Competitive and organisational constraints on quality, investment and innovation in a liberalised health system Tanzania

1. Competitive and organisational constraints on quality, investment and innovation in a liberalised health system (Tanzania) Maureen Mackintosh and Paula Tibandebage

2. Aims To focus attention on the scale of the challenge for innovative approaches to poverty reduction represented by the current market structure of health care in low income countries, And to discuss some policy implications

3. Key points Fee for service systems with formal and informal elements Government formal and informal fees Private and NGO/religious formal and informalised small businesses Regressive and exclusionary Much of very poor quality Largely unregulated

4. We conclude Support for health system integration and organisational sustainability and probity is essential for poverty-focused care and innovation, and is extremely hard to achieve without major investment and structural change after many years of deregulation and fee-based finance.

5. �Informalisation� Situations where there is a lack of enforcement of basic regulatory constraint including: no enforcement of registration requirements, very poor clinical oversight and supervision, absence of quality assurance in provision and medicine sales, at worst a shift of health care into an informal sector of unlicensed, unstable and abusive services and drug sales.

6. Sources Fieldwork in 1998 and 1999 in two areas of Tanzania (urban and rural) Ten hospitals: government, religious and commercial ownership; larger and smaller size. Thirty six health centres and dispensaries Paper uses a set of facility interviews on business strategy and problems Framed by market structure and access and exclusion analysis already published

7. Market segmentation: DSM dispensaries/ health centres

8. Market Segmentation Mbeya dispensaries/ health centres

9. Price-based competition: dispensaries/ health centres

10. Majority small providers: dispensaries/ health centres

11. Majority small providers: hospitals

12. The �emptying middle�

13. The �emptying middle� In a DSM suburb A full time doctor (owner with businessman) Losing patients to cheaper dispensaries Being pushed up-market Individual patients find fees hard to pay Bad debts from companies (75% of patients)

14. A just-viable private dispensary

15. A just-viable private dispensary In higher charging area Nurse-run, with clinical officer Doctor owner has other job Does MCH without charge Profitable areas are tests, drug sales, assistance with normal childbirth

16. Reasons for poor quality and bankruptcy: dispensaries Competitors Poor staff management by non-clinicians Greed, cheating and over-charging Low income clients unable to pay Corporate clients who did not pay Loss of reputation Lack of working and investment capital More money to be made in other areas

17. Unstable small business environment �People's decisions to open businesses go in phases here. Once it was chickens, everyone invested in those; then it was daladalas [minibuses for public transport], that has stopped now; then it was kiosks, they were everywhere... now it is groceries and dispensaries.�

18. Loss of reputation and bad management in a DSM dispensary

19. Keeping it in the family An Mbeya small private hospital: Administrative staff family members � one embezzled funds A single doctor building up gradually The only facility studied with a bank loan Most profits from surgery and sale of drugs Income sharing with others using facilities

20. Charitable religious facilities

21. Charitable religious facilities Substantial subsidies Used to keep prices down Did preventative care Rising OPD numbers (against trend) Qualified staff Moving up to health centre status too

22. Collapsing religious facilities No or few donations No MCH Struggling staff Declining numbers Had cut prices Rising losses

23. Up market religious facilities Better off clientele Moving up market High prices � some of highest in study Good reputation Some evidence of over-prescribing Losing patient numbers to private hospitals and lower charging dispensaries.

24. Implications for innovation, quality and development The market incentives are problematic for the provision of stable primary care. Good primary care needs to be routinely available, physically and financially accessible, reliable, stable, trusted, clean, reputable, with trained staff,, doing effective preventative care. There are no market incentives driving this system in this direction.

25. Only non-governmental facilities resisting these market incentives successfully fit these requirements. Preconditions: commitment to resist market pressure, arising from professional and/or religious principles; financial subsidy. The private dispensaries achieving this were supported by salaries earned elsewhere by medical staff; the religious ones by donations. Commitment alone is insufficient.

26. 3. This situation puts an unmanageable burden on limited governmental provision. Just under 40% of registered dispensaries in Tanzania in 2001 were in the non-governmental sectors. The 2001 Household Budget Survey showed extensive use of private facilities in all quintiles Urban poor particular rely on non-government sector

27. Reliance on non-government sector by poor is high (DHS data)

28. 4. Non-governmental facilities are very financially constrained. Many are not financially viable; all sector need subsidy Small private businesses rely on resources and staff from the government sector Overheads and risk both high Loan finance for investment unobtainable, most finance from other businesses

29. 5. Organisational constraints on business development and innovation severe Problems of hiring and motivating staff Informal charging above the agreed prices Low paid/ unpaid family members Few professional partnerships Severe organisational constraints on business growth Lack of cooperation among businesses e.g. on referral or training

30. Conclusions Not a �health system� in the sense of an integrated set of organisations and processes with an objective of population health improvement. Market dynamics creating pools of under-used equipment within unstable small businesses side by side with lack of basic, accessible, quality-assured and stable primary care. Substantial government and donor subsidy going into the system not well focused on system integration and accessibility.

31. Challenges Innovation to improve access by those at the lowest incomes has to be associated with improvements in the dynamics of the health sector: a move towards health system integration. Needs better use of public/ donor funds to counter the worst perverse dynamics of the current marketised health care.