How do countries regulate the health sector ... - Semantic Scholar

03 Kumaranayake (jl/d)

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HEALTH POLICY AND PLANNING; 15(4): 357–367

© Oxford University Press 2000

How do countries regulate the health sector? Evidence from Tanzania and Zimbabwe LILANI KUMARANAYAKE,1 SALLY LAKE,1 PHARE MUJINJA,2 CHARLES HONGORO3 AND ROSE MPEMBENI2 1Health Policy Unit, London School of Hygiene and Tropical Medicine, UK, 2Muhimbili University College of Health Sciences, Dar es Salaam, Tanzania and 3Blair Research Institute, Harare, Zimbabwe The health sectors in many low- and middle-income countries have been characterized in recent years by extensive private sector activity. This has been complemented by increasing public–private linkages, such as the contracting-out of selected services or facilities, development of new purchasing arrangements, franchising and the introduction of vouchers. Increasingly, however, experience with the private sector has indicated a number of problems with the quality, price and distribution of private health services, and thus led to a growing focus on the role of government in regulation. This paper presents the existing network of regulations governing private activity in the health sectors of Tanzania and Zimbabwe, and their appropriateness in the context of emerging market realities. It draws on a comparative mapping exercise reviewing the complexity of the variables currently being regulated, the level of the health system at which they apply, and the specific instruments being used. Findings indicate that much of the existing regulation occurs through legislation. There is still very much a focus on the ‘social’ rather than ‘economic’ aspects of regulation within the health sector. Recent changes have attempted to address aspects of private health provision, but some very key gaps remain. In particular, current regulations in Tanzania and Zimbabwe: (1) focus on individual inputs rather than health system organizations; (2) aim to control entry and quality rather than explicitly quantity, price or distribution; and (3) fail to address the market-level problems of anti-competitive practices and lack of patient rights. This highlights the need for additional measures to promote consumer protection and address the development of new private markets such as for health insurance or laboratory and other ancillary services.

Introduction The health sectors in many low- and middle-income countries have been characterized in recent years by extensive private sector activity, resulting in quite significant levels of private involvement in the sector. This has also been complemented by increasing public–private activity, such as the contractingout of selected services or facilities, development of new purchasing arrangements, franchising and the introduction of vouchers. These types of reforms have been broadly promoted on the international policy agenda as having the capacity to achieve the multiple objectives of the improvement of efficiency, coverage and consumer choice (World Bank 1993, 1997) and are evidence of the changing role of central Ministries of Health, away from direct service provision towards more general policy-making and supportive activities. Increasingly, however, experience with the private sector has indicated a number of problems with the quality, price and distribution of private health services (Bennett 1991; Bennett and Ngalande-Banda 1994; Yesudian 1994; Kumaranayake 1997; Stenson et al. 1997; Bhat 1999). The continued development of new quasi-public bodies which actually manage

health services at the operational level, such as District Health Boards and autonomous hospitals, has led to the potential for more fragmented implementation of policy. The critical role of the state in regulation and in facilitating the overall management of a diverse health sector is therefore coming under renewed focus (World Bank 1997). The traditional focus on regulation within the health sector has been on standard-setting, e.g. ensuring minimum levels of quality and safety. This approach, often called ‘social’, can be distinguished from the more ‘economic’ approach, which looks at the role of regulation in the context of markets (Ogus 1994). However, the extent to which existing regulations reflect current realities is unknown, particularly in developing countries about which there is very little literature. In response to this gap, the 1995 meeting of the Public– Private Mix Collaborative Research Network (PPMNet)1 developed a comparative research framework to explore these issues. This paper reports results from studies undertaken in two countries: Tanzania and Zimbabwe. The general objective of the work was to assess existing regulatory mechanisms and to use this information to feed into policy


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Regulating the health sector

development. The specific objectives of the overall research were to: • describe the existing network of regulations within the health sector; • assess the effectiveness of the particular regulations and to identify factors influencing effectiveness; • explore different groups’ perceptions of existing regulatory interventions. Specifically, this paper outlines the findings of the first phase of research which was a mapping exercise undertaken in both of the countries in order to ascertain the nature of existing regulatory instruments employed to influence the private health sector. The paper is organized as follows: the first section reviews what is meant by regulation, particularly in a low-income context. This is followed by a description of the context of the two countries, and a review of the existing regulations in place in each country. The next section summarizes and discusses the findings in the light of what is known about experience in other low-income countries, identifying some common gaps. The paper ends with a discussion of priorities for further work.

Regulation: a framework for analysis We begin by reviewing what is meant by regulation, and discussing a framework for the assessment of different types of regulatory instruments. Regulation occurs when government controls or deliberately tries to influence the activities of individuals or actors through manipulation of target variables such as price, quantity and quality (Maynard 1982; Kumaranayake 1998). The extensive size of private sector activity and deliberate policies promoting it have led to the increasing ‘marketization’ of the health sector and a concomitant role for stronger regulation (Bennett et al. 1997). In simple terms a market occurs when there is an exchange between buyers and sellers. While the market for health is not a typical market, and is characterized by imperfections, the use of market analysis from economic theory can give insight into the changing roles and nature of health sectors across the world. Market analysis suggests a broader set of variables and roles for regulation within the health sector. For example, in addition to the standard setting, social role of regulation, there is now greater need to consider issues such as anti-competitive practices taking place within the health market. Figure 1 presents an analytical framework by which to consider the changing nature of regulation. It reflects the additional market or economic roles that regulation may now need to play, given private sector activity (Kumaranayake and Lake 1998). Private sector activity in the health sector is not uniform. Rather private sector development can be seen as a continuum reflecting different organizational structures and roles. At the simplest end there are individuals working in solo practices, or working more informally, often unlicensed and untrained. Then there is the

Figure 1. The process of regulating. Source: Kumaranayake and Lake (1998)

emergence of more formalized private sector activity where individuals are now working together in group practices, and operating in private facilities. More complex private sector development includes very formal activity, where management and ownership of private health facilities are completely separated (Kumaranayake 1998). Figure 1 explores three dimensions related to regulation: what to regulate, who to regulate and how to regulate. The figure shows three levels2 at which target variables may be addressed by regulation, together with the nature of the instruments used. The ‘what to regulate’ is reflected by a range of target variables, described in terms of entry, quantity, quality, price, distribution and competitive practices. In economic terms, the choice of ‘who’ to regulate must now encompass successively complex levels in the provision of services, addressing individual inputs, such as solo physician practices, to organizations, such as hospitals, nursing homes or pharmacies, and then to the broader question of the market in general. Markets are an additional level that results from the interaction of agents buying and selling health services. The levels are obviously linked (i.e. combinations of inputs create organizations) and a number of organizations co-exist in the market. The ‘how’ to regulate refers to the instruments used to affect these variables, and is described later in the section. The target variables can apply at different levels and are aimed at different actors within the health sector. Entry refers to initial acceptance into the market. There are issues regarding entry at each level or organization: • individual inputs: the selection of personnel, drugs, or medical equipment; • organization: licensing of facilities and clinics; • overall market level: e.g. the promotion of competition and contestability. Quantity regulation can be used to affect the volume of inputs in health service provision (e.g. certificate of need laws restricting purchase of equipment or facility development); to restrict the number of organizations (e.g. limitations on the number of private clinics within a given area); and to promote an increased number of providers in the market through antimonopoly legislation. Quality regulation refers to the earlier notion of standard-setting and quality assurance, and covers such areas as quality control of drugs and approved curricula for the training of health professionals. Price regulation


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Lilani Kumaranayake et al. includes the articulation of minimum salary levels of health workers or the setting of fees for the provision of particular health services. Regulations addressing distribution issues can relate to the locating of health professionals in underserved areas. Regulations that relate to competitive practices aim to directly influence the way people compete within a private market and any adverse practices that might result from this. In practice, these areas may overlap – for example regulations aimed at ensuring a minimal quality of a service or good in a market also work to restrict entry into the market. The third dimension in Figure 1 is the ‘how’ of regulating and refers to the manner in which regulation is undertaken, i.e. the nature of the regulatory instruments. These instruments range from formal legal controls enacted through legislation, where there are sanctions if the regulations are not followed, to more informal codes of practice or policy guidelines. The extent to which official codes of practice are seen as regulation depends on the extent to which there are any enforcement mechanisms attached to them. A second broad way of regulating is through the creation of incentives, both financial (whether a tax or a subsidy) and non-financial, aimed at encouraging participants to change their behaviour. A more formalized approach to incentives is seen in the use of incentive regulation, which can be thought of as rules which use verifiable outcomes such as market prices to affect individual participant’s behaviour (e.g. prices can only rise by some proportion of market price). This is often seen in the regulation of former public sector utilities (energy, telecommunications) in industrialized countries (Abbott and Crew 1995). Context Both Tanzania and Zimbabwe are currently undergoing broad restructuring of the health sector. This follows a fairly typical pattern, including the mobilization of additional sources of finance such as the introduction of user fees and insurance, and organizational reforms such as the decentralization of resources and management responsibilities to the district level. In both countries, there has been a policy of encouraging private sector provision of health. This has been accompanied by narrowing the focus of government away from direct service provision and towards strengthening the traditional policy-setting role and developing its facilitatory role in an increasingly diverse sector. Both countries are characterized by significant non-profit (particularly mission) activity within the health sector, but for the purposes of this analysis, we focus on the for-profit health sector.

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characterized by problems of unemployment, high inflation and interest rates, low investment and high government expenditure and budget deficits (currently estimated to be in excess of 11% of GDP) and increasing national debt. In 1991, Zimbabwe embarked on an Enhanced Structural Adjustment Programme (ESAP). Consequently, resource allocation in the social sectors started to decline considerably in real terms, and there was a greater focus on cost recovery in the social sectors and more investment into non-social sectors of the economy. It is against this background that Zimbabwe embarked on an ambitious programme of public sector reforms. Health sector reforms were kick-started by the results of a Public Service Review in 1987 that undertook an in-depth assessment of public service procedures. This review showed that the public service was inefficient and required rationalization. Between 1991 and 1996, the civil service was to be cut by 23 500 people, or more than 10%. Health sector reform proposals focused on strengthening management and organization, health financing, contracting out, regulation of the private sector and decentralization of health services (MoHCW 1995). The most dramatic change to be introduced has been the introduction of health service decentralization and the most significant change within the health sector in Zimbabwe has been the rapid emergence of private sector activity. One reason for this expansion is a deliberate change in government policy to encourage private sector partnership, in light of the government’s resource constraints. This has led to a relaxing of rules allowing public employees to operate in the private sector. The government saw this as a way of increasing the provision of services, and allowing scarce public resources to be diverted to other needy areas, in particular a shift towards more rural and preventative health care in government expenditures. The burgeoning number of private sector providers has been seen as a means of increasing access to and coverage of health services. The private medical sector has now started to play a significant role in health services delivery. In 1993 it was estimated that about 92% of health services in Zimbabwe were provided by government health institutions, 5% by mission hospitals and NGOs, and the remainder by the private-for-profit sector. By 1996, about 45% of registered doctors were estimated to work full time in the private sector, 56% of whom were based in Harare (Hongoro et al. 2000). The growth of the private sector has been aided by an increase in the number of people taking up private health insurance. Medical Aid Societies in Zimbabwe cater for about 800 000 beneficiaries, representing about 10% of the potential contributors who are formally employed.

Zimbabwe In the decade after independence, Zimbabwe invested considerable public resources in health, population, nutrition and education. The overall focus of government policy was growth with equity, particularly removing systemic biases in favour of the colonial minority. The 1980–90 period saw a marked increase in real health expenditure. The beginning of the 1990s saw a decline in the performance of the economy

Tanzania Post-independence Tanzania gave high priority to education and health, with a prominent role for the government as a provider. In 1967 the government of Tanzania, through the Arusha Declaration, committed itself to a policy of providing essential health care services free at the point of use. This was financed both through government and external donor


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resources. Private practice in the health sector was actively discouraged, and in 1977 was prohibited by law, although the actual consequences of this were to mask private sector activity rather than actually ending it (Mujinja et al. 1993). However, by the mid-1980s, Tanzania was facing economic constraints. In 1985–86 Tanzania embarked on a policy of economic liberalization and by the end of the 1980s, resources for the health sector had been substantially reduced, with real per capita expenditure falling by 46% in the decade to 1988/89. One consequence of this was the removal of the prohibition on private medical practice in 1991 as part of a broader set of government policy reforms introduced to encourage private initiative. Individuals were now allowed to establish, own and manage health care facilities and services, and following this change, private health sector activity increased dramatically. It was estimated that between 1991 and 1996 there was a 36-fold increase in the number of private for-profit dispensaries and that the number of for-profit hospitals increased five-fold (Munishi 1997). This recent increase in private sector activity has taken place within the context of broader sectoral reforms presented by the Ministry of Health in 1994 (URT 1994). These focus on the articulation of district health plans, broadening the range of financing options, and ‘continuous revision of the implementation of various acts, ordinances and regulations pertaining to health management and administration’ (URT 1994). In contrast to the past, the private sector is explicitly seen as a partner rather than an opponent, complementing government provision and widening consumer choice. However, the reform documents stress the need for a ‘strong regulatory authority’ to monitor the supply, quality and geographical distribution of health services and industries such as pharmaceuticals.

Methods The aim of the research in this first phase was to understand the framework of existing health sector regulations facing private for-profit providers in Tanzania and Zimbabwe. As there were only limited attempts to distinguish between private and public providers in the legislation encountered, the review focused on the main legislation which was thought to potentially affect the private health sector. In Zimbabwe, the study also considered the public health Acts that might affect private providers. Two methods of information collection were used. First, a review of existing regulations within the health sector was undertaken at national level with the hope of establishing a basic mapping of the existing network of regulations for each country. Information was collected through a review of existing documents and legislation. These data were then supplemented with data obtained through structured interviews with key stakeholders. The outcome of this stage was a description of the existing regulations addressing the health sector, discussed in terms of: • the types of variables being targeted (e.g. salaries, standards, etc.); • the specific interventions (e.g. licensing, incentives); • whom the regulations affect (e.g. the level: physicians, facilities).

During the process of information collection, we also tried to note what are the main gaps, in light of the changes in the health sector. Much of the review focused on regulation by legislation, and related administrative bodies empowered to implement them, as this was by and large the main type of regulation currently in place. The detailed country analysis is found in Hongoro et al. (2000) and Mujinja et al. (1998).

How do they regulate? Tables 1 and 2 present the detailed mapping of the main legislation affecting the health sector in the two countries. In Tanzania, the majority of the legislation was more than 20 years old. All but one of these regulations was legally based. The legislation in Zimbabwe has been more recently updated, with three of the ten pieces of legislation being changed or enacted since 1996. The legislation in both countries was then categorized by the variables targeted, the level (individuals, institutions or markets) and by the manner of regulation used. In both countries the majority of the regulations focus on entry (licensing) requirement for health personnel, such as medical and dental practitioners, nurses and midwives, pharmacists, as well as drugs and other medical devices. The entry restrictions work through specifying a minimal level of quality, below which individuals and organizations cannot enter the market. Thus, entry will also be implicitly controlling quantity, although there are no explicit intentions to deliberately influence the supply of these personnel. Zimbabwe also has an act designed to regulate traditional practitioners. The quality restrictions are aimed at ensuring a minimum basic standard, below which entry is restricted. Similar to regulations at the input level, there are existing regulations for the entry and quality of health facilities. Generally there is mandatory registration of hospitals and clinics. But regulations relating to other forms of facilities, such as nursing homes and mental institutions, are not systematically found. The major changes with respect to the growing ‘marketization’ of the health sector have reflected the need to regulate private hospitals/facilities. In Tanzania, there was the passage of the Private Hospitals Act (1991) and the Amendments to the Pharmaceuticals and Poisons Regulations in 1990. These changes essentially legalized private practice for pharmacists, hospitals and medical practitioners. Legislation in Tanzania restricts registering of new private pharmacies in areas where it is deemed there is an adequate number (distribution), but it is not clear that this happens in practice. In Zimbabwe, the Medical Services Act (1998) gives authority to the Minister of Health to regulate a wide variety of practices and actors related to the private for-profit sector. However, no specific measures have been identified or put into practice. Regulations become more limited, as the nature of the variables and the level becomes more complex. In terms of the price variable, there are very few regulations. In Tanzania there is an Act regulating salaries of physicians and determination of price structures for private facilities. Nothing has been explicitly aimed at improving competitive practices.

Quantity Prices

Drugs Medical supplies Institutions

Institutions

Individuals Institutions

Drugs Individuals Institutions

• Creation of Medical Council (1963) • Decision re qualifications for medical and • dental practitioners • Registration and licensing of approved • practitioners • Approval of health facilities and posts in • which necessary experience may be gained • Caution/suspension following unprofessional • conduct • Creation of Nurses and Midwives Council of • Tanganyika • Registration/licensing of nurses and midwives • Approval and regulation of nursing curricula, • and approval of examiners • Appointment of supervisors • Licensing of private nursing and maternity facilities • Creation of Optical Council (OC) • Recognition of qualifications • Registration of all individual opticians and • approved bodies corporate • Restriction on sale and supply of optical appliances • Creation of Pharmacy Board • Decisions regarding qualifications for pharmacists • Registration of pharmacists • Regulation of manufacture, importation, sale etc. • of pharmaceuticals and their inputs • Prescription of minimum quality standards for • manufactured or imported pharmaceuticals • Creation of PHAB (1991) • Registration of ‘approved organizations’ (1977) • and ‘persons’ (1991) • Removal of prohibition on profit making • Registration of private hospitals • Monitoring of quality • Determination of price structures • Control of medical practitioner salary scales • Aimed at voluntary agency facilities requesting • government subsidy • Rationalize medical services and ensure economic • use of all available resources • Changed legal status of Medical Supplies • Department • Established Tender Board Legislation

Legislation

Legislation

Legislation

Legislation

Legislation

Legislation

• Ministry of Health

• Ministry of Health

• Private Hospitals • Advisory Board • Courts of Law

• Pharmacy Board • Courts of Law

• Optical Council • Disciplinary • Committee of OC • Courts of Law

• Nurses and Midwives • Council of Tanganyika • Courts of Law

• Medical Council of • Tanganyika • Courts of Law

Nature of instrument Enforcement agency

Lilani Kumaranayake et al.

Source: Mujinja et al. (1998).

1993

Medical Supplies Department Act

Quantity Prices Quality

Distribution Quality

1977 1991

Medical (Grant-in-Aid to 1955 Voluntary Agencies) 1980 Regulation

Private Hospitals (Regulation) Act

1990

1978

Pharmaceuticals and Poisons Act; Pharmaceuticals and Poisons Regulations

Individuals Facilities Optical appliances


Individuals Institutions Training

Instruments

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Entry Quality Quality


1965

Opticians Act

Entry Quality (Quantity)


1959 1963 1966 1968

Medical Practitioners and Dentists Ordinance; Associated Acts – No. 42 of 1963 No. 50 of 1966 No. 24 of 1968

Variables targeted Level targeted

Nurses and Midwives 1950–4 Registration Ordinance

Date

Principal legislation affecting the Tanzanian health sector

Legislation

Table 1.

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1956

1972

Dangerous Drugs Act

Hazardous Substances and Articles Act

Entry Quality Quantity


Hazardous Substances Individuals Institutions Premises Transportation facilities

Drugs Individuals Institutions

Legislation

Legislation

Legislation

Incentives Legislation

Legislation

• Hazardous • Substances • and Articles Control • Board and its • Executive Board • Courts of Law

• Drugs Control • Council • Courts of Law

• Ministry of Health • with assistance from • various Mental • Health Boards

• Advisory Board • of Public Health • Courts of Law • Local Authorities

• Health Professions • Council through its • various committees • Courts of Law


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1976

Mental Health Act

• Provides for the establishment of the Medical, • Dental and Allied Professions Council (Health • Professions Council – HPC) • Registration of all health professions, except natural • therapists and traditional medical council practitioners • who have own their own council • Registration of all health institutions in accordance • with defined structural minimum standards • Monitoring and control of practice standards in • health • Inspection of training institutions and supervision • of training • Provides for the establishment of an Advisory • Board of Public Health • Prevention and guarding against the introduction • of diseases from outside the country • Promotion of public health and the prevention, • limitation or suppression of infectious or • contagious diseases • Advising and assisting local authorities in regard to • matters affecting public health • Promotion or undertaking of research and • investigations in connection with the prevention or • treatment of human diseases • Preparation and publication of reports and statistics • or other information relating to public health • Conditions of reception, detention, treatment and • discharge of mentally disordered or defective persons • Monitoring of quality • Establishment of Mental Health Boards for each • institution • An act to control the importation, exportation, • production, possession, sale, distribution, and use • of dangerous drugs • Provides for the establishment of an Inspectorate, • which can institute inquiry on premises owned by • pharmaceutical chemists, general dealers or licensed • manufacturers of any drug to which the Act refers • Provides for the establishment of Hazardous • Substances and Articles Control Board to administer • powers provided by the Act • Registration of individual licenses to suppliers • Registration of premises, vehicles, vessels or • aircraft licenses in terms of the Act • Registration of persons licensed to possess store or • use hazardous substances or articles • Registration of hazardous articles licenses in • terms of the Act

Instruments

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Quality

Quality Individuals (Standards setting Institutions for disease control)

1925 1996

Public Health Act, No. 15:09


Level targeted


Variables targeted

Medical, Dental and 1971 Allied Professions 1996 Act, No. 27:08 (various amendments)

Date

Summary of main legislation affecting the Zimbabwe health sector

Legislation

Table 2.



Date 1969

1981

1981

1971

1998

Drugs and Allied Substances Act (Chapter 320)

Traditional Medical Practitioners Act (Chapter 27:14)

Natural Therapists Act

Food and Food Standards Act (Chapter 321)

Medical Services Act

Continued

Legislation

Table 2.

Entry Quality Quantity Price

Quality


• Provides for the establishment of the Drugs • Control Council • Registration of drugs • Provides for certain prohibitions, controls and • restrictions relating to drugs and other substances • Provides for the establishment, procedures and • powers of an executive committee, whose function is to • exercise the powers of the Council between meetings • Establishment of any other committees which may • have powers and functions such as those of the Council • Licensing of premises and persons to dispense • Inspection of premises and drugs to check • registration requirements Individuals • Establishment of Traditional Medical Practitioners • Council to supervise and control the practice of • traditional medical practitioners, to promote the • practice of traditional medical practitioners and to • foster research into and develop knowledge of such • practices; to make grants or loans to associations or • persons which the council considers necessary or desirable • Registration and regulation of the practice of • traditional medical practitioners Individuals • Provides for the establishment, composition of the Institutions • Natural Therapists Council of Zimbabwe • Establishment of any other committees to assist the • Council in the exercise of its functions • Registration and licensing of the practices of • homeopaths, naturopaths and osteopaths in • Zimbabwe • Exercise of disciplinary powers after inquiry into • improper or disgraceful conduct Food and food • Provides for the establishment of a Food Standards substances • Advisory Board, from a cross-section of government, Premises • professional, private and civic sector, to advise the • Minister on all matters relating to food and food • standards • Provides for the delegation to local authorities of • power of appointment of analysts and inspectors to • enter, inspect/check, seize and dispose of food and • food substances that are hazardous in the interests • of public health Public and private Empowers the Minister of Health to do the institutions • following: Medical aid • To delegates some of his function in the provision societies • of medical services to local authorities and other (insurance) • persons

Drugs and allied substances Individuals Institutions Premises

Instruments

• Food Standards • Advisory Board • Local Authorities • Courts of Law

• Natural Therapists • Council of Zimbabwe • Courts of Law

• Traditional Medical • Practitioners Council • Courts of Law

• Courts of Law • Drug Control Council • Customs Authorities

No clear mechanisms • Ultimately the identified yet • Ministry of Health • but no clear • enforcement • mechanisms identified

Legal Sanctions

Legislation

Legislation Incentives

Legislation


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Variables targeted Level targeted


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Figure 2 summarizes the main findings according to these categories. The bottom right quadrants represent the most complex parts of a potential regulatory framework, focusing on market structures and competitive practices.

• To regulate the admission to government hospitals • of private patients by private practitioners through • the classification of open and closed hospitals • Patients at government hospitals will have no right • to choose to be attended by a particular doctor • To fix the fees payable for medical services to all • government and state-aided hospitals • To regulate the establishment and maintenance of • medical aid schemes and private hospitals

It is quite clear that much of the existing legislation reflects the still more ‘social’ dimensions of standard-setting for entry and quality, with new legislation starting to reflect the need to address private actors in the health sector. However, even this legislation is still somewhat focused on entry and minimum quality and some price regulation functions, as opposed to broader measures attempting to discipline the market, promote competitive practices and consumer protection. In order to understand the impact of these regulations, it is clearly important to explore their enforcement and effectiveness. This is looked at in more detail in the country-specific publications (Mujinja et al. 1999; Hongoro et al. 2000).

Where are the gaps? Figure 1 provided a summary of the nature of the regulations which are now needed as governments come to address private sector activity. The figure provided a range of categorization by level and nature of instrument. In Figure 2, we summarized the type of legislation that was actually found in our review of Tanzania and Zimbabwe. We now consider what may be the most important gaps in existing regulation, in light of our knowledge of the changing nature of the health sector. Relative to the growing marketization of the health sector, there are a large number of gaps identified in terms of the focus of existing legislation and target variables. The existence of documented problems suggests the need for action not only at the entry stage, but also on the broader distribution and competitive practices dimensions, particularly on the market side. Examples of these problems and noteworthy gaps are summarized in Table 3.

Source: Hongoro et al. (2000).

Legislation

Table 2.

Continued

Date

Variables targeted

Level targeted

Instruments


At the market level, there is very little regulation found, except for the sale and importing of drugs into the local markets. In terms of competitive practices, Tanzania has no explicit protection for the consumer, as found in places such as India with its Consumer Protection Act. This Act attempts to protect consumers (e.g. patients) in transactions purchasing medical care (Bhat 1996).

Private sector activity is not confined to health care practitioners alone. There is also a range of other private sector providers who are apparent in these countries. In terms of entry, there is a growing need to recognize new private sector actors (e.g. laboratories, other health care staff) in both thinking about minimum standards for entry and ensuring quality. In terms of more ‘economic’ type regulation, key areas identified for more focus are at the organization/ market level and on new types of markets such as the rapidly increasing private insurance industry, and issues related to entry and quality. Given the nature of private transactions, problems also arise due to the lack of restrictions on competitive practices. Public practitioners working in private practice also engender a


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Figure 2. How do they regulate?

whole host of problems, including leakage of supplies and pharmaceuticals from public facilities. In Zimbabwe, the additional problem of self-referral – with physicians owning private facilities such as laboratories where patients are sent – has been documented (Hongoro et al. 2000). This type of ownership can be thought of as vertically integrating certain services, reducing competition and potentially increasing costs. In the context of the broader market, consumers have very little protection (unlike India) apart from the existing negligence/malpractice provisions governing the licensing of medical practitioners.

Conclusions The growing marketization of the health sector requires newly defined and strengthened roles for the state. In terms of regulation, the challenge is to have both appropriately designed and effective measures given changing realities. In this paper, we consider the first issue and explore what is the nature of current health sector regulation in Tanzania and Zimbabwe, and how they reflect changing realities. Findings indicate that much of the existing regulation occurs through legislation and: Table 3.

(1) focuses on individual inputs rather than health system organizations; (2) aims to control entry and quality rather than explicitly quantity, price or distribution; (3) fails to address the market-level problems of anticompetitive practices and lack of patient rights. It has been argued that one needs to have basic legal mechanisms in place relatively early on in the marketization process, as it is much harder to do so later. In order to keep pace with the new realities of the health sector, there is much that still needs to be done. Emerging markets require the emergence of appropriate regulations. However, these tend not to keep pace. As the private sector develops and becomes more formalized, coalitions of interest emerge, and then it becomes very difficult to put into place basic regulatory legislation which works against vested private sector interests. Even though the extent of private health insurance is small at the moment, experience from countries such as Thailand and the United States suggests that it is virtually impossible to implement legislation for private health insurance once the industry is well established. While we have examined Tanzania and Zimbabwe in detail, the nature of existing regulation is

Where are the gaps? Priority problems and possible action

Level/variable Entry

Quality

Quantity

Price Distribution

Competitive practices

Input

Organization

Market

No restrictions on entry by private insurance and new private entities such as laboratories; need for entry regulation Wide variation in quality

No regulation of private insurance; need for both entry and quality regulation

Wide variation in quality abuse by private practitioners; unclear whether this can be accomplished by regulation alone Exodus of staff to private sector or public practitioners working in private sector; need for regulation of dual practice Wide variations in price; unclear whether it is possible to affect by regulation? Private practitioners concentrated Private facilities concentrated in in urban areas; need for urban areas; need for incentives incentives for providers to for providers to re-locate re-locate Ownership of facilities – vertical integration limiting competition; need for regulation addressing this

Rapid increase in number of private insurers; need for entry and quality regulation

Limited consumer protection; need for regulation and other measures to strengthen consumer protection


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similar to many low-income countries also facing extensive private sector activity. There is still very much a focus on the ‘social’ rather than ‘economic’ aspects of regulation within the health sector. Although there have been recent changes which attempt to start to address aspects of private health provision, there are some very key gaps. These particularly include measures to promote consumer protection and to address the development of new private markets such as for health insurance or laboratory and other ancillary services. However, the other key question is about whether these regulations are effective, and if they do have limited impact, can and how do we address the gaps identified by the existing network of regulations? Secondly, as the objectives and levels of regulation change within the health sector, is the nature of the instruments differentially important for different levels and organizations? These questions relate not only to the variables and levels that regulations are targeting, but also to the ‘how’ of the process. Further work needs to be done in identifying successful cases of effective implementation of regulation, and considering non-legal mechanisms to meet these objectives.

Endnotes 1 The PPMNet is a network of collaborative research partners working together since 1993. It currently consists of 14 members from around the world. The network is funded by the European Union. 2 The term ‘level’ in Figure 1 refers to the degree of complexity in organization, rather than the usual primary, secondary and tertiary levels associated with the health system.

References Abbott TA, Crew MA. 1995. Lessons from public utility regulation for the economic regulation of health care markets: an overview. In: Abbott TA (ed). Health Care Policy and Regulation. Boston, USA: Kluwer Academic Publishers. Bennett S. 1991. The Mystique of Markets: Public and Private Health Care in Developing Countries. PHP Departmental Publication No. 4. London: London School of Hygiene and Tropical Medicine. Bennett S, Ngalande-Banda E. 1994. Public and Private Roles in Health: A Review and Analysis of Experience in Sub-Saharan Africa. Geneva: World Health Organization. Bennett S, McPake B, Mills A. 1997. Private Health Providers in Developing Countries: Serving the Public Interest? London: Zed Press. Bhat R. 1996. Regulation of the private health sector in India. International Journal of Health Planning and Management 11: 253–74. Bhat R. 1999. Characteristics of private medical practice in India: a provider perspective. Health Policy and Planning 14: 26–37. Hongoro C, Kumaranayake L, Chirove J, Musonza T. 2000. Regulation of the Private Health Sector in Zimbabwe. PHP Departmental Publication, London School of Hygiene and Tropical Medicine, UK (in press). Kumaranayake L. 1997. The role of regulation: influencing private sector activity within health sector reform. Journal of International Development 9: 641. Kumaranayake L. 1998. Economic Aspects of Health Sector Regulation: Strategic Choices for Low and Middle Income Countries. PHP Departmental Publication No. 29. London: London School of Hygiene and Tropical Medicine.

Kumaranayake L, Lake S. 1998. Regulation in Low and Middle-Income Country Context. Working Paper, Health Economics and Financing Programme, London School of Hygiene and Tropical Medicine, UK. Maynard A. 1990. The regulation of public and private health care markets. In: McLachlan G, Maynard A (eds). A Public/Private Mix for Health: The Relevance and Effects of Change. London: Nuffield Provincial Hospital Trust. Ministry of Health and Child Welfare. 1995. Health Sector Reforms. Harare: Republic of Zimbabwe. Mujinja P, Mpembeni R, Lake S. 1998. Mapping of health sector regulation in Tanzania. Muhimbili University College of Health Sciences, Tanzania, and Health Economics and Financing Programme, London School of Hygiene and Tropical Medicine, UK. Mujinja P, Lake S, Mpembeni R. 1999. Regulation of the Private Pharmaceutical Sector in Dar es Salaam, Tanzania. Draft Research Report, Muhimbili University College of Health Sciences, Tanzania, and Health Economics and Financing Programme, London School of Hygiene and Tropical Medicine, UK. Mujinja P, Urassa D, Mnyika KS. 1993. The Tanzanian Public–Private Mix in National Health Care. Report presented to the first workshop on the Public–Private Mix for Health Care in Developing Countries. London, UK. Munishi GK. 1997. Private Health Sector Growth Following Liberalization in Tanzania: Some Policy Considerations. International Health Policy Program Working Paper, World Bank, Washington DC. Ogus A. 1994. Regulation – Legal Form and Economic Theory. Oxford: Clarendon Press. Stenson B, Tomson G, Sihakhang L. 1997. Pharmaceutical regulation in context: the case of Lao PDR. Health Policy and Planning 12: 329–40. United Republic of Tanzania. 1994. Proposals for Health Sector Reform. Dar es Salaam: Ministry of Health. December. Wagao J. 1993. Adjustment Policies in Tanzania, 1981–9: the impact of growth, structure and human welfare. In: Cornia CA, van der Hoeven R, Mkandawire T (eds). Africa’s Recovery in the 1990s. London: Macmillan. World Bank. 1993. World Development Report 1993: Investing in Health. Washington, DC: World Bank. World Bank. 1997. World Development Report 1997: The State in a Changing World. Washington, DC: World Bank. Yesudian CAK. 1993. Behaviour of the private health sector in the health market of Bombay. Health Policy and Planning 9: 72–80.

Acknowledgements The Tanzania and Zimbabwe country studies were supported by the DFID-funded Health Economics and Financing Programme (HEFP) at the London School of Hygiene and Tropical Medicine. Lilani Kumaranayake and Sally Lake are members of HEFP.

Biographies Lilani Kumaranayake is a Lecturer in Health Policy and Economics at the Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, United Kingdom. Sally Lake is a Research Fellow in Health Economics at the Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, United Kingdom. Phare Mujinja is a Senior Lecturer in Health Economics and Public Health at Muhimbili University College of Health Sciences, Tanzania, and a guest lecturer at Heidelberg University where he is pursuing a Ph.D.


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Lilani Kumaranayake et al. Charles Hongoro is a Medical Research Officer (Health Economist) in the Public Health Unit, Blair Research Institute, Harare, Zimbabwe. Rose Mpembeni is an Assistant Lecturer in Medical Statistics of Muhimibili University College of Health Sciences, Tanzania.

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Correspondence: Lilani Kumaranayake, Health Policy Unit, London School of Hygiene and Tropical Medicine, Keppel Street, London WC1E 7HT, UK. Email: [email protected]