Making health markets work for poor people

People use a variety of market-based providers of health-related goods and services ranging from highly organised and regulated hospitals and specialist doctors to informal health workers and drug sellers operating outside the legal framework. Many encounters with health workers and suppliers of pharmaceuticals involve a cash payment.

The boundary between public and private sectors is often very porous, with people either paying government health workers informally or consulting them outside their official hours. Unregulated markets, in particular, raise problems with safety, efficacy and cost. This issue of insights explores some of the responses to these problems.

Almost everyone agrees that governments are responsible for making markets perform better, particularly in meeting the needs of poor people. However, serious weaknesses in public sector management and in governance arrangements have contributed to problems with safety, efficacy and cost, and the same factors affect efforts to strengthen regulation.

Successful strategies for constructing more effective regulation increasingly involve partnerships between government, civil society organisations and the private sector. Health sector initiatives can learn from experience in managing other types of market relationships, while taking the special characteristics of health into account.

A growing body of research and experience is addressing ways to improve the performance of markets that poor people use. One example is the ‘markets for the poor’ approach. This Asian Development Bank and DFID-funded regional technical assistance project has carried out research on the relationship between providers and users of goods and services in a number of sectors.The evidence demonstrates the influence of both formal and informal rules on this relationship and the multiple agencies that undertake supporting functions. 

Governments have a special responsibility for making markets perform better, particularly in meeting the needs of poor people

Strategies for change thus need to go beyond improving the management of a single organisation or intervention to include measures that consider the diversity of contexts and how to influence them. They also need to acknowledge the importance of conflicts of interest and the degree to which power relationships influence the organisation and functioning of markets. For example, many health-related markets are segmented, with well-regulated components used mostly by the better off and unregulated ones used by poor people.

An important aspect of the relationship between health providers and users is the transfer of the benefits of medical expert knowledge to the latter. As in other specialised sectors, this transaction is characterised by varying degrees of asymmetry of information and a consequent imbalance in power, which possessors of expertise can use to their advantage.

Societies have mechanisms to address this problem through a combination of regulation by the state, different forms of self-regulation and organisations that build and maintain a reputation for competent and ethical behaviour. The relevant organisations include the regulatory arms of central and local government, professional and trade associations, large service provision organisations and civil society organisations and consumer associations. Different configurations for managing information asymmetries are likely to emerge to manage poorly regulated health markets.

In the health sector, there is consensus on the desirability of governments using public funds and their regulatory powers to ensure access to certain services as a right. This can take the form of insurance and/or government subsidies for services used by poor people. In highly marketised health systems, one of the most pressing issues for equity is “who pays”.

This issue of insights addresses different aspects of the characteristics of the markets for health-related goods and services and emerging approaches for improving their performance. Wim van Damme and Kristof Decoster show how the growing burden of chronic disease is creating new needs and new markets for health-related goods and services.

Dominic Montagu and Richard Lowe discuss the factors behind the development of retail pharmacy chains and the potential role of this kind of private sector arrangement for exerting positive influence over quality and price. Arunesh Singh shows how a social entrepreneur has developed a simple model for making eyeglasses widely available to people in India, raising interesting questions about possibilities for adapting the model to other countries and other health-related problems.

Rowen Aziz, Meenakshi Gautham, Oladimeji Oladepo and Kate Hawkins discuss examples of strategies from Bangladesh, India and Nigeria to improve provider performance, including the potential roles of associations of providers and citizen groups for health monitoring on the performance of informal providers of health services.

Henry Lucas highlights the opportunities and challenges associated with developments in information and communication technologies and the proliferation of channels of information and organisations producing health-related content. He suggests that the growing access to expert knowledge creates the possibility of major changes to the existing provider-patient paradigm.

Finally, Gina Lagomarsino and Sapna Singh Kundra explore how health insurance can catalyse improvements in provider behaviour by establishing a secure source of funding and exercising the powers associated with strategic purchasing.

These articles focus on the influence of civil society and market arrangements on providers of health-related goods and services. These types of initiatives are more likely to be scaled up when complemented by strong political leadership and effective support from government systems.

Hilary Standing and Gerry Bloom

Institute of Development Studies
University of Sussex
Brighton BN1 9RE, UK
h.standing@ids.ac.uk
g.bloom@ids.ac.uk