Making the most of the private sector

It is now well recognised that the private sector plays a major role in the delivery of health services in low and middle income countries and that even the poor are paying large amounts of money to access such services. In many countries the growth of the private sector has been extremely rapid and largely unregulated. This does offer potential benefits in terms of providing patients with a wider choice of options, broadening access to essential services and helping take the strain off the public sector. However there are major concerns that that many of the services being provided by the private sector are high cost but low technical quality (and are sometimes even harmful) and that a growing private sector is undermining Governments’ capacity to deliver an effective safety net for the poor.

Against this background, the UK Department for International Development (DFID) hosted a meeting in May 2000 to review what is already known about the performance of the private sector and public private partnerships (PPPs) with the aim of identifying key lessons and areas where we need to learn more. Participants were drawn from donor agencies, academia, developing country partners, and private organisations.

The general messages that arose from the meeting were:

• A more informed policy in relation to the private sector and public private partnerships will require more intelligence on what the private sector is doing. A better understanding of the determinants of private sector behaviour and its performance is needed. More information should be gathered about the impact of private sector behaviour on the poor and on the nature and impact of interactions between public and private sectors.
• Partner Governments can help create an enabling environment by ensuring that policy towards the private sector is clear, realistic and consistent with broader health policy. At present in many countries, a far higher standard is set for private providers than public providers and this sends a clear and negative message to the private sector. It is important that partner Governments take the lead in developing public private partnerships. Even where services are being delivered by the private sector, Government should still set the overall agenda and working through the private sector should not be seen as a way of bypassing Government bureaucracy.
• Donors can support Governments by helping develop the new skills and the new ways of working required to support effective partnerships. Key areas where skills are currently lacking include policy analysis, purchasing or commissioning of services, setting provider incentives, monitoring and evaluation and the provision of information to consumers. They can also help by replicating successful pilotsalthough experience has shown that this rarely happens and we need to critically review why this has been the case.
• Expectations of what can be achieved should be high but not unreasonable. Whilst we need to recognise the limitations of such partnerships there is still significant potential to tap into new areas. On the one hand public private partnership interventions are unlikely to meet the needs of the poor let alone the very poor and Governments will have to find other ways of meeting such needs. On the other hand, the private sector could play a larger role in the delivery of essential services if only the demand was there.

In terms of next steps, the main conclusions were to:

• begin a dialogue on the development of a rapid assessment guideline to help DFID advisers and ultimately a broader group in developing public private partnerships
• consider commissioning further work - with a focus on what works where, what are the limitations, and what experience has been in other sectors - on vouchers, contracting, working with the informal sector, social marketing, targeting the poor, reconsidering the priority roles of Government, regulation and learning from other donors’ experience
• foster better links with other departments within DFID, notably the Governance Department through informal meetings on governance, enterprise and regulation issues. [adapted from author]