The private sector has a large and expanding role in health systems in low-income and middle-income countries. The goal of universal health coverage, as outlined in the Sustainable Development Goals, provides a renewed focus on the need to take a system perspective in designing policies to manage the private sector. Universal coverage systems maximise health outcomes; equitably distribute health-care services that are of good quality and are financially and geographically accessible; ensure that services are delivered efficiently; and are associated with low levels of out-of-pocket burden distributed according to ability to pay. Management of the private sector to achieve this goal requires choosing policies that will contribute to the performance of the system as a whole, rather than of any sector individually.
The papers in this Series have produced important insights into the parts played by the private sector in health systems across the world, and evidence of the effects of some policy responses and interventions. Mackintosh and colleagues1 argued that a large and dominant formal private sector and a highly commercialised public sector exclude poor people from sources of care that meet minimum quality standards and leave them dependent on poor quality, underqualified private providers, such as drug shops. Health systems with these characteristics are also typified by high levels of out-of-pocket payment, and they also have the highest incidences of causing or sustaining poverty through the burden of health expenditures.2, 3 Conversely, when competent and affordable care is widely available, much of the potential demand for poor quality and informal private providers is diverted, leaving little scope for their survival. Morgan and colleagues4 presented evidence that the private sector is sometimes able to provide services that are of higher quality and lower cost than the public sector. However, this outcome is variable across provider types; unsubsidised private providers generally provide a limited set of services, and the private sector as a whole neglects important public health services, particularly preventive and promotive care. Such providers on their own will not provide comprehensive universal care, even at a primary care level.
Morgan and colleagues also identified the need to think about interventions and effects at the level of the health system, not focusing on individual providers, and the ways in which public and private sectors are linked. Such links imply that approaches to managing the private sector cannot be taken in isolation from the system as a whole. Montagu and Goodman5 reasoned that banning the private sector has rarely been successful, except in instances of exceptional control associated with socialist economies; and neither has statutory or professional self-regulation. The findings reviewed by Montagu and Goodman show that although a range of interventions improve private sector quality or access for specific health disorders in specific places, there is limited evidence of their ability to improve the system as a whole and to be scaled up, both geographically and to address a range of health problems. They also highlighted the relative effectiveness of policies that are compatible with the financial incentives of providers, allowing them to pursue their own interests and objectives while at the same time achieving public goals.
Key messages
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The main aim of government policies should be to encourage a public–private mix that ensures widespread availability of good quality, affordable care so that the health system meets the needs of the population as a whole.
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Presented with the option of affordable services of acceptable quality, data suggest that demand for unqualified, low-quality providers that are used mainly by the poor will fall.
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Beyond this insight, the specific mix of public and private providers cannot be specified; it will depend on the characteristics of providers in a particular context, and the capacity of government to regulate and purchase.
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As a system progresses towards universal health coverage, the private sector could be involved as providers of publicly funded services for everyone, or as providers of services beyond those of the basic universal entitlement.
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In these universal systems, governments' role as a regulator will be to ensure that public resources are used for the public's benefit and to protect against predatory behaviour by private providers.
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When there is no political appetite for ensuring that public subsidies are directed to those most in need, or when government capacity is severely limited, there is scope for targeted interventions in the private sector to address quality and encourage provision of specific services to address the most pressing needs.
Together, these insights imply that government policies that support widespread availability of financially accessible and competent providers, whether public or private, have the greatest potential to ensure a public–private mix that services the population as a whole. This approach operationalises the notion of universal health coverage within the realities of pluralistic health systems.
Here we discuss and extrapolate main messages from the papers in the Series and from additional sources to inform policy and research agendas in the context of global and country level efforts to secure universal health coverage in low-income and middle-income countries. The heterogeneity of the private health sector has been emphasised throughout the Series and it follows that policy and research agendas should reflect and respond to that heterogeneity. We explore the types of policy that might be an appropriate response to the challenges and opportunities created by four stylised private provider types on the basis of the three dimensions: objectives (for-profit or non-profit), size of organisation, and quality (proxied by qualified or unqualified front-line staffing).4 The table shows key dimensions of heterogeneity among private sector providers that are presented in the papers in the Series: the low quality, underqualified sector that serves the poor population in many countries; not-for-profit providers that operate on a range of scales; and formally registered small-to-medium private practices. Additionally, we look at the emerging corporate commercial hospital sector, which is the target of much international investment, but which has been studied very little up to now.6