Making health markets work for poor people

In many countries people use a wide 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. A large share of encounters with health workers and suppliers of pharmaceuticals involves a cash payment.

The boundary between public and private sectors is oftenvery porous, with people either paying government health workers informally or consultingthem outside their official hours. Unregulated markets, in particular, raiseproblems with safety, efficacy and cost. This issue of id21 insights explores someof the responses to these problems.

Almost everyone agrees that governments have a specialresponsibility for making markets perform better, particularly in meeting theneeds of poor people. However, serious weaknesses in public sector managementand 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 effectiveregulation increasingly involve partnerships between government, civil societyorganisations and the private sector. Health sector initiatives can learn from experiencein managing other types of market relationships, while taking the specialcharacteristics of health into account.

A growing body of research and experience is addressing waysto improve the performance of markets that poor people use. One example is the“markets for the poor (M4P)” approach. This Asian Development Bank andDFID-funded regional technical assistance project has carried out research onthe relationship between providers and users of goods and services in a numberof sectors. The evidence demonstrates the influence of both formal and informalrules on this relationship and the multiple agencies that undertake supportingfunctions.

Strategies for change therefore need to go beyond improving themanagement of a single organisation or intervention to include measures thattake into account the diversity of contexts and how to influence them. Theyalso need to acknowledge the importance of conflicts of interest and the degreeto which power relationships influence the organisation and functioning ofmarkets. For example, many health-related markets are segmented, withwell-regulated components used mostly by the better off and unregulated onesused by poor people.

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

Societies have evolved mechanisms to address this problemthrough a combination of regulation by the state, different forms of self-regulationand organisations that build and maintain a reputation for competent andethical behaviour. The relevant organisations include the regulatory arms ofcentral and local government, professional and trade associations, largeservice provision organisations and a variety of civil society organisationsand consumer associations. Different configurations for managing informationasymmetries are likely to emerge to manage poorly regulated health markets.

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

The articles in this issue of id21 insights addressdifferent aspects of the characteristics of the markets for health-relatedgoods and services, and emerging approaches for improving their performance. Wimvan Damme and Kristof Decoster point to how the growing burden of chronicdisease is creating new needs and new markets for health-related goods andservices. Dominic Montagu and Richard Lowe discuss the factors behind thedevelopment of retail pharmacy chains and the potential role of this kind ofprivate sector arrangement for exerting positive influence over quality andprice.

Arunesh Singh shows how a socialentrepreneur has developed a simple model for making eyeglasses widely availableto people in India raising interesting questions about possibilities foradapting the model to other countries and other health-related problems. Rowen Aziz, Meenakshi Gautham, Oladimeji Oladepo and KateHawkins discuss examples of strategies from Bangladesh, India and Nigeria toimprove provider performance, including the potential roles of associations ofproviders and citizen groups for health monitoring on the performance of informalproviders of health services.

Henry Lucas highlights the opportunities and challengesassociated with developments in information and communications technology andthe proliferation of channels of information and organisations producinghealth-related content. He suggests that the growing access to expert knowledgecreates the possibility of major changes to the existing provider-patientparadigm. Finally, Gina Lagomarsino and Sapna Singh Kundra explore how healthinsurance can catalyse improvements in provider behaviour by establishing asecure source of funding and exercising the powers associated with strategicpurchasing.

These articles focus on the influence of civil society andmarket arrangements on providers of health-related goods and services. In mostcases, these types of initiatives will be much more likely to be scaled up whencomplemented by strong political leadership and effective support fromgovernment systems.