Global Health Ideas

Finding global health solutions through innovation and technology

Can microfinance improve health services to the poor?

The question was raised on the Pienso blog [Dec 18 “Link Drop“] in reference to a Harvard Business School newsletter Q&A [Dec 13, “Improving public health for the poor“] with Michael Chu, Harvard Business School lecturer and one-time micro-financier. Chu developed Project Antares [course description at bottom of HBS link] with colleagues at Harvard School of Public Health to explore means of delivering public goods and services via the private sector.

Microfinance may offer a window on new methods for widening access to healthcare for the poor, says Harvard Business School’s Michael Chu… Bringing together public healthcare and market forces “could have huge impact,” he says.

I have two problems with the interview and some praise for taking on issues outside the standard purview of business schools.

First criticism: The language in the Q&A comes off at times as naive –

Martha Lagace: What is missing by defining health, as we do today, as a public good?

Michael Chu: …right off the bat you need scale and permanence. Both private and public philanthropy, when they work well, play a key role in fostering the birth of new concepts and ideas. But neither philanthropy nor development agencies are structured for scale or permanence. Some really powerful instruments of philanthropy, like the Bill & Melinda Gates Foundation, are putting hundreds of millions of dollars towards the eradication of a disease. Huge as that is, it’s not an effort that can be permanent.

There are numerous examples of public sector health programs in the past 200 years that have operated at scale and achieved lasting impact. Two immediate examples contradict his odd statement on disease control: global eradication of smallpox led by public sector agencies and the history of the March of Dimes, an innovative charity that financed the research for and distribution of the polio vaccine [Amazon link: Patenting the Sun: Polio and the Salk Vaccine].

Second criticism: This interview indicates a partial understanding of what is involved in protecting the public’s health. “Public health” consists of activities across several domains: research, education, service delivery, and disease surveillance. The ratio of social and private returns varies across those domains and in only one do health care services, both public and private, figure prominently.

However, the idea of incentivizing the health care for the poor via the private sector is an applaudible effort. It’s well known that the poor in low-incomee countries, when they seek care at all, disproportionately use private sector services.

In the majority of the sub-Saharan African countries for which DHS [Demographic and Health Surveys] data were available, of those children seen by a medical practitioner, the use of public services by the rich was not significantly different from that by the poor. On average, of those children seen by a medical practitioner, most of those from the poorest quintile sought care from private providers for both diarrhoeal disease and ARI [Prata et, al. 2005 “Private sector, human resources and health franchising in AfricaWHO Bulletin].

Chu’s work does underscore the need for greater investment in innovative schemes to bring scaled health services to the poor and lessons from microfinance would certainly apply. Identification of the appropriate services is key as is targeting the right service to the truly poor patient.

Q: What are your next steps for Project Antares?

A: We want to refine the matrix that will allow us to propose what the high-impact interventions are and develop commercial delivery systems for them. Next term, we’re looking towards establishing teams of HBS and School of Public Health students who will work on independent field study projects in the development of commercial approaches.

THDblog recommends the Disease Control Priorities Project with its exhaustive chapters of cost-effective interventions across the full range of human illness.

Microfinance also has unique targeting properties that may hold some lessons for targeting of services to low-income patients. Micro-finance brings limited but critical credit to customers. The customers self-select in the applicant pool for screening. Better-off individuals do not apply. One example where this happens now is in the hugely successful Indian NGO, Aravind (Aravind Eye Care System). Aravind provides a no-frills eye care services including cataract surgery at little cost for low-income patients. The same medical procedures are sold to high-income patients but additional customer service amenities are added to enhance the experience and justify the expense. And Dr. Chu’s program will certainly add new insights in the entrepreneurial approach to public health.

ADDENDUM Dec 20th:

There’s a great discussion started last August at about the new found consumer potential at the bottom of the pyramid. Should the poor be empowered as consumers or producers? Perhaps simplistic to group low-income earners as “either-or” but interesting discussion.

And Laurie Garrett writes in the Jan/Feb 2007 issue of Foreign Affairs [“The Challenge of Global Health“] on the importance of local private sector investment in health if increases in healthcare provision and innovation are to be sustained beyond limited donor horizons in low-income countries.

…it is curious that even the most ardent capitalist nations funnel few if any resources toward local industries and profit centers related to health. Ministries of health in poor countries face increasing competition from NGOs and relief agencies but almost none from their local private sectors. This should be troubling, because if no locals can profit legitimately from any aspect of health care, it is unlikely that poor countries will ever be able to escape dependency on foreign aid.


Written by Ben

December 19, 2006 at 1:54 pm

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