Promoting the private sector: a review of developing country trends

Two questions are addressed in this article: (i) How can itbe ensured that private sector resources promote national healthgoals? and; (ii) What can be learnt from the private sectorto enhance operations in the public sector? There is a surprisingdegree of private sector activity in both the finai icing andprovision of services, despite the fact that few countries haveadopted wide-reaching privatization programmes. In some countriespressure upon government budgets for health has led to privatesector expansion - in others rapid income growth accompaniedby increased demand for health care is a causal factor. A number of problems related to private for-profit providersare evident; often quoted are supplier-induced demand and excessiveinvestment in high technology equipment, the equity implicationsof private health care, and the availability of manpower forthe public sector. Governments have tried to tackle these problemsthrough a range of innovative interventions, however littleproper evaluation of these policies has been carried out. Whilesuch problems are less likely to arise with the private, not-for-profitsector, the financial sustainability of their activities ismore worrying. There is also a need to define more clearly therelationships between governments and not-for-profit organizations. The paper considers market-oriented reforms in industrializedcountries, and their implications for the health sector in developingcountries. The measures taken in industrialized countries appearto be of limited direct applicability in developing countries,due to factors such as the sparse coverage of health facilitiesin the latter. However the principles on which the reforms arebased are relevant, in particular the need for greater transparencyin the activities of public and private sector providers andin the use of con tracting out services. Finally it is suggestedthat too much research in this area has focused on defendingone or other side of the privatization debate. Not enough workhas considered the health sector as a whole, and the complicatedinteractions between public and private sectors as providers,buyers, financ ing agents and regulators of health care services.