As key figures, influential business people and healthcare stakeholders gather in Addis Ababa today for the launch of the African Business Coalition on Health (ABCHealth) – an initiative between the Aliko Dangote Foundation and GBCHealth, David Thomas explains why the future of healthcare in Africa lies increasingly in a mixed market approach, as governments look to ease pressure on budgets by entering public-private partnerships.
In a crowded United Nations conference room at the height of the 2018 General Assembly week, ministers from across Africa united in support of an unlikely cause – a bid to boost private healthcare. Rubbing shoulders with the private sector, representatives from Namibia, Botswana, and Togo explained how their countries are enabling the once-controversial arrival of big business in hospitals and clinics.
After years of being left to their own devices as governments toiled on donor-funded public systems, profit-making providers are once again in vogue as governments look for ways to boost mixed outcomes and ease the pressure on ballooning budgets. Healthcare experts say that government scepticism towards private sector involvement is abating as ministers face new disease threats and an uncertain financial outlook.
“In an era where things have opened a bit and there’s much more acceptance of the private sector, we can begin to see what the opportunities are,” says Pape Gaye, chief executive of IntraHealth International, a US-based non-profit that trains health workers on the continent.
“There’s severe underinvestment in the training of health workers, and we don’t have enough schools. There’s an incredible opportunity for people to invest. The epidemiological profile is changing and in Africa we are seeing more non-communicable diseases (NCDs). We need more engagement of the private sector and pharmaceutical companies to deal with these complex issues.”
Despite a perception that governments dominate Africa’s health systems, the private sector has long been embedded on the continent. A 2008 survey by the International Finance Corporation estimated that around 60% of health care financing in Africa came from private sources, while citizens spent around 50% of the continent’s total health expenditure on costly out-of-pocket payments. This inefficient system meant that governments and businesses rarely worked together on well-planned initiatives to promote and deliver sustainable solutions.
Double disease burden
While donor-funded initiatives have slashed deaths from communicable diseases such as malaria and HIV/AIDS, the rise of sophisticated non-communicable ‘rich world’ conditions such as cardiovascular disease, cancer and diabetes, are forcing a rethink about how the government can utilise private sector expertise to tackle what has become a double disease burden. The World Health Organisation estimates that NCDs will rise by 27% over the next 10 years in Africa, resulting in 28 million additional deaths, compared to a global rise of just 17%.
Meanwhile, Africa’s economic emergence and growing population has created a class of consumer eager to spend on health services – a clientele the private sector is keen to engage with. Governments and businesses are signing public-private partnerships (PPPs) to drive “deliberate, systematic collaboration in line with national health priorities, beyond individual interventions and programmes”, according to a UNECA/GBC Health/Aliko Dangote Foundation report released at the UN event.
“It’s going to be public-private for infrastructure and it’s going to be public-private for healthcare,” UNECA executive secretary Vera Songwe told the assembled ministers. “How can we scale it, how can we bring in all those initiatives? The private sector needs to start talking to government and start building these coalitions and innovative ways of doing things.”
For governments, the primary attraction of PPPs is that they shift some of the financial burden from the state. Some 38% of current PPP spending is on health service provision, with significant space to grow in technology, financing, medicine, logistics and advice – areas where government funding is often short.
The potential injection of funds is welcome news on a continent where only five countries currently achieve the 2000 Abuja Declaration target of spending 15% of their budgets on health. But legal, regulatory and skills barriers to entry remain intimidating. Just 10 countries account for more than half of all PPPs, with nearly two-thirds in East Africa (32%) and West Africa (31%), compared to just 9% in Central Africa and 6% in North Africa. Eight out of the top 10 countries for health PPPs are deemed to be high growth, high resilience countries with strong internet penetration, suggesting that a strong business environment remains essential to health investment.
Patrons or profiteers?
Perhaps the most significant barrier is a residual belief in Africa that private sector operators are unscrupulous profiteers, a perception driven by alarming media reports of patients being forcefully held in Kenyan hospitals until outstanding bills are settled.
Even in developed countries, some legislators and citizens have a powerful aversion to an industry which they accuse of capitalising on the poor. African policymakers remain weary of embedding a two-tier system where access to quality healthcare is defined by the size of a citizen’s bank balance.
“The cultures in the two worlds are so different – the private sector is about efficiency, speed, bottom line, and customers who can afford it… I think companies will have to accept that in order to make an investment in development, they have to go for big volumes and small margins,” says Gaye.
Other experts insist that innovative pricing can satisfy both parties. The Bill & Melinda Gates Foundation says that it is working with private sector operators to deliver lab services in Africa, having worked with profit-making pharmaceutical companies to supply cheap generic drugs to the public market while wealthier customers buy branded alternatives.
“They’re going to charge higher prices in the private sector and the private hospitals, and that would subsidise much lower costs but the same diagnostic for the public sector,” says Trevor Mundel, president of global health at the Foundation.
Many African countries will have to accept that the private sector’s interest in the continent is driven by wealthy customers willing to pay for products and services, while private operators may have to accept a haircut on their usual profits. But the direction of travel is clear.
“We are moving in sub-Saharan Africa to a world of mixed markets, you’re going to have a cohabitation of private and public sectors and you’re also going to move towards a focus on the consumer and patient-centred approaches,” says Gaye. “Their ability to make their own decisions will increase as their purchasing power increases. So naturally you’re going to get competition and in a system like that you will see the growth of private sector and market driven models.”
The Africa Business: Health Forum (ABHF) is taking place at the Hyatt Regency, Addis Ababa on 12 February. It aims to strengthen partnerships, promote an ongoing dialogue between the African private and public sectors, and foster opportunities for the private sector to contribute towards the collective efforts of key stakeholders in strengthening national health systems in Africa.
For more information, visit the Africa Business: Health Forum website.