Innovation in the private sector and
future trends
Gerald Bloom
Institute of Development Studies, UK
Bangkok
January 2009
Rapid spread of markets for health-
related goods and services
Out-of-pocket payments account for a large
proportion of health expenditure in many
countries
Emergence of pluralistic health systems with a
variety of providers of health-related goods and
services in terms of skills and relationship to
legal framework
Blurring of boundaries between public and
private sectors and increased role of market
relations within the public sector
Increased channels for health related information
through education, mass media, information
technologies and promotion of drugs

Segmentation of health markets
Unorganised providers of drugs and a
variety of health-related services
Regulated providers of drugs and medical
care
Large national and transnational service
delivery companies
Very large R&D-based manufacturers of
special medical goods and equipment
Performance of poorly organised health
markets
Overemphasis on curative services
Dangerous practices (sub-standard
drugs, iatrogenic illness)
Ineffective treatment, unnecessary costs
and late referral
Highly unequal access by different social
groups

Understanding market systems (M4P)
Relationship between providers and
purchasers of goods and services
Performance influenced by formal and
informal rules and a variety of agencies
Local and global markets are linked
Interventions need to bridge micro and
macro and take into account power and
the existence of segmented markets
Health-related markets
Information asymmetry and trust-based
institutional arrangements
Path dependency, increasing returns and
the importance of history
Emergence of pluralistic health systems
and the challenge of creating organised
markets
A turning point in global health markets

The health knowledge economy and
the creation of market order
Spread of markets faster than creation of
appropriate institutional arrangements
From low efficiency equilibrium to well-
organised markets
Organisations: ownership, motives,
incentives and reputation
Institutions: partners, co-production and
the balance between social and individual
interests
Organisations for better provider
performance
Informal providers and the creation of
market order
Building and maintaining reputations
(branding, franchises and accreditation)
Knowledge and communications
intermediaries

Co-production of organised markets for
health-related goods and services
Local and national government
Traditional accountability structures
Faith-based and philanthropic
organisations
Trade and professional associations
Citizen and community groups
International organisations (market,
philanthropic and government actors)
Where innovations arise
Spread from advanced market
economies (investment and training)
Adaptation to different contexts
Emerging markets and new sources of
innovation and regulatory challenges (eg
drugs)
Pro-poor innovation in unorganised
markets and bottom-up approaches

Learning approaches to innovation and
scaling up
New organisations and new understandings of their
role
Co-production of institutions, rules and ethical
norms
Risk, unintended consequences, interests and the
importance of path dependency
Little systematic evidence on alternative strategies
for improving provider performance
Monitoring studies for design and redesign to
adapt to context
Evaluation, learning and development of indicators
for regulation
A time of challenge and change
High political priority of health-related issues
A move beyond ideological understandings of the
roles of states and markets
Growing influence of private and state actors in
emerging markets
Economic crisis and implications for health finance,
government regulation, competition for markets
and the role of regulatory issues in international
trade negotiations
Responding to a window of opportunity