Economic analysis for health projects

The author applies to the health sector an approach to analyzing projects advocated in a recent paper by Devarajan, Squire, and Suthiwart-Narueput. In the health sector, a project evaluation should: 1) Establish a firm justification for public involvement. The author identifies a number of common failures in the markets for both health services and insurance but argues that this should be the starting place for economic analysis, not a reason to ignore economics; 2) Establish the counterfactual: what happens with and without the project. Project outputs should be predicted net of the reaction of consumers and providers in the private sector. This requires knowledge of the market structure (supply, demand, and equilibrium) for health services; 3) Determine the fiscal effect of the project. The issue of appropriate levels for fees should be handled jointly with project evaluation; and 4) Acknowledge the fungibility of project resources and examine the incentives facing public servants. Ministries of health may shift their own resources away from activities that are funded by project to those that are not evaluated at all. Project outputs depend on the incentives for civil servants to provide good service--a consideration rarely taken into account in project evaluations. The author concludes that much of the analysis relevant to projects should be done before project evaluation. If the issues of fungibility and incentives are given due respect, the donors'best form of intervention may not be traditional projects at all but rather general loans with conditions related to general sector strategy and reform. For a standard project, a fair amount of information from supporting sector work is needed before evaluation. If clinical services (or anything depending on people s behavior) are part of the project, information is needed about the supply and demand for substitute services. The market structure of health care is an essential part of the background work.Public Health Promotion,Environmental Economics&Policies,Health Systems Development&Reform,Health Economics&Finance,Health Monitoring&Evaluation,Health Economics&Finance,Health Monitoring&Evaluation,Environmental Economics&Policies,Health Systems Development&Reform,Economic Theory&Research

Prices and protocols in public health care

The author tries to derive price and rationing rules for public health facilities. He highlights the effect on these rules of different assumptions about the objectives of government (health versus welfare), the limits of available policy instruments, and the market environment in which the public system operates. One recurrent finding: policy reform must be assessed in relation to the changes it induces relative to the status quo before reform. This point may seem obvious, but it represents a distinct gap in the literature on resource allocation in health. To assess changes, the behavior of the private sector must be known in the type of care given in a system and on how this care will change in response to the policy. Substituting for a reasonably well-functioning private sector is not as valuable as providing services that the private sector cannot be expected to sustain. Research is needed to characterize market equilibrium for medical care and its response to policy measures. The author could not examine many issues - most important, those related to uncertainty and insurance. But if the research he calls for in this paper is pursued, those issues must figure prominently as major determinants in the demand for care. This need was originally identified by Arrow, and there is still a long way to go. The author's analysis is not done in terms of preventive or curative care, and he argues for assessing interventions on the basis of changes in the stated objectives of a public system. But there could well be a connection with the preventive-curative dichotomy if there were reason to believe that preventive care will systematically lose out to curative care in a market setting. Onthe basis of people's generally acknowledged undervaluation of preventive services, this may well be the case. Other prevention activities also have many public good features, with few private alternatives, and will look good when improvements over stauts quo are examined for all interventions. But all activities must be evaluated in their improvement over market provision. It is not necessary to prejudge the case for certain types of intervention.Economic Theory&Research,Health Monitoring&Evaluation,Health Economics&Finance,Health Systems Development&Reform,Environmental Economics&Policies

Which doctor? Combining vignettes and item response to measure doctor quality

The authors develop a method in which vignettes-a battery of questions for hypothetical cases-are evaluated with item response theory to create a metric for doctor quality. The method allows a simultaneous estimation of quality and validation of the test instrument that can be used for further refinements. The authors apply the method to a sample of medical practitioners in Delhi, India. The method gives plausible results, rationalizes different perceptions of quality in the public and private sectors, and pinpoints several serious problems with health care delivery in urban India. The findings confirm, for instance, that the quality of private providers located in poorer areas of the city is significantly lower than those in richer neighborhoods. Surprisingly, similar results hold for providers in the public sector, with important implications for inequities in the availability of health care.Health Monitoring&Evaluation,Disease Control&Prevention,Health Systems Development&Reform,Public Health Promotion,Educational Sciences,Health Monitoring&Evaluation,Educational Sciences,Information and Records Management,Health Systems Development&Reform,Health Economics&Finance

Money for nothing : the dire straits of medical practice in Delhi, India

The quality of medical care received by patients varies for two reasons: differences in doctors'competence or differences in doctors'incentives. Using medical vignettes, the authors evaluated competence for a sample of doctors in Delhi. One month later, they observed the same doctors in their practice. The authors find three patterns in the data. First, what doctors do is less than what they know they should do-doctors operate well inside their knowledge frontier. Second, competence and effort are complementary so that doctors who know more also do more. Third, the gap between what doctors do and what they know responds to incentives: doctors in the fee-for-service private sector are closer in practice to their knowledge frontier than those in the fixed-salary public sector. Under-qualified private sector doctors, even though they know less, provide better care on average than their better-qualified counterparts in the public sector. These results indicate that to improve medical services, at least for poor people, there should be greater emphasis on changing the incentives of public providers rather than increasing provider competence through training.

Strained mercy : The quality of medical care in Delhi

The quality of medical care is a potentially important determinant of health outcomes. Nevertheless, it remains an understudied area. The limited research that exists defines quality either on the basis of drug availability or facility characteristics, but little is known about how provider quality affects the provision of health care. The authors address this gap through a survey in Delhi with two related components. They evaluate"competence"(what providers know) through vignettes and practice (what providers do) through direct clinical observation. Overall quality as measured by the competence necessary to recognize and handle common and dangerous conditions is quite low, albeit with tremendous variation. While there is some correlation with simple observed characteristics, there is still an enormous amount of variation within such categories. Further, even when providers know what to do they often do not do it in practice. This appears to be true in both the public and private sectors though for very different, and systematic, reasons. In the public sector providers are more likely to commit errors of omission-they are less likely to exert effort compared with their private counterparts. In the private sector, providers are prone to errors of commission-they are more likely to behave according to the patient's expectations, resulting in the inappropriate use of medications, the overuse of antibiotics, and increased expenditures. This has important policy implications for our understanding of how market failures and failures of regulation in the health sector affect the poor.Public Health Promotion,Disease Control&Prevention,Health Monitoring&Evaluation,Health Systems Development&Reform,Educational Sciences,Health Monitoring&Evaluation,Health Systems Development&Reform,Educational Sciences,Health Economics&Finance,Gender and Health

Ghost doctors - absenteeism in Bangladeshi health facilities

The authors report on a study in which unannounced visits were made to health clinics in Bangladesh with the intention of discovering what fraction of medical professionals were present at their assigned post. This survey represents the first attempt to quantify the extent of the problem on a nationally representative scale. Nationwide the average number of vacancies over all types of providers in rural health centers is 26 percent. Regionally, vacancy rates (unfilled posts) are generally higher in the poorer parts of the country. Absentee rates at over 40 percent are particularly high for doctors. When separated into level of facility, the absentee rate for doctors at the larger clinics is 40 percent, but at the smaller sub-centers with a single doctor, the rate is 74 percent. Even though the primary purpose of this survey is to document the extent of the problem among medical staff, the authors also explore the determinants of staff absenteeism. Whether the medical provider lives near the health facility, access to a road, and rural electrification are important determinants of the rate and pattern of staff absentee rates.Public Health Promotion,Gender and Health,Health Systems Development&Reform,Health Monitoring&Evaluation,Housing&Human Habitats,Health Systems Development&Reform,Health Monitoring&Evaluation,Housing&Human Habitats,Gender and Health,Agricultural Knowledge&Information Systems

The economic control of infectious diseases

Despite interesting work on infectious diseases by such economists as Peter Francis, Michael Kremer, and Tomas Philipson, the literature does not set out the general structure of externalities involved in the prevention, and care of such diseases. The authors identify two kinds of externality. First, infectious people can infect other people, who in turn can infect others, and so on, in what the authors call the pure infection externality. In controlling their own infection, people do not take into account the social consequence of their infection. Second, in the pure prevention externality, one individual's preventive actions (such as killing mosquitoes) may directly affect the probability of others becoming infected, whether or not the preventive action succeeds for the individual undertaking it. The authors provide a general framework for discussing these externalities, and the role of government interventions to offset them. They move the discussion away from its focus on HIV (a fatal infection for which there are few interventions), and on vaccinations (which involve plausibly discrete decisions), to more general ideas of prevention, and cure applicable to many diseases for which interventions exhibit a continuum of intensities, subject to diminishing marginal returns. Infections, and actions to prevent, or cure them entail costs. Individuals balance those parts of different costs that they can actually control. In balancing costs to society, government policy should take individual behavior into account. Doing so requires a strategy combining preventive, and curative interventions, to offset both the pure infection externality, and the pure prevention externality. The relative importance of the strategy's components depends on: 1) The biology of the disease - including whether an infection is transmitted from person to person, or by vectors. 2) The possible outcomes of infection: death, recovery with susceptibility, or recovery with immunity. 3) The relative costs of the interventions. 4) Whether interventions are targeted at the population as a whole, the uninfected, the infected, or contacts between the uninfected, and the infected. 5) The behavior of individuals that leads to the two types of externalities.Disease Control&Prevention,Economic Theory&Research,Environmental Economics&Policies,Decentralization,Poverty Impact Evaluation,Economic Theory&Research,Environmental Economics&Policies,Poverty Impact Evaluation,Health Monitoring&Evaluation,Agricultural Knowledge&Information Systems

Is ‘big data’ over-hyped? The importance of good data for improving health policy in Punjab

Despite the hype around ‘big data’, caution should be urged. Efforts to improve data collection require greater coordination and planning in order to ensure greater quality and usability of data. Overcoming the inertia around data collection needs a longer-term view on the application of the data. Improvements to collection and organisation of data sets can then facilitate integration of different kinds of data to better inform experimental policy designs

The effects of a fee-waiver program on health care utilization among the poor : evidence from Armenia

This study examines the impact of a fee-waiver program for basic medical services on health care utilization in Armenia. Because of the reduction in public financing of health services and decentralization and increased privatization of health care provision, private out-of-pocket contributions are increasingly becoming a significant component of health costs in Armenia. To help poor families cope with this constraint, the Armenian government provided a free-of-charge basic package service to eligible individuals in vulnerable groups, such as the disabled and children from single parent households. Drawing on the 1996 and 1998-99 Armenia Integrated Survey of Living Standards (AISLS), which allows the identification of eligible individuals under this program, the authors estimate the impact of the fee-waiver program on utilization of health services, particularly among the poor. Across the two survey rounds utilization rates have indeed declined despite comparable levels of income, and this decline has occurred among both the poor and the rich, with average utilization falling by 12 percent between the two surveys. But families with four or more children, the largest beneficiary group under the"vulnerable population"program, have decreased their use of health care services in a disproportionate manner-21 percent reduction in use between the two survey rounds. This precipitous drop in health care use by this vulnerable group, despite being eligible for free medical services, suggests that the program was inadequate in stemming the decline in the use of health services. The authors further present evidence to suggest that the free-of-charge eligibility program acts more like an income transfer mechanism, particularly to disabled individuals.Health Systems Development&Reform,Health Monitoring&Evaluation,Public Health Promotion,Early Child and Children's Health,Health Economics&Finance,Health Systems Development&Reform,Health Economics&Finance,Gender and Health,Regional Rural Development,Health Monitoring&Evaluation

The design of incentives for health care providers in developing countries : contracts, competition, and cost control

The authors examine the design and limitations of incentives for health care providers to serve in rural areas in developing countries. Governments face two problems: it is costly to compensate well-trained urban physicians enough to relocate to rural areas, and it is difficult to ensure quality care when monitoring performance is costly or impossible. The goal of providing universal primary health care has been hard to meet, in part because of the difficulty of staffing rural medical posts with conscientious caregivers. The problem is providing physicians with incentives at a reasonable cost. Governments are often unable to purchase medical services of adequate quality even from civil servants. Using simple microeconomic models of contracts and competition, the authors examine questions about: a) The design of rural service requirements and options for newly trained physicians. b) The impact of local competition on the desirable level of training for new doctors. c) The incentive power that can be reasonably expected from explicit contracts. One problem a government faces is choosing how much training to give physicians it wants to send to rural areas. Training is costly, and a physician relocated to the countryside is outside the government's direct control. Should rural doctors face a ceiling on the prices they charge patients?Can it be enforced? The authors discuss factors to consider in determining how to pay rural medical workers but conclude that we might have to set realistic bounds on our expectations about delivering certain kinds of services. If we can identify reasons why the best that can be expected is not a particularly good, it might lead us to explore entirely different policy systems. Maybe it is too hard to run certain decentralized systems. Maybe we should focus on less ambitious but more readily achievable goals, such as providing basic infrastructure.