Private investment and expertise is required to help deliver universal health coverage, yet most private providers in low and middle income countries are not gearing up for the opportunities.
In 2015 the United Nations' Sustainable Development Goals called for everyone to have the chance of a healthy life by 2030, with universal access to essential healthcare services. Yet more than one billion people worldwide still lack even basic healthcare.
The private sector is a key partner in delivering the vision of universal health coverage (UHC), particularly in developing countries where public healthcare systems are largely underfunded and underdeveloped.
As part of the World Innovation Summit for Health, WISH Executive Chair Lord Darzi, former NHS Chief Executive Sir David Nicholson and KPMG have launched Healthy returns: the role of private sector providers in delivering universal health coverage, a report which shows how collaboration between the public and private sectors in delivering UHC can be made to work for citizens, governments and companies.
It explains the importance of aligning private healthcare provision to UHC, outlines the business case for private providers to support universal coverage, and discusses how to create the conditions for this to happen.
For private providers, UHC is both an opportunity and a threat. The opportunity is the chance to access large numbers of patients under public contracts, often through new national health insurance (NHI) schemes such as those being rolled out by India, Indonesia, Kenya, South Africa and Egypt.
The threat is shifts in healthcare spending trends. In the coming decades, public payers will take an increasingly dominant position in low-and middle-income countries implementing UHC. Traditional private sector revenue sources from out-of-pocket payments and voluntary private insurance are expected to grow much slower than public funding.
Compounding the long-term challenge for the private sector, demand from public payers is likely to be for services that many private providers do not currently offer. Existing private services are fragmented, clustered in city hospitals and focused on delivering high cost, episodic, specialist care from impressive but expensive islands of excellence, where innovations drive up prices. However, leaders of large public payers, such as NHIs, say they want standardized, high quality, large-scale, low-cost services which find innovative ways to drive down prices and integrate preventative, primary and secondary care. Crucially, developing countries want support delivering the “last mile” access to the poorest, remotest and most vulnerable communities.
As KPMG explains in The Triple Win (PDF 2.3 MB), its report on rethinking public-private partnerships in healthcare, governments need to derive maximum benefit from limited capital; the public need accessible, affordable, quality healthcare; and the private sector wants a sustainable return on its investment and expertise.
WISH surveyed 20 of the largest private provider chains operating across 40 low-and middle-income countries to find out if established operators are preparing to take up these opportunities. It is clear that most are not. Only a quarter said they planned to significantly shift their business towards publicly financed universal care services. This suggests there is space for market entrants. Telecoms and digital technology companies, training institutes, life sciences firms and multinational provider chains will be significant players in UHC.
The technical and resourcing challenges of achieving `health for all' by 2030 are enormous. Analysis by Stenberg et al (2017) shows that 67 low- and middle-income countries need to address a combined annual health spending gap of between $274 billion and $371 billion to make significant progress towards UHC. Meanwhile the World Health Organization (WHO) predicts a global shortfall of 17 million healthcare workers by 2030, focused in Asia, Africa and the Middle East. Governments will struggle to fill this shortfall alone. Private investment and expertise will be needed to close the gap and find ways to deliver more with less.
The scale of private healthcare is too big for most governments to ignore. In India it accounts for almost 80% of outpatient visits and 60% of inpatient. In Argentina it provides around 40% of both services, and around 30% in Ghana.
Many countries in the vanguard of UHC expect to be heavily reliant on private providers. National insurance schemes form the cornerstone of reforms in Egypt, India, Kenya, South Africa, Indonesia and many other countries, mostly with the intention of buying health services from private providers on behalf of their citizens. Even in countries pursuing alternatives to national insurance, there is strong growth in the size and number of healthcare public-private partnerships.
With such momentum, it is vital that the private sector's role in each country is properly coordinated. Alignment can accelerate progress towards UHC by providing capacity, investment, innovation and expertise. Misalignment will waste money, undermine partnerships and encourage profiteering.
Strong growth in public spending on UHC represents an unprecedented opportunity. These healthcare programs are long term and can be enormous. World Bank analysis of 24 UHC programs in developing countries found the median annual spend was 1.4% of a country's GDP, and as high as 6.8%. This is helping make healthcare one of the fastest growing global sectors.
This growth - focused in Asia, Africa and Latin America - comes as public-private partnerships in high income health systems appear to be a declining force after 15 years of expansion.
Our Healthy Returns report highlights five aspects to creating the conditions for a `UHC-ready' private sector:
1. Provide certainty over future public financing and purchasing of UHC, and follow through on funding commitments.
Financing levers have a critical role to play in directing private investment in the health system and improving standards of care. Two of the most important initial steps are to increase public funding to a level where it is going to attract providers, and to consolidate or align existing finance pools. These steps increase a government's power to shape the market.
2. Provide clarity over the direction of UHC reforms and what is required of public and private providers.
Governments need to spell out their key choices, such as what they plan to build themselves and what they intend to buy. Setting the direction early gives clarity to the market and encourages investment in the right places.
3. Improve trust between public and private stakeholders through transparency and measures to address concerns over collaborating with government.
Many countries need to overcome a legacy of mistrust between the public and private sectors. Companies need to ensure that all claims for payment are based on accurate and transparent data. Governments need to pay on time and listen to private sector concerns. Partners need to find common ground in developing solutions. Progress can be encouraged by identifying easy agreements to generate confidence before moving on to more difficult issues.
4. Drive out poor performance.
Championing quality services helps build trust with the best private sector providers and drive out the worst. Controls such as licensing, price regulation and sanctioning of poor performers can help address market failures, but finding the right incentives to secure high standards, such as accreditation and promises of further investment, is just as important.
5. Encourage new care models and market entrants, particularly for primary care.
The private sector's ability to develop innovative care models is often its greatest attraction. New approaches are critical to sustaining universal coverage because developing countries cannot afford to replicate the high cost models of existing healthcare programs. Using digital technology to reach underserved and remote communities is just one example of where the private sector can make a critical difference in expanding coverage while bringing down costs.
Despite huge ambition and impressive examples of progress, the pace of development in many countries is insufficient to deliver universal coverage in the near future. At this month's conference, WISH is proposing three ways in which countries can be supported to go further and faster.
First, we are launching a global peer-learning network of `Investors for Health' dedicated to developing `UHC-ready' approaches to selecting and managing their investments in private healthcare companies. Established providers need to be encouraged to see the opportunities and new and smaller players need investment.
Second, WISH proposes a mediation service hosted by a neutral international group to improve the quality of discussions between public and private sector organizations. This would help overcome barriers such as mistrust and the rapid turnover of many politicians and officials. Support could include relationship and trust building, developing a joint vision, commercial negotiations and grievance management.
Finally, a collaboration charter could act as a checklist of the readiness of the public and private sectors in a country to work together to achieve UHC. A charter setting out each side's commitments could encourage both to play their part in developing sustainable UHC programs in which the private sector can thrive.
KPMG and WISH believe the global momentum towards universal healthcare offers an unprecedented opportunity for private providers. The successful ones will help the public sector drive up quality, drive down costs and reach the most vulnerable and isolated communities.
Read the full report on the WISH Summit website.
KPMG's Center for Universal Health Coverage (UHC) is the hub for a growing portfolio of global projects helping countries achieve `health for all'. Leveraging the knowledge and experience of our 4,500 health professionals across 50 countries, our Center for UHC makes this expertise available to clients that wish to make real progress towards universal health coverage.
Reference: Roland J, Bhattacharya-Craven A, Hardesty C, Fitzgerald E, Varma N, Aufegger L, Orlović M, Nicholson D. Healthy Returns: The Role of Private Providers in Delivering Universal Health Coverage. Doha, Qatar: World Innovation Summit for Health, 2018