Engaging the private sector to deliver COVID-19

tools and achieve Health for All

Why do policy makers need to

engage the private sector in
health?

Module 2
LEARNING OBJECTIVES

By the end of this module, participants should be able to:

• define “private sector engagement”;
• understand the benefits of this form of engagement; and
• explain how engagement can be used to address critical policy objectives related to the
COVID-19 tools.

INTRODUCTION

In this module, we examine what is meant by the term “private sector engagement”, and why
engagement is such an important part of what government does in the health system.

We have previously defined the private sector in health as:

All entities involved in provision of health services that are not owned nor directly controlled by
governments. We have shown that such entities are, in most countries, active across a range of
health system functions – namely, governance, financing, resource generation and service
delivery.

Private sector engagement is:

The meaningful inclusion by government of private sector entities in efforts to achieve public
health and health policy objectives. That engagement may come in various forms, for instance,
regulation, or financing mechanisms.

Hence, private sector engagement means governments taking action to:

• acknowledge the private sector’s role across these health system functions, ensuring,
for example, that data about the private sector’s activities in health service delivery are
routinely collected and used to inform decision-making, and that the sector is included in
processes of policy formulation; and

• act in order to shape the sector’s role and contribution in the pursuit of health policy and
population health goals (i.e. what the sector does, for whom it does it, and how well it

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 performs) - using the powers of government, including its powers to regulate, finance,
and purchase, to modify the incentives and behaviours of private sector entities.

Engagement, then, is a complex process. It incorporates processes through which governments

engage the private sector in policy processes – for instance, to share ideas, intelligence and
interests, deliberate on the costs, benefits and risks of the existing regulatory, financing, and
purchasing apparatus, and agree on feasible strategies for improving performance. (We provide
a more detailed examination of these processes in module 3, in which we examine six key
Governance Behaviours for management of health systems.) These are what we might call the
“software” of engagement - the set of processes that government need to establish for
meaningful inclusion to be achieved

Often, such processes focus on informal dialogue and information-sharing. However, in some
cases – usually when a high level of trust has been developed via repeated interactions -
government and private sector representatives work together on a more institutionalised basis,
to co-design policies, plans and strategies, to establish partnerships and to implement specific
reforms as a matter of routine.

But to achieve real change in private sector incentives and behaviours, what we might call the
“hardware” of engagement needs to be activated. This involves the design and implementation
of “rules and tools” –regulations, financing mechanisms, purchasing and contracting
arrangements, and systems for information collection and sharing. The package of such rules
and tools deployed by governments will collectively determine the incentive and accountability
environment in which the private sector operates, shape its access to resources and capacities,
and define its role in and contribution to the pursuit of important health policy and population
health goals. (We provide a more detailed examination of these instruments in module 8, in
which we examine the Tools of Government through which government can bring about
improved performance in the private sector.)

Our purpose in this module is to set policy context for these two, more specific modules. In it,
we seek to explain how private sector engagement can help governments to advance their
policy objectives, including the promotion or maintenance of equitable access to high-quality
COVID-19 tools.

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WHY ENGAGE THE PRIVATE SECTOR?

In module 1, we examined why the private sector is an important focus for policymakers’
attention. We also saw in that module that the private sector presents a range of critical
opportunities and challenges.

Private sector entities possess resources and capacities that can be useful to, and can be
harnessed by, governments in pursuit of their strategic objectives. Conversely, the private
sector can be subject to incentive structures that conflict with those objectives. For example, if
care providers have market power they have an incentive to charge high prices, increasing
financial barriers to access. This is especially problematic for goods and services for which
supply is constrained and demand is inelastic – including goods such as oxygen, or ICU
services). Equally, when patients have limited information about their health care needs,
providers may benefit from providing substandard or inappropriate goods and services.

These performance problems are referred to in the academic literature as market failures. But
they are not just theoretical problems; they are observable realities. Behaviours of these kinds
have, for example, been reported during the COVID-19 pandemic, especially during surges in
demand for COVID-19 related products and services, which has enabled opportunism of
various forms, to the detriment of health equity and health outcomes [1].

The WHO's advice is that, to address a health system’s challenges in the most effective way,
governments should take a proactive and inclusive approach, that focuses on the whole health
system, both public and private sectors. They should develop and implement a policy
framework that effectively leverages all health service providers in the achievement public
health goals. They should act where necessary - using policies and mechanisms discussed in a
subsequent video - to redirect, constrain or eliminate undesirable behaviours that can
undermine such goals.

In most countries, Ministries of Health allocate most of their managerial attention to governance
of the public sector – the part of the health system over which they exert direct control.

While most Ministries of Health have in place a number of process-oriented regulations for the
private sector – such as compulsory standards on private sector facilities, or certifying the
professional qualifications of doctors and other health workers, they could benefit from

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assessing what the private sector does and how well it does it – as the range of products and
services it delivers, the quality of those outputs (e.g. their safety, appropriateness, efficacy and
so on), and their prices (which, as we know, are usually paid by patients ‘out of pocket’) may or
may not be well aligned with the values and objectives of the health system, in normal times, or
in times of health emergency. In either scenario, this clearly needs to change!

In the current pandemic situation, for example, fulfilling the government's duty to protect the
right to health means ensuring that there is sufficient availability of COVID-19 vaccines,
therapeutics, and Personal Protective Equipment (PPE), and that these are distributed to
different geographies and different people in line with Universal Health Coverage goals.

THE OBJECTIVES OF PRIVATE SECTOR ENGAGEMENT

DURING THE COVID-19 PANDEMIC

Let’s be clear about governments’ common objectives in the context of the pandemic, and how
these can be advanced through private sector engagement.

The definition of Universal Health Coverage provides a helpful framework for this analysis –
focusing our attention on equity of access to, quality of, and protection against the financial
costs of, COVID-19 tests, treatments and vaccines [2].

STRATEGIC OBJECTIVES IN THE COVID-19 CONTEXT

ACCESS Achieve equity of access to/ affordable utilisation of therapeutics, diagnostics,

and vaccine services to their populations, including among poorer/ more
remote populations.

Ensure all population groups are aware of the benefits of accessing COVID-
19 tests, treatments, and vaccines.

Increase the number and scope of approved COVID-19 therapeutics,

diagnostics, and vaccine services available in the private sector.

QUALITY Ensure all COVID-19 therapeutics, diagnostics, and vaccine services available
in the private sector are of high-quality.

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 Ensure that suppliers have the information they need to deliver services in line
with national/ international standards; and that consumers have knowledge
about/ awareness of which private providers are available and qualified to offer
COVID-19 therapeutics, diagnostics, and vaccine services.

FINANCIAL Increase affordability of COVID-19 therapeutics, diagnostics, and vaccine

PROTECTION services.

Reduce incidence of out-of-pocket payments and catastrophic expenditures

related to utilisation of high-quality COVID-19 therapeutics, diagnostics, and
vaccine services.

In terms of equity, a common objective will be to achieve equity of access to/ utilisation of the
tests, treatments and vaccines needed to fight COVID-19 effectively. Where these tools are
being delivered by the private sector in the absence of effective engagement approaches by the
government, there are likely to be inequities in access to/ utilisation of these goods – e.g.
because they may only be available in more affluent areas, and/ or because the prices charged
to consumers for them are unaffordable for many, especially the poor.

These represent serious impediments to equity – and, only through engagement can
governments overcome this problem, by ensuring that COVID-19 tools are distributed to
consumers in accordance with need, and not ability to pay; while also acting to ensure there is
good availability of information, so consumers have a sound understanding of the health
benefits of critical tools such as vaccines.

In terms of quality of care, a common objective will be to ensure that high-quality (and only high-
quality) tests, treatments and vaccines are available to/ from the private sector. Achieving this
may involve constraining the activities of some providers – for instance, governments may wish
to ensure that the activities of informal providers (e.g. drug sellers) are curtailed. In addition,
governments may wish to use a strengthened regulatory apparatus (or stronger enforcement of
an existing apparatus) to ensure that consumers are vaccinated by only those entities –
individuals and organisations – that have the qualifications and the quality systems in place to
perform this role safely, effectively and appropriately.

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For those that do have the qualifications and the quality systems, we may want to support
demand for their services, for example by ensuring that consumers have good knowledge
about/ awareness of which providers are available and qualified to offer COVID-19 tests,
treatments and vaccines.

Finally, in terms of financial protection, it may be necessary to enhance the affordability of

quality-assured COVID-19 tools - and to reduce incidence of out-of-pocket payments and
catastrophic expenditures related to COVID-19 tools. We do not want people unable to access
needed services for want of the money to pay for them, and we do not want people who do find
the money to pay for them exposed to financial risks as a result.

All of these things require the government to adopt a pro-active stance towards the private
sector – and in some cases a change in “mindset” that acknowledges that what happens in the
private sector is, actually, the government’s business. Only then can government begin to
engage the private sector in the establishment of strategies for resolving these critical problems.

CONCLUSION

In this module, we have focused on a fundamental why question. Why should governments
engage the private sector? The answer has three main elements.

1. First, the private sector is there, it is already delivering services; and indeed its presence
is growing in many health systems.
2. Second, it is acting in ways which may or may not be consistent with policymakers’
objectives.
3. Third, it possesses resources, capacities and incentives that can be harnessed by
governments to pursue their objectives.

Engagement is therefore of fundamental importance to many policy issues, including effective

management of the pandemic.

We have only begun to explore how this can be done. It is clear that governments can benefit
the health of their populations by adopting a more pro-active approach towards the private
sector by embracing the “software” of private sector engagement - new, or strengthened
governance behaviours, and new, more inclusive, processes of policy formulation. Because of

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its powers, government has access to a unique set of “hardware” through which it can modify
the incentives and accountability environment in which the private sector operates – to ensure
that it is doing the ”right” things and doing them well; and that its resources and capacities are
deployed in coordination with those of the state.

In subsequent modules, we will provide more detail on these aspects of the “software” and
“hardware” of private sector engagement.

REFERENCES

[1] Y. K. David Williams O, " The failure of private health services: COVID-19 induced
crises in low and middle-income country (LMIC) health systems.," Global Public
Health, 2021.
[2] World Health Organization, "Factsheet: Universal Health Coverage.," [Online].
Available: https://www.who.int/news-room/fact-sheets/detail/universal-health-coverage-
(uhc).