Is foreign direct investment and commercialisation of national health systems desirable?

Globalisation is a key challenge facing health policy-makers. Increased trade has been encouraged by the World Trade Organization (WTO), resulting in significant foreign direct investment (FDI) and the commercialisation of health care. How should governments assess the risks and benefits of commercialisation of their health sectors?

The World TradeOrganization’s General Agreement on Trade in Services (GATS) aims to furtherrelax laws on trade in services. The health sector is still relativelyunaffected by trends in globalisation, but combined with the rising influenceof transnational corporations, challenges in health care financing, the growingmobility of health professionals and patients and the rise of e-commerce and tele-medicine, this is likely to change.

A paper from the University of East Anglia in the UK provides the first comprehensive review ofFDI’s impact on health services. National policy-makers find it almostimpossible to fully assess the potential impact on their health servicesbecause of a lack of knowledge. This is critical because commitments to theGATS process made now on the basis of inadequate information could constrainfuture policy indefinitely.

FDIcould have a significant negative impact on the public nature of many healthsystems by:

• attracting personnel away from public facilitiesby allowing international companies to offer better pay and/or equipment – thuscreating an internal ‘brain drain’ which governments may be unable to reverse
• creating or reinforcing a ‘two-tier’ system,with high quality care for the rich and poor quality for the poor
• encouraging governments to compete with theprivate sector by investing in technology at the expense of broader social andpublic health needs.

The strengthof a country’s regulatory environment will determine the economic and healthimpact of FDI, the effectiveness of safeguard measures and the stability of commitments (under GATS or otherwise). To negotiate from aposition of strength, governments must be able to set recognised standards forhealth services and personnel.

Governments,academics and international organisations are advised to:

• assess therisks and benefits of commercialisation of the health sector before deciding onthe appropriate level of foreign investment
• realisethat the level of commercialisation of the health sector is more relevant thanwhether the investment is foreign or domestic
• definewhat constitutes FDI in health, in terms of ownership and management systems,so that negotiations can be based on a common understanding
• carryout research on the health and economic impact of FDI, including the costs ofresulting regulatory changes, the costs and benefits of GATS commitments, andwhat this means for equal access to health services
• distinguishbetween ‘for profit’ and ‘not for profit’ FDI: it might also be useful forpolicy purposes to examine health investment from non-resident nationals and foreigncitizens.