Where there is no regulator

Until very recently, the healthcare sector in developed industrialised countries consisted largely of public services for curative and preventive care provided by governments and the regulated private sector. These services were organised into different levels from primary care facilities up to tertiary hospitals providing specialist care, with a referral mechanism from one level to the next. But in many low and middle income countries healthcare has moved away from this model.

People, including many of the poor, use a wide range of different service providers, all of which they have to pay. The healthcare sector increasingly resembles an unregulated marketplace rather than an organised public service. How has this come about, what does this marketplace look like and what does it mean for health policy and planning?

Members of the Health and Social Change Team at the Institute of Development Studies have been examining the causes, characteristics and consequences of this unregulated marketplace for service provision. A striking finding is that unorganised markets in healthcare are a feature of countries as diverse as China, India and low-income countries in Africa. However, we must beware of assuming that the same policy prescriptions can apply to all.

The factors that produce unregulated markets come about in various ways. They are a response to declining government capacity to finance and regulate the health sector. These factors are also a product of rapid transition in countries moving from one model of economic and social organisation to another. But shifts in where and how people obtain health-related information are also important. Mass communications mean that health knowledge is available through many channels, not just through formally qualified providers. The extension of systems of distribution and sale of goods means that most drugs (although potentially of sub-standard quality) are widely available.

Factors such as cost, convenience, perceived better treatment and poor quality of organised public services make poor people great users of marketplace providers. While many provide useful services, lack of regulation means that users have no reliable means of assessing their quality.

Who are the providers?

As public sector salaries have declined, many health workers have moved or been forced into the marketplace to improve their livelihoods. Their skills, training and qualifications vary and their practice is unsupervised. It is common in some countries for people working in health facilities, such as guards, to learn some basic skills and sell them to patients. Shopkeepers and drug pedlars are other major sources of drugs and advice. Again, there is no quality control over the products they sell or the information they give to buyers. Traditional practitioners are a major source of treatment and may also operate in the marketplace as well as through their traditional relationships to communities.

The common policy response to the unregulated marketplace has been to recommend improving regulation. But many governments have limited capacity to regulate. Indeed, this is why the market flourishes. So policy must be guided by what is achievable in the particular country context. In countries with very limited capacity, it is more helpful to think in terms of what can be achieved in the short and long term.

In the short term, efforts can be made to:

• increase health-related knowledge and information to users to enable a more informed selection of providers and better choice of drugs
• work with commercial and informal providers such as pharmacies and traditional practitioners to improve dispensing and treatment practices
• expand the use of the organised market in areas such as contraceptive delivery, malaria protection and basic test kits where good practice already exists
• encourage the efforts of existing community-based and consumer organisations to be involved in managing or monitoring health service provision.

In the long term, policy needs to concentrate on constructing capacity to:

• develop regulatory frameworks and formal accountability mechanisms to improve health sector performance
• contract with different types of providers against specific service outputs and quality standards
• establish appropriate information systems to monitor key aspects of performance.

Hilary Standing and Gerald Bloom
Institute of Development Studies
University of Sussex
Brighton BN1 9RE
UK

T +44 (0)1273 877147
F +44 (0)1273 691647
H.Standing@ids.ac.uk

See also
'Pluralism and marketisation in the health sector: meeting health needs in contexts of social change in low and middle income countries', Institute of Development Studies Working Paper 136, by G. Bloom and H. Standing, 2001

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