Economic and health care restructuring— the need for better governance

Chitr Sitthi-amorn, Ratana Somrongthong and Wattana S Janjaroen

Chulalongkorn University, College of Public Health, 10th Floor, Institute Building 3, Soi Chula 62, Phyathai Road, Bangkok 10330, Thailand. E-mail: chitr{at}md2.md.chula.ac.th

In recent years, public health in developing countries has been affected by the restructuring in both the health and non-health sectors (e.g. education, employment, transport), and international politics. Economic and health care restructuring have had an impact on health. We aim to highlight some key events in South-East Asia and their effect on public health during the past 15 years and to propose measures to deal with the phenomena.

Health impact of restructuring in the non-health sector

Globalization has brought about restructuring that impacts on health and health care. The economic boom in most developing countries has seen a restructuring around cheap labour, foreign investment and oil discovery.1 Unfortunately, restructuring has not put in place adequate governance—the systems of management, monitoring and evaluation—to ensure transparency and accountability.2 Thus, in South-East Asia, the boom was followed, in 1997, by a crisis sparked by the devaluation of the Thai and Malaysian currencies. The crisis threatened to become a global economic recession. Many put the blame on blunders by Ministries of Finance in defending their currencies. However, it can be argued that the root cause of the crisis was due to inadequate governance of the economic sector for many years, spearheaded by corruption (nepotism, cronyism, and favouritism) as well as mismanagement including non-productive investment, wasteful practices, inefficiency and procrastination. People borrowed money for speculative activities with a high return, such as for golf courses, rather than investing in potentially productive sectors.3

Poor governance in the economic sector can also lead to health problems via environmental degradation and the ‘spill over’ effect of social inequalities. Inadequate treatment of raw sewage (e.g. associated with rapid tourist industry development in isolated areas) and pollution are causing oceanic crisis.4 Increasing disparity in the distribution of wealth can increase the rate of crime, violence, and ‘social diseases’ such as prostitution, sexually transmitted diseases and other infections. This leads to increase in health care utilization.5

Health effects of globalization in the health sector

The effect of globalization on health is compounded by the corruption and poor governance in the health system. There have been many non-productive investments and wasteful practices in the health care sector. In parallel with general economic practices, resources were invested in speculative markets providing potential for large expansion. Since the 1980s and well before the economic crisis, South-East Asia invested in many private hospitals. In Thailand, for example, private hospital beds increased dramatically over the years, i.e. from 8066 in 1982 to 21 297 in 1992 and 34 973 in 1996. The number of doctors in private hospitals and the ratio of specialists increased, leading to a shortage in the public sector, pressuring the government to train more doctors.6 The culture of free enterprise, the enlarged middle class, the inclusion of hospital insurance in salary packages, and tax incentives for the private health care industry, provided strong inducements for investment in private hospitals, advanced technology, and migration of leading specialists from the public to the private sector at the expense of the public sector.7 Increases in the import of new expensive drugs and wastage due to treatment occurred in response to aggressive pharmaceutical industry promotion and consumers' demands for more expensive medicine and procedures.6,8 Medical care costs provided as ‘welfare’ to government civil servants and those employed in medical enterprises has increased sharply from 4315 million baht (US$108 million) to 16 500 million baht (US$412 million) in 1995; a fourfold increase in 7 years. Inadequate management, monitoring and evaluation necessary for good governance and lack of regulation of the corporate health care business sector have prevailed.9

Due to the crisis many direct health consequences such as an increase in suicides occurred, as well as other adverse health effects such as malnutrition, abandoned children, low birthweights among the poor, mortality from acute respiratory tract infections and vaccine preventable diseases including diphtheria, measles and hepatitis.10,11 These adverse health effects were partly due to the lower rates of utilization of services especially by those who had no prepaid insurance.10 The poor were disproportionately affected by adverse health consequences of the economic crisis, perhaps because they have not been in a position to make their voices heard. Ironically, such injustice was apparent despite the fact that the public hospitals in the Ministry of Public Health received increased budgets for their poor patients through the ‘Good Health at Low Cost’ programme.10 Moreover, free health insurance received by poor people decreased from 19.7% in 1997 to 13.5% in 1998,10 adding greater inequity in access to health care.

Health effect of international politics

Trade and economic sanctions to lever political change or advantages can deplete a country of food, essential medical supplies and essential infrastructure for housing, transport, water and waste disposal causing outbreaks of infections and other health problems.12 Economic crises resulting from such politically motivated sanctions have caused suicides, reduction of food consumption and change in the diversity, cleanliness and quality of food eaten.13 Despite the obvious hardship of the general public, many ‘unacceptable’ regimes still exist, challenging the ‘punishment’.

What needs to be done?

Strategies at the national level
Uphold values of public health
Equity, social justice, self sufficiency, and sustainability have been suggested as the key values for public health and global development which should be upheld.14 The fundamental role of government in the provision of health care should be revitalized. For example, in Thailand, tax incentives for use of expensive equipment and 25% taxation on essential drugs should be dropped.15 Guidelines and options are available to guide a wider application of the concept of sustainable development through involving more players in, for example, private sector contracts for primary health care.16

Appropriate restructuring involving public health values and new players
Restructuring the health system requires involvement and commitment of all stakeholders if appropriate technology is to be delivered to desirable targets. Thus, even though effective medicines are available to treat AIDS, control of the disease will not be possible without a robust infrastructure to bring the medicine to those in greatest need: the poor and the underprivileged. The restructuring of health care systems by means of involving both the public and private sectors has been tarnished by inadequate governance which never considered impact in terms of adverse health impacts, but solely on cost containment.9,16,17 The key question is what kind of organizational change is optimal for a health system, which can uphold key public health values and is still cost-effective and affordable by a country. Answering this question requires some hard decisions involving changes in the role of different government ministries, and changes in the roles of both public and private sectors. Such changes are paralleled by the failed health system changes attempted in the USA during the first Clinton administration18 and the new National Health Service plan now being attempted in England.19 One of the keys to effective organizational reform is to create a platform for evidence-based discussions (see below) among the main stakeholders. This may result in some degree of wider ownership of the reform agenda and a system of compensations or allowances instated to reward good performance.20

Focus on evidence-based decisions
Several tools and methods are available for knowledge management to aid movement towards better decisions. These tools and methods are needed for estimating demand for health care resources based on needs.21,22 Instruments that are capable of estimating needs, resources, utilization, costs and outcomes of care are essential if the full impact of decisions is to be understood, and public values maintained. Research focusing beyond epidemiology and onto health systems is needed when financing, incentives for providers, incentives for facilities, acquisition of technology, and the production of human resources are all integral parts of the decision process. Efforts are needed by countries to explore, collate, use and refine these tools and instruments to guide decisions, such as questions about the feasibility of national health insurance purchase co-operatives to foster equity, efficiency and quality of care.

Participation of intended beneficiaries in evidence-based policy decisions
Social policies that focus on human development must be the main aim of the public sector, i.e. investment in human capital. To enhance equity, human development policy should set as a target increasing the social opportunities of all members of society in their access to education, health care, and natural resources. According to Amartya Sen, re-vitalized intended beneficiaries with sufficient opportunities for access to social opportunities will not be content with reliance on welfare but would rather produce quality activities that can compete in any market or can bring in resources.23,24 Such users of services will have more freedom to choose and can make more informed decisions, which in turn, can strengthen the market. Stronger members of society will increase the efficiency of the market through more freedom of choice. Investing in human capital must involve co-operation of the social, economic and environmental sectors.25 Improved social opportunities for the voices of the poor to be heard through democratic means are essential to deal with the unwanted consequences of economic or environmental crises, which disproportionately and unfairly affect the poor. Enhanced democracy will make the voice of the poor loud and clear, and it is likely that demands for appropriate ‘safety nets’ and greater fairness in the society will result.5

A key to success in implementing these strategies and actions lies in a nation's capacities—which include epidemiology and public health—to manage knowledge for good governance. Each country may need to review the kind of expertise, information and management system required for knowledge generation and management to achieve good governance. Good governance is needed for both the health system and the health research system through building strong interactions between the two. Income per capita alone does not define the health of the people in a country despite demonstrated relationships between health and economic growth. Some poor countries appear to do things right and have better health at a low GNP than others that do not. This is not to deny the fact that the biggest killer in the developing world remains poverty. It is rather a challenge for nations to make plans using long-term goals, intermediate goals and step-by-step measures. Appropriate infrastructures and information systems are essential for achieving logical decisions. The infrastructures and information systems will have to focus on development of knowledge management to facilitate decision-making based on good governance through a check and balance mechanism participated in by key stakeholders in a society.

Strategy of the international community
Globalization has moved the world from an era of national concerns to an era of global health. There is an increasing international transfer of health risk such as pollution and epidemics which increasingly threaten the health of countries. Nations are increasingly losing power and capacity to ensure their policies are protecting the health of their people.

International development agencies and enterprises need to define clear moral authority and values on the acceptable norms and standards of accountability and compliance, and fair conflict resolution as well as negotiated dispute resolution. These should be based on a ‘level playing field’ rather than unilaterally imposed by sanctions. New global health contexts, architecture, rules and regulations are needed to define new ways of co-operation and setting priorities to balance the positive and adverse interactions between economic growth and disease, and between health and wealth.

One moral aspect is a concern for equity. Efforts must be made to enable countries to participate in the opportunities for economic growth but through knowledge management for good governance. Price and profit control might not work as expected if not focused on economic evaluation and good governance.26 Health must be considered a global public good particularly if a concern for equity is to be honoured. The World Health Organization has been exploring ways to partner with the private sector to enhance better equity in health.27,28 Basically, the world is looking for new rules and new platforms for collective action and these cannot emerge from nation states. We need global rules for global governance. The new global rules have to go beyond being concerned solely with economic phenomenon (i.e. growth) but have to link with cultural and political processes, which shape the ways people and nations live their daily lives. The use of new electronic media, in addition to other traditional means, can serve as a platform to transfer information and to engage the attention of stakeholders. Trying to find and to work with set rules that satisfy all stakeholders and produce global agreement is a challenge. Transparency, accountability and consistency in managing knowledge to make balanced decisions, and respecting a concern for equity, will be fundamental to recast and sustain an effective global health governance infrastructure.

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