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Managing Markets for Health: Products and Providers

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This is part two of our series on Managing Markets for Health. Click here to see the previous post.

Shipra Pandey is the program manager for the National Health Mission in the state of Uttar Pradesh, India. As she reflects on the markets framework introduced yesterday, she wonders whether she will think through the six domains of the framework next time she prepares the program implementation plan for her state. She gets talking to Andrew Mutawa, from the Ministry of Health in Kenya. He is excited to explore the possible public sector strategies that can be used to manage healthcare products and services markets in his county.

With expectations flying high among the participants, we moved into the second and third days of the Managing Markets for Health course. On day two, we took an in depth look at Sweden and Tanzania. We compared the strategies each country used to manage markets in supply chains. Before 2006, the public sector in Sweden not only manufactured medications but also managed drug wholesale and retail distribution. In Tanzania, the drug supply chain was organized as a mixed market. A large, unregulated, private market managed the wholesale and distribution of drugs alongside government provision of medicine. Tanzania introduced a reform to bring greater regulation into how the private sector provided drugs to the people.

The approach in Tanzania is an example of regulation. In Sweden, the government moved toward deregulation, or “reregulation,” as the process was dubbed to cast it in a more positive light. In this case, the drug market in Sweden shifted from one that was entirely controlled by the public sector to one that included the private sector.

Both Sweden and Tanzania aimed to ensure greater access to drugs, and to improve the quality of drugs available. Yet the strategies adopted by the two countries were different. According to Prashant Yadav, an expert on supply chains from the University of Michigan, both country governments moved from an exclusive government regime to an inclusive regime. Both countries took notice of the existing role or the potential role of the private players in the retail pharmacy market. The two nations used policy levers appropriate to their contexts to maneuver each market so that drugs became more accessible and more affordable.

Dominic Montagu, from the University of California, San Francisco, introduced contestability and measurability, two more concepts that policymakers can use to understand markets and gauge the potential of policy to influence these markets. A highly contestable market is one with low barriers to entry and few sunken or exit costs. A market with high contestability will likely have a greater number of players.

World Bank expert Mirja Sjoblom analyzes case studies with a participant from Ethiopia.

Analyzing case studies from the course.

In the context of the course, measurability refers to the ease and extent to which one can measure the outputs from a product or service. Policymakers can use these two concepts – contestability and measurability – to understand competition in a given market, and the degree to which that competition can be regulated. These tools help guide policymakers as they explore strategies and policy levers to steer the market toward a chosen healthcare goal.

The third day of the course addressed how to manage healthcare service delivery markets, including primary, specialist, and tertiary level care. The delivery of primary care is relatively less complex and less resource intensive than tertiary care service delivery, explained World Bank expert Mirja Sjoblom. The market for primary care services has low barriers to entry, so it is considered a highly contestable market for providers. The primary care market is considered to have low or medium measurability because estimating the quality of interactions between physician and patient objectively can be fairly difficult.

To look at primary care through the lens of contestability and measurability helps to explain why poorly regulated primary care markets in developing countries often feature diverse primary care providers, little accountability among public sector providers, an unregulated private sector, and questionable quality of care. Lack of systems to collect and use data makes it even more difficult to improve these markets.

Mark Hellowell, from the University of Edinburgh, explained that specialist and hospital service markets are more difficult to maneuver than primary care markets, due to low contestability and even lower measurability. The experience of Organization for Economic Co-operation and Development (OECD) countries handling subsectors of the healthcare market can be represented by this graphic:

Prashanthi

Increased structure in complex tertiary care and specialist markets has often yielded better control, improved adherence to standards, and more equal access. Governments can use policy levers, such as entry contracts, to structure these markets. Many Indian states have attempted to contract out select hospital services and public private partnerships to manage entire hospitals. The sophisticated nature of these markets requires that we invest more in building the capacity of the public sector to gauge healthcare challenges, define healthcare goals more clearly, identify whether private sector participation can contribute to a given health goal, and ultimately engage the private sector more effectively, where necessary.

The participants in the course shared some of the current policy reforms being implemented in their respective regional contexts. Throughout the course of discussion, many of the participants kept returning the same question: Which is the right kind of public private partnership for a particular subsector of the health system? After much deliberation, the group agreed that there is no magic formula or best mode of public private partnership that will provide assured results. Each healthcare challenge in each geographical and social context will have its own unique solution. Of course, applying the market forces template is a great way to approach the problem solving process.

 

Prashanthi Krishnakumar

Prashanthi Krishnakumar

Prashanthi Krishnakumar works on the Public Private Partnerships Project. She also contributes to the India work for the Center for Health Market Innovations.

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