Making Health Markets Work Better for Poor People: Improving Provider Performance

Gerald Bloom, Claire Champion, Henry Lucas, David Peters and Hilary Standing.

During the past two decades there has been a dramatic spread of market relationships in the health sector of many low and middle income countries. The spread of markets has often been much faster than the capacity of the state and other key actors to establish regulatory arrangements to influence their performance. The growth in largely unregulated markets has resulted in problems with the safety, quality and cost of health services, particularly for the poor.

There has been a growing interest in recent years in strategies to make markets for a number of goods and services work better for the poor. The so-called M4P (Markets for Poor People) approach argues that reform strategies need to bridge micro and macro levels in building arrangements to support improved performance of markets. This means understanding markets in their social and institutional context. This paper argues that the same applies to markets for health-related goods and services. These markets face particular problems with respect to information asymmetry and the danger that providers will abuse the power it gives them. They also face problems with quality and oversight in situations where the potential for harm is high.

This is particularly important since poor people obtain a large proportion of their health related goods and services in largely unregulated markets. For example, informal providers and drug sellers are an important source of advice and pharmaceuticals in many countries. The spread of the mass media and of a variety of information and communications technologies have also greatly increased access to health-related knowledge, including for the poor. These developments are creating major opportunities for enabling people to gain access to effective solutions to their health problems. However, it also exposes them to information, goods and services where judgements have to be made on competence and quality and where many different stakeholders may be attempting to influence their behaviour.

The health systems of the advanced market economies have evolved complex arrangements to address these kinds of problems. These are adapted to a context of highly regulated markets and well organised and largely accountable governments. Health systems are also path dependent in that early institutional and technical choices are highly determining of future pathways. For both these reasons, arrangements do not therefore necessarily transfer predictably or appropriately to other country settings. This paper argues that local innovations are much more likely to address the problems of unregulated markets and that we are now seeing considerable dynamism in a number of developing countries in response to the grwoth in health markets.

The paper develops a framework for designing and implementing innovations aimed at making markets work better for poor people. Focusing on the social contract between providers and users, it reviews a number of arrangements that have emerged with a particular focus on the providers largely used by the poor. Noting that there are major risks of unintended consequences in attempts to alter the performance of markets about which there is very little systematic information, it argues for a learning approach in which innovators and health systems analysts collaborate in the design and redesign of innovations to address the needs of the poor and in the development of indicators to evaluate their impact. The aim is eventually to enable appropriate institutional actors – whether in or outside government – to monitor and regulate their performance.

A full version of this paper is available on the Results for Development Institute website