Mixed commercialized health systems: the implications for regulation and stewardship HPF Hub Technical Review meeting Krishna Hort : Monday 10 October 2011

Purpose Examine literature and studies from other countries to identify potential comparators Compare findings from studies in Vietnam and Indonesia with concepts from the literature Identify broader issues for policy makers and development partners

Commercialized mixed health systems Literature refers to commercialized mixed health systems with following features: 1.Market transactions involved in most health care provision 2.Blurred boundaries between state (public) and non state (private) 3.Under investment in state services (to varying degrees) 4.Weak regulation See: WHR 2008; Mackintosh (2007); Nishtar (2010), Bloom and colleagues (2009)

Commercialised mixed health systems Country studies demonstrate many of these features: –High OOP; financial incentives drive much of hospital behaviour –Dual practice; health workers in both public & private sectors; private services in public hospitals –Under-funded state services with poor quality –Regulatory gaps; existing regulations not enforced

Commercialised health systems Issue is not role and contribution of non- state / commercial providers, but extent of commercialization of all providers Autonomy and user fees in state hospitals exposes them to market competition and incentives State and non state providers compete and influence each other

Why the move towards commercialization ? Intentional policy strategy: –Vietnam – social mobilization – raise resources from private / community sector –Indonesia – compete in SEAsia market Political shift from single control to pluralistic, competitive environment – market ideology Community demand: rising income and expectations of medical care Supply driven: availability of specialist doctors; suppliers of pharmaceuticals, technology

Implications for policy makers Increased need for regulation of commercialised mixed system Shift from management of state provision of services to stewardship of a complex, mixed system

Literature lessons on regulation Regulation tends to be seen as government action, but can be viewed more widely as “sustained and focused attempt(s) to alter the behaviour of others according to defined standards …with the intention of producing broadly identified outcomes or outcome”. Use range of mechanisms : (1) command and control; (2) self-regulation and enforced self regulation; (3) incentive-based regimes (taxes and subsidies); (4) market harnessing controls (competition laws, franchising, contracts); (5) disclosure regulation; (6) direct governmental action; (7) legal rights and liabilities; and (8) public compensation/social insurance schemes.’ Can be undertaken by the state or state agencies; or in partnership with non state actors (co-regulation)

Stewardship and governance Managing regulation is one aspect of stewardship or governance of health systems Stewardship: “Overseeing and guiding the whole health system, private as well as public, in order to protect the public interest.” (WHO 2007) In addition to regulation: planning, providing policy guidance, ensuring accountability, determining the structure and organisation of system.

Stewardship challenges Fragmentation and diffusion of power and authority Ensuring alignment and balance among different levers: policies, regulation, financing Appropriate balance & consistency across levels: system  organisation  individual Importance of non financial incentives in influencing provider behaviour: organisation & professional culture, values