PROMOTING THE PRIVATE-SECTOR - A REVIEW OF DEVELOPING-COUNTRY TRENDS

Two questions are addressed in this article: (i) How can it be ensured that private sector resources promote national health goals? and; (ii) What can be learnt from the private sector to enhance operations in the public sector? There is a surprising degree of private sector activity in both the financing and provision of services, despite the fact that few countries have adopted wide-reaching privatization programmes. In some countries pressure upon government budgets for health has led to private sector expansion - in others rapid income growth accompanied by increased demand for health care is a causal factor. A number of problems related to private for-profit providers are evident; often quoted are supplier-induced demand and excessive investment in high technology equipment, the equity implications of private health care, and the availability of manpower for the public sector. Governments have tried to tackle these problems through a range of innovative interventions, however little proper evaluation of these policies has been carried out. While such problems are less likely to arise with the private, not-for-profit sector, the financial sustainability of their activities is more worrying. There is also a need to define more clearly the relationships between governments and not-for-profit organizations. The paper considers market-oriented reforms in industrialized countries, and their implications for the health sector in developing countries. The measures taken in industrialized countries appear to be of limited direct applicability in developing countries, due to factors such as the sparse coverage of health facilities in the latter. However the principles on which the reforms are based are relevant, in particular the need for greater transparency in the activities of public and private sector providers and in the use of contracting out services. Finally it is suggested that too much research in this area has focused on defending one or other side of the privatization debate. Not enough work has considered the health sector as a whole, and the complicated interactions between public and private sectors as providers, buyers, financing agents and regulators of health care services.