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April L. Harding

Private Participation in Health Care

In this InDepth Analysis, April Harding discussed the role of private sector participation in health care and associate challenges.

Awareness is growing about the importance of the private sector in achieving health sector objectives within developing countries.

Recent household surveys from many of these countries indicate private providers play a significant role in health care delivery, even to the poor (Gwatkin, Rustein, Pande and Wagstaff 2000).

Reviews of disease control and child and reproductive health programs have similarly found the private sector to be a necessary, though oft-overlooked part, of these efforts (Waters, Hatt, Axelsson 2002, Uplekar, Pathania, Raviglione 2001, Rosen 2000).

This recognition is motivating increased efforts to engage the private sector, especially private health care providers, in developing-country health programs.

Although most experts agree that ignoring the private sector’s large part in the service delivery system is unwise, there is less agreement, and far less knowledge, about strategies for engaging the private sector—which strategies work and under what conditions.

So far, efforts to engage the private sector have often been poorly documented and almost never rigorously evaluated.

Nevertheless, it is critical that health policymakers and analysts glean whatever insights can be gained from these early developing-country experiences.

Where relevant, learning from the established mechanisms used in developed countries’ mixed-delivery health systems is also critical.

Many policymakers will confront a number of predictable challenges as they try to identify and implement strategies to mobilize private providers toward achieving important program or sectoral objectives in their own countries.

Numerous World Bank clients are among those policymakers struggling to integrate this new perspective on the private sector into health policy and practice in their countries.† Bank sector specialists are working to assist them in these efforts.

The†analysis presented in the remainder of this article was developed to help these clients and staff by presenting in a “user-friendly” manner whatever practical information is available about methods of working with the private health sector that is relevant for developing countries.† This†analysis which is presented in a Handbook entitled "Private Participation in Health Care" is intended to be a practitioner’s guide.

The Task

Countless topics and strategies could be covered in such a guide.

To define the scope and structure of the Handbook, we have divided policymakers’ tasks into three parts:

. assessing what is going on in the private health sector
. selecting a strategy to engage the private sector in contributing to the programs and objectives being considered
. identifying the appropriate set of instruments for doing so.


Frequently, health sector analytical work focuses on the public sector.

When, as is commonly the case, the private sector plays a significant role in health care delivery, this narrow focus undermines the soundness of the analysis and the validity of conclusions and recommendations.

Chapter 2 of the Handbook, “Conducting a Private Health Sector Assessment,” presents guidelines for ascertaining the private sector’s current role in delivering health services and for identifying areas where private providers might increase or improve their contribution to government programs and objectives.

Thus, this “how-to” chapter is intended to complement traditional health (public) sector analysis with comparable evaluation of the private sector. Such analysis is necessarily the first step of any effort to work with the private health sector.

Although this assessment may lead to a decision to encourage the private sector to expand or take on new tasks in certain areas, the Handbook does not advocate private sector expansion, privatization, or even working with the private sector, for its own sake.

Instead, it proposes approaching the private sector from a strategic and pro-active perspective—looking for opportunities to utilize or enhance its contribution to social objectives.

Selecting a Strategy

The Handbook distinguishes clearly between overall strategies for working with the private sector and instruments for implementing these strategies.

Any instrument (e.g. contracting, franchising, training) can be used in multiple ways to pursue a range of objectives, and as part of specific strategies toward the private sector.

Contracting, for example, can be used to improve current providers’ quality of services or to attract new providers to generate growth of services.

Contracting is also a critical element of conversion, where publicly delivered services are transferred to private providers but continue to be publicly funded.

To differentiate among these distinct initiatives, we categorize efforts to work with private providers according to what they are seeking to do with respect to the private sector.

Are they seeking to harness or influence the private sector that already exists? Are they seeking to grow the private sector in a strategic way? Or, are they seeking to turn over or convert public services to private operation?

Harnessing. As noted, most developing countries already have a large private sector in health care, especially in delivery.

Hence, engaging or harnessing those providers is the first and most obvious strategy to consider for enhancing the private sector’s contribution to health policy objectives.

Such a strategy consists of taking steps to guide the behavior of identified providers, and takes advantage of the fact that the providers are already delivering services and serving populations critical to program or sector objectives.

This is a lower risk strategy than others, such as conversion, where public services arrangements are discontinued and handed over to new operators.

Growing. An assessment of the private sector may identify areas where increased private sector activities would further priority objectives such as increasing access to services in specific regions.

In such a situation, policymakers will want to take steps to encourage private providers to grow their activities in these areas.

Similar to “harnessing,” this strategy is relatively low risk, as it does not alter existing service delivery arrangements.

Conversion. In certain countries, an assessment of the private sector, combined with traditional analysis of the public (health) sector, will identify public activities that may be productively turned over to private hands.

In Central Europe, for example, the transition to social insurance funding arrangements motivated a number of countries to convert their salaried general practitioners to private (self-) employment.

In these instances, policymakers can use the same instruments to work with the private sector as under the previous strategies, but they will need to include additional steps to transfer the activities to private entities.

From the wide range of instruments for implementing these strategies, this Handbook focuses on two: contracting and regulation.

These two mechanisms are the most widely used in developing (and developed) countries, though often with disappointing results. Thus, they are of interest to a large portion of World Bank client governments.

Identifying Instruments

Policymakers must start by selecting their strategy: by deciding exactly what they want the private sector to do. They must then identify the right instruments to get them to do what they want.

As noted, most instruments can be used to implement any of the strategies, but contracting and regulation are the tools most often used in both developing and developed countries in all three cases.

Accordingly, the second half of the Handbook presents “how-to” chapters on these critical instruments.

In these “how-to” chapters, every effort is made to present available knowledge about these instruments and their use.

Since operational research is so scanty in the developing-country context, the insights presented must necessarily be tentative.

Since many Handbook users will be working in an information-poor environment, all chapters supplement presented material with key operational references and, wherever possible, internet links.

The framework presented in the Handbook is also used in the World Bank website on Public Policy and Private Participation in Health.†

Handbook users are encouraged to check this site for newly completed research or other resources.

Each chapter is intended to function as a stand-alone piece as well as an integral part of the Handbook. Thus, some repetition is unavoidable.

Before reading and using the “how-to” chapters, Handbook users are strongly urged to read the Introduction (Chapter 1).

This chapter sets the context for the Handbook and presents the framework underlying its approach to public policy toward the private health sector.

It also presents the strategic categories described above in more detail, as well as the full range of instruments commonly used in working with the private sector (such as training, franchising, information dissemination, integration into referral networks or vertical programs).

It is envisioned that subsequent work by the World Bank and its partners will develop additional tools for developing-country policymakers.

New “how-to” chapters will then be added to this Handbook, both on-line and through publication, to expand the knowledge base for choosing and using instruments to work with the private health sector.

In addition to stimulating new policy initiatives, the changed perspective on the private sector’s role in delivering health services has triggered a rapprochement within the health and development field. It has created a common ground for analysts and policymakers, who up to now have perceived themselves as members of opposing camps—the “private sector is perfect” camp versus the “private sector is malign” camp.

Most debates between these two camps in the 1980s and 1990s were grounded more in ideology than evidence, and centered on the advantages and disadvantages of privatization.

Members of both camps now realize that this debate holds little relevance for developing countries, especially the poorest countries. For it is in these countries that the State’s capacities are most limited and the private sector already provides most services.

Debates and, more important, policy research are now turning to a host of more pragmatic issues such as how and when different strategies work to integrate the private sector into health sector policy.

Mechanisms such as contracting, regulation, training, and franchising hold the promise of building on what is already there. But, to realize that promise is a huge challenge.

We hope the Handbook will help World Bank clients, partners and staff meet this challenge.

Contact details

April L. Harding

Visiting Fellow
Global Center for Development
1750 Massachusetts Ave., NW
Washington, DC
United States of America

Office: 1 (202) 416-5618
Office: 1 (202) 416-0700
Cell: 1 (202) 247-1496
Fax: 1 (202) 416-0750

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  January 01, 2007