Public, Private Partnerships


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Wendy Johnson, MD, MPH
Clinical Assistant Professor, Global Health

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Public, Private Partnerships

  1. 1. Public or Private? In Defense of the Public Sector Wendy Johnson, MD, MPH With acknowledgements to Amy Hagopian, James Pfeiffer, Steve Gloyd, David McCoy, Rick Rowden and Anna Marriott/Oxfam.
  2. 2. Thesis <ul><li>The recent phenomenon of the erosion of the public sector and the increased focus on privatization are linked. </li></ul><ul><li>Without a strong public sector, provision of health care is doomed to be inequitable; excluding the poor, those in rural communities and marginalized populations. Public health measures also risk neglect. </li></ul>
  3. 3. A quiz
  4. 4. Disclosure: Conflicts of Interest <ul><li>All of my education (Elementary School, High School, BA, MD) was granted through the public sector except my MPH (and I still harbor some resentment about how much that cost.) </li></ul><ul><li>Except for 2 years working in Africa for HAI, all my paychecks in adulthood have come from public sector institutions. Twice, I have worked directly for government: the Ohio Legislature and the City of Cleveland. </li></ul>
  5. 5. <ul><li>Oxfam video </li></ul>
  6. 6. Dimensions of public and private health delivery and financing Public financing Private financing Public provision Ministry of health facilities; clinicians are public service employees Private donations to public sector Private provision Public insurance schemes that pay for private care Self-pay at private facilities
  7. 7. A Taxonomy of terms <ul><li>Public facilities or health systems are those owned by a government entity, directly or indirectly accountable to voters. </li></ul><ul><li>Private non-profit facilities are run by governing boards that ideally represent the interests of the community, but are not directly accountable through a vote. </li></ul><ul><li>For-profit facilities are accountable to shareholders, whose interests are represented by the size of their financial investment. </li></ul>
  8. 8. In theory. . . . <ul><li>Public Sector is controlled by and responsible to: </li></ul><ul><li>Private Sector is controlled by responsible to: </li></ul>
  9. 9. What is privatization? <ul><li>DIVESTMENT: Transfer of enterprise or asset ownership from state to private hands or independent authority </li></ul><ul><li>DELEGATION: Contracting for </li></ul><ul><li>public services (outsourcing) </li></ul><ul><li>Competitive sourcing </li></ul><ul><li>Public-private partnership </li></ul><ul><li>DISPACEMENT: deregulation, withdrawal, abandonment of role </li></ul>Source: Privatization and Public-Private Partnerships, ES Savas, CQ Press, 2005 Photo: Madrid protests of health system privatization
  10. 10. Investment in the public sector is in decline. 1. Public Investment in Developing Countries, 1970-2000 as a % of GDP (constant 1995 prices) Source: Everhart and Sumlinski Public Investment in Developing Countries, 1970-2000 From: Fiscal Space for Public Investment, UNDP, Sept 2006
  11. 11. Why has public investment spending declined ? <ul><li>IMF “structural adjustment” put limits on public-sector spending in low-income debtor countries </li></ul><ul><li>Ideological support for the private sector </li></ul><ul><li>Macroeconomic policy focused on inflation </li></ul><ul><li>Theories about “the Predatory State” </li></ul><ul><ul><li>Private sector would compensate for drop in public investment </li></ul></ul><ul><ul><li>Crowding-out (fear that public system would “crowd-out” private enterprise) </li></ul></ul>
  12. 12. What’s driving privatization? <ul><li>International financial institutions (WTO/IMF…) </li></ul><ul><li>Private sector interests </li></ul><ul><li>Weak public sector actors seeking new resources </li></ul><ul><li>Foundations </li></ul>
  13. 13. IMF and G20 to the rescue? <ul><li>The Pittsburg summit of the 20 richest countries reaffirmed the London Summit. </li></ul><ul><li>More money for the IMF, very little policy change. </li></ul>CEPR study showed 31/41 countries had imposed fiscal or monetary policy which could make the economic crisis worse.
  14. 14. WTO’s special role <ul><li>“ High up on the agenda of the WTO is the privatisation of education, health, welfare, social housing and transport…” </li></ul>Lancet 27NOV99
  15. 15. Context <ul><li>Early to mid 1990s collapse of USSR and transition to capitalism </li></ul><ul><li>Shock doctrine “solutions” </li></ul><ul><li>Rise of neo-liberal economic policy in the 2000’s </li></ul><ul><li>Economic collapse 2008 </li></ul><ul><ul><li>20 million people are pushed into poverty for every 1% decline in economic growth </li></ul></ul>
  16. 16. What Really Happened? Private sector did not compensate for the drop in public investment <ul><li>Recent research IMF research (2005): shows that “the private sector did not compensate for the drop in public investment as it was hoped” </li></ul><ul><li>In Tanzania, the private sector did not improve equity of access or coverage (Benson, 2001) </li></ul><ul><li>A review of public-private partnerships for SRH shows only evidence of their benefit was increased condom promotion. </li></ul><ul><li>China recently acknowledged the failure of their privatization efforts which lead to increased infant mortality rates in rural areas and among the poor. </li></ul>
  17. 17. Effects on Public Health Care Systems <ul><li>Health services </li></ul><ul><li>Decreased quality of services </li></ul><ul><li>Less money for drugs, fuel, supervision </li></ul><ul><li>Service fees/ User fees </li></ul><ul><li>Decreased utilization </li></ul><ul><li>Inadequate workforce—eroding salaries, low morale and exodus </li></ul><ul><li>Health Impact – difficult to measure, but leveling off of mortality rates </li></ul>
  18. 18. Arguments for the Public Sector <ul><li>Equity </li></ul><ul><li>Universal Access </li></ul><ul><li>Scalability </li></ul><ul><li>Less expensive </li></ul>
  19. 19. Where’s the difference? In public or private provision? Use of public and private inpatient services by income quintiles
  20. 20.
  21. 21. Where do we have evidence? <ul><li>Health care access is a right; civilized countries have universal coverage </li></ul><ul><li>User fees decrease utilization to unacceptable levels </li></ul><ul><li>Private insurance adds significant overhead costs </li></ul><ul><li>Public sector is the responsible entity in the end </li></ul><ul><li>Health system functions are not just commodity exchanges </li></ul>
  22. 22. Arguments for Private Investing <ul><li>The private sector delivers a majority of health care </li></ul><ul><li>They aren’t going away </li></ul><ul><li>Investment will improve quality </li></ul><ul><li>More efficient delivery, better results, low cost </li></ul><ul><li>Take the burden off the public sector </li></ul><ul><li>Public sector is corrupt, private sector not so much. </li></ul>
  23. 23. From the WHO Report on the Commission on the Social Determinants of Health
  24. 24. Who are the players? <ul><li>World Bank’s Int. Finance Corp--finances private sector investment </li></ul><ul><li>USAID </li></ul><ul><li>Donors, UN institutions </li></ul><ul><li>NGOs </li></ul><ul><li>Coalition of Service Industries--lobbies WTO to privatize health services internationally </li></ul><ul><li>Health insurance schemes </li></ul>
  25. 25. World Bank’s Special Role “ When the state is weak or not interested, civil society and the social capital it engenders can be a crucial provider of informal social insurance and can facilitate economic development” World Bank, 2002
  26. 26. USAID’s Special Role
  27. 27. Gates Foundation special role <ul><li>Gates: </li></ul><ul><li>“ Foundations are unusual because they don’t have to worry about being voted out at the next election.” </li></ul><ul><li>… 2009 annual letter, page 16. </li></ul>
  28. 28. New Private Equity Fund
  29. 29. Affordable Medicines Facility for Malaria (AMFm)
  30. 30. Public private partnerships <ul><li>UN & WHO interests in public-private partnerships: </li></ul><ul><ul><li>Leverage financing & talent from private sector </li></ul></ul><ul><ul><li>Bestow legitimacy & authority on the UN </li></ul></ul><ul><ul><li>Enable the UN to fulfill its functions & mandates in a context of its own financial weakness </li></ul></ul><ul><li>Corporate interests: </li></ul><ul><ul><li>Green-wash tarnished reputations </li></ul></ul><ul><ul><li>Expand market opportunities </li></ul></ul><ul><ul><li>Expand influence on public policy </li></ul></ul><ul><ul><li>Expand image and branding </li></ul></ul>Source: Buse & Walt, WHO Bulletin 2000: Global public-private partnerships (2 paper series)
  31. 31. Is the invisible hand all thumbs?