Understanding the consequences for quality and efficiency of expanding services through the private sector in South Africa

The private sector provides a large proportion of health services in many low- and middle-income countries (LMICs), particularly for primary health care (PHC), even for poor patients. But the role of the private sector in expanding universal health coverage (UHC) in LMICs remains contentious. Proponents argue that the private sector could increase patient choice and PHC access, and that competition incentivises private providers to be more responsive and provide better quality care than public providers. However, evidence suggests that these advantages may not materialise. Arguments supporting the role of the private sector rely on the assumption that private providers compete for patients. Yet many factors influence market performance and health markets are often not competitive. Effective competition also requires that patients respond to changes in price or quality. Although these dynamics are critical in determining the health system impacts of private PHC provision in LMICs, they have received little attention in the literature.

Understanding the role and impact of private sector provision is especially important in South Africa as policy proposals for achieving UHC promote the contracting of private providers to expand access to quality PHC for uninsured patients. There are concerns about the current performance of private PHC providers, and the functioning of the PHC market, with little empirical evidence to inform current debates. Expanding the role of the private sector as part of efforts to achieve UHC requires a more thorough understanding of the potential risks and benefits, and the likely responses of both the supply and demand sides of the market.

The aim of this study is to undertake a detailed empirical investigation of the market for public and private primary care services. It will focus on the determinants of provider performance on the one hand, and demand for private services from uninsured cash-paying patients on the other. The study will be conducted in Soweto, Johannesburg, and it will include five components. Firstly, we will undertake a detailed description of the local PHC market through a census, mapping and interviews of all providers, an analysis of market concentration, and investigation of the strategies which private providers use to compete for patients. Secondly, using 'fake' standardised patients (SPs), we will compare the performance of private and public providers in terms of accessibility to services, technical quality of care and cost of treatment recommended. Thirdly, we will establish the relationship between competition and performance outcomes, testing if greater competition leads to better outcomes. Fourthly, using linked data on provider performance and cost, we will investigate if accessibility, quality and cost are important determinants of the demand for services by uninsured patients. Finally, in a small randomised pilot, we will test study how populations would react to the introduction of subsidised access to private services, and explore if information about quality influences demand.

The study will provide important information on whether the private PHC market can contribute to better health system access, quality and efficiency. The results are relevant to many LMICs trying to expand UHC within mixed health care systems.

The private sector provides a large proportion of health services in many low- and middle-income countries (LMICs), particularly for primary health care (PHC), even for the poor. But the role of the private sector in expanding universal health coverage (UHC) in LMICs is contentious. Supporters of private care provision argue that competition makes private providers more responsive, exert more effort, and provide better quality care. Yet the empirical evidence supporting this is mixed. There is also limited evidence that the demand for care is responsive to quality or costs, a pre-condition for a functioning competitive market. These dynamics are also likely to vary between countries.

These questions are central to current policy proposals in South Africa, where the government plans to expand access to quality primary care services by contracting private providers. This study aims to address these questions and inform current policy debates by undertaking a detailed investigation of a self-contained market for PHC services among the urban poor in South Africa. The study has five components: (1) a detailed description of the structure of the market for PHC in Soweto; (2) an audit study of PHC providers in the market using standardised patients, allowing us to describe the relative performance of public and private providers in terms of access, quality and efficiency of treatment; (3) an investigation of the relationship between measures of market competition and performance; (4) a study of the determinants of patients' choices of PHC providers; and (5) a field experiment testing the impact of subsidised care and information about quality on demand.

By describing the market structure, the differentiation strategies of providers, and the key determinants of the demand for healthcare, we will provide robust and innovative evidence that will lay out the grounds for designing future regulatory and contracting arrangements with the private sector.

This research will provide new knowledge on the performance and role of the private sector in the primary health care (PHC) market in South Africa; and the impact of competition and patient preferences on the quality, cost and efficiency of private PHC provision. This knowledge is critical to understanding if the stated advantages of private sector provision are credible, and how private PHC providers can be included in strategies to expand universal health coverage (UHC) in South Africa.

The study results are expected to benefit six main groups:

1. National policymakers: This includes managers in the National Department of Health and National Treasury that have overall oversight of the health system and private sector in South. These officials are currently developing legislation and policies related to National Health Insurance (NHI) and UHC, the regulation of the private health sector, and the contracting of private general practitioners (GPs) as a UHC strategy, that would be directly informed by our study results.

2. National stakeholders: The regulation of the private sector is relatively well-developed in South Africa. The important regulators involved with the private health care sector include the Competition Commission, the Council for Medical Schemes, and the Health Professions Council of South Africa. The Health Market Inquiry (HMI) of the Competition Commission has specifically been tasked with investigating competition in the private health care market. Our study findings will be helpful to the ongoing work of the HMI. Other national stakeholders closely related to the private sector who will be interested in the study results include medical scheme administrators and managed care organisations.

3. National health care providers: GP organisations (South African Medical Association, Independent Practitioner Associations) and individual GPs will be interested in results on the comparative quality and efficiency of primary care provision, and the relevance of these findings to future GP contracting under NHI.

4. National health care users: Ultimately improvements in the access, quality, and efficiency of health services are intended to benefit health service users. Patient groups are not well organised in South Africa but there are a few consumer and activist organisations such as Section 27 that focus on patients and are directly involved in debates about NHI and the appropriate role of the private health sector.

5. International health systems development actors: Understanding the appropriate role of the private sector in LMICs is important to a number of global actors supporting UHC development in various countries including the World Health Organization, the World Bank, international development partners, funding agencies, and health policymakers in other LMICs.

6. Other academics: Lastly our research will be of interest to other national and international academics involved in health systems and health economics research. The study will provide new empirical evidence and/or methodological innovation on:
- Evidence and measures of comparative quality and efficiency of primary care providers.
- Measures of market concentration for PHC markets in LMICs and their association with performance.
- The determinants of patients' choices for primary care services.
- The price elasticity of demand for PHC.
- The usefulness of the Structure-Conduct-Performance (SCP) framework for analysing health care markets in LMICs.

Our research findings will be shared with these stakeholders through:
- Succinct policy briefs summarising the study findings and their policy implications.
- Research dissemination events structured to allow engagement and debate about the study results and implications.
- Peer-reviewed academic publications.
- Academic presentations in relevant national and international conferences.