great control over
prospective NPOs, despite their lack of understanding
about citizens' organizations. Inorder to register, organi
zations still require the approval of local authorities. Local
authorities also maintain the legal power to disband NPOs
at their own discretion. Citizens’ organizations arc there
fore pressing for guidelines to ensure that local authon-
ties’ pass the necessary ordinances to promote NPO
participation, according to the spirit of the NPO Act.
Second, although NPOs need tax exemptions to
make them financially viable, the NPO Act has left this
essential point to be decided three years' hence. Citizens’
groups are calling for immediate establishment of a sys
tem of lax exemptions to promote NPO activity.
Third, citizens’ groups, loo. still need to do some
senous thinking. The aim of the NPO Act is to make it
easier for citizens’ groups to contribute to society. These
groups must consider, then, what and how they can best
contribute. In particular, this w ill involve more openness
and accountability regarding organizational finances and
activities. For small organizations this may be mean a
substantial extra workload as accounting procedures be
come stricter.
In practical terms, many Japanese NGOs already
have legal recogni lion as corporations or foundations, and
others are uk> small toconsidcrapplymg for official NPO
status. At the Nagoya NGO Center, there are 25 member
organizations (including AHI), all locally-based NGOs.
Of them, only the NGO Center itself has announced its
intention to apply for legal NPO recognition. Its experi
ence will be closely watched by other local groups.
8
INSIDE JAPAN
A Pact to Guide Global
Investing Promises Jobs But at What Cost?
Japanese Citizens' Groups
Say NO to MAI
Based on an article of die same name by Peter Ford
Christian Science Monitor, Feb. 25, 1998.
It is a pioneering treaty that will boost foreigr
investment woridwideandbringhigherwages.andgreate
prosperity in its wake.
It is a disastrous surrender to giant corporations,
leaving governments and citizens powerless to control the
activities of multinationals.
These arc the two radically opposing views of a
document few people have actually seen, but which hopes
to set legally binding rules for companies around the
world who invest across borders.
A comerstone of the 21st-century world economy,
the Multilateral Agreement on Investment (MAI) will be
"the constitution for a single global economy," in the
words of Renato Ruggiero, head of the Geneva-based
World Trade Organization.
The MAI was to be signed in April at the annual
meeting of the Organization for Economic Cooperation
and Development (OECD), the "rich man's club" of 29
industrialized nations. Unable to reach agreement, the
negotiators now have another extension to work out the
deal, which was supposed to be completed a year ago.
After three years of quiet negotiations in the OECD,
the treaty came under increasingly vocal attack by citi
zens' groups worldwide, who say it will give corporations
the right to ride roughshod over local legislation.
Foreign investment - whether it's a Japanese Nissan
auto-plant in the United States, or an American Compaq
compuuter assecmbly line in Taiwan - is worth over $8
trillion, and it's going up by $350 billion a year. OECD
officials say the planned accord will simply level the
playing field for foregn investors, ensuring that govern
ments treat them on an equal footing with domestic
companies.
"What does MAI mean for our lifestyles?"
Cartoon by the Japanese anti-MAI coali
tion.
set standards fora foreign corporation that was bidding on
a contract The municipality could not insist that the
company hire a certain percentage of its workers from the
local community or ask that it leave some profits in the
country.
Balance rights with responsibilities, accountability,
and transparency
The main problem from the ordinary citizen's per
spective, is that the MAI aims to expand the rights of
multinationals, without expanding their legal obligations
to society and the environment Moreover, it is being
decided by a small group of bureaucrats at the OECD,
rather than in a more open, global forum where develop
ing countries and ordinary citizens have a stronger voice.
Forthese reasons, protesters from around the world,
linked through the Internet, have been ringing alarm bells
about the implications of the MAI. The critics range from
community activists in the US, to French cinema directors
and actors who worry that Hollywood will swamp them if
laws that favor local productions are outlawed.
Japanese Citizens' Groups Say NO to MAI
Japanese citizens' groups, have joined together in
opposition to MAI in its current form. Since February
1998, more than 50 organizations (including the Nagoya
NGO Center, of which AHI is a member) ran a national
advocacy campaign. A lecture series and leaflets publi
cized the dangers of the MAI. and petitions and a letter
writing campaign organized lobbying of politicians. The
groups alsocarricd out a survey of local authorities to find
out how much they knew about the MAI. Of the 83
authorities which responded. 77% reported that they did
not know about the deal, which could seriously limit their
authority to govern in their own local region. Citizen's
goups still have a lot of publicity work to do.
Investing afar can be risky
Investing abroad is riskier than it is close to home.
The investor is less familiar with local languages, cus
toms, and laws, and more worried about being cheated.
The MAI would encourage more foreign investment (and
thus promise jobs and socioeconomic benefits) by offer
ing protection against some of the risks.
But it would also strip national and local govern
ments of some of their authority. Under MAI rules, tor
example, a Japanese city council would not be allowed to
9
HERE AND THERE!
essential in bringing about improvement in the
organization’s way of working. In the mid 90s, support
ers called for more openness regarding AHI money mat
ters. and as a result, since fiscal year 1994 the annual
financial report has been sent each year to all supporting
members. Further, in 1995 supporting members criti
cized the secretariat’s one-sided decision to approach
only board members and other limited benefactors for a
special anniversary fundraising campaign. In response,
the campaign was publicized to all members, and an
additional ¥11,955,874 (approx. USS100,000) was raised
for the organization. Supporting members are also gradu
ally taking on more responsibility to carry out work
formerly done by staff, including organizing the annual
AHI FesUval and the Talk Matsun. They are also taking
more imUative for developing certain aspects of AHI.
One group, for example, has set itself the task of translat
ing Asian wnting into Japanese. Another group intro
duces AHI by running a handicrafts and information stall
at community bazaars
Participatory
decision-making at AHI:
New moves to involve
supporting members
Steps to an open, learning organization
Thus, AHI is now taking essenual, if wobbly, steps
to becoming a more open, learning organization. At this
stage, a key role for the secretariat is creating opportuni
ties for different stakeholders to get to know each other, as
a basis for working more effectively. The Supporters’
Gatherings and AHI Plaza were such opportunities.
Supporters’ Gatherings were held in Tokyo, Osaka,
Kyoto, Fukuoka, Hiroshima, and Nagoya. A wide range
of supporters took the time to participate and offer their
insights to AHI staff, deepen their own understanding of
Asian health issues, and clarify what sort of organization
they want AHI to be. Although the discussion was
rewarding, the number of participants was small. Staff
realized once again there is still a long way to go to gain
the active participation of supporting members. Further,
it became clear that different supporters have different
needs and different styles of committment to the organi
zation. For some, sending a yearly contribution is suffi
cient; others want to participate in festival activities; and
others want to be involved in decision-making.
The next opportunity included board members, as
well as staff and supporters, in a deeper discussion of
AHI’s past and future roles in sharing with the peoples of
Asia. This took shape as the AHI Plaza, held at the AHI
building in Nisshin. Again, participants included first
time visitors to AHI as well as long-time supporters. To
provide a common start, the day began wi th presentations
by AHI staff introducing AHI’s history and current train
ing programs. After sharing a casual lunch, participants
split for small group discussions, focusing on two main
issues: I) “The future of AHI - What is its role?”; and 2)
"AHI and Me - How shall I participate?.”
At the AHI Plaza, AHI supporters, staff,
and board discuss their roles in AHI's
future, March 1998.
ILDC alumni and counterpart organizations know
AHI as a center for participatory training. But, on the
home front, AHI is still wrestling with the issue of partici
pation by its own supporting members and board mem
bers. For the AHI secretariat, the past six months have
seen a special focus on listening to the voices of support
ing members - almost 8,000 of them, spread all over Japan
- as well as to partners throughout Asia. It’s still just an
intriguing beginning.
Last year’s AHI Festival included focus group dis
cussions with supporting members. Next, from Novem
ber to December 1997, a series of local AHI Kaiin no
Tsudoi (Supporters' Gatherings) were held between sup
porting members and AHI staff at six major cities around
Japan. And in March, a one-day workshop, the AHI no
Hiroba (AHI Plaza) again brought together supporting
members, board members and staff to share views and
collaborate on rethinking and developing the organizauon. These efforts to facilitate more active participation
by supporters and the board members are part of the
overall program of evaluation and organizational devel
opment, in which the roles and relations of AHI stake
holders are being reconsidered.
In the past few years, AHI has become more con
scious of the need for openness, transparency and ac
countability to its stakeholders. But old habits die hard
and the critical voices of supporting members have been
(Continued on p-11)
10
HERE AND THERE
(Continued from p.10)
X Let’s DOH it at AHI!
"
■■
Visit from Dr. Juan Flavier
Those familiar with the Philippine health sector will
recognize the most famous slogan of former Minister of
Health. Dr. Juan Flavier, during his service at the Depart
ment of Health (DOH). Once a country physician, during
Participants' views in graphic form.
One poster says, "Don't just look - get
in and stir things up."
Supporters' voices
Given the range of views, it is quite difficult to sum
up the workshop. The following are just a sample of the
many opinions voiced:
“I like AHI because it’s a people to people movement. A
name like “Human Plan’ would be better."
“It’s a pity even grassroots health work turns into politics.
It’s better to just focus on local health issues. Then it’s
easier to raise funds in Japan, too.”
“To me it’s important that AHI is based on Chnstian faith
and lifestyle.”
“We need to involve more young people in AHI.”
“What’s going to happen after Dr. Kawahara (AHI’s
founder and director)? We have to make the organization
strong enough to continue without him.”
“Japanese ODA has changed a lot. Now JICA also
emphasizes participatory commumly development So
what’s special about AHI? Given the policy changes.
should we accept ODA money and work more closely
with Japanese government organizations?
“AHI started in part as a way to express our sorrow for the
cruelty of the Japanese invaders in Asia before and during
World War II. That’s still an important issue."
“MostAHIsupportersarefromcities in Japan. I thinkit’s
important to build links between rural areas in Japan and
other countries in Asia.”
“AHI islikeabigdrum. The members arc the drumsticks.
Together we make enough noise and rhythm to speak to
society."
Dr. Juan Flavier "dobing it" with AHI’s
Taka Nakashima, AHI, April 1998.
the Marcos era Dr. Flavier worked w ith the NGO Inter
national Institute of Rural Reconstruction. He is now a
senator in the Philippine national government And if he
ever feels ready for another career change, his quick wit
assures him a job in TV comedy.
This multi-talented star of commumly based health
action also has long links with AHI. During a recent visit
to Japan. Dr. Flavier and a staff of four stayed at AHI for
three days, visiting local hospitals which offer combined
acupuncture and conventional "Western" treatment. The
visit was a research trip to investigate Japan's experience
with legal regulation of acupuncturists, for reference in
drafting a bill to legalize and establish minimum qualifi
cations for acupuncturists in the Philippines.
As part of his lifelong work to bring affordable,
quality health care to the Filipino people, Flavier is
promoting a variety of legislation to incorporate alterna
tive treatments w ithin the Filipino national health system.
In the past few years, Dr. Flavier has been a major force
behind legislation to employ more herbalanos or tradi
tional Filipino herbalists w ithin the public health system.
In December 19*97, his Traditional and Alternative Medi-
What kind of drum arc we going to be? What sort ot
rhythm? Most importantly, who will be the drummers?
The next discussions between supporting members
and secretariat arc planned for summer, when AHI’s
Indian partner, Hari John visits Japan. Watch lor the next
installment...
(Continued on p.12)
1I
HERE AND THERE
(Continued from p.ll)
cine Act (TAMA) became law. One of its major achieve
ments was thecstablishmcntofthc Institute ofTraditional
and Herbal Medicine, which will conduct more scientific
research into the effects of indigenous medicinal herbs.
This sort of scientific evidence is important in gaining
credibility in general, and especially to counter the argu
ments of powerful physicians' lobbies and pharmaceuti
cal companies, who see the use of alternative medicines
as a threat to their business interests.
Flavicr is known for his brilliance as a communica
tor, his knack for social marketing in the heal th sector. The
name TAMA, too, was chosen for its catchy, sassy mes
sage. As an answer to the M.D.s who called the bill
"wrong," in Tagalog "tama" means "correct.”
The acupuncture law project aims to set standard
qualifications for practitioners, and to give treatment
explicit legal status. Al present in the Philippines,
acupunctue is not specifically illegal, but it is not offi
cially recognized. Legal status is an important step in
increasing the use of this low-cost and effective treatment,
stretching the government health budget, thus allowing it
to care for more of the health needs of the poor.
Filipino participants Cesar Cussion and
Chona Segismundo of the Community Medi
cine Development Foundation in the
Oriental Medicine Course, 1991.
Last year's OMC participant was a Filipina physi
cian, Dr. Abigail (Abby) Tauli. Abby works as program
physician for CHESTCORE Program, a community
based health organization in Benguet, Northern Luzon.
As an M.D., she is legally qualified to treat patients using
acupuncture. Currently, though, health volunteers have
no formal legal approval for giving such treatment. If
Flavier's acupuncture bill is passed it will be easier for
Abby’s organization to serve more needy people in this
mountainous region.
AHI Promoting Acupuncture hi the Philippines
AHI, too, is promoting the use of acupuncture in the
Philippines via training in the Oriental Medicine Course
(OMC). Of the 64 OMC participants to dale, 24have been
Filipinos. These alumni have since trained many more
people in their regions (see, for example, the letter from
Josie Isidro in the previous issue). AHI also has informal
links with other influential acupuncture promoters in the
Philippines, such as the Acupuncture Research and Train
ing Center (ARTC), a Filipino NGO.
CALL FOR ARTICLES:
WHAT'S THE NEWS?
YOUR EXPERIENCES AND OPINIONS MAKE
THE AHI NEWSLETTER
In the next two issues we plan to highlight health care
policies in Asia. In particular, we would like to share
experiences and views on:
1) Changes in government health policy;
2) The trend toward GO/NGO collaboration;
3) The trend towards privatization of health care
services.
What's the situation in your country or area?
Submission deadlines:
End of August, End of December 1998.
12
WRITE IN YOUR OWN
LANGUAGE IF YOU
PREFER.
AHI volunteers will
translate your article
into English.
Please send your contri
butions to AHI
newsletter to:
THE EDITORS
Ui Shiori
Mela Berkowitz
Send by regular mail,
HERE AND THERE
TSUBOESAN CETS ON HIS BIKE - TO SUMA TEA
Last year. AHI supporting member
Kaoru Tsuboi cycled around the is
land ofSumatra. Indonesia. On his
gruelling trip, Mr. Tsuboi wasstruck
by the friendliness of the local
people, and the peculiar legacy of
Japan's military occupation. At AHI.
Mr. Tsuboi is a member of the
Fundraising Committee, which
works to recruit new supporting
members and drum upfinancialsupport for the organization's activi
ties. He is also involved in a range of
community activities, including a
wheelchair twin basketball league
and a study group on Indonesian
culture.
Tsuboi-san on the road in Sumatra.
I have no willpower. So after deciding to cycle
around Sumatra I announced my plan to my friends so
they wouldn't let me change my mind.
It's a total of 2,000km from Banda Ache at the
northenttpofSumatralsIandtoIndonesia'scapital, Jakarta,
in Java. "I'll manage," I told my friends. But never having
cycled long distance, privately I had big doubts. So two
months before my scheduled departure on September 1st,
through the heat of Nagoya's summer, I cycled 50-100km
each day to build up my strength.
From my friends there were two types of reactions.
First, there were the people who immediately said, "Fan
tastic! I want to go, too!" although they knew almost
nothing about the journey I was contemplating. Then
there were those who immediately belittled it - "What
for?" they asked. Both groups had one key point in
common: they didn't know the first thing about Sumatra.
Most people knew that Singapore is on the tip of the Malay
Peninsula, but they didn't know that Sumatra isjust across
the Straits, that it lies right on the equator, or even that it
is part of Indonesia.
Last year came my chance. With restructuring in my
former company, I opted to leave. Finally I had the three
things I needed - strength, time and money. It was now or
never.
Start from Banda Aceh
From Jakarta I traveled by boat and bus to Banda
Aceh, the northernmost point in Sumatra. The big mo
ment came on September 16. At 6:45a.m. I set off from my
hotel, cheered on by the owner, a former Japanese army
volunteer. I had bought my bicycle a couple days before
and had it kitted out with basket, lamp, and luggage rack.
Praying for a safe journey graced by charming ladies, I
named it Arjuna, after the hero of Indonesian Waayang
shaddow puppet plays.
No sooner had 1 started than I was surrounded by
local people cheering me on. Children on their way to
school shouted out "Hello, mister!" Drivers beeped and
waved. At first I greeted each one with a polite "Yo!
Selamat Pagi!" (Good morning.) But there were just so
many, I soon shortened it to" Yo! “ Already I was enjoying
the unique delights of a bicycle trip — stopping when and
where I wanted to enjoy the scenery and chat with people
along the way. Many, many of the discoveries and joys of
my journey were only possible because 1 was cycling.
When I got back to Japan a lot of people asked me
whatl thought about as I rode. Actually, going uphill I had
no energy spare to think of anything but "When will this
damn hill end? Going dow nhill it would be dangerous to
think of anything but staying in one piece and on my bike.
On the flat parts of paddy fields and coconut trees, what
did I think about? Unfortunately my thoughts were notas
noble as people seemed to expect. Mostly it was some
thing like, "That lunch was too spicy, and expensive, too!"
Why Sumatra?
You may wonder why 1 chose Sumatra. Actually,
my long affair with Indonesia began 30 years ago, when
I was a university student. Asa member of my university's
"Expedition Society" I visited Borneo twice and fell in
love with Southeast Asia. In those days there was very
little information available, and visiting really was an
adventure. Later, after graduating from college, I entered
a trading company selling electrical appliances, and lor
three years, from 1975-78, 1 was posted to Jakarta.
During my stay I traveled extensively in Java, by car and
plane. But 1 managed only a brief trip to Sumatra and
always wanted to go back for a more leisurely look
around.
(Continued on p.14)
13
HERE AND THERE
(Continued from p.13)
can't break though the clouds, and tn places the smoke is
as thick as fog. E\ cn Sianok Valley was out of sight.
During World Warll Bukittinggi was the headquar
ters for the 25th Regiment of the Japanese Army. I walked
around the town following a copy of a wartime map. The
former headquarters is now used by the Indonesian army,
and the army hospital is still used as a hospital. The former
military police barracks and the Japan Cinema building
are still standing afterfifty years. The railway is gone now,
but the station building remains, and I could still read the
station sign.
Sited overlooking the vast panorama of the Sianok
Valley, is the Army Headquarters air raid shelter, now
known as the "Japanese Hole" and one of the town's tourist
attractions. At the entrance there used to be a relief panel
showing laborers allegedly forced to dig the shelter and
then bayoneted by the Japanese forces. Early last year,
however, the panel was removed as there is no conclusive
evidence of forced labor or civilian killings at the shelter.
In Japan, Koshida Ryo's Ajia no Kyokasho ni Kakareta
Nihon no Senso ("Japan's War in Asian Textbooks")
states "Three thousand laborers were mobilized to build
the underground headquarters, and all of them were killed
upon completion of the facility." In a 1986 report, the
Hokkaido Shimbun Newspaper stated "Hundreds of
thousands of forced laborers were involved in construc
tion of underground facilities, and many of them died in
service." However, former Senior Lieutenant of Payrolls
at Bukittinggi, Honjo Hiromichi, notes in his "Construc
tion Log" that the building work was completed in three
months, that there was not a single injury, and that the
laborers were well treated and paid a daily wage through
the Bukittinggi city government. Nearby, however, is the
Umbilin Coalmine and the railway which earned its yield
to Singapore. Up to 30,000 Indonesian forced laborers
and Dutch prisoners of war were involved in the construc
tion of the railway, and many of them perished at work.
or "Tonight I want some chicken satay and a good cold
beer..." I also thought about the history of Japanese
occupation in the area. The Japanese army marched along
the routes I took, and ran cruel brothels in the area...
The best part of the inp staned each day after
finishing my ride. After showenng I'd head to a nearby
street stall fora glass of beer with ice, and long chats with
the locals. Each day the questions were the same: "Why
are you going by bicycle?" "Where are you going to?"
Though they didn't say it, the villagers must have thought
I was weird, doing something so hard with not a penny to
show for it.
Legacy of Japan's Occupation
One of the highlights of my trip was in the town of
Si borongborong, on LakeToba The town's peculiarnamc
means "He who knows, knows." During the Second
World War, Si borongborong was home to a sake factory
run by the Japanese army, and produced a rice wine by the
name of Toba Nishiki. The best Japanese sake is said to be
made in the cold of winter, so I wondered about the taste
of Toba Nishiki, brewed right on the equator... The former
sake factory is now used as a livestock research center by
the IndonesianMimstry ofAgriculture. Remi niscingabout
chilled sake, I took a swig of my local coconut liquor,
Tuak.
On my way back to my hotel I came across a group
of people singing and playing the guitar. The Batak people
of northern Sumatra are known for their beautiful poly
phonic music. The group 1 met that night were also helped
by a good dose of Tuak. One old man suddenly broke into
song in Japanese - a wartime marching song about the
rising sun in the eastern seas. Apparently, he had been a
reserve in the Japanese army. Meeting a Japanese person
after so many years must have brought back memories. He
kept singing marching songs overandover. In fact, on this
trip I met many old people who can still speak Japanese
even 50 years since the occupation army left. "How's Mr.
So and So?" they asked me, checking on the health of their
former superior officers. "Young people nowadays can't
speak any Japanese," they complained, even though the
period of occupation was a hard time, with not enough
food to eat or clothes towear. The reserves must also have
faced rough treatment in the army. They spoke a little of
those hardships, but more than anything, the sight of a
Japanese traveler seemed to make them nostalgic for the
past. Their responses made me realize that even I, bom
after World War II, cannot escape from the legacy of
Japan's actions during the war.
On September 29, I rode uphill for six hours to the
hilltop town of Bukittinggi. At 900m above sea level, it
is cool despite it's location on the equator. The vast Sianok
Valley, the Grand Canyon of Indonesia, spreads out to the
southwest. As I neared the town, the cloud thickened, and
I saw people wearing masks over their mouth and nose. I
found out later it was the effect of forest fires. The sun
Epilogue
On October 21st, after 36 days and 2,850km, I
finally reached the capital, Jakarta. Where shall I go this
year? Privately, I'm already planning, but it's still a little
early to pressure myself by announcing it to my friends.
14
HERE AND THERE
LEARNING BY DOING ~
ILDC EVALUATION
IN INDIA
From January 12-15, AHI course alumni in India
gathered at the Deenabandu Training Center, South India,
to contribute their insights to the ongoing AHI program
evaluation. The India workshop had three basic aims:
1) To assess the impact and significance of the AHI ILDC
as well as the Oriental Medicine Course;
2) To assess AHI's capability and management system in
organizing these training programs;
3) To share information regarding the courses and their
impact with AHI supporting members.
AHI has an especially long history in South Asia,
and particularly Southern India. Since AHI's foundation
in 1980, course participants, facilitators and resource
people from the region have been contributing to AHI's
courses and to its organizational development. In terms of
numbers of ILDC participants, with a total of 67 alumni,
India is second only to the Philippines (74 alumni). After
seventeen years of w holehearted collaboration, then, it is
high time fora formal general evaluation of AHI's courses
and their impact
The evaluation program consisted of two parts, an
Evaluation Workshop held at the Deenabandu Training
Centre, AHI's counterpart in India, followed by Field
Visits to the working areas of two ILDC alumni, from
January 16-22. The 26 evaluation workshop participants
were primarily ILDC alumni from the past ten years, but
also included a number of community development and
health workers from prc-ILDC years, and Oriental Medi
cine Course alumni. Sessions were facilitated by AHI
staff member Taka Nakshima, three alumni participants,
and ILDC resource person Dr. Desmond D'Abreo.
Still smiling: workshop participants in
Deenabandu, January 1998.
organization as a stakeholder in ILDC participation.
Further, while individuals reported that they them
selves had grown tremendously after the ILDC, during
discussion of the micro and macro level changes in Indian
society, most participants also felt that conditions on the
micro or local level had worsened. Does this mean that
the ILDC has little impact at the grassroots level? Or does
it mean that the individual participants are pessimistic
about social change? Or does it mean that when partici
pants discussed the "micro-level situation in India" they
were not referring to theirown working area, but rather to
India in general? It may also be that the positive effects
of alumni's work at the local level are canceled out by
neganve macro-level trends. There are still many points
to clarify' to achieve an evaluation report which accu
rately reflects participants' views.
Learning by doing participatory evaluation
Through this process of clarifying and sharing
different people's viewpoints, the evaluation process is
facilitating learning by both course alumni and by AHI
training staff. Particularly , through the Indian program,
AHI staff are learning and developing more effective
methods for participatory evaluation. AHI staff are
committed to the concept of participatory evaluation,
because it fits with the organization’s vision of develop
ment towards empowering, people-centred, people-con
trolled ways of working and living. However, participa
tory evaluation is very open-ended and process-centred,
w hich makes it difficult to finish w ith clear and solid
conclusions. One issue to emerge regarding the evalua
tion itself w as the need lor various ty pcs of data in order
to meaningfully measure the effects of training.
From professional development to social impact
Preliminary findings are already clarifying the
strengths and weaknesses of AHI's training program.
During the first day's session, participants each reflected
on their own career history and then represented this self
evaluation in visual form, as a "lifcroad map." (Sec picture
this page.) A common pattern in participants' liferoad
maps, was a sharp fall or block to growth upon returning
to work after the ILDC. Many reported that the ILDC was
a period of great learning and re-energizing. However,
upon reluming to work, they faced barriers to implement
ing what they learned in the course. Either the sending
organization or their communities were not ready to ac
cept the participants' new ways of thinking. This suggests
the demand for increased follow-up from AHI for ILDC
alumni, and the importance of involving the sending
(Continued on p.16)
15
HERE AND THERE
(Continued from p.15)
this self-evaluation is valuable,
it would be moreconvincingas
program evaluation if it were
complemented by supervisors'
orcoworkcrs' evaluation of the
parti epants' atu tude and behav
ior change.
Further, if
parti pants were tosupportand
illustrate their self-evaluations
with reports of concrete events,
their statements would become
more understandable and cred
ible.
Participants' recommenda
tions to AHI
Participants' recommen
dations to AHI urged more fol
low-up for alumni, a greater
role for local core groups of alumni, and a focus on
advocacy as well as grassroots work.
The training program evaluation has been continu
ing with workshops in Indonesia and the Philippines, and
using different methods in other countries. Findings will
be compiled and analyzed by AHI staff, course alumni,
counterpart organizations, board members and outside
experts, and put together as a report around the end of the
fiscal year.
Ups and downs: liferoad map of John Augustine, 1995 March ILDC.
In particular.onedilemmanowbeingfacedisachieving balance between "objecuve" standardized data, and
"subjective" assesments. The dilemma was clear in the
evaluation of change in alumni's attitudes and behavior.
Since the ILDC focuses on attitude and behavior change
of participants, evaluation workshop participants also
considered this point Specifically, each participant as
sessed his/her own altitude and behavior changes. While
MESSAGES TO OUR FRIENDS
Suddenly, when the landlord saw my name he realized I
was Okinawan and suddenly refused to rent to me. And
when I was working ala gasoline station, some customers
would look at my name on my uniform and say, "Get
someone else." Another time I saw a hospital survey by
the local doctors' association. One of their questions to
hospi tai di rectors was," Do you accept nurses of Oki nawan
descent?" Little by little the people around me all started
to look like enemies. 1 got scared of telling people my
name. I changed the Okinawa number plate on my car.
And I started getting in fights for the smallest reason. But
I didn't want to go home. There's no work, it's too small,
and then, there are the American bases — I don't want to
face those headaches all the time."
SoTaira-san became an AHI staff member, and for
the past six years, he has been involved with AHI's
domestic programs, including AHI'sspccch festival. Open
House and other local events, study tours, and administra
tive work onAHI membership. He has also made a unique
contribution as AHI musical director, composing the
unofficial AHI song, “We arc the Asians." As well as
singing and composing, he plays five instruments, includ
ing the sanshin, a sort of Okinawan banjo.
AHI's Taira Heads
For The Courtroom
Six years agoTairaKazuki gotinanotherfight, with
a motorcycle gang, and woke up in Aichi International
Hospital, where AHI founder Dr. Kawahara is director.
That was his first meeting with AHI. A few months later
he had given up his job al a local rice warehouse and was
a full-time AHI staff member. He says, "I happened to
have a friend who's a nurse at the hospital. While I was
waiting for my X-rays she went and called (former secre
tary general) Yoshi Ikezumi. She thought we might get
along."
"We started talking. I told him how I was so frus
trated with being treated as a second class citizen just
because I'm from Okinawa (the islands between mainland
Japan and Taiwan). I had come over to the mainland
when I was 19. I wanted to sec why my friends all came
back home so bitter and strange. Besides, there's not much
work in Okinawa Little by little I started to understand
what it means to be Okinawan in Japan. To start with, one
time I wasjuslaboul to sign aconlracttorcntanapartmenl.
(Continued on p-17)
16
MESSAGES TO OUR FRIENDS
(Continued from p.16)
Sato-san Sets Sail:
Taira-san is unusually talented in other ways, too.
Y oung. handsome, and outgoing, he has a gift for commu
nicating and connecting with all sorts of people, as well as
a straightforward generosity. While AHI tends to have a
serious, and churchy image among local people, Tairasan brought a light and easy charm to the organization,
attracting fans among men as well as women. For him,
communicating with ordinary Japanese citizens is now a
key issue for AHI. as the organization is losing supporting
members. "People join AHI because they want links with
other Asian peoples, through AHI. AHI has a responsibil
ity to respond to its supporting members, and it should
have confidence in its special role. If AHI really commu
nicates with supporters, they will not leave."
Looking back. Taira-san says he learned a great deal
during his time at AHI, about Asia and Us people, and
about the struggles of other groups which face discrimina
tion, in Japan and in other countries. He also calmed down
a little. Six years ago, faced with discrimination, he
responded with frustrauon and anger. At AHI he began to
think instead, "What should I do to improve the situa
tion?" This new outlook is now leading him to a new
challenge, studying to become a lawyer. No more
streetfights. Your Honor.
i
cutenuceca
-
i.ec’ieta’ty
Two years ago - how many years younger?
Sato-san as ILDC participant/observer,
1996 Sept-Oct.
In June Mr. Sato celebrates his first anniver
sary at the helm of AHI. Looking back, he com
mented on the road which brought him to his new
career. In the next issue, the report continues with
Mr. Sato's first year review.
Sato Hikaru worked as a physician for 19 years
before joining AHI as general secretary. Asked if it was
difficult to give up his work as a doctor, he answers, with
typical understated wit, “Don’t you think 19 years is
enough?”
Dr. Sato’s dream
The story starts when Sato was still a high school
student considering going to medical school. As the son
ot two Christian physicians, in the close-knit world of
Japanese Christian phy sicians. Sato met AHI founder Dr.
Kawahara, and even spent a summer as a volunteer intern
in Dr. Kawahara’s Nagoya hospital.
But for the next 10 years or so, Sato dnfted away
Irom mainland Japan, fix:used on his drcam of serving as
a physician inSouth India. Dunng his travels as a student,
he had been impressed by the Christian Fellowship Hos
pital, south ot Madras, and set out to work there someday.
His image, he recalls, was of himself in a white coat,
Sing out! Taira-san at the AHI Open
House, October 1996.
Taira-san is succeeded by new AHI
staff member, AKITA Machiyo. Akitasan is fluent in Sinhalese (the main
language of Sri Lanka), so some
alumni may already have received
birthday greetings from her in their
language. Watch for an introduction
to Akita-san in the next issue.
(Continued on p.18)
17
MESSAGES TO OUR FRIENDS
(Continued from p-17)
charged with conserving some
elements and adapting others. “It
would have been fun to continue
as a physician, too. But I felt it
was time for a new challenge.
I’m rcallylucky tobcinvolvcdat
this period of change in the orga
nization. It’s an unusual chance
to play a role in shaping AHI’s
future.”
In the next issue. the report continues with a look back on
Sato's first year as AHI general secretary.
sitting behind a simple doctor’s desk, with a mass of poor,
sick, brown people lining up lor his help.
After completing medical school, m preparation
for his planned work in India, Sato found his first place
ment in the subtropical island of Okinawa. He soon had
another opportunity to prepare as he was accepted for two
years’ advanced study at the London School of Hygiene
and Tropical Medicine. Now with a wife, Sumiko, and
small child, the promising young physician took his next
step towards India.
Sato’s colleagues at the London School were ex
cellent physicians from throughout Asia and Africa. Little
by little, they shattered his dream.
NEWS FROM FRIENDS
A different way to serve - “Nagoya people are pretty
impressive”
SRI L ANKA
On an intellectual level, Sato already believed
people would generally be betterserved by health workers
from their own country, sharing the same language, cul
ture, and community. In his colleagues in London, he
found not only skilled physicians, but also wonderful
human beings - full of energy, humor and love - dedicated
to their work promoting the health of theircountry people.
Now on a gut level, too, he began to question his drcam of
going to work in India.
Meanwhile, the Indian High Commission still
refused to issue Sato a working visa. He was tempted by
an offer of work in South Africa. But his wife, pregnant
with theirsecond child, was ready to return to Japan. Sato
chose family. Back in Tokyo, he continued to apply fora
working visa for India - to no avail.
It was around this time that he began to learn more
about AHI. In fact, he had heard of the organization while
in London, as his father was one of the founding board
members. Sato, bom and bred in Tokyo, recalls, “I
thought, Nagoya people are pretty impressive and aware
of development issues, to start and support an organiza
tion which offers only indirect aid for health promotion
and training for self-reliance. I hadn't thought Japanese
people were ready for that," Perhaps, he thought, this is a
more effective way for me, a Japanese, to contribute to
heal th care and be close to the lives of othqr Asian peoples.
Recently the plantation workers in my field area
participated in a 13-day strike by 350,000 tea and rubber
industry workers. Due to inflation, since 1994 the prices
of essential food items have shot up. However, while the
government has increased public servants' salaries, the
wages of plantation workers remain unbearably low, far
below the wages of other laborers. There are two impor
tant background issues to the strike. First, 80% of the
plantation workers are of Indian (Tamil minority) origin.
Second, the plantations were privatized in 1992 as part of
the government's structural adjustment program.
Nearly all the plantation trade unions united in the
original demand, asking for an increase from the previous
Rs.83/- per day to Rs./125 per day, still below the typical
wage of Rs. 150/ per day for ordinary daily laborers.
However, the company management dragged their feet,
and the plantation workers began their general strike on 5
February 1998.
At this stage the companies agreed to sit down to
talks wi th the trade unions. They were offering Rs.93/- per
day, while the unions were prepared to accept Rs. 105/-.
The deadlock continued until the President of Sri Lanka
intervened. Finally an agreement was reached for Rs.95/
- per day and Rs.6/- as allowance, for a total of Rs. 101/perday. After 18 months the unions will negotiate with the
management for a further increase.
As a NGO involved in the plantation sector, my
organization, the Institute of Social Development (ISD),
supported the strike and conducted several grassroots
level workshops to motivate the workers to join the
strike. Apart from this, with the initiative of the ISD, a
Civil Forum was formed in the plantation sector, includ
ing trade unions and NGOs as constituent members.
Although they could have won Rs. 105/-, the trade
unions lost an opportunity. This has given rise to anxiety
among the plantation workers, which is likely to ad
versely affect future struggles in the sector. Hence, as one
“Lucky to be involved in AHI at this time of change”
After a break of 10 years, then, he contacted his
former mentor, Dr. Kawahara, looking for a way to get
involved in AHI. He was offered work in internal medi
cine at the Aichi International Hospital, nextdoor to AHI
, where Kawahara is director. The question was, what
could he do at AHI? Within a few years, to his surprise,
he found himself in a new career as manager of an NGO,
AHI’s third general secretary. Following the charismatic
first generation of leaders, Kawahara, Yamashita and
Ikezumi, is not an easy task. And this is not an easy lime
for AHI, as it moves to develop and institutionalize. Sato
describes himself as the third anchor in a long relay.
(Continued on p-19)
18
NEWS FROM FRIENDS
(Continued from p.18)
of its awareness programs, the ISD plans to conduct a
workshop for trade union representatives in the near
future. (P, Muthulingam (Muthu), 1994 Sept-Oct
crs. All these courses were conducted in rural areas, some
with the assistance of local community-based organiza
tions. So far, it seems that the training is worthwhile for
the participants. They gained self-confidence, realized the
need for self-reliance, and learned skills for problem
analysis. (Nirmala K. C-, 1994 May-June ILDC)
ILDC)
INDIA
INDONESIA
I very much want to communicate with the AHI
Board of Di rectors about the new training policies they are
considering. First of all, AHI's training opportunities
should be kept open to people from a range of professions,
not only for medical people. Health cannot exist in isola
tion — it involves agriculture, education, culture, and
environment. I do agree that there are alarming new
challenges in the health (medical) sector, and there is
definitely a need for health sector training. However, at
the same time, intersectoral coordination must be encour
aged even more to achieve holistic health.
Secondly. I want to stress the Oriental Medicine
Course. This sort of course is badly needed for countries
like India where ordinary' people cannot afford allopathic
medicine. The short courses on acupuncture, ICN therapy
and herbal medicine arc of great importance, and AHI
should offer them frequently.
The third point I want to make regards the current
process of globalization. Globalization is bringing up
many new issues for community-based health. We must
frame our strategics accordingly to be effective. This is
why I feel topics such as social, economical, political and
cultural analysis of community should be the focus of
future training at AHI, to help communities become
conscientized and empowered for health.
(Anil
Darmayanti with former General Secre
tary Yoshi Ikezumi in Jakarta, 1987-
Thank you so much for the birthday wish. Your
attention made me very happy, and for a while I could
forget the monetary crisis we are facing in Indonesia.
We arc now having a very difficult time, but we
believe with God everything can be solved. We hear a lot
of rumors and information from friends and from the
internet. I assure you that it is still safe to visit Indonesia
Please come! (Darmayanti Saiudung, 1985 Sept-Oct,
Rananavare, 1986 June-July Interantionai Course)
International Course)
NEPAL
We are now thinking hard how our organization,
CBR-DTC, can overcome the impact of the monetary'
crisis. Some of my NGO colleagues in Solo have limited
their activities because of the crisis. I trust that my
organization can get through these problems. (Emilianus
In Nepal nowadays the NGO culture has become
regressive. The number of NGOs is increasing, but the
total outcome is trivial. Sometimes, ratherthan improving
the situation of the poor, these organiazations increase the
burden on society. This has induced me to renew my
commitment to the community by changing the prevail
ing pracuces of these so-called NGOs.
Together with some like-minded friends, I formed
an NGO, the Society for Action and Research for Sustain
able Development (SOARS), and am now serving as
President. We aim to fight against the new exploitation
started by so-called NGOs and to help the most vulnerable
members of the society. The ignorance of these people
towards the functioning of NGOs and in assessing their
own problems leaves open too much room for exploita
tion.
At SOARS we have already conducted training
courses on gender issues, legal awareness, local implica
tions of economic policies, management and partiepatory
planning for NGOs, community-based organizations turd
self-help groups, and leadership training for social work-
Elip. 1996 May-June ILDC)
I still work in Jakarta Islamic hospital, owned by
Muhammadiy ah. 1 am Head of Research and Develop
ment Programs. At Muhammadiyah. my main work is sill
in community development Now my project is devel
oping a health and medicine post in a rural area to help the
poor people from villages obtain health care and inexpen
sive medicines.
(Ms. Atikah Zaki 1986 June/July
International Course)
I am still at PERDHAKI for family planning train
ing. In addition, I am now working on an AIDS program.
It's very interesting to develop ways for the health
staff to motivate and involve the community - motorcycle
(Continued on p.20)
19
NEWS FROM FRIENDS
(Continued from p.19)
CAMBODIA
drivers,vegetable peddlers, and young people - in AIDS
prevention events. As more people learn about AIDS.
they can spread correct information to other people.
In 19961 participated in a course in Switzerland on
"Health Care and Management in Tropical Countnes."
And in 1997 1 took a course in Jakarta on Disaster
Mangement. So I've been very busy.
I am very grateful to AHI, forthe valuable training,
and also for remembering me through birthday cards and
the newsletter. My warm greetings go out to all AHI's
staff. Atother institutes, I have neverexperienced this sort
of personal touch. I'm learning a lot from your model. It
is important to touch all participants one by one. (Eliza
beth Surkalim, 1990 May-June International Course)
BANGLADESH
In 19961 earned a diploma on environmental issues
from the Nehru Foundation in Gujarat, India. In the same
year, my organization. BRAC, formed an Environment
Group, of which I am a member. The Group has started an
Environment Awareness Program (EAP) that will cover
the Women's Health Program. We also designed and
conducted an awareness orientation for all BRAC senior
level staff in October 1996. The awareness program w ill
be conducted with field level staff as well as the members
of our village organization. Ten training specialists were
selected and participated inasix-day TOT course in early
September, 1997.
BRAC has started the following activities, down to
the village level: public sanitation, waste management,
bio-gas, EAP for BRAC-school children, soil fertility
program, organic farming, afforestation and awareness
raising, solar and wind energy projects, arsenic pollution
testing of tubewells in BRAC field areas, development of
alternative drinking water sources (pond preservation,
DTW installation, and rain water collection).
I would be glad if friends from different parts of Asia
could share their suggestions and experience regarding
the above environmental issues. (Shahajan Chowdhury,
1988 Sept-Oct International Course, do Ganu M.
Bary, P.O. Santir Hat Via Mohajan Hat, P.S. MirsaraL,
Dist. Chittagong, Bangladesh)
PHILIPPINES
Mr. Ith Sarin with his 11 month old daughter.
I became a father! (Ith Sarin, 1993 May-June ILDC)
I really gained a lot from the training at AHI. I
realize this now I am a student at Cairo Demographic
Center, Cairo, Egypt Here, I can use my AHI experience
to discuss and share with participants from different
countries. Especially, my ieamingat AHI on globalization
and sustainable development has been very useful in my
current course. (Po Samnang, 1996 Sept-Oct ILDC,
currently studying in Cairo for one year.)
0’
iet taac&f
What's happening in your world?
o
Any suggestions for the newslet§
ter? What do you like? What
o should we change? What sort of
o
information do you want?
%
I am very happy to be involved with AHI again for
the evaluation activities, and to know that after all these
years AHI is still firm in its commitment to Asia.
For three years now I have had a consultancy with a
nationwide community health project, and I still teach at
the Davao Medical School. My family is well, loo, and my
husband is very much involved in church activities.
A&t'a
°a
°
aetd tell ct&f
AHI's e-mail address has
changed. Ournewaddressis:
ahi@j ca.ax.ape.org
(Millet A. Ty, 1987 May-June International Course)
20
=
- Media
RF_COM_H_61_SUDHA.pdf
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