|
Research |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issues in the Financing of Family Planning Services in Sub-Saharan AfricaChapter IV: Expanding the Commercial Sector |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
In theory, the need for government and donor financing of family planning services could be reduced if more individuals obtained services in the commercial sector. The commercial sector includes predominantly for-profit sources of contraceptives and related services such as retailers, private providers and facilities, employers, and private health insurance. It does not include other private sector providers, such as non-profit, government- or donor-financed NGOs (mission facilities, IPPF affiliates). Neither does it include most social marketing programs, which tend to be highly subsidized by governments and donors. To what extent is the commercial sector a participant in family planning service delivery and financing in sub-Saharan Africa today? Is it reasonable to assume that the role of the commercial sector will expand significantly in the African context? To explore these questions, we begin by presenting recent data on the scope of commercial sector family planning service provision in the region. This is followed by a review of the constraints to expanding the commercial sector, including specific constraints to expanding the role of employer-based services, social marketing, health insurance, providers in private practice, and retailers. We also outline options to overcome these constraints, drawing as much as possible on policy and program experience. What Role Does the Commercial Sector Currently Play in Family Planning in Sub-Saharan Africa? It is difficult to gauge the size and nature of the commercial sector using available data.1 Based on extensive re-categorization of DHS data for the region, Winfrey et al. (1996) were able to show that sub-Saharan Africa has the least developed commercial sector worldwide, with market share ranging from less than 2 percent in Mali and Rwanda to about 50 percent in Cameroon. (See Figure 4.1 for data on the market share of public, NGO, and commercial providers in the region.) Even within those categories defined here as commercial, there is often some kind of public subsidy; the "pharmacy" share of the market, for example, is often dominated by social marketing products, which are often heavily subsidized.
 Click to view enlarged image (290k) Twelve of the 21 sub-Saharan Africa countries with DHS surveys have commercial market shares below 20 percent; again, however, much of this limited activity is comprised of subsidized social marketing. In Latin America, by contrast, only one country (El Salvador) has a commercial market share of less than 20 percent and far less of this commercial activity is comprised of subsidized social marketing. The limited role of the commercial sector in sub-Saharan Africa becomes even clearer when one assesses what Winfrey et al. (1996) term market size, defined as the percentage of married women served by the commercial sector. Commercial market size is the product of the contraceptive prevalence rate and the share of the market made up by the commercial sector, calculated as follows:
Commercial market size is below 5 percent in all but one (Zimbabwe) of the 21 sub-Saharan African DHS countries (see Figure 4.2). In nine countries, it is below 1 percent. Given the low levels of contraceptive prevalence in many sub-Saharan African countries, commercial market size tends to be limited even in those countries with a large commercial market share. In Cameroon, for example, commercial market share is 50.4 percent, but market size is only 2.2 percent.
 Click to view enlarged image (126k) Again, the contrast with other regions is dramatic. Almost half of all DHS countries in Asia and North Africa have a commercial market size greater than 10 percent (nearly 25 percent in Egypt). In Latin America, only three countries have a commercial market size below 10 percent, and in five countries, more than 20 percent of married women obtain contraceptives from the commercial sector. What has happened to commercial market share and size over time? Trend information on commercial market share and size is available for Ghana, Kenya, Senegal and Zimbabwe, where two DHS surveys have been conducted. This information must be interpreted with caution, however, given possible changes in source definitions over time.2 The data seem to show that commercial market size grew in all four countries from 1986 through 1989 to 1992 through 1994, though market share increased only in Ghana and Zimbabwe (see Figures 4.3 and 4.4). In Kenya, market share decreased very slightly, while in Senegal it decreased from almost 44 percent to 30 percent. It must be noted that while market size appeared to grow in all cases, nowhere does it exceed 6 percent; in Senegal, it remains below 2 percent.
The reasons for these conflicting trends is related to trends in contraceptive prevalence. Because commercial market size is defined as CU/W x Com/CU, it can increase if either the contraceptive prevalence rate or the share of the commercial sector increase. Thus, commercial market size may increase even if commercial market share declines, as long as the growth in the contraceptive prevalence rate exceeds any decline in commercial market share. Dominance of the public sector It is clear that the public sector remains the dominant source of family planning services in sub-Saharan Africa (see Figure 4.1). In 16 of the 21 sub-Saharan African countries where DHS surveys have been conducted, more than 50 percent of contraceptive users obtained their method from a government source (Winfrey et al., 1996). In Botswana, Niger and Rwanda, more than 90 percent of clients use public sector sources. The public sector plays a much more significant role in contraceptive provision in this region than in other parts of the developing world. The contrast with Latin America, where the government is dominant in only one country (Mexico at 62 percent), is particularly stark. Source patterns for clinical versus re-supply methods Analysis of the role of the purely commercial sector in providing particular methods has not been undertaken; however, it is possible to observe source patterns using the more limited, mixed DHS source definitions, which also include noncommercial private providers (Curtis and Neitzel, 1996). In most of the world, source patterns do tend to vary by method; clinical methods are usually obtained from fixed government facilities or other private providers (including both commercial and noncommercial personnel and facilities), while re-supply methods are more likely to be obtained from pharmacies. This is the case in all countries surveyed with the exception of several in sub-Saharan Africa. In almost half of sub-Saharan African countries surveyed, less than 10 percent of re-supply methods are provided by pharmacies (see Figure 4.5). Only in Cameroon does the pharmacy share of the market for re-supply methods exceed 50 percent. In several Latin American countries, as well as in Egypt and Jordan, pharmacy shares of the market for re-supply methods exceed 50 percent. There appears to be ample room for encouraging a greater role for pharmacies in the provision of re-supply methods in sub-Saharan Africa.
 Click to view enlarged image (282k) Can subsidized service users afford to pay for commercially priced services? Figure 4.6 (adapted from Shaw (1995)), shows how household characteristics, quality, accessibility, and prices may affect the choice of source of supply (and method). The affordability of services -- which is affected by both their price and users' income and assets -- has an important impact on users' choice of source of supply.3 Households with higher incomes and more assets are more likely to use the commercial sector, and those with lower incomes and fewer assets are more likely to use lower cost, public and NGO service outlets. However, there is likely to be some overlap in the income/assets levels of clients using different sources, implying that some clients who use the public or NGO sectors could afford to use the commercial sector.
 Click to view enlarged image (170k) The way in which two household characteristics -- availability of piped water and husband's profession -- affect source patterns in sub-Saharan Africa is illustrated in Tables 4.1 and 4.2. These variables are used here as proxies for assets and income. While they are not perfect proxies (the availability of piped water, for example, may simply be an indicator of urban residence) they can give some idea of the extent to which there is room to improve the impact of scarce public funds.4 As discussed above, one can hypothesize that wealthier individuals -- or, in this case, those with piped water or whose husbands have white-collar jobs -- are more likely to use commercial sector sources. It is also likely that at least some of those who use subsidized services could afford to use the commercial sector. Table 4.1 illustrates the percentage of women with piped water in their homes according to their source of contraceptives. The percentage of all women with piped water is illustrated for comparison. In most countries, the proportion of women with piped water is highest among those using the commercial sector. In two countries, Nigeria and Togo, the reverse seems to be the case.
* Countries where the NGO or commercial sectors represent less than 10 percent of market share, or where the number of cases was too small for analysis, are excluded. Source: Winfrey, 1997. Table 4.2 illustrates the percentage of women whose husbands work in white-collar professions according to source of contraceptive services. The percentage of the general population of women married to white-collar workers is illustrated for comparison. In most countries, the percentage of women married to white-collar workers is highest among users of the commercial sector. This again suggests that in most countries, commercial sector users are more economically secure than those who use the public sector. However, in three countries, Ghana, Malawi and Zambia, the opposite seems to be the case.
* Countries where the NGO or commercial sectors represent less than 10 percent of market share, or where the number of cases was too small for analysis, are excluded. Source: Winfrey, 1997. While it is clear that in most countries commercial sector users are wealthier than users of government services, not all public sector clients are poor. In fact, if one can assume that the indicators in Tables 4.1 and 4.2 are adequate proxies for wealth or income, there is some indication that in all countries, some of the government subsidy for family planning accrues to individuals who could afford to pay for commercially priced services. In Ghana, for example, 23 percent of public sector contraceptive users have piped water, compared to only 13 percent of the general population. Similarly, while only 17 percent of all women in Malawi are married to white-collar workers, this is true of more than 30 percent of public sector contraceptive users. To determine the overlap in income according to source, information is needed, not only on mean values, but also on the range of incomes. For example, what percentage of public sector users have income levels that overlap with income levels of commercial sector users? The greater the overlap, the more likely it is that some public sector users can afford to obtain services in the commercial sector. An expanded DHS module on income and expenditures would facilitate analyses of ability to pay for family planning. Moreover, it would provide data to help determine what percentage of the public subsidy accrues to those with the ability to pay, and the potential for shifting public sector users to commercial sources through market segmentation. Market segmentation as a strategy to increase the size of the commercial sector Market segmentation strategies are used by businesses to divide their customers into distinct groups based on different factors, such as income, and to target their products accordingly. A variation of this approach is used to market public health goods, including family planning. In family planning, market segmentation is used to divide the family planning market into groups based on choice of method and provider and to match clients with sources based on need and ability to pay. Effective market segmentation strategies can make it possible for the public sector to focus its resources on those most in need while promoting the growth of commercial sector services for those who are able to pay. Family planning market segmentation studies provide the information needed to formulate and develop strategies to promote the commercial sector. While such studies have not yet been conducted in sub-Saharan Africa, they have been conducted in Indonesia (Winfrey and Heaton, 1997), the Philippines (Alano et al., 1998), Turkey (Cakir and Sine, 1997), Egypt (Berg et al., 1995) and other countries. These studies often find significant room for a transfer of users from the public to the commercial sector. In the Philippines, for example, while high- and middle-income women are more likely to use the private sector, more than 40 percent continue to use the public sector (Alano et al., 1998). How effective these studies are in catalyzing transfers in clients from subsidized to non-subsidized programs needs to be evaluated. The potential of market segmentation for the sub-Saharan region should also be explored. Commercial Sector Development: Constraints and Policy Options A wide range of factors influence the size of the commercial sector for family planning. Some of these factors can only be influenced by longer-term socio-economic change. For example, in low-income countries, average per capita income is strongly correlated with commercial market share (Winfrey et al., 1997). More urbanized countries also have larger commercial sectors, most likely because urban centers provide the demand levels necessary to make family planning a profitable enterprise (Winfrey et al., 1997). Other factors that govern commercial market share are more amenable to policy intervention (see Box 4.1). However, intervention to spur commercial sector growth by reducing these constraints is likely to have much more impact in some countries than in others, based on socio-economic and other contextual factors. A matrix of opportunity should be developed to direct resource allocation in this area.
Lack of information on the commercial market There is perhaps no greater barrier to donor and government efforts to promote the commercial sector for family planning than lack of detailed, country-specific information on its size and configuration and the constraints to its development. To some extent, the characteristics of the commercial sector in any given country are the consequence of historical and socio-economic antecedents and recent market and nonmarket forces, including government policy toward the commercial sector (Berman and Rannan-Eliya, 1993; Curtis and Neitzel, 1996). In addition, the policy variables over which governments or donors may have some degree of influence vary across countries. Policies to affect source patterns must, therefore, be based on detailed, country-specific analyses. Country-specific assessments of the commercial sector have already been conducted by the Promoting Financial Investments and Transfers (PROFIT) project in Kenya, Nigeria, and Zimbabwe, as a first step in an effort to encourage commercial sector involvement in family planning in those countries (PROFIT, 1992; PROFIT, 1993; Adamchak, 1996). The assessments -- which vary considerably in scope and level of analysis -- summarize demographic data and profile relevant areas of the family planning, economic, social, and political environment; examine the potential for innovative investments, private providers, and employer-provided family planning; and describe potential interventions. The HFS project also conducted private sector (commercial and NGO) assessments covering health care as a whole in Senegal, Tanzania, and other settings (Knowles et al., 1994; Munishi et al., 1995). Some of these assessments examined the actual and potential role of the private sector in advancing the public health agenda, including its role in family planning and reproductive health service delivery (generally limited to maternal health care). These analyses need to be undertaken in significantly more depth to be of practical use, but they represent an important first step. Even when family planning and reproductive health care are not specifically addressed, or are addressed in a cursory manner, many of the legal, regulatory, and financial factors that impede the development of private sector health care as a whole are relevant to family planning and reproductive health care. Government and donor programs providing contraceptives at low or no cost make it difficult for the commercial sector to compete The scale of donor and government intervention in the family planning market over the past 50 years has led to significant distortion. This is particularly true in many sub-Saharan African countries, where a very limited proportion of women obtain their methods from commercial sources (Desai, 1997). The provision of contraceptives at zero or highly subsidized prices is the main type of distortion.5 The commercial sector will have a greater role where the ratio of public to private prices is higher (Berman and Rannan-Eliya, 1993). There is a very strong negative correlation between the percentage of public sector clients who receive free services and commercial market share, particularly in low-income countries (Winfrey et al., 1997). The commercial share of service provision will be limited by the extent to which donors support the development of subsidized NGO and public sector family planning programs.6 In Senegal, for example, the commercial share of the contraceptive market fell from about 50 percent to 25 percent as the number of donor-provided contraceptives increased during the late 1980s (Osmanski et al., 1991 in Knowles et al., 1994).7 In Kenya, the availability and low cost of public sector family planning services has been identified as one of the most significant impediments to private sector growth (PROFIT, 1993). Between 1984 and 1989, the private sector grew by less than 1 percent, compared to public sector growth of more than 14 percent. Numerous examples from other parts of the developing world show that efforts to expand the public and NGO sectors have a negative impact on the commercial sector. For example, one study found that the introduction of free services in the state of Piaui, Brazil, resulted in a decrease in the share of the commercial sector, while use of oral contraceptives (the main program method) remained unchanged (World Bank, 1993). Commercial sector users simply switched to the public sector to obtain services at a lower price. Similarly, in Honduras, the introduction of a social marketing program did not increase the use of oral contraceptives but did reduce the share of the commercial sector (Janowitz et al., 1992). In Bangladesh, the share of the social marketing company (which was subsidized but did charge for contraceptives) was reduced when the government expanded its force of outreach workers who provide contraceptives free of charge to women in their homes (Ciszewski and Harvey, 1995; Janowitz and Bratt, 1996). User fees are a much-overlooked method of influencing the development of commercial sector services (Berman and Rannan-Eliya, 1993). One of the most significant steps governments can take to improve commercial sector prospects is to stop providing free or subsidized family planning services to those who can afford to pay. However, as discussed in Chapter III, it is not easy to use means testing to determine who can and cannot afford to pay for family planning. Regulatory and tax environment A wide array of regulations, taxes, and import duties discourage the commercial sector from providing family planning services by making it a burdensome or unprofitable venture. In Kenya, the Ministry of Health and the USAID-funded Health Care Financing Project identified strict licensing requirements for business start-up, ownership, and operation, as well as high taxes on medical equipment and pharmaceuticals, as key constraints to commercial sector expansion (PROFIT, 1993). The public sector can do a great deal to improve the regulatory and tax environment in favor of commercial sector service provision by eliminating or reducing regulatory and tax barriers. The experience of Tanzania is illustrative: Half of all private facilities now operating in the capital city, Dar es Salaam, were established after the laws regarding private practice were liberalized in 1991 (Munishi et al., 1995). The public sector can go a step further by setting out to create a positive environment for commercial sector development. Strategies include facilitating the purchase of imported equipment and supplies through the use of preferential import quotas, providing access to rationed foreign currency, and granting exemptions from import duties (Berman and Rannan-Eliya, 1993). In Sudan, for example, the government placed oral contraceptives on the essential drug list, reducing import barriers and improving supply (Cross, 1993). The Role of Employer-based Services Employer-based family planning programs have the potential to shift users from the public to the private sector (Fort, 1990). However, the small size of the formal employment sector, the limited number of women in this sector, and the small number of formal sector companies large enough to consider providing on-site services limits the potential of this option for the region. In addition, formal sector employees are least likely to be using subsidized services, further limiting the potential of this option for inducing a shift from subsidized to commercial sources. Employer-based services also have the potential to increase the number of contraceptive users -- not just to provide an alternative source to current users. One of the most significant barriers to the development of employer-based services is lack of employer knowledge of the benefits of doing so. Family planning can be a profitable enterprise for employers if the benefits of providing services (e.g., reduced maternity leave and related productivity losses) outweigh the costs of establishing and running services. It may also be profitable if it enables employers to attract and retain a more qualified work force, or if it enhances the company's image, thereby boosting sales. Companies are more likely to see on-site services as a worthwhile endeavor if they adopt this broader economic perspective. If they focus narrowly on benefits (reduced maternity leave and related productivity gains), they are less likely to be interested, since they will only benefit if services generate new demand for family planning. Otherwise, they are simply paying for services their employees would otherwise have received elsewhere -- often at zero or no cost -- and there will be no benefits. This highlights a fundamental conflict between some donor and employer objectives for employer-based services: The objective of donors may be to shift contraceptive use from the public sector, while employers will find little incentive to provide services if employees are already using contraceptives they obtain elsewhere. Even when convinced that providing family planning services to their employees is profitable, employers may not be interested due to their perception that family planning is a government responsibility, the cultural/political sensitivities around family planning, or other factors. Employers also face a range of financial, organizational and technical constraints to providing family planning services. A number of major projects, most of them funded by USAID, have aimed to help overcome some of these barriers to employer-based services. These include PROFIT, the Enterprise Project, and the Technical Information on Population for the Private Sector (TIPPS) Project. A recent review of these projects (Epstein, 1996) identified a range of interventions to promote employer-based services. The interventions are summarized in Box 4.2.
Lessons learned from a decade of employer-based service projects Epstein (1996) concludes that "the experience does not provide enough evidence to draw conclusions about which approaches are most effective..." Long-term follow-up data are not available to provide information on sustainability or project replication. Nonetheless, a number of lessons have been learned. For example, strategies must take into account the fact that employer motivations to provide services vary enormously and are not limited to narrow economic interests. Employers with a prior commitment to employee health and welfare are most likely to be interested, since the added costs they incur will be lower. The commitment of high- and mid-level managers is also key. Perhaps most important is the fact that programs are experimental, need continuing flexibility, and are unlikely to achieve significant results within typical project time frames. Epstein suggests that USAID recognize that truly scientific comparisons among approaches will be impossible since there is no single standard against which to measure results and the objectives of individual projects are, to some extent, unique. She recommends that USAID wait to make a major investment in evaluating different approaches until they are well under way and proven from an operational standpoint. As discussed above, however, employer-based programs have limited potential to expand commercial sector provision of family planning in the region, due to the small size of the formal sector, the limited number of women in this sector, the small number of formal sector companies large enough to consider providing such services, and the fact that formal sector employees are already most likely to be using commercial sources. The Role of Managed Care In managed care arrangements (e.g., health insurance or health maintenance organizations (HMOs)), a third party pays providers for services supplied to individuals in exchange for premiums paid by the individuals -- or, more often, the individuals' employers (Janowitz and Gould, 1993). While expanded managed care coverage will have an impact on the number of users who turn to the commercial sector, the potential of this approach in sub-Saharan Africa should not be overestimated. The group most likely to be covered, salaried, formal sector employees, is very small; and women, who are most likely to use these services, comprise a limited proportion of formal sector employees. Salaried, formal sector employees are also most likely to use commercial sector services already. On the other hand, a significant number of salaried, formal sector employees do not have managed care coverage. In Zimbabwe, for example, only 13.7 percent of formal sector employees are covered by medical aid, implying that 1.3 million are not yet covered (Adamchak, 1996). In addition, existing managed care arrangements tend not to cover family planning services. TIPPS, the Enterprise Project, and PROFIT have worked with insurance companies and HMOs in a number of countries to convince them to add family planning to their benefits package. The projects have also worked to assess the feasibility of expanding coverage per se. In Kenya, for example, PROFIT collaborated on an assessment of private insurance options (Enright et al., 1994). These efforts are reviewed in Box 4.3.
Based on an evaluation of these and other projects, Epstein (1996) concludes that efforts to expand managed care coverage or to integrate family planning into existing managed care arrangements tend to be relatively high risk and to have few short-term benefits. Insurance companies with purely commercial interests -- which are the norm -- tend to be conservative, risk-averse, and not primarily socially motivated. Unlike employers, insurance companies and HMOs do not derive savings from reduced employee turnover, productivity gains, etc. Like employers, insurance companies and HMOs can benefit from covering or providing family planning through the savings derived from a reduced number of pregnancies, deliveries, and children among their beneficiaries. However, since most insurance packages do not cover maternity benefits, these potential savings are limited. In addition, the salaried formal sector employees most likely to have insurance coverage are already likely to be contraceptive users. The potential benefits to insurers are, therefore, even lower than those to employers. Including family planning among insurance benefits is unlikely to be profitable; there is little or no incentive for insurers to do so without substantial subsidies. Epstein concludes that further investigation of the potential role of managed care arrangements in financing and providing family planning services is an area where USAID experimentation could make a major contribution. However, given the limited potential for insurance coverage overall in sub-Saharan Africa, and the clear disincentives insurers face to getting involved in family planning, it could be argued that scarce resources to explore commercial sector options should be directed elsewhere. The Role of Private Health-Care Providers Health-care providers are influenced by many of the general constraints outlined above, as well as a number of additional constraints. Factors that affect the participation of private providers include:
Limited pool of personnel The supply of health-care providers available to provide family planning services may have an impact on the development of a commercial sector for such services. In some settings, the overall pool of available personnel is a constraint; the commercial sector must compete with the public and NGO sectors for a pool of providers often diminished by migration to other countries (Berman and Rannan-Eliya, 1993). Cutbacks in public recruitment necessitated by economic crisis or prompted by a deliberate privatization policy can result in an expansion of the commercial sector, even in environments that are not otherwise conducive to commercial sector development, e.g., Mali (Brunet-Jailly, 1992 in Berman and Rannan-Eliya, 1993). Restrictions on private practice In some countries, available providers are prohibited from engaging in private practice or can only do so to a very limited extent. A critical step towards the development of effective commercial sector provision of family planning services is to permit personnel to engage in private practice. Where private practice is permitted, providers need to be made aware of this option. Most nurses surveyed by PROFIT in Zimbabwe, for example, were not aware of their right to engage in private practice (Adamchak, 1996). In addition, the nurses believed that they were only allowed to practice under the supervision of a physician; a legislative review concluded that there was, in fact, no such requirement. Lack of knowledge or understanding of the complicated legal procedures involved in setting up a private practice is also an impediment. Even where there is a favorable environment for private practice, numerous restrictions on providers can limit the extent to which family planning services are included as part of the care package they provide. In Zimbabwe, for example, the government requires that all physicians interested in providing family planning services pass a forensic exam or provide evidence of familiarity with regulations on safe custody and dispensing (Adamchak, 1996). In addition, physicians who do not practice within five kilometers of a pharmacy are not allowed to prescribe oral contraceptives. Restrictions on the types of services particular categories of personnel can provide also inhibit the commercial sector role in family planning. In Zimbabwe, nurses are not allowed to prescribe or provide most drugs (Adamchak, 1996). As discussed in Chapter V, there is a growing body of evidence that indicates that non-physician staff with appropriate training and supervision can safely perform numerous family planning procedures often reserved for physicians (Cottingham and Mehta, 1993). Limited interest among providers Even where the environment for commercial family planning services is favorable, provider interest may be limited. Evidence on the extent to which commercial providers are interested in engaging in family planning service delivery is mixed, and varies from country to country. In Senegal, a survey found that providers lacked interest in providing low-cost, preventive services, including family planning (Knowles et al., 1994). In Kenya, however, 46 of 69 providers surveyed by the Family Planning Private Sector Programme expressed strong interest in providing or expanding family planning services (PROFIT, 1993). In Zimbabwe, almost all physicians interviewed already provide a range of family planning services to their private patients (Adamchak, 1996). Limited profit potential The size of the family planning market determines the profits a provider can expect to make by providing services. This is particularly true when the absolute profits from each unit of the product are small, as is the case with contraceptives (Desai, 1997). Because the market for family planning is so small in many sub-Saharan African countries, it is generally not a profitable enterprise in and of itself. As noted by Desai (1997), contraceptive services are rarely, if ever, the only good or service provided by a commercial provider. The profits generated by contraceptives will comprise only a limited proportion of a provider's total earnings; this accounts for much of the lack of dynamism in the commercial sector for family planning. Lack of training in family planning service delivery Where they are interested in providing family planning services, providers often lack the requisite training. Physicians in Zimbabwe identified lack of training in family planning as one of the most significant barriers to service provision (Adamchak, 1996). One-third expressed an interest in additional overall training in family planning service delivery; far greater numbers were interested in training in Norplant and voluntary surgical contraception. Efforts to promote provider interest and give them the training they require to engage in commercial family planning activities can have an impact. Governments have a key role to play in influencing the content of curricula (promoting the inclusion of family planning topics) and providing targeted training and re-training subsidies. A number of targeted efforts to promote private provision of family planning through training have been undertaken. In Kenya, for example, family planning training initiatives have involved more than 2,000 private physicians. The extent to which this effort has increased the physicians' share of the family planning market is not known. In Ghana, the Enterprise Project worked with the Ghana Registered Midwives Association to help position midwives as family planning service providers through management training, provision of start-up funds, and efforts to reduce their dependence on technical support from physicians. Midwives have become respected and well-known providers of family planning services; by 1991, 240 were providing services and had increased their profits by an average of 15 percent, encouraging other midwives to do the same (Fort and Hart, 1991). Limited access to capital Service providers need capital to buy or expand facilities, equipment, and supplies to provide family planning services. The Ministry of Health of Kenya and the USAID-funded Health Care Financing Project identified lack of capital for providers as a key constraint to commercial sector expansion and called for targeted subsidies (PROFIT, 1993). Lack of funding for specialized equipment and supplies was also found to be a significant impediment to private practice among midwives in Zimbabwe (Adamchak, 1996). Governments often have considerable control over the supply of capital needed by doctors and other health personnel to set up or expand their practices to provide family planning services. Possible interventions include credit schemes to assist with start-up costs. Limited ability or incentive to market services Providers often lack the ability or incentive to market their practices or new services to potential clients. Desai (1997) notes that given the limited profitability of the contraceptive delivery component of the service package, it is unlikely that private providers will conduct independent advertising of these services. This is compounded by the personal and sometimes controversial nature of the service. Even when providers are willing and able to advertise, they are sometimes prohibited from doing so. One potentially profitable avenue for private practice is to market provider services to employers on a contract or fee basis. A limited number of projects have aimed to strengthen providers' ability to market their services to employers (Epstein, 1996). Experience to date seems to indicate that this is an expensive and labor-intensive approach. There are no long-term data to indicate whether or not provider-employer relationships are sustained once donor support is withdrawn. The Role of Retailers Retailers are also influenced by many of the general constraints outlined above, as well as a number of additional constraints. Factors that limit retail contraceptive sales include:
In many countries, retailers operate in a regulatory environment that inhibits them from fulfilling their full potential role in family planning. In Nigeria, for example, pharmacists are not permitted to provide injectable contraceptives, though they do provide other types of injections, and market tradeswomen are not permitted to sell oral contraceptives (PROFIT, 1992). In Zimbabwe, lack of up-to-date information prevents pharmacists from starting women on oral contraceptives, though they are permitted to do so (Adamchak, 1996). University of Zimbabwe pharmacists received only three or four days of training on contraceptives, and were trained an average of seven years ago. In addition, the informational checklist they have for their own use and to provide to clients has not been updated or redistributed since 1982. Pharmacists expressed great interest in additional training in contraceptive technology. Given the limited profitability of the contraceptive component of most retailers' sales inventory, they may be unlikely to engage in independent advertising of contraceptives (Desai, 1997). Producers, not retailers, will generally undertake product-specific advertising. Lack of a private area for counseling patients can inhibit pharmacist participation in family planning service delivery, as in Zimbabwe (Adamchak, 1996). Contraceptive Social Marketing Contraceptive social marketing (CSM) -- i.e., the sale of contraceptives at subsidized prices at retail outlets -- is the most important component of retail sales in developing countries, including those in sub-Saharan Africa. The approach involves the application of commercial marketing techniques to contraceptive sales, with the objective of increasing the availability and affordability of contraceptives to low- and moderate-income consumers. Although programs sell their products through commercial outlets, they cannot be considered as purely commercial because they generally receive some funding and in-kind contributions of contraceptive commodities from donors. An approach that is becoming common is one in which for-profit distributors reach formal agreements with governments and donors to maintain prices at levels affordable to the middle and lower-middle class in order to encourage them to switch from the more highly subsidized public sector to social marketing products. In return, donors provide funds to companies for marketing their products with the expectation that these efforts will eventually be funded by the companies. Several CSM programs have been active in sub-Saharan Africa; these generally received support either from the Social Marketing for Change (SOMARC) Project or Population Services International (PSI), which were funded by USAID. Table 4.3 provides a list of countries in sub-Saharan Africa in which there are such programs. All of these programs sell condoms and a few also sell other methods. Ghana's program sells five methods, the most of any sub-Saharan African country. The dominance of condoms in CSM programs is related to an emphasis on AIDS prevention and to restrictions on the sale of hormonal methods at commercial outlets.
* Excludes PSI's regional initiative in four West African countries. Separately contracted activities in Burkina Faso and Cameroon are included. Source: Information on PSI provided by PSI. Information on SOMARC reported in Stover and Heaton, 1997. Some social marketing programs have shown substantial growth. For example, in three of the largest social marketing programs which have received support from SOMARC, (Ghana, Mali, Uganda) sales growth has been strong. However, in some countries (Togo, Niger, Zimbabwe), sales have remained low or fallen (Stover and Heaton, 1997). Two important issues related to the introduction of CSM are: a) whether it decreases program costs; and b) whether it reduces the reliance of country programs on donor funding. The costs of CSM programs implemented through the SOMARC project have been evaluated (Stover and Heaton, 1997). The authors conclude that the average costs per couple year of protection (CYP) of social marketing projects implemented by SOMARC are substantially lower than those of other modes of service delivery. However, these costs are defined as the total USAID costs and do not include any costs covered by other sources (clients, governments, etc). Thus, the study measures only those costs borne by SOMARC and its funder, USAID, rather than total program costs. Over time, as the commercial sector and governments in developing countries take over some of the tasks originally paid by SOMARC, they will require less funding from SOMARC, and donor funding per CYP will decline. Thus, while the distribution of costs between donor and in-country sources may shift, total costs might not change. However, it is certainly important that lower donor contributions per CYP will be required. In general, CSM programs are expected to decrease reliance on African government and donor funds by inducing users to switch from more to less highly subsidized services. One study in Honduras, however, found that the introduction of a social marketing program which provided oral contraceptives (OCs) did not accomplish these goals. The market share of commercial brands fell, and the costs of providing OCs to users previously paying the full cost of OCs was now partially borne by donors. However, given that the share of the commercial sector is far smaller in sub-Saharan African countries than in other regions, source switching from commercial to social marketing brands may be of little significance. While the market share of the CBD program also fell, which was a positive result, any cost savings of OC provision by the CBD program were likely to be minimal as the number of distributors in that program actually increased (Janowitz et al., 1992). An earlier study showed that about half of the purchasers of the OCs sold in the CSM program had previously used other brands of OCs, with about half of those previous users from the commercial sector (Bailey et al., 1989). Similar analyses have not been conducted in sub-Saharan African countries. However, before we can say that substitution of social marketing for other service delivery modes saves donor and public funding, such analyses should be undertaken. More qualitative assessments suggest that the change from subsidized to sustainable programs is a slow and not always successful process (Handyside et al, 1996; Kincaid et al, 1997). Conclusions A vast array of activities has been undertaken to stimulate commercial sector provision and financing of services; the activities profiled in the literature are limited to a few countries (notably Kenya and Zimbabwe) and were generally developed based on detailed assessments of the particular characteristics of each country's commercial sector. Given the heterogeneity of this sector among countries, lessons learned in one setting cannot necessarily be applied elsewhere. Even within countries, lessons learned often have limited applicability. The nature and outcomes of any given employer-based program, for example, relate to the unique nature of that employer. Similarly, interventions to facilitate the commercial sector participation of any given cadre of health personnel must be developed based on the very particular barriers these providers face. Nonetheless, it is important to evaluate which approaches work best in order to provide guidance to donors and countries as to how best to use limited resources to encourage commercial sector growth. Projects undertaken to date have tended to have weak evaluation components (Cross, 1993). Efforts must be made to ensure that the evaluation components of commercial sector projects assess their ability to provide family planning services; their ability to increase the size of the commercial sector by transferring users of subsidized services; and their sustainability, replicability, and cost-effectiveness. In addition, the following points should be considered in determining whether and how to invest further resources in the development of the commercial sector: 1. Is it reasonable to expect a thriving commercial market for family planning to develop without substantial economic development? Research indicates that variations in the size of the commercial sector reflect basic differences in countries which are not amenable to policy change in the short term. Thus, the potential to increase the commercial sector may be very limited in scope. The limited success of projects that have sought to increase commercial sector provision of family planning must be judged against this background. 2. Is it possible for donors to support simultaneously the growth of commercial and noncommercial sources of family planning? There is evidence that the growth of subsidized services has impeded the growth of the commercial sector. While the commercial sector might have shown healthier growth in the absence of support for subsidized services, the result would likely have been slower growth of family planning services overall. There is a fundamental conflict between donor efforts to stimulate service provision through subsidization of government and NGO services and the goal of fostering domestic resource mobilization. Donors will not be able to fill the growing gap between needs and resources; in-country resources will need to fill the gap. Careful attention needs to be paid to the role that donors play in encouraging the growth of the public sector and NGOs, since their services may be difficult to sustain in the long run, while in the short run they impede the growth of the commercial sector. 3. Do governments use resources that are freed by the transfer of users to the commercial sector to expand or improve public sector services? It is often taken for granted that the resources freed by a reduction in the number of public sector clients will be used to extend services to needier groups. If this is not the case, then it is difficult to justify investment in efforts to expand commercial sector services. Research should be conducted to identify both the quantity of public sector resources freed by commercial sector mobilization, and how the public sector uses these resources. 4. What should be the mix of support for particular versus more general interventions? To a large extent, commercial sector projects undertaken | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
