By: Dr Owain WilliamsThis is the final part of the collection of posts on the triple crises of private health, these largely having focused on the private hospital sector. I will be splitting this post into two parts, one looking at national responses and the other the emerging multilateral governance of the crises of private health.
So far, by means of focus on a range of LMICs and the United States, with other outlier examples from other OECD countries, the background to these crises has been detailed. Private health and hospital care should be understood as having numerous long-burning market failures embedded within them. These include failures surrounding price signalling problems, long-term lack of access to healthcare by the poor, informational asymmetries between price setters in health and those paying for services, and market failures more widely construed, whereby there are routine and predictable failures in providing welfare and public goods like health. These existing market failures have all been multiplied by the present viral crisis.
Underlying present problems are histories of health sector privatisation, financialization, austerity, government neglect, and assumptions of market efficiencies and the promise of private sector investments for plugging gaps in national health systems. These processes have all played their part in prepping systems of private health for its present systemic problems. The erosion of publicly provided health and erosion of state capacities in health, toward a hollowed out and one-step-removed set of governance of private sector providers, have made the COVID response chaotic and uncoordinated in many countries. The parallel private health system has proven hard to assimilate into pandemic responses by existing legal and regulatory arrangements, and many countries and sub-state jurisdictions have had to scramble to develop new sets of instruments to get the private sector on board withing national responses and capacities. The multilateral level has in many ways been far worse in its direction.
Thus, as I have detailed in previous posts in this train, the hasty nature of many state responses to private sector failures in the pandemic are not really surprising, as many states have much withdrawn steadily from health systems governance and service provision. The ascendancy of the private sector in health systems has also involved a process of state withdrawal from health, with reformulation of its role creating the spaces for commodified health. Tertiary health, in particular, has been marketized and privatised and largely removed from the public domain, and both these journeys have been deliberate historical and political processes which have permitted private sector to become preponderant in many national health systems.
In brief so far, I have detailed how market failures have interacted with the pandemic to produce a financial and liquidity crisis in the private health and hospital sectors, with various drivers mass disruptions of established service models (based for example on elective care)[1] leading to bankruptcy or temporary suspension of services. The liquidity and financial crisis has in turn led to a crisis in service provision and in pricing of services, particularly for COVID patients needing hospital care. In many countries the bulk of hospital bed capacity and ICU lie in the private sector, and this has granted larger providers fiscal space to operate and use capacity as leverage for income from COVID services.
Finally, state dependence on the private sectors, combined with the needs of capacity as COVID cases either surge or threaten to do so, has led in turn to a crisis of state market relations. This has been evidenced in range of ad hoc governance responses and negotiated or enforced arrangements, with an attendant multilateral responses by a range of key institutional stake-holders whose involvement in health systems governance and policy is longstanding.
Many of the governments who have neglected public health, by means of external conditionalities or through their own ideopolitical preferences, accepting the status of the private sector as parallel and separate system to that provided publicly, have basically been caught out by the degree of market failure in the pandemic. Responses and attempts to rapidly control or assimilate private sector capacities, where present at all, reflect much of the ad hoc nature chaotic nature of state governance of many dimensions of the COVID pandemic, especially when state responsibilities to populations have collided with multiple market failures that have characterised health sectors and technologies. In private health as much as in other areas experiencing market failure - PPE supplies, vaccines and medical oxygen - this represents a basic failure in disaster planning as much as it is a product of wider governance failure.
The crisis of state-firm relations between private providers and governments is also being propelled by deep discontent with, and loss of legitimacy of, the private model of health service delivery. Discontent across the world with the public-private partnership model is clearly emerging from publics and health workforce - both have both been routinely failed by it throughout the pandemic. Workforces in the private health sector have undertaken industrial action because of the lack of protections offered to them, as well as the fate of colleagues who have lost their jobs because of the financial impact of the pandemic on providers. The public in many countries has also been increasingly voicing dissatisfaction with the failures of governments and firms in being unable to provide adequate access to hospital care, with or without exorbitant prices. This discontent is filtering up to governments and leading to a ratcheting-up of discourses framing the need for real radical change to the marketized and parlous state of many national health systems.
If the private sector stays afloat at all in a prolonged pandemic, then it will need reform or massive state and/or multilateral financial intervention to do so. It will also require new forms of political backing, legitimacy and stabilisation, at least in the face of antagonistic populations. Indeed, the present triple crisis may be the basis of radically new arrangements with providers and the business model that has developed in recent decades. Certainly, the role of the private sector in progress to UHC, as well policy momentum and measures toward health financing and population access, are all very much at a juncture where the legitimacy of the private sector is in serious question.
The Crisis of State-Firm Relations
As has previously been argued, it is certain that many European countries with high levels of private health and hospital service provision have not suffered problems in governing the private sectors role in the pandemic response as has been the case in many LMICS and the USA. Good governance and systems of progressive risk pooling ensure that majority of populations in countries such as the Netherlands, Italy and Germany have been ensured access to hospital care throughout the pandemic, and degrees of surge capacity are present in the routine composition of the private system. But it is misleading to portray state responses in Europe as not requiring serious intervention in private health.
Indeed, many of these more successful mixed models have required emergency legislation and injections of state finance to ensure service continuity, as was the case with Germany, perhaps one of the most robust of all mixed systems with prevalent private hospital care. As early as March 23rd, Germany chose to intervene at the federal level with the Covid 19 Hospital Discharge Act, this with a range state measures boosting hospital liquidity and setting up a compensation scheme for practitioners suffering an already critical shrinking revenue stream, and guaranteeing patients reimbursement for services.[i] Empty beds would receive up to €350 per day until the end of September 2020.[2] Australia was also forced by threat of private hospital closure to intervene in the same week (March 31st), guaranteeing private hospital treatment income and other forms of wage support for the duration of the pandemic in return for access to capacity.[ii] In Belgium, the government gave private hospitals an up-front €1 billion to ease liquidity. In countries in Europe where public hospitals receive government revenues with mixes of normal monthly payments and new fee for COVID treatment payments covering shortfalls, as is also the case in the Czech Republic and Poland. Switzerland has granted compensation for loss of electives to the private sector as well as bridging loans.[3] In Europe there has been a mix of financial arrangements reached, but it is all in the direction of stabilization and continuity of access. These more functional deals toward reveal both government recognition of dependence on the private sector and the degree of industry need for liquidity. Nonetheless, intervention in markets has been required to keep the model alive and services intact for the pandemic and afterwards.
Interventions of various forms have also become apparent in rather more dysfunctional and fragmented health systems, where poor governance or more laissez faire arrangements characterise state-firm relations with the private health sector. A spectrum of responses across countries and sub-state jurisdictions have emerged, involving a timeline in which various governments are either forced proactively to intervene in market failure to meet pandemic needs, or where they have been progressively and chaotically dragged in to doing so. In almost all instances, and even where proactive governance has been apparent, policy and legislation has been constructed on the hoof and private firms have displayed degrees of resistance. We now have often very fractured and oppositional relationships with private providers, which in many countries have had to be brought into line in terms of service provision or the prices being charged. In some cases, the private sector has reached deals or relations with governments that clearly benefit their positions and financial needs, far greater than public good or emergency needs would seem to demand. The state is not always in the driving seat in this respect.
Many of these state responses and state-firm relationships have been detailed in previous posts on the triple crisis, particularly regarding state-enforced price capping and fee for patient/service arrangements. But it is worth giving detail to examples of the types of governance across this loose spectrum that have become apparent and are still chaotically emerging. The response spectrum involves what can be characterised as laissez faire and business as usual relations; subsidy and negotiation; regulation and legal intervention; sanction and threat; through to sequestration of capacities and nationalisation.
The more laissez-faire, hands off approach to the private sector is still very apparent in a range of countries – this cutting two ways. First, governments are unwilling or unable to rescue the private sector in the form of emergency cash interventions to provide badly needed liquidity, or in terms of the present inability of some governments to fund the sector by means of state-based insurance transfers for COVID patients, or indeed for other forms of state covered service provision. The crisis in in private sector liquidity has also had a counterpart crisis in government liquidity, particularly evident in the reported failures in reimbursements being experienced in a number of countries: for example, in Kenya, Lebanon, and Iraq. This will need further monitoring, especially in countries dependent on commodity exports as a source of government revenues, and may indeed be a more widespread problem in LMICs than this research has revealed. On the other hand, in the US, for example, we see fairly unconditional attempts to stabilise the private sector under the Cares Act in April, with a $175 billion injection into private sector health. Despite the fact most US hospitals and associations immediately saw this as hopelessly insufficient package, as compared with losses emerging, the US federal government seemed willing to let the private sector crisis unfold unassisted after this, leaving providers and the US population to mediate events and arrangements, albeit with substantial and uneven state-level variations in governance, policies and financial and service arrangements being present. Huge job losses in the private sector health are reported to be ongoing.
More interventionist policies have been demanded in a range of states, these involving mixtures of emergency regulation, negotiation, threat of sanction, litigation, and political decrees, all directed at securing access to private sector capacities and price capping for COVID treatment. The governance response to hospital in many ASEAN states has been much more proactive, early and direct, with a range of countries unilaterally and often rather aggressively passing legislation, or simply decreeing limitations on private providers. In Egypt, for example, emergency powers were passed on April 22nd to effectively sequestrate private hospitals (as was the case in Ireland) for the pandemic response. In the same month, Thailand legislates to prevent private sector from charging COVID patient user fees. Malaysia, the Philippines, Thailand and Indonesia all secure COVID treatment and fixed government subsidised rates.
In Brazil, more laissez faire approaches at the federal level are apparent, with range of ad hoc state-level deals emerging as April saw widespread infections overwhelming the public hospital system, with many private hospitals still enjoying free capacity. The Bolsonaro government continued to resist pressure to intervene federally, or respond to a situation where much of Brazil’s ICU capacity lay in the private sector. There have been half-hearted and piecemeal attempts to unify a the public and private sector response since then, with very uneven state and even city-based funding programs and agreements. By July massive disparities in survival rates of COVID patients are reported between the private (50% survival) and public system (just 34%), these reflecting deep inequalities in standards of care and real social and regional divisions in terms of access to private care.[4] One of the stories to emerge across many LMICs – such as from Chile, Uganda, Kenya, India – is how an extant and two tier health and hospital systems has led to markedly different outcomes in terms of mortality in those treated in the private as opposed to the the public system, or indeed for those not treated at all because of a lack of basic access to any hospital care.
Previous posts have centred on the situation in India. It is worth stating flatly that the governance response to the service and pricing crisis in that country has been chaotic and confused, not least in terms of the still highly fragmented and largely state-based health systems governance responses to the private sector crisis. State governments - such as in Maharashtra and Delhi, the initial epicentres of India’s COVID epidemic - first reacted slowly to emerging evidence of the private sector withdrawing services or charging exorbitant prices early that countries epidemic in April and May. The central Modi-held Union government has continued to display its historic apathy to public health, and have not intervened to curb the behaviours and gaming of rules and emergency regulations that private hospital providers have been undertaking the state level. Indian states have moved through their own trajectories of responses to the service and pricing crisis, with even pro-market ruling BJP administrations becoming increasingly aggressive toward private providers.[5][6] Despite multiple states capping prices for treatment of patients, and despite sequestration of beds and capacities by legal means and emergency powers, the situation has been anarchic, with tensions and real divisions emerging between state governments and private providers. There is consistent evidence of firms still routinely breaching price caps and gouging, turning away COVID patients and hoarding beds,[7] and even for unlicensed provision treatment. States have reacted with the sequestration of hospitals, enforced openings, prosecution, and other measures, but circumvention of law and emergency measures have continued through to September 2020, nonetheless. A number of hospitals have now been seized by state governments for continued breaches. India is boiling with press and civil society demands that the neglect of the public system and unfettered 'regulation' of the private sector[8] cease, with new investment in public health demanded from numerous quarters. Nationalisation is also a rapidly apparent discourse.
In other LMICs, private providers with strong market positions and huge hospital capacities in aggregate national terms have been able to exploit government reluctance to intervene in terms of sequestration and the wider need for capacities additional to the public system during the pandemic. Theswe firms have negotiated hard on prices. Added to this, there is suspicion in countries such as Mexico, Brazil, South Africa the UK, India and Peru, that there is complicity in preserving the private model and political and ideological influences at play in the price agreements being settled. Notwithstanding often cosy relationships between the private health sector and governments, some of the government deals for hospital access have been eyewatering, particularly when compared to the limited financial resources at the disposal of LMICs. South Africa’s has made a high-profile deal with the Big 3 firms dominating the private hospital market, with the multisite Netcare, Mediclinic and Life accounting for more than 80% of the hospital beds and 90% of all the admissions, serving just 27% of the South African population. The sector was reported as holding over half of the national critical care beds. After more than 2 months of negotiations the Big 3 agreed on a price per patient of Rand 16,000 (US $950) per day in mid-June. This is a huge potential cost to the nation. Similar patterns of firm leverage and hard negotiation are present in Peru, with a hard-fought deal seeing private providers get $15,000 per COVID patient deal also in June, an astronomical figure given that countries resources and normal health budget.[9]
In all, it is deeply concerning that long term neglect of public health systems and increasing penetration by financialized private health of LMIC systems has not been balanced by coherent or concerted governance responses to the private sector liquidity and service crises. There is clearly in-built market failure in the balance of services in many countries, and their basic orientation to better off populations for rent seeking. The chaos in countries such as India also reflects badly on national pandemic preparedness, and the clearly mismatched profile of many LMICs national health systems to pandemic emergency needs. The private sector as such is one component in the failure of disaster planning in many states, and yet another damning verdict on the health systems gaps left in place by the global health security agenda and the policies that have rolled back public health. If the private sector emerges intact financially from the pandemic, it should expect to encounter much more opposition from civil society and health workforces to its role in healthcare, with regulatory push back from governments and far tighter controls on market entry and competition. As countries ostensibly move to UHC, the private sector should be rolled back and replaced by public financing for public service provision. Governance at the national level has failed as much as private markets for health, and many are already considering way forward to UHC, both radical and by means of go-to reform discourses of new financial instruments and better regulatory measures:
‘In some countries, privatization of the hospital sector has taken some extreme forms over the last decades; national or local governments may want to reinvest the sector and take back some control. In nearly every country, there will be some strategic questions under the ‘Build back better’ agenda. Is it relevant to save, with public money, all hospitals in difficulty or should there be some criteria? Should some extra conditions be added (e.g. obligation to merge with another group or close some activities)? Should new rules be enforced (ex. obligation to report some health and economic data or mechanisms leading to a downward revision of prices)? These schemes will be key for the survival of many hospitals but could also be strategic for much better foundations for UHC.‘
Multilateral governance and the Triple Crises of Private Health
Global governance responses to the crises in private health and hospital care are still emerging. However, it seem immediately clear that we cannot understand responses to the severe private sector crises under COVID without appreciating some of the key movements in the recent history of multilateral governance and policy regarding health systems. We need to understand the constructed and financed role of the private sector in areas such as health systems strengthening and Universal Health Coverage (UHC), all by the direct and indirect means that austerity and debt driven global economic governance of the last four decades has propelled. What is occurring at the multilateral level presently is bound by institutional policy approaches and historical ideological orientations to the private sector and markets and health. If the private sector survives as a viable entity in national health systems of many LMIC – either financially or politically – it will be due to a large part to multilateral path dependency and political and financial support of the sector, both of which are readily apparent in global health and wider global governance.
Before peeling back to this wider history today’s piece first looks to the immediate multilateral crisis response. The responses to the triple crises of the private sector are only nascent, but there are discernible positive framings and concrete measures to prop up private providers. It must be said that multilateral institutions and donors are in many ways bound by the same realities facing national governments – there is little alternative to private sector capacities in LMICs for the pandemic, nor toward establishing rapid measures to engage and assimilate providers in national planning, in the short term at least. However, beneath immediate and crisis action plans and stability financing, money for training, infrastructure improvements and PPE and other essential supplies, there is a great deal of framing of the crises in the private sector that indicates longer-term ideological and political commitment to the public-private partnership model for health systems. In fact, present multilateral (and donor) framings of ‘engaging the private sector in the COVID response’ are borrowing readily (and very directly) from recent high-level political commitments expressing the need to engage private the providers in progress to UHC. The re-commitment to the private sector in the COVID crisis, albeit tinged with multiple statements of ‘the lessons learned’ and the ‘need for change’ in areas such as investment in public health systems and financing for equitable access, reflect an effective political and policy détente that has been reached among the key multilateral institutions with a governance role in health systems.
The WHO has clearly identified the wide impact of the private sector financial and service crises under COVID, and has set about establishing means to to stabilise and engage private providers in national pandemic response measures.[1] While admittedly this is still part of a crisis response, in truth it has not added up to much at present. For example, WHO has responded to COVID and the financial and service problems facing private healthcare firms and governments by assisting in national audits of capacities lying in the sector; in the support of a Resource House on private providers (run by Impact for Health, and amounting at present to no more than a very useful digest of news reports of private sector problems in a range of countries); and a few national studies (Kenya and Rwanda) focused on government and Ministries of Health experience of harnessing the private sector in the COVID response.[2]
Apart from this, WHO has linked its private sector response to the newly badged Health Systems Governance and Financing Department (HSGF), and the Advisory Group on the Governance of the Private Sector for UHC (AG), this convened in 2019 to provide advice as to the regulation and engagement of the private health sector in SDG commitment to Universal Health Coverage. The pandemic has seen the Advisory Group, Impact for Health and HSGF constitute and assemble the WHO’s Private Health Sector for COVID-19 Initiative, a 3-phase plan starting with rapid audits of capacities and dialogue, through to offering ‘a rapid, real-time, evidence-based, tailored support to countries that will drastically improve private health sector engagement’ in pandemic responses, these directed at constituting an appropriate ‘whole-of-government’ and ‘whole-of-society’ approaches.[3]
Most of the limited WHO documentation to date acknowledges informational black holes regarding the private health sectors in many LMICs, as well as the deeper problem of capacity resting in a parallel and largely unregulated private health system. WHO seems well aware of the need to overcome these obstacles in terms of pandemic response. The framings of the present ‘big asks’ for the private sector in terms of population access and service provision toward pandemic response, are naturally accompanied by more intensive, strategic, technical and standard health systems and operational guidance for all providers in pandemic response – both public and private – in terms of testing, infection control, planning and monitoring, surveillance and so on.[4] But evidence of concrete measures and successes of private engagement on the ground and in national contexts presently looks very scanty and largely rhetorical at present, at least from the standpoint of WHO’s own direct involvement in such activities. Criticisim of the private sectors numerous failures in the pandemic are totally absent.
However, the framing and institutional remits are telling here, and there is no change of course apparent in WHO recent positions on engagement with the private sector for UHC as compared to the statements on the need to do the same for a COVID response. What WHO stated and committed to in terms of ‘the need for engagement with the private sector’ in the 2019 UNGA Political Declaration on UHC has been repurposed for the COVID crisis. It is at once all very shallow as it is telling of WHO's acceptance of the private sector as a partner and long-term actor in national health systems.
In contrast, the World Bank Group and IMF have been both busy and resourced, committing large multi-billion dollar sums to grants and loans, some of which have been targeted at health assistance and pandemic response. Unlike WHO, the Bank has been able to put money on the ground in a range of LMICs. In April 2020 the bank announced a 15-month program of pandemic response and economic recovery worth $160 billion and immediate crisis response sums totalling $14 billion, six billion of which was targeted at health systems emergency responses. Many of the projects approved to date are for health and health systems. Much of the immediate support went to the supply of badly needed medical technologies, PPE, vaccine partnerships, surveillance capacities and staff training. But there are also infrastructural and health systems investments for LMIC health.
The World Bank is frontloading grants through their COVID-19 Fast Track Facility with more lending to follow. As of June, the Bank had approved loans and grants totalling $14 billion in 60 countries through their new Fast Track Facility. These loans aim to ‘help countries respond to immediate health consequences of the pandemic and bolster economic recovery.’ Out of these sums, the International Bank for Reconstruction and development (IBRD targets Middle-Income Country lending) and the IDA were allocated $2.8 billion and $3.8 billion respectively, while the Bank’s private sector arm, the International Financial Corporation (IFC), was allocated a large $8 billion to support the private sector.[5] The IFC facility is also significant in health terms as it has been at the forefront of facilitating the financialization of health sectors, particularly in low-middle income and middle-income countries. It has launched a US$4 billion medical supply platform and the Real Sector Crisis Response Facility. Under this latter instrument, refinancing and stability loans are flowing to private sector providers and other wider private sector businesses and banks. Much of the health provider loans identified by research are targeted at easing liquidity problems – such as a US$ 4 million loans to CIEL Healthcare’ a medical and diagnostic service provider based in Mauritius and Uganda, with investments in the Nigerian (Hong Kong listed) multisite hospital provider Hygeia Health Group, and US70 million to the Bolivian Healthcare Network Service Project[6] These are also only the beginning of considerable further investments , and after the immediate emergency of the first wave recedes there will be a greater focus on health systems strengthening
The World Bank itself is deploying much more money than any of the investment arms. This includes US$ 7.5 million to the Fijian health system; and $1 billion to India (including money to revamp ICU facilities, wards, infectious disease hospitals, and laboratory capacities); $500 million to the Philippines; $200 million to Pakistan; and $350 million to the Ukraine. Not all these grants and loans cover health systems and responses, but portions of the large raft of COVID response monies are for health infrastructures and emergency capacities. While clearly not ostensibly private sector provider stabilisation funds, it seems inevitable that government held money will be channelled via governments to private hospital firms, not least to secure private sector participation in service delivery within the pandemic, and in the aftermath of the pandemic will reflect that private health is a key part of World Bank imagining of national systems. Indeed, as early as April the World Bank President, David Malpass, was framing COVID recovery money in terms of the need for more investment in private and market-driven health, and it appears that loan conditionalities might be echoing this ideological and policy commitment.
Most of the funds have been provided as highly concessional investment loans, and not development policy loans as budget support instruments. While many of the loans for COVID response are to governments, such government investments may be distributed to private sector entities to pay for health services. Indeed, both IMF and World Bank loans since the COVID crisis have largely suspended investment criteria, and governments have ‘flexibility’ in how loans are used. Increased less concessional loans will follow these initial investments. Moreover, the loans will mean greater government debt and less public finance fiscal space, and notwithstanding the fact that at least some of the present loans offer favourable repayment periods and interest, money from the Bank (and IMF certainly) will be added to national deficits.
We should have good reason to be suspicious of what this will mean for re-commitment to private healthcare. It will certainly add to the Bank Groups leverage and future emphasis on the composition and orientation of national health systems in the multiple recipient countries of COVID emergency loans. Those who have experienced to World Bank conditionalities in the past, will again have to further restructure policy and financing to further favour market-driven health. The Bank is signalling nothing different.
Indeed, the past is instructive here. Historically, debt conditionalities have shifted from roll-back austerity policies for health, infrastructure and social sectors, involving austerity and state withdrawal (as well as wage capping in the public sector), to post-structural adjustment policies that have promoted public-private blended health systems. The market 'roll out' in health has also involved the ongoing expansion of private investment in health, particularly in tertiary and allied sectors. Health has been a key sector that has been at the centre of this double movement, of removing the state to let the market. The IFC has been critical to the financialization process in the latter roll-out market phase, assiduously courting and facilitating investment to plug the trillion dollar investment gaps in LMIC health.
Bank policies of the past have already hollowed out public health care systems and bolstered private healthcare, intensified the private provision of tertiary care, all with consequences for service provision and health system vulnerabilities in the pandemic detailed in previous posts. I believe that the Bank is both path dependent in this policy template, and ideologically and financially committed to market-based health. The private sector crisis and service failure experienced under COVID will not alter its course.
The World Bank’s own direction in the COVID response has also to be understood in terms of its double act with the IMF. It has been speculated that the IMF has up to US$1 trillion for loans to respond to COVID. The IMF approved 77 loans to June 2020 via new or adapted existing loan programs. There are unsurprisingly de facto conditionalities attached to the present raft of emergency lending, with expectations in cases of many of the ‘COVID lending’ will commence resettlement and budget balancing as early as 2021.[7] Billion dollar emergency funding to Egypt, Jordan, Ukraine, and some of the 90 countries that have asked for COVID-related emergency assistance, are coming with conditionalities. These are not only shrinking future policy and financial space for investing in health workforce and public systems, but are insisting on fiscal consolidation, involving in many LMICs further rounds of cuts to public wages and social and welfare spending. The IMF and the World Bank are trying to lock out the state and public spending, and lock in the market for provision of welfare goods, and doing so in the pandemic. So despite the market failure and the crisis of private sector health, it is nonetheless getting a great deal of indirect and direct policy and financial support, and certainly positive signalling of support for present and future investors. The IMF has also used loans in recent years to insist on hospital privatisations, in Pakistan, for example, in 2019, or on huge cuts to public hospital funding, as in Ecuador in the same year.[8] Current bailouts and lending will intensify these pressures.
So how does all this tie up and how do we start to make sense of the multilateral health governance responses to the crises in private health, and the fractured relations emerging between many LMIC countries and private providers during the pandemic?
There has clearly been a very substantial institutional and ideological shift in the WHO with regard to policy and practical commitments to publicly provided health services. The role of the private sector is now accepted. There is explicit assumption that the public-private partnership model for health is both necessary and inevitable – and an acceptance of the vital role and embeddedness of private provision in health systems. The significance of the shift is worth explaining as it gives background to why WHO is not seizing on the failure of private health in the COVID crisis as a means of promoting and reinvigorating commitments to publicly funded and provided health internationally.
The shift within WHO, particularly in the Health Systems Division, dates back over a decade. Indeed, present positioning about the need to engage and secure the private sector as a component in COVID response represents more than just a realistic and ‘real time’ assessment that the private sector is desperately needed in terms of capacities for COVID. Rather, the response to the private sector in the present crisis reflects the effective détente and shift in WHO's position toward the wider multilateral economic governance framing in which the market has been accepted as part of the solution to perceived government failures in providing and allocating healthcare. WHO has shifted its historical position on the private sector in health to align with other major multilateral actors and donors. To be sure, this reflects the wider ascendancy of the public-private model in neoliberal national and global health governance, this thinly veiling a more market-oriented set of government and firm relationships in which the private was permitted to expand its share. This also speaks to the private sectors more recent framing as an essential part of progress toward UHC by WHO and other actors.
In terms of understanding what has occurred and present framings of the private sector in the pandemic, we can take two exemplary WHO World Health Reports in the last 12 years – high-profile, signatory policy documents produced by WHO with regard to health systems policy for progress to UHC and pro-poor access to health. The World Health Report of 2008 – Primary Healthcare – Now More than Ever – was a landmark document, commissioned by then Director General, Margaret Chan, and written by authors committed to publicly provided healthcare in the Health Systems Division. This built on the roadmap to UHC and the strategic plan for health systems strengthening by WHO set out in the 2007 ‘Everybody business: strengthening health systems to improve health outcomes: WHO’s framework for action.
The 2008 report laid out a vision for rejuvenated primary health and a return to the Alma Alta vision of global health in which state and public provided and financed health would be targeted at poor and marginalised populations. At the same time, it was an up-front critique of the impact of neoliberal and marketized health, particularly with regard to the inequitable effects of user fees and out of pocket payments on access, and the narrow, biomedical and curative models of healthcare services. The ‘laissez-faire governance' that had allowed unregulated commercialization of health to flourish was the final cut. These movements and policies had all served to direct health, via the allocative function of effective demand and the market mechanism, only to those who needed health services the least.
It should also be obvious that this is exactly the critique of market failure and poorly aligned, elective and curative focused tertiary care that has been increasingly directed at the service and pricing crises in the COVID cpandemic, especially regarding private hospitals. Poorly aligned services and narrow business models are presently failing to serve population health needs, these allocating health by means of a price mechanism that excludes and collapses without electives - this all bound up with weak national systems of governance and regulation. The 2008 World Health Report in fact listed these vulnerabilities with respect to future pandemic preparedness.
However, and scrolling forward just two years, many observers have seen a significant change in WHOs orientation to health systems strengthening present in the 2010 World Health Report, Health Systems Financing: the Path to Universal Health Coverage. This bold report notes huge investment gaps in LMIC health, and the wasted government spending and inefficiencies in state-based resource allocation - these constituting glaring opportunity costs for health systems strengthening. Financing health and better governance arrangements were the solution, with the corrective role of private provision lurking beneath all these economistic problems. The WHO shifts the focus of policy to financing arrangements for UHC, to new arrangements for collecting and pooling resources, including government, employer and social insurance, and, by doing so, takes health systems policy away from the question of who is delivering health. The particular public or private mode of service delivery becomes far less important, replaced by a rather bland focus on quality services and coverage by means of essential and other packages of health. Notwithstanding commitments with regard to removing financial barriers to access and direct payments for healthcare, financing arrangements come to be seen as the new important instrument by which to secure access for all irrespective of the service provider. It is clear that many in WHO see this again as the route and mechanism for post-COVID reforms.
These shifts are far from arcane and technical, and rather reflect an ideological and policy retreat by WHO from primary health and publicly provided health, all toward less of an emphasis on the particular mode of health service delivery. The Global Financial Crisis and wider senses of government retrenchment from health may be much to blame in the zeitgeist. However, there is a counterpart ascendancy of health economists and the public private partnership model in Geneva and global health more widely, and WHO becomes caught up in this movement.
This shift in WHO moves the institution toward the World Bank’s own interests and policy orientation to health systems strengthening via financing-based measures. The Bank also has a commensurate interest in introducing health systems efficiencies and better resource allocation by market-based, rather than public means. The Bank also has more institutional and financial leverage over health systems policy, and certainly better and more direct relationships with private health providers. The World Bank has had its own institutional journey toward financing the public-private model for health systems. After the disasters of the SAPS, global health governance has undergone major changes in the 2000s without the Ban (so to speak), with new international health organisations emerging such as Gavi, the Global Fund. the Bill and Melinda Gates Foundation and UNITAD. All these organisations largely coalesced around so-called vertical disease-specific programs. Serious health aid was poured into these programs via global health’s new organisational architecture.
This forced the Bank to rethink its global health orientation and particularly its role in the market end of healthcare. Given the narrow focus of the new actors and organisations organisations, a key development in the Bank’s health financing has been its espousal of the sector-wide approach, which was popularised by its former director of health, nutrition and population, Richard Feacham. This gave the Bank a comparative advantage over other organisations by taking a broader, non-disease-specific focus that combined technical and policy support with health sector financing and strengthening.
In global terms, the World Bank alongside the WHO have been pretty much the only two multilateral organisations with remit over health systems development and assistance, but unlike the WHO, the World Bank has had money behind it, if not the ideological and technical legitimacy. This would develop into a crucial institutional rivalry over a number of highly contested policy areas for health, such the role of user fees, private service provision, primary health, universal health coverage, and issues of quality services and population coverage. However, by 2010, as is detailed above, this had drifted to convergence on health systems strengthening and the route to UHC. It is contentious to state, but WHO has been left, in effect, with technical, advisory and policy oversight of publicly provided systems, these often just the rump and neglected end of wider ‘mixed’ national systems. It had very little choice, by virtue of emasculation and exclusion, to participate in what it could not stop, and support the private in health systems, hoping to tame perhaps the worst excesses.
At the same time as the Bank and WHO reach détente on the public-private partnership model, the private sector investment arm of the Bank – the IFC – has been increasingly busy since the mid-2000s in promoting the financialization of the hospital sectors of Middle income and lower-Middle income countries. This period of financialization saw the counterpart rise in the state as provider of governance and oversight narrative, as the necessary leader and regulator of the system, as well as one vital source of revenue collection and resource allocation for health services.
What these shifts produce with regard to private health and hospitals are neoliberal and hollowed states, emasculated regulatory shells with poor health service capacities and public health provision. The mixed systems of insurance being developed and encouraged, those involving combinations of voluntary government insurance, employment insurance and private insurance, have merely further excluded the poor from health, as it has those billions working in the informal economy. Historic changes in policy and governance of health systems from the multilateral level have abetted a process in which LMIC national health systems and their governments have neglected the health of substantial proportions of their populations, and created state-firm relations, system vulnerabilities and market dependencies that COVID has cruelly exposed. We need change in all this, and we cannot simply lock in the mistakes of the recent past by multilateral policy path dependence.
WHO’s own position with regard to private providers is now badly compromised. My long digression to the recent history of health systems governance at the multilateral level is only intended to supply an understanding of why the failure to really expose the triple crisis of private health in the pandemic reflects such a profound abnegation of WHO’s historic role as multilateral custodian of health systems for all. WHO should be monitoring and tracking the extent of present failures in the private sector. It should be calling the failures of marketized health and marketized states to provide services that can respond adequately or comprehensively to population needs in ‘normal times’, and perhaps, especially, calling out that failure in ‘pandemic times’.
As the financial crisis facing the private sector intensifies as the pandemic unfolds in LMICs, many governments are currently seeking to reign in service failures and price gouging, or are simply unable to harness private sector capacities in coherent national responses. The failure in health systems governance at the state level is historic as it is at the multilateral level. Again, where is WHO in this process? Markets have been allowed in, and as the 2008 World Health Report identified, the COVID crisis has found their service model to be profoundly unstable and narrow, ill-suited to service continuity, access and population coverage in a viral crisis.
While populations and healthcare workers in LMICs and Higher Income Countries alike are demanding better public investment in public health systems as a key response to the market failures witnessed in the COVID crisis, and for the curtailment of market-provided health by means up to nationalisation, the WHO and other agencies appear path dependent and bound to the illusory PPP model. If the private sector survives the pandemic, then it must be on new terms and with much more burdensome governance and regulatory arrangements in place. Intervention in the sector by states and multilateral donors should be more than enough leverage to secure a new settlement. Nationalisation and the need for greater publicly provided services are clear alternatives to dragging the private sector into new accommodation.
However, it is clear that the triple crisis has also signalled the deeper and more fundamental mismatch of health to its provision by a market system. At worst the pandemic has clearly magnified weaknesses and the market failures embedded in market systems for health, and at worst it has shown the dangerous dependence on a system too flawed and too weak for either universal coverage or health crisis interventions.
[1] https://hsgovcollab.org/en/blog/covid-19-and-collapse-private-health-sector-threat-countries-response-efforts-and-future
[2] https://impactforhealth.com/project/engaging-the-private-health-sector-in-covid-19-response/
[3]https://www.uhc2030.org/fileadmin/uploads/uhc2030/Documents/Key_Issues/Covid19/AN_ACTION_PLAN_TO_ENGAGE_THE_PRIVATE_SECTOR_IN_THE_RESPONSE_TO_COVID-19.pdf
[4] https://www.who.int/emergencies/diseases/novel-coronavirus-2019/technical-guidance; and https://www.who.int/docs/default-source/coronaviruse/covid-strategy-update-14april2020.pdf?sfvrsn=29da3ba0_19
[5] https://www.thelancet.com/journals/langlo/article/PIIS2214-109X(20)30135-2/fulltext#.Xo__BjNyLnQ.twitterwider
[6]https://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/covid-19/covid-19-projects
[7] https://www.brettonwoodsproject.org/2020/07/the-imf-and-world-bank-led-covid-19-recovery-building-back-better-or-locking-in-broken-policies/
[8]https://www.brettonwoodsproject.org/2020/07/the-imf-and-world-bank-led-covid-19-recovery-building-back-better-or-locking-in-broken-policies/
[1] https://blogs.worldbank.org/health/how-covid-19-coronavirus-affects-private-health-care-providers-developing-countri es
[2] https://analysis.covid19healthsystem.org/index.php/2020/06/15/how-do-countries-adjust-hospital-payment-systems-for-covid-19/
[3] https://analysis.covid19healthsystem.org/index.php/2020/06/15/how-do-countries-adjust-hospital-payment-systems-for-covid-19/
[4][4] https://www1.folha.uol.com.br/equilibrioesaude/2020/07/taxa-de-cura-da-covid-19-e-50-maior-em-hospitais-privados.shtml
[5] https://www.thehindu.com/news/cities/Visakhapatnam/bjp-leader-seeks-action-against-private-hospital/article32481867.ece
[6] https://timesofindia.indiatimes.com/city/mumbai/mumbai-bjp-demands-audit-of-private-hospitals-over-inflated-bills/articleshow/77583359.cms
[7] https://www.outlookindia.com/newsscroll/bengal-bjp-attacks-government-for-hospitals-turning-away-covid-patients/1892933
[i] Germany, Federal Government (2020), ‘Gesetzentwurf zum Ausgleich COVID-19 bedingter finanzieller Belastungen der Krankenhäuser und weiterer Gesundheitseinrichtungen’ (COVID-19- Krankenhausentlastungsgesetz), available at https://www.bundesgesundheitsministerium.de/presse/pressemitteilungen/2020/1- quartal/gesetzespakete-corona-epidemie.html