Concentration and fragmentation: analysing the implications of the structure of Georgia's private healthcare market for quality and accessibility

The private sector is increasingly recognized as playing an important role in health systems in low- and middle-income countries (LMIC), yet policymakers struggle to identify the role of the private sector in relation to their Universal Health Coverage objectives. Developing policies for engaging with private health care providers requires a good understanding of how healthcare markets operate. Markets are described according to their market structure which can range from highly fragmented (a large number of small firms), through to highly concentrated (one or a few large firms, including those where providers have invested in diagnostic facilities or pharmaceuticals). While the risks of excess concentration have long been recognised, evidence is emerging from a number of LMICs about the potential risks to patients of excess fragmentation. These include quality of care, if treatment volumes are too small to be safe or where opportunities for training are absent; or health system risks, arising from the difficulties of purchasing from or regulating large numbers of small providers.
The overall aim of this study is to elaborate this conceptual framing of risks of harm from concentration and fragmentation of healthcare markets and develop a set of tools for undertaking healthcare market analysis that can inform policy options for shaping healthcare markets in the context of UHC. We will undertake this research in Georgia, a lower-middle income former soviet country which has undergone extensive privatisation. This award will set the foundation for evaluating future policy changes in Georgia and extendingt the analytic approach to other settings in a future research project.
We will achieve this aim through 4 specific research questions:
1. What is the structure and nature of the healthcare market in Georgia: to what extent is the market characterized by fragmentation and concentration, and by horizontal and vertical integration?
2. What demand, supply and policy factors are driving this pattern?
3. What are the risks and benefits for patients, and for the health system, of fragmented and consolidated health service provision?
4. What policy levers are available to shape the private healthcare market to better serve the needs of UHC?
The study uses a mixed methods approach, collecting qualitative interview data and undertaking quantitative analysis of large social insurance databases. We will describe the Georgian healthcare market in terms of types of business and market structure, explore the reasons for the patterns that we observe, and then construct "theories of harm" which will describe the potential risks to patients and to the health system of fragmentation and concentration. We will use quantitative methods applied to insurance claims data to look at the extent to which key individual outcomes such as price and intensity of treatment, and system level outcomes such as accessibility, approaches to quality assurance and the costs of contracting and regulating, differ by provider business model and market structure.
Findings will be presented at a series of structured policy dialogues, to validate our data and interpretations, and to develop potential policy interventions. These will engage a wide variety of health policy stakeholders and consider how to shape private health care markets through for example, changes in regulation and purchasing policies, so that they operate in the interests of UHC.
This project is being proposed by a highly experienced, multidisciplinary, international research team with strong connections at the national, regional and global level to support the achievement of research impact. Capacity will be developed in both directions, with Georgian colleagues gaining exposure to approaches to researching the private sector as well as analysis of large administrative datasets, and UK collaborators learning about the nature of privatization in a former Soviet setting.

To inform decisionmakers on how to engage effectively with the private sector, better evidence is needed of how healthcare markets are structured, the risks of different market structures for patients and for the health system as a whole. This evidence can help design health system policies to (i) shape the market to avoid excessive concentration or fragmentation, and (ii) design appropriate private sector engagement strategies, including by healthcare purchasing agencies.
Our study will generate new evidence on the structure of the healthcare market in Georgia, a lower-middle income country where the health system is highly privatized. Applying economic theories of market performance we will:
- Describe the Georgian healthcare market in terms of business models and the extent of vertical and horizontal integration. This will use publicly available information (national statistical yearbook, company financial reports, national health accounts), social insurance claims data and key informant interviews
- Analyse the demand, supply and policy factors driving the observed market structure and business models, and elaborate a set of "theories of harm" about the risks of concentration and fragmentation and their potential influence on health system outcomes by different provider types.
- Assess quantitative, and where necessary, qualitative evidence about the risks of fragmentation and concentration, looking at the extent to which individual outcomes such as price and intensity of treatment, and system level outcomes such as accessibility, approaches to quality assurance and the costs of contracting and regulating, differ by provider business model and market structure.
- Conduct structured policy dialogues to test our interpretations of the data and identify potential policy levers to shape the private healthcare sector, engaging key stakeholders from government and the private sector.

The proposed research is expected to benefit three groups: policymakers in Georgia, regional and global policy actors, and researchers. Patients and populations also have the potential to benefit from policies that improve the quality and efficiency of health services provided by the private sector, in the context of UHC.
Georgian policymakers: These include Parliamentarians, the Ministry of Health and the Social Service Agency which administers the social health insurance fund. Economic competition authorities are also part of this community, as they are responsible for undertaking market analyses of different sectors, including the health sector, and for developing policies to respond to harmful market conditions. Beyond government, beneficiaries could include civil society groups, including the media and think tanks, and healthcare providers themselves.
The findings will inform policies to address risks of excessive fragmentation and concentration in the healthcare market. These could include measures to regulate mergers and acquisitions of healthcare organisations, or actions by the social health insurer such as price regulation or utilization review to influence provider behavior. Risks arising from excessive fragmentation could be addressed through policies to encourage aggregation of small providers into larger practices/organisations. Policy impact will be encouraged by interacting with policymakers throughout the process of research, and by using structured policy dialogue methods to test the validity of interpretation of study findings and joint development of policy options. CIF already have a high level of credibility with government developed through their extensive advisory and technical roles. The relationships developed with the Ministry of Health and the Social Service Agency through collaborative analysis of insurance claims data, and the new skills developed at CIF to undertake such analysis, will together form a foundation for future research activities that make use of this rich data source. Collaboration agreements with these agencies have been established as part of the process of developing this proposal.
Many low- and middle income countries are recognizing the important role played by private providers in their health systems but struggle to devise policies to shape this role to achieve universal health coverage goals. Regional and global level policymakers will benefit from new evidence on how the structure of healthcare markets can influence patient and health system outcomes, and from fresh ideas about policy options to address these. Together CIF and LSHTM have extensive experience of communicating health policy and systems research findings to regional and global policy audiences, and have a myriad of connections to the technical bodies that advise national governments on their UHC plans. The input of a communications officer funded by the project will ensure that the policy messages developed from the findings are crafted and presented in a way to facilitate impact nationally and internationally.
We will advance the health systems research literature on how private markets influence UHC objectives. By presenting findings in conferences and workshops, conducting webinars through key professional bodies such as Health Systems Global and the International Health Economics Association, and publishing in leading health policy and systems journals, we will reach a global audience of researchers. The capacity of early career researchers at CIF to undertake qualitative and quantitative health systems research will be enhanced.
Our analytical approach of "theories of harm" brings a particular focus on patients and how healthcare provider behavior influences service access, quality and financial protection. They should be the ultimate beneficiaries of policies to improve the performance of healthcare markets.