Sick Development: How rich-country government and World Bank funding to for-profit private hospitals causes harm, and why it should be stopped
Published: October 26, 2024
Development finance institutions owned by European governments and the World Bank Group are spending hundreds of millions of dollars on expensive for-profit hospitals in the Global South that block patients from getting care, or bankrupt them, with some even imprisoning patients who cannot afford their bills.
At the height of the COVID-19 pandemic, some of these same hospitals denied entry to patients suffering from the virus or sold intensive care beds at eyewatering prices to the highest bidder. These development institutions have woefully inadequate safeguards, invest via a complex web of tax-avoiding financial intermediaries, and offer little to zero evidence on the impacts their investments are having. Oxfam is calling on rich-country governments and the World Bank Group to immediately halt their spending on for-profit private healthcare, and for an urgent independent investigation to be conducted into all active and historic investments.
2024 Washington DC Panel | Public Health vs Private Wealth?
On June 6, 2024 Oxfam hosted an expert panel event, Public Health or Private Wealth? to explore fundamental questions about the appropriateness of public funds mandated to fight poverty and achieve global development goals being used to finance for-profit private healthcare in the Global South.
The aim of the panel was to bring together global health stakeholders to discuss the impact of World Bank Group financing of private healthcare in the Global South.
The discussion – moderated by Oxfam America’s Global Economic Change Manager Maaza Seyoum – looked at the impacts of these investments in a world where half the global population is currently denied access to even the most essential healthcare.
In response to this challenge, actors like the World Bank Group are advocating for greater inclusion of the private sector in the financing and delivery of healthcare in low- and middle-income countries.
Mounting evidence indicates that in pursuing this approach the World Bank’s International Finance Corporation (IFC) and other Development Finance Institutions (DFIs) are funding expensive out-of-reach private hospitals and clinics in low- and middle-income countries that are widening healthcare inequalities, exacerbating poverty and gender-based discrimination and violating human rights. Far from advancing progress towards Universal Health Coverage as governments have committed, this form of development finance is undermining it.
Who were our panellists and what did they have to say?
Award-winning US journalist and author Gretchen Morgenson opened the panel to speak to the findings of her new book on the role of profit-hungry private equity firms in American public services and help situate the discussion of international development funds being used to encourage a greater role for private finance and private equity funds in global health in the US experience. She explained the varied insidious tactics used by profit-hungry private equity firms to extract profit from US public services, including healthcare. There is a growing body of evidence highlighting how the resource extraction tactics of these firms - that lead to fewer staff, less resources and poorer working conditions - result in worse patients' outcomes. For example, in nursing homes owned by private equity firms, residents experienced 10% greater mortality.
Why is this relevant to the discussion on IFC investments in healthcare? Well, a significant tranche of IFC healthcare investments are made indirectly, through financial intermediaries, mostly private equity firms. As Gretchen explained, these firms are notorious in the US healthcare system for maximising short-term high returns for investors at any cost and via the IFC they are being entrusted with minimal accountability to invest in the name of development and poverty reduction. She was unsurprised by the steady encroachment of private equity firms into lower-income and less regulated settings - such as the case of US based Blackstone buying up Care Hospitals in India - and described this as being “depressingly familiar” to what has happened for years in the US healthcare system.
Read "These Are The Plunderers: How Private Equity Runs and Wrecks America."
Oxfam’s Global Health Lead Anna Marriott went on to spotlight what the profit motivations of private equity firms and IFC-investee hospitals means for patients in practice by sharing the stories of two women, including Franciska, whose mother’s dead body was detained by Nairobi Women’s Hospital for over 2 years, due to the family’s inability to pay the astronomical fees for her medical care which continued to soar with interest.
Anna shared Oxfam’s evidence showing a pattern of IFC investing in out-of-reach expensive private hospitals that block patients from getting care, or bankrupt them, with some even imprisoning patients who cannot afford their bills. At the height of the COVID-19 pandemic, some of these same hospitals denied entry to patients suffering from the virus or sold intensive care beds at eyewatering prices to the highest bidder. She explained how the IFC’s safeguards are inadequate, how it invests via a complex web of financial intermediaries, and how, despite decades of healthcare investing, it offers little to zero evidence of impact.
For more on these findings, read Oxfam’s "Sick Development" report.
We were pleased to be joined by a representative from the World Bank’s IFC, Global Sector Specialist Raju Narayan, to continue Oxfam’s engagement with the organisation since our reports were published last year. We have had words aimed to reassure from IFC that they intend to act upon our findings, but are yet to receive detailed commitments on what this will look like in practice. In his interventions, Raju did not directly respond to Oxfam’s findings or Gretchen’s evidence of the US experience, but pointed to global healthcare gaps and emphasised the need for a coming together of actors in order to address them. We intend to continue engaging IFC on this issue and will keep hoping for meaningful and transparent responses.
More specifically, in response to a query on the lack of impact reports and public evidence on the merits of this approach, Raju referenced a benchmarking initiative that the IFC works on to collate a range of indicators measuring hospital performance against investment aims. These findings are not currently made publicly available however, and Raju did not share any other examples of impact.
This panel also welcomed panellists to talk about the impacts on patients and health workers in India and Kenya – two countries with a high prevalence of these types of investments. Dr Abhay Shukla of SATHI and the People’s Health Movement (PHM)-India described the reported horrific ‘cash for kidneys’ racket happening in the Apollo Hospital chain – a recipient of nearly two decades of IFC funding in India - whereby impoverished people from Myanmar are being enticed to sell their kidneys to wealthy patients. He highlighted the incoherence of wealthy, powerful healthcare corporations like Apollo and Max being funded by IFC in the first place and questioned how this model can possibly be expected to help the poorest people in India.
Abhay challenged the IFC, arguing that after twenty-five years of investing the organisation has not contributed in any meaningful way to expanding healthcare access to the poor in India, has driven up costs of healthcare dramatically due to its model of investing and has failed to act on alarming evidence of patient rights abuses.
Dr Mercy Nabwire, of the Kenya Medical Practitioners Pharmacists Dentists Union (KMPDU) turned the focus from patients to healthcare workers as she highlighted how IFC funding is going to private hospitals with a monopoly on private healthcare provision in Nairobi. She stated that one private equity firm in which IFC is invested at one point owned 66% of private healthcare provision in the capital.
Mercy highlighted how IFC-funded hospitals in Nairobi have been litigated against for the abuse of patients and worker rights. She described the prolific use of short-term or otherwise precarious contracts, and pressuring of healthcare workers to turn a profit by overcharging, overprescribing and delaying discharge of patients. Despite IFC’s oft repeated claims that they are creating jobs with these investments, Mercy questioned the quality and stability of these jobs, and asked how they can better align with the International Labour Organisation (ILO) standards for ‘decent work’. She also highlighted the lack of capacity for enforcement of labour standards in Nairobi and called on IFC not to shirk their responsibility for due diligence and regulation to ensure workers are protected.
In closing, Anna expressed her regret that the IFC continues to fall short in engaging and responding to the growing evidence base demonstrating the harms of their healthcare investments. She made clear that as much as the IFC wishes to dismiss the evidence as a case of a few bad apples, the evidence shows a systemic pattern of harmful and inequitable investing that is prioritising profits over patients. She wrapped up, “This isn’t just ‘feedback’. This is urgent. These are lives that need protecting.”
Many questions came from the audience, several directed at the IFC. One audience member questioned how IFC reconciles the channelling of development funds to private equity funds who are “laser-focused on profit” and another asked for examples of countries that have successfully achieved universal health coverage through private sector investments. Abhay weighed in, stating that we must take note that there are no comprehensive and satisfactory examples of countries achieving UHC through the private sector, and that countries that have achieved UHC have done so through public finance.
At the end of the session Abhay shared, “We have a saying in India that if a man is asleep, you can wake him up. But if he is only pretending to be asleep, you will not be able to wake him.”
We hope that IFC now has its eyes wide open and are awake to the harms that their investments in private, for-profit hospitals in low- and middle-income countries have – and continue – to cause.
Concerns echoed globally
An open statement supported by over 70 civil society organisations from all around the world was launched at the event, calling on all the IFC – and other DFIs – to stop spending development funds of for-profit private healthcare providers.