Typology and characteristics of private sector providers in mixed health systems

In many LLMICs, a key barrier to a policy approach to the PHS is the inability of policy-makers and planners to accurately characterise it. This is because the sector is often heterogenous and provides a broad array of services from small shops selling medicines to independent practitioners, including unlicensed providers, to large corporate hospitals and private insurers.12 Different types of providers serve different types of populations, provide different kinds of services and most importantly require different regulatory strategies to better align their activities with the overall goals of the health system.11 Strategically leveraging the role of the PHS should start with an assessment of the sector’s diversity, composition and contribution.13–15 While it is challenging to classify private providers in well-defined categories in LLMICs, in this paper we have adapted the categories of private providers as defined by McPake and Hanson11 (Table 1).

The role of private sector in implementation of EPHS

Much of the existing literature on EPHS focuses on package development. Much less information is available on country experiences regarding implementation of these packages and even less on the role of the PHS, except in certain areas such as health insurance and commodity supply.16 More pertinent information is available regarding public–private partnerships (PPP) through outsourcing of publicly financed health services to the PHS, although it is often not specific to the delivery of EPHS.17–19 Previous experience on implementing EPHS comes mostly from countries that are in crisis and those in postconflict states that receive significant donor funding for health, such as in Afghanistan,20 Cambodia,21 East Timor, Mozambique and Uganda.22 Two illustrative examples from Afghanistan and Cambodia are briefly discussed.

Around the year 2000, Afghanistan had some of the world’s worst health indicators and a devastated health system. The public health sector was largely dysfunctional, with services delivered by a multitude of national and international non-governmental organisations (NGOs). In parallel to the development of their EPHS (called the basic package of health services) in 2003, a decision was made by the Ministry of Public Health (MOPH) to contract NGOs to provide these services.20–23 Despite concerns that health service delivery was a function of the state, the donors encouraged contracting with well-established NGOs for provision of EPHS in defined geographic areas.24 The NGOs were paid according to budgets they submitted, with full payment depending on achievement of agreed-on goals. The institutionalisation of a grants and contracts management unit within the MOPH allowed the Ministry to lead the nationwide implementation of EPHS, which was instrumental in increasing access especially for women and increased use of services for birth deliveries.20

In 1999, in Cambodia, management of public sector primary care facilities was contracted out to NGOs in five randomly selected districts.21 The contracts specified targets for maternal and child health service improvement. The programme increased the availability of 24-hour services, reduced provider absence and increased supervisory visits. It involved increased public health funding and led to offsetting reductions in private expenditure as residents in treated districts switched from unlicenced drug sellers and traditional healers to government clinics. Concurrently, the Asian Development Bank piloted two models of contracting for health services: (1) contracting out, where contractors had full responsibility for delivery of all district health services in accordance with the Health Coverage Plan and (2) contracting in, where contractors only managed district healthcare services, with staff remaining MOH civil servants. An evaluation found that contracting to NGOs was feasible, cost-effective, high performing and equitable and effectively targeted and benefited the poor.25

Feasibility of engaging the private sector in implementing EPHS: experience from six countries

More recently, the Diseases Control Priorities 3 (DCP3) Country Translation Project26 conducted a review of the experience of Afghanistan, Ethiopia, Pakistan, Somalia, Sudan and Zanzibar27–32 in setting and implementing EPHS using the DCP3 evidence and model packages. All countries have a mix of public and private providers. Formally registered providers operating as individuals or small to medium facilities seem to provide the bulk of services in the private sector, especially in urban areas. Despite its importance, the PHS does not play a major role in the delivery of EPHS. As mentioned, Afghanistan is an outlier, where most of the essential package of health services is delivered by NGOs through outsourcing of services. Notwithstanding its short-term benefits, outsourcing is unlikely to be sustainable because of the unpredictability and increasing scarcity of external aid for health.33

There is a wide range of private healthcare providers from large tertiary hospitals, qualified practitioners to unqualified providers in all six countries. In all countries, policy and regulatory frameworks exist to varying degrees to govern the PHS, but no country, including those with social health insurance programmes, is using this sector in the delivery of EPHS.

All countries, except Ethiopia, have policy frameworks that support PPP. The predominant mechanism for engagement of the PHS is contracting. PPPs are being used in Afghanistan, Pakistan and Somalia to enhance delivery of services. There is only limited use of social marketing and franchising in delivery of the EPHS, except for services such as family planning in Pakistan and family planning and nutrition in Afghanistan, but they are being actively considered in Zanzibar. Out-of-pocket expenditure as a percent of total health expenditure is substantial in all countries except Zanzibar, where it is less than 20%.

Table 2 summarises the feasibility of engaging the private sector in the implementation of EPHS and presents information on related health financing and service use indicators in the six focus countries.

Key challenges to engagement of the PHS: implications for EPHS implementation

There are multiple challenges to engaging the private sector in providing high-quality services as part of EPHS implementation. The first is incomplete information to understand the complexity and heterogeneity of private providers, which is a prerequisite for devising a clear role for these providers in implementing an EPHS. Second, private health providers are part of complex mixed health systems and need to complement the public sector without operating in isolation. The various roles that the private sector play in mixed health systems are elaborated in box 1.12

Third, equity and population coverage become a challenge when the PHS is left to its own choices. Without any public subsidy, it generally provides only a limited set of services and crucial public health services are neglected. Private providers therefore are not geared to provide universal coverage of needed services even at the primary level without clear financing mechanisms, additional incentives and performance monitoring.11 Fourth, there are challenges related to quality and performance. It is often asserted that people use health services from the private sector because of better perceived quality compared with the public sector.34 However, perceived quality is often confused with technical quality and patient outcomes. In many cases, overall services are of low quality in both public and private sector.35 The final challenge relates to system inefficiency. Private health services may add to the overall costs of care through, for example, overuse of diagnostic services and expensive medications leading to waste of resources and other system inefficiencies such as antibiotic resistance. For routine and simple ailments, the public sector is more efficient by limiting overuse of resources and treatments and by providing preventive and public health services.35

Leveraging the private sector to achieve UHC: what can governments do?

There is no denying the importance of engaging private health providers in the implementation of UHC packages in the context of LLMICs. What is less clear is how to do so, as the evidence is rather limited. Summarised below are the associated challenges and opportunities based on country experiences and possible options for governments to consider while implementing EPHS in partnership with the PHS.

Characterising private providers is essential to understanding their composition, characteristics and contribution to the overall provision of healthcare and in determining how the private sector will behave and respond to regulatory tools, incentives and disincentives, and market supply and demand dynamics. In systems where the public sector is inadequate and/or of low quality, engaging the private sector in delivering EPHS seems a realistic option—at least in the short to medium term—for rapidly improving access to essential health services and enhancing financial protection.36 37 Such engagement has its challenges related to governance issues, such as dual practice of health providers,34 poor quality of care, regulatory compliance and limited number of private service providers creating a barrier to the rapid increase in access to services.

One of the key take-aways is that while private providers have an important role to play in these contexts, they are not a panacea to the problem of limited, poor-quality access to healthcare services.12 37 For instance, the current evidence is mixed whether financial protection will be provided when services are offered by the private sector as part of a publicly funded benefit package.34 36 Although the private sector may play a significant role in the delivery of a publicly financed EPHS, concurrent improvement in the quality of public sector healthcare delivery in strategic and planned ways is an imperative. Whatever strategies are used to involve the private sector in the delivery of UHC packages, it is necessary to pay attention to the issues of performance and quality. Various regulatory tools such as credentialing, accreditation and use of key performance indicators in purchasing interventions from the private sector along with regular monitoring and enforcement will be needed.37

Several strategies can be used for regulating private providers such as better statutory control to prevent unlicensed practice, self-regulation by professional bodies to maintain professional standards of practice, and accreditation (especially of large private hospitals and chains). Additionally, purchasing delivery of essential services by engaging private providers can serve as an effective ‘regulatory tool’ to modify provider behaviour.

Large-scale purchasing of interventions has mainly been used in postconflict situations. While this may be a useful strategy to quickly increase access to services, its long-term sustainability is questionable, especially as donor interest fades over time.33 36 In Lebanon, the key challenges to contracting were a weak enabling environment, weak clinical governance and poor marketing and promotion of the package.36 In Egypt, PPPs have been used to deliver services for the basic package of health services for child and maternal care, primary care and laboratory services, directly managed by a Family Health Fund. In Pakistan, contracting with private providers has been used to improve access to services in remote areas or to improve the functionality of existing public sector facilities.34 However, the evidence for whether such efforts improve access and quality of services is mixed even for small portions of services.17 For contracting to be sustainable requires building capacity of the local governments to take over, having collaborative planning and review processes and involving key partners including community stakeholders in planning and monitoring.38 Further, assessment of cost-saving and value-for-money is key for financial sustainability, and should be part of monitoring and evaluation frameworks of such interventions.39 Given the unpredictability of global aid flows for health, governments in LLMICs need to increasingly rely on generating domestic revenues and using them efficiently.

Evidence for financial protection is also not clear. In Nigeria and Argentina, the adequacy of funds has been a problem, only a limited set of services could be provided, and financial sustainability of purchasing interventions has been questioned. In addition, most contracting initiatives in many LLMICs have not had a pro-poor focus, which suggests inadequate emphasis on equity.34 Therefore, given the evidence so far, it is not clear that large-scale purchasing could be an effective, efficient or sustainable strategy to provide the larger number of services included in an EPHS.

One view is that a package can be a tool or instrument of systematising and aligning the interests of private providers with the overall goals of the health system. In turn, the package can be leveraged as a coordination tool for organising the healthcare system and its components, such as financing, purchasing, provider payments and the organisation of service delivery, conceptualising the role of the private sector within this framework. The explicit nature of the package also facilitates negotiation and conditions of contracts between providers and the government.40

While incentives to providers are not always explicitly aligned with EPHS, in some countries there is evidence that purchasing strategies are used to ensure quality and efficiency in delivery of the packages. For instance, in Argentina, resources are linked to prioritised services and the outcomes obtained by the providers. Whereas in Mexico, where resources to providers are not linked with the services in EPHS, providers have limited incentives to provide services included in the package.40

Given the urgency to meet the UHC goals, what can governments do to navigate the challenges of implementing EPHS and progressively achieving UHC, and enhancing health security in the postpandemic scenario, while dealing with the uncertainty that is inherent in working with large, heterogenous, insufficiently documented and poorly regulated PHS? First, policy-makers need to characterise and understand the PHS in terms of service mix, health expenditure, distribution of services, as well as its interactions with the public sector as a prerequisite to its involvement in implementation of the EPHS. Second, attention must be paid to the supply side, especially the availability of health providers of various categories as that can limit their role in rapid expansion of service delivery. Third, a systematic preassessment of private providers and facilities should be conducted to identify any shortfalls in infrastructure and personnel needed to provide the services included in the EPHS.16 Delivery of EPHS will not be realised unless these gaps in health systems are systematically identified and addressed.3 Fourth, investment and capacity building will also be needed in developing high-quality contract management monitoring and enforcement systems. Finally, increase in overall health expenditure is a must for effective engagement of the private sector in EPHS implementation.

The health systems in three of the six countries assessed have been devastated by conflict, political instability and underinvestment. They face unique challenges of coordinating and dealing with the fragmented aid system accompanied by large number of NGOs supported by donors who come with different approaches to planning, financing, implementing, monitoring and evaluation. The governance system in those countries has either collapsed or been severely weakened and financing healthcare largely depends on foreign aid. Yet, opportunities also exist to rebuild their health systems, including the options on models of service delivery, for example, the adoption of public financing and private provision. Recent experience in these countries shows that policy-makers are more receptive to positive change than one would expect to encounter while transforming rigid and unyielding health systems.