Posted by: davidjolson | 04/30/2010

Harnessing the private sector in developing countries

NOTE: This is a guest blog written by Aarthi Rao, program associate with Results for Development Institute.

Maureen Teymar and Edith Walla, two Ghanian women with demanding family responsibilities and stretched budgets, both have infants with persistent fevers. Maureen spends the day at a public clinic and pays 10 cedis in “facilitation fees” for her son’s malaria medication. Edith goes to an accredited private Black Star Clinic, pays a 4 cedi insurance copayment for the same malaria treatment and returns home within the hour. Why is there such a difference?

In “The Good, the Bad and the Ugly: The Private Sector’s Role in Health,” an event this week co-hosted by the Global Health Council and Results for Development Institute (R4D) as part of their series “New Visions for Improving Global Health in Developing Countries,” Marty Makinen of R4D explained that the private sector emphasizes customer service  and responds to incentives like insurance and social franchising that empower patients.  With the advent of health insurance in countries such as Ghana, the government has expanded health care purchasing power from the hands of only the rich to the poor, transforming how the private providers approach low-income populations.

Despite the potential of the private sector, many governments and donors neglect private providers in developing countries.  “Both ministries of health and donors continue to focus on a small piece of the pie,” noted Makinen.

However, Lily Dorment of the Rockefeller Foundation, another session panelist, said that this is beginning to change.  She is leading Rockefeller’s efforts on coordinating HANSHEP, a group of donors who intend to change the status quo and support the capacity of the private sector in health.  Rockefeller, Dorment said, wants to know the size of the private sector, its impact and its potential.  In other words, who are they and what are they doing?

In Ghana alone, the private sector provides 55% of all the healthcare services used in the country. Without thorough mapping and engagement efforts, which have already been carried out in four countries by Makinen’s team at R4D, private providers may remain disparate, officially invisible, variable in quality and unaffected by deliberate public policy.

The World Bank-IFC has been considering the private sector from not only the government’s perspective but also from that of business. Connor Spreng of the World Bank Group revealed the Bank’s goal to compare the operating environment for private providers across countries.  How long does it take to start a practice?  Do private providers have access to credit to expand their business?  Does public infrastructure meet their needs?  Are government regulations enough to ensure baseline levels of quality, while not being overly onerous?

These are all key questions for external governments and development partners trying to foster the role of private providers.  One insightful audience member suggested including a business management course in medical schools — strategies for harnessing the private sector must be well rounded, embracing private providers and public officials alike.

And of course, there will always be a role for public providers, notes Shyami DeSilva of the U.S. Agency for International Development.  In addition to ensuring quality, the public sector will likely continue to provide preventive services and care to the most vulnerable populations.  Public health is a public good after all.  DeSilva finds that care for long term chronic conditions, like HIV/AIDS will always be partly subsidized by the public sector.  The key is finding a way to link public and private services so that providers are not in the dark and patients receive the most consistent care possible. DeSilva called for better referral mechanisms between public and private providers.

As more and more countries scale up health financing reforms in the face of overarching resource constraints, the session offered a good lesson: the private sector is an existing resource which can complement the public sector.  If governments practice sound stewardship in addition to maintaining their public health services and development partners continue to recognize the potential of private providers, then the private and public sectors can operate in tandem, achieving the best health outcomes for the most people possible.

For more information on this issue see the Global Health Council Research Brief, “Understanding Private Sector Involvement in Health Systems,” February 2009 | view brief


  1. An interesting past USAID project that leveraged the power of the private sector was Banking on Health, which focused on providing credit to private health facilities to scale up availability of health service (particularly FP/RH) in underserved areas. In reading about some of the project’s outcomes, they were able to successfully increase the number of providers offering family planning services, and the number of family planning visits increased notably in 5 countries (increase of 57% in Uganda and 42% in Peru, for example). Information on the project is at

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