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Private sector contributions

What patterns can we observe in the complex dynamics of mixed health systems?
A woman gives birth in a hospital with the assistance of two female medical officers
© UNICEF/UNI73176/Holtz

What patterns can we observe in the complex dynamics of mixed health systems?

In this week we have already looked at some findings within the Lancet series on the private health sector and universal health coverage. Mackintosh and colleagues (2016) focused in this series on characterising these dynamics across a wide range of countries. To do so, they used data on three dimensions of the private sector:

  • The extent and pattern of private finance within health-care expenditure as a whole (demand side)
  • The scale and level of the private sector enterprises in health care, indicated by their weight in the use of ambulatory and primary, and clinic-based and secondary, care (supply side)
  • Accessibility of the public sector, measured by the extent to which the public provision relies on fees

Using the data found on three dimensions of the private sector, Mackintosh et al. generated a typology (classification) of five types of mixed health systems. Let’s look at each of these in turn.

Type 1: Dominant private sector (e.g. India and Nigeria)

Countries with a dominant private sector have out-of-pocket spending as a very large proportion of total health expenditure, with primary and secondary care dominated by the private sector, while the public sector is significantly compromised and may also be reliant on user fees. This is typically linked to rapid growth of the private sector, low quality public services available to the poor, and few safety nets for the poor to access quality care.

In India, this means that more than 80% of publicly funded health insurance scheme reimbursements go to private providers.

Type 2: Private sector complementing universalist public sector (e.g. Sri Lanka and Thailand)

This type of country has relatively modest private health expenditure, and the private sector has a small share of hospital services, and a moderate share of primary care services. The public sector provides close to universal coverage, with low or no user fees, meaning that the private sector’s role is to complement the public services and fill in gaps.

In Sri Lanka, this means that richer people spend relatively more of their income on the private healthcare than the poor.

Type 3: High-cost private sector heading a stratified system (e.g. Argentina and South Africa)

This type of mixed health system is characterised by large proportions of private and social insurance in health spending, and a private providers having a significant share of secondary and primary care, but co-existing with financially accessible public services who mostly provide care to the poor.

In Argentina and South Africa, this means that private health insurance finances hospitals and clinics (for richer people) while the poor generally rely on lower quality public provision. The better off spend most on healthcare through health insurance while the poorest spend most out-of-pocket to buy drugs. Private care is also geographically focused in richer areas.

Type 4: Highly commercialised public sector undergoing reform (e.g. China)

These countries have a high (but falling) share of health expenditure that is private, but with private services accounting for only a small share of care. Most expenditure is in a heavily commercialised public sector which relies on fees and charges.

“China is a good illustration, with useful lessons for less extreme cases, of the emergence of public sector commercialisation from ad-hoc reform, of its effect, and of the scope for tackling perverse market effects through subsequent holistic health system reform” (p 601-602).

Type 5: Stratified private sectors shaped by low incomes and public sector characteristics (e.g. Tanzania, Malawi, Ghana, and Nepal)

This type of mixed health system had high private expenditure, which has for most countries fallen over time. There are private hospitals and clinics for wealthier people, and private shops, clinics and informal provision for the poor. The public sector in this group of countries may have some reliance on fees and charges, which then affects demand for private services.

In Ghana, Malawi, Tanzania, and Nepal this means a sub-sector of secondary level private clinics and hospitals attended in growing numbers by wealthier people. Deregulation has also allowed smaller scale and poorer quality providers to flourish.

Mackintosh and colleagues have described the role of the private sector in each of their typologies, but they have not always described how the public sector functions.

Can you briefly describe the public sector role or performance for at least one of these typologies, based on what you see described here and what you may know about countries in each category? What links can you observe between the public sector role and the private sector roles?

When you have noted down your thoughts, the pdf document (available to view in the ‘downloads’ section below) has some suggestions for how the public sector is likely to look for each category in this typology.

Mackintosh, M, Channon, A, Karan, A, Selvaraj, S, Cavagnero, E & Zhao, H, 2016. ‘What is the private sector? Understanding private provision in the health systems of low-income and middle-income countries’, The Lancet, vol. 388, no. 10044, pp. 596-605.
© Nossal Institute for Global Health at the University of Melbourne
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