Private gain, public pain: does a booming private healthcare industry in Nepal benefit its people?

Public dissatisfaction with the health sector in Nepal has grown in recent years. A prominent figure in health activism, Govinda KC, has staged several hunger strikes to pressure the government to undertake necessary reforms in the medical education sector. He recently called for an end to the haphazard granting of affiliation to many new medical colleges, and for the introduction of a uniform student fee structure. These issues are just part of a bigger problem of rampant privatisation in Nepal’s health sector.

In the wake of several policy changes in the early 1990s, which we will expand on later, the Nepalese private health sector has expanded rapidly in comparison to the public sector. In 1990 there were only 16 private hospitals in Nepal, a number that had soared to 301 in 2014. The private sector has over two thirds of the hospital beds in Nepal and 60% of Nepal’s doctors work in this sector.

However, there is little information on the quality of care provided by this sector. There is no central registration system in place and limited empirical information is available on the size, composition, and characteristics of the private health sector. There is a lack of routine monitoring by regulatory bodies, and insufficient institutional structure or resources to monitor the sector and guide it towards achieving government policy. Hence, the sector has grown without robust standards, accreditation, and protocols.

Private health service providers are mostly located in urban areas and are used predominantly by wealthier Nepalese patients. In rural areas—where public facilities are accessed more than in urban areas (with a utilisation rate of 39.1% and 26.8%, respectively) but are still not the predominant provider—pharmacies are the chief private providers, mostly used by poor patients. People use private facilities more frequently than public ones—one study found that about 63% of people with an acute illness used the private sector regardless of their economic status. As a result, out of pocket spending is high (out of pocket payments account for 55% of total health expenditure) and financial protection for patients is poor. Consequently, patients who are poor utilise health services less than wealthier patient groups, despite having a higher incidence of reported illness.

Despite improvements in the health status of Nepal’s population in recent decades, inequity remains a major problem. Many public healthcare professionals are also engaged in private practice and there have been reports of healthcare professionals trying to attract patients to their private facilities instead.

There are two reasons for the growth of Nepal’s unregulated private healthcare sector:

Firstly, in the early 1990s, after political reform and the introduction of a parliamentary monarchy, Nepal adopted an economic liberalisation policy that resulted in the massive growth of the private sector across industries, including health. However, there was a lack of corresponding enforcement of regulatory mechanisms to control the private sector. The World Health Organization argues that it is politically difficult to seize this kind of market control if there is a long delay between the entry of the private sector into the market and rule enforcement.

The irony is that Nepal has a progressive constitution, which guarantees health as a fundamental right, and health policies aimed at achieving universal health coverage, yet the government continues to leave the private health sector unregulated. It is beyond the capacity of the health ministry alone to address this problem. The government, lawmakers, and political parties in Nepal need to reform existing policies regarding deregulation of healthcare services to protect the health rights of Nepalese citizens.

Secondly, the health ministry lacks the sufficient vision and influence needed to address the problem. The ministry has a myopic vision, which mostly focuses on public sector healthcare; it has been unable to provide overall stewardship in the healthcare industry by properly regulating the private sector. Furthermore, the ministry largely focuses on policy formulation, overlooking the practicalities of policy implementation. Hence, it is high time for the ministry to provide stewardship for the wider health sector by formulating and enforcing appropriate policies, laws, and regulations to monitor the private sector based on a robust vision and grasp of the system.

Complete disinvestment of the private sector may not be possible today. However, establishing and enforcing appropriate regulatory tools is necessary to ensure the sector’s primary motivation is not only monetary, and that it is also contributing to the goals of health and healthcare for all people.

gagan_gurungGagan Gurung
is a doctoral candidate in preventive and social medicine, University of Otago, the Dunedin School of Medicine, New Zealand. He has more than ten years’ working experience in public health, particularly in community engagement and local health systems governance in Nepal. His current research interests include health policy, health systems, and health services research.

Competing interests: I have read and understood BMJ policy on declaration of interests and declare the following interests: None.

robin-gauldProfessor Robin Gauld is head of the department of preventive and social medicine, and director of the Centre for Health Systems, University of Otago, the Dunedin School of Medicine. His current research interests are in health system design and performance improvement, with an emphasis on primary care and whole of system approaches.

Competing interests: I have read and understood BMJ policy on declaration of interests and declare the following interests: None.