Comparative advantage of the private sector in delivery of health services

The report found that the evidence on this topic is often mixed and sometimes conflicting and policy implications are unclear

Abstract

The query for this report:

  • What are the areas of likely comparative advantage of the private sector in delivery of health care services for public health goals? In particular, in the areas of Maternal, Newborn and Child Health (MNCH) and Sexual and Reproductive Healthcare (SRH) including work with adolescents and Sexual and Gender Based Violence (SGBV)

There is a considerable body of evidence on the private provision of healthcare in low- and middle-income countries, often focusing on sub-Saharan Africa. However, the evidence base is not robust. Evidence is often mixed and sometimes conflicting and policy implications are unclear.

The arguments in favour of private healthcare suggest it is more responsive and efficient, while arguments in favour of public services suggest they are more equitable and better equipped than the market to respond to health needs. Some studies find that the private sector is unregulated, has financial incentives for inappropriate healthcare, and is expensive.

There is very little evidence on the comparative cost-effectiveness of the private sector. This varies considerably across country contexts and types of services. There is no conclusive evidence that the private sector is more cost-effective or more efficient than the public sector. The literature warns that increased use of private services may crowd out or decrease the funding available to the public sector.

The major criticism of private sector services is that their higher user fees create inequality of access, limiting their use by the poor. The literature is quite clear that private for-profit health services create inequality. Private non-profit, or services run by non-governmental organisations (NGOs), appear to mitigate some of the inequality effects.

In practice, boundaries can be blurred between public and private; both formal and informal cost recovery schemes operate at public facilities. NGOs providing healthcare are generally seen as private, although they may not charge for their services. The difference between free-at-the-point-of-use NGOs and out-of-pocket-expenditure on private doctors can be enormous, and it is important to differentiate between the types of providers when reviewing the evidence on private services.

Citation

Health and Education Advice and Resource Team (HEART). Helpdesk Report: Comparative advantage of the private sector in delivery of health services. HEART, Oxford, UK (2016) 9p

Comparative advantage of the private sector in delivery of health services

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