Ownership in the health care system

More from Roberts and Hsiao:

We also need to stress that health care ownership choices are more complex than the classic public-private dichotomy suggests.  There is often a "third way" in the form of nonprofit, non-government organizations.  Such NGOs often combine incentives to and accountability of managers with a board of directors that is not solely profit oriented.  At their best, such NGOs can produce greater "technical efficiency than rigid public organizations.  Moreover, they can recruit staff with different skills and motives than either for-profit business or classic bureaucracies... 

 How, then, should health reformers choose between using the public and private sectors to deliver services?  We believe this decision should depend on several features of a nation's circumstances and of the particular activity under consideration: 

• Regulatory capacity: A government with greater technical expertise, a relatively law-abiding citizenry and a well-functioning legal and administrative apparatus can more easily control the excesses of private sector providers. 

• Reform priorities: Markets do better on efficiency but worse on equity.  The choice of ownership may well depend on the relative importance of these goals...  

(There) is a deep irony that the nations least-equipped to make their public sector function effectively are often those least able to discipline private markets to achieve public goals.  

In the frenzied debate between market supporters and adversaries, it is often lost that there may be different best practices for countries at different stages of development.  One of the strengths of Roberts and Hsiao's book is that it embraces this complexity and recommends different levels of government intervention depending on a country's stage of development.

As Roberts and Hsiao argue, there is no good system of ownership for developing country health providers, just competing bad alternatives.  Nevertheless, there seem to be sounder argument in favor of keeping hospital ownership private in developing countries.  In the short-term, it seems that expanding the proverbial pie is a higher priority than equitably distributing the pie.  Once a country increases the supply of health care and the efficiency of its distribution, there seems to be an increasing role for government, as China is now learning, and as Western European countries (and even the U.S.) have all learned.