The financialisation of healthcare: the World Bank’s role in promoting Public-Private-Partnerships in health

Julia Ngozi Chukwuma, Maria Jose Romero and Elisa Van Waeyenberge

Still today, not all people globally are able to access the healthcare they need. This is because in many places, particularly in the African context where a third of inhabitations still lives in extreme poverty, access to healthcare is predetermined by individuals’ ability to pay for healthcare. Overreliance on out-of-pocket spending is the direct result of limited public funding for healthcare. In 2020, only one African country met the Abuja declaration target of allocating 15 percent of Governments’ budgets to improving health (South Africa, 15.3%, according to WHO data). Insufficient attention to fund public healthcare service delivery systems appears thus to be a key cause for the persistence of health inequities.

In recent years, Public-Private-Partnerships (PPPs) are being promoted as a way of mobilising private sector resources to finance the attainment of Universal Health Coverage (UHC). This needs to be placed within a broader trend that has redefined the scope of UHC, which increasingly entails a lesser focus on how healthcare services are provided and financed compared to earlier ambitions to universal and publicly funded and provided healthcare. The World Bank Group (WBG), especially, is at the forefront of encouraging an increased role for the private sector in national healthcare systems, notably via PPPs. Hereby, the WBG’s efforts are not targeted at increasing the role of private healthcare providers only. Rather, healthcare systems are becoming more and more exposed to globalised finance, with financial private actors (such as investment and equity funds) accorded an important role filling in a financing gap for the attainment of the Sustainable Development Goals (SDGs), including SDG 3 on UHC.

Against this background, we seek to make two arguments: first, we contend that PPPs in health are a vehicle for the financialisation of healthcare rather than a mere manifestation of privatised healthcare. Second, the WBG’s involvement in encouraging the roll-out of PPPs in health extends beyond their provision of financial support to PPPs but includes active support to the creation of markets for private investment in healthcare and the putting into place of regulatory frameworks for PPPs to emerge independently from the financial source.

Lesotho and Kenya provide two excellent case studies to exemplify these points. Prominently, in 2008, the International Finance Cooperation (IFC), the private-sector financing arm of the WBG, directed the Government ofLesotho to enter into a PPP with a private South African healthcare company. This PPP arrangement, to construct and operate a 425-bed hospital in Lesotho’s capital, Maseru, was advertised as the WBG’s ‘model PPP’. However, the Government of Lesotho terminated the agreement prematurely in March 2021, from sides of the Government citing misunderstandings since inception.

In various ways, this PPP in health served as a vehicle to advance the financialisation of healthcare. First, it was managed by a consortium of private investors, some of whose shareholders were financial actors such as banks, investment funds and insurance companies. Second, it engaged in thin capitalisation practices, with the consortium only providing an up-front payment of 0.9 percent (compared to 34.3 percent provided by the Lesotho Government). This led the consortium to take out several loans, which were underwritten by the public sector. And, third, the daily operations of the PPP hospital were reliant on high incoming recurrent payments from the Government. What is more, the involvement of the WBG in Lesotho’s healthcare sector reform process since the early 2000s, showcases how the financial institution was able to prepare the foundation for the roll-out of the PPP.

In Kenya, the WBG’s efforts to promote PPPs in health follow structural adjustment policies implemented in the 1980s and 1990s. Since the 2010s, the WBG has worked to combine its use of funding, policy advice and knowledge in support of private sector development. It has approved two loans (in 2012 and 2017) to shape the country’s regulatory framework in support of PPPs and built a pipeline of so-called ‘bankable’ (or profitable) projects. As of February 2023, six PPP in health projects are in the pipeline, including the modernisation of a 300-bed hospital in Kenya’s capital, Nairobi.

Given the WBG’s continuous efforts to spearhead PPPs in health as viable solution to increase access to healthcare and tackle health equity, understanding the reasons and motives that led to the premature termination of the PPP contract in Lesotho is of interest. At the same time, it appears crucial to engage in research activities that allow us to better understand the nature of existing PPP arrangements in health in Africa and it what ways they further the financialisation of health; the role and modalities of WBG involvement in brokering and fostering PPPs in health; as well as the risks associated with PPPs in health and implications on health equity of involving financial (alongside non-financial) private actors in national healthcare systems.