Qualitative Health Economics (Interview, Analysis, Policy Implication)
Methodology
Research methods can be divided into two categories; qualitative research and quantitative research methods. According to Schreier (2012, 15), quantitative research provides objective information by assigning values to the data collected. On the other hand, qualitative research utilizes ideas, emotions, and personal experiences to provide subjective information. Therefore, quantitative research emulates scientific methods, whereas qualitative research is more natural and focuses on creating understanding and providing a description of the elements (Snape and Spencer 2003, 14). Flick (2009, 25) further highlights that quantitative methods depend on qualitative methods to explain the relationship between elements. However, qualitative methods are independent, and they can explain phenomena without relying on quantitative methods (Flick, 2009, 25). Therefore, this research utilizes the qualitative approach as it provides an analysis of how health impacts the economic growth potential of a country.
This section analyzes the research methodology, the findings, and the limitations of the study. As stated by Schreier (2012, 25), qualitative research uses an inductive process, which creates an open platform for both the researcher and the participants to interact and shape the outcome of the research process. As a result, the research adopted semi-structured in-depth interviews with guided topics to facilitate the collection of data. In this case, systematic sampling, which involves the selection of elements from an ordered frame, was used (Fowler, 2013, 24). According to Acharya, Prakash, Saxena, and Nigam (2013, 133), systematic sampling is simple and straightforward compared to random sampling. Hence, the sample frame, which consisted of 15 professionals, was selected from development banks, international financial institutions, strategy consultants and advisors, public health specialists, and clinicians.
The interviews were conducted over the phone and face-to-face using open-ended questions. Each participant was interviewed for 30-45 minutes with topic guides to create a flexible, responsive approach. The topic guides used focused on three areas; (i) rationale for health care investment, (ii) challenges in securing capital for health care provisions, and (iii) political intervention or solutions to curb the challenges faced.
The interview transcripts were indexed and mapped based on recurring themes. The synthesized data were also examined to identify explanatory accounts, and preliminary typologies were developed. Although only a small number of interviews were conducted, data saturation was achieved after 12 interviews and confirmed with the two final interviews.
Results
Theme 1. Challenge in securing funds for health initiatives
Key Findings
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Notes from Interview
Respondent 1:“We observed significant improvements in health outcome. With this success, it is tempting for policymakers to shift their investments away from the health sector and toward other sectors, such as climate” Respondent 2: “Healthcare is the second largest area of public expenditure; as a consequence, it is put in the financial spotlight. After the financial crisis some European regions led to reducing health spending growth” Respondent 3 :“Conventional understanding is that population health will improve naturally when economic conditions reach a certain threshold, not the other way around. So why should developing countries with limited resources see healthcare as a priority?”
Respondent 4: “People like us (health policy makers) face skepticism when seeking for additional financing. People with the money (financial policy makers) will question how it will help the country to meet key economic and fiscal objectives and it’s difficult to put a dollar sign in all of the initiatives”
Respondent 5: “It is extremely difficult to convince those who control the public purse to adopt a long-term view, as clearly healthcare interventions need time to achieve tangible outcome. Especially for emerging countries, absence of political stability is another concern”
Respondent 6: “Where I practice, health policy-making, costing, and budgeting take place independent of each other. This leads to a misalignment between priority areas and allocation and use of resources”
Respondent 7: “We saw a lot of new hospitals being built. Some remain empty not opened for many years. Hospital projects must be coupled with supporting infrastructure like medical schools, pharmaceutical goods, road, sewage treatment support for the delivery of care.”
Respondent 8:“Greenfield hospital projects take longer to see return. I built a hospital in Ghana and I haven’t seen profit for the last four years”
Respondent 9: “Running a hospital is complicated and a lot of revenue leakage happens down the road. Regulators, investors, insurers, clinicians, suppliers, you name it. They all have different interests. Stakeholder dynamics is complex. Planning and execution take time. It is not as simple”
Respondent 10: “Income from hospitals is in local currency, providing foreign currency loans increases project risk. We can seek for guarantees or design a hedging mechanism. All this is an exhaustive exercise – time and effort wise”
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Theme 2. Focused areas to prioritize health investment
| Key findings
· Developing countries stress the importance of prioritizing scarce capital to scale impact on public health matters. There are three key areas which was highlighted several times.
· First is NCD (Non-communicable disease). NCD is becoming a greater threat to the developing countries. With the rapid economic growth and change in lifestyle, epidemiological trend is shifting more towards NCD. Attention towards preventive medicine, health promotion is key to prevent economic burden from NCD in the near future.
· Second is primary healthcare (PHC). Capital is put into building hospitals offering advanced care. However, it is not sustainable for the developing countries – considering accessibility and affordability. Participants echo the importance of primary healthcare services close to the community to prevent and cater for health which is economical compared to being admitted in a hospital.
· Third is Universal Health Coverage (UHC). The economic case for UHC is strong. In countries including Brazil, China, Thailand and Turkey, universal health coverage has been a key investment. Emerging markets need affordable, accessible and sustainable health financing models and UHC is the first step. |
Notes from interviews
Respondent 1: “Allocating and prioritizing resources (budget) is even a greater importance to developing countries with severe resource constraints, limited administrative capacity, and numerous competing critical priorities pose serious challenges “
Respondent 2 :“NCDs kill 41 million people each year. This is more than 70% of all deaths globally. NCDs lead to huge costs that fall heaviest on the low income countries that can least afford them.”
Respondent 3: “Obesity is a great challenge for those in low-income countries. This fact dispells the myth that it is a problem only in high-income countries and urban areas. As they experience economic growth and life-style changes, people start to seek out for cheap unhealthy foods and exercise less”
Respondent 4 : In China, the number of people aged 65 and over is expected nearly to treble from 123m to 330m by 2050, to a quarter of the population. As people age and lifestyles change, the burden of chronic diseases has risen sharply and accounts for 80 per cent of China’s overall disease burden. Tackling these conditions now and in the future is a daunting task.”
Respondent 5:“Countries in the Asia Pacific spend, on average, 8% of GDP on health. A lot of that money goes to care provided in hospitals. In many cases, the money could be better spent by focusing on primary health care”
Respondent 6: “It is unfortunate to see that health investment especially in the developing countries is focused around building fancy tertiary care hospitals. A lot of them remain empty, because its neither affordable or accessible for the local population” (Clinician)
Respondent 7: “We end up accepting a lot of the patients in the emergency department because it is free of charge. Then, follow up treatment is always an issue for them because the concept of integrated care system has not been set up from a public health point of view and its extremely expensive” (Clinician)
Respondent 8: “if you look at the stats, low-income countries rely more on out of pocket financing for healthcare. Without any form of social protection or insurance, healthcare is simply a luxury for the regular people you see here” (Clinician)
Respondent 9:“We need to invest in the basics. Countries need to invest in a resilient primary health care system to improve access and manage health care costs”
Respondent 10: :“Countries in the Asia Pacific spend, on average, 8% of GDP on health. A lot of that money goes to care provided in hospitals. In many cases, the money could be better spent by focusing on primary health care”
Respondent 11: “For Universal Healthcare, we saw the case from the Japanese. After World War II, half of Japan was living near the poverty line. The government set a goal to double economic growth and established universal health insurance in 1961. Household incomes doubled between 1960 and 1967 and health outcomes also improved drastically. Many believe equitable access to quality basic health care played a major role in helping the country achieve economic success.”
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Theme 3. Political Implication
| · There is no single approach. Investment decisions whether public or private would need to consider the geopolitical, epidemiological, socioeconomic conditions and tailor it accordingly.
· Using economic evidence to support policy decisions to fund interventions for non-communicable diseases. Health authorities can use economics to communicate challenges and solutions in a manner that resonates with other sectors
· Many of the most important determinants of health lie outside the health system, so improvements in health might be better achieved through other programmes, specifically target behavioural risk factors related to NCD.
· For low income countries, creating and fostering an enabling environment to promote greater private sector engagement or FDI. Establish a conducive and well-structured institutions to support investor friendly policies.
· Diversify the health investment portfolio into pharmaceutical goods for greater impact and scalability.
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Respondent 1: “Simply increasing health spending will not solve the problem. For maximum impact in the form of human capital, health spending must be carefully designed and rolled out”
Respondent 2: “Many of the problems facing emerging markets are similar to those in high-income countries but the solutions are not. Providing effective universal health coverage systems requires countries to develop new models of healthcare delivery and financing to adapt to changing needs”
Respondent 3: “There is no cookie cutter approach. recommendations are made in the context of a country’s burden of disease, institutional capacities and political environment”
Respondent 4: “health-policy-makers must be proactive in demonstrating that – in addition to their core objectives of improving population health – health systems also have direct and indirect favourable effects which are aligned with such economic objectives or social benefits.”
Respondent 5: “Promote private sector investments in health sectors such as the pharmaceuticals, medical education and digital technologies that are presently under-invested”
Respondent 6: “preventive medicine, health promotion activities can be further incentivized (taxation) to tackle behavioral life-style issues contributing to NCD”
Respondent 7: “Work with governments through various modalities, including public-private partnerships, to crowd in more private sector investment aligned to achieve the health related Sustainable Development Goals”
Respondent 8: “All health systems have numerous examples of misallocated resources and waste, and in some cases elements of corruption. It is argued that such inefficiency should be eliminated, or that greater proof of efficient spending is provided, before considering increased spending. Private sector may have good insight on cost efficiency. With foreign investment, developing countries can benefit from knowledge transfer”
Respondent 9: “Majority of the projects we have been engaged in is purely commissioning new healthcare facility. We need to start moving away from hospital building but invest in other areas such as pharmaceutical goods that can touch million of lives”
Respondent 10:“Moving away from convention sources, governments in developing countries can identify innovative sources for financing healthcare such as Development Impact Bonds and debt-to-health swaps”
Respondent 11:“health delivery is dependent on basic infrastructure that is lacking in developing countries like insufficient supply of electricity and the poor quality of highways, railways and other transport infrastructure – as well as outdated information and communication technologies – severely limit the productivity of firms and hinder intra-regional deal”
Respondent 12: “There is definitely an area to leverage the capital and capacity of the private sector. But this dialogue is not active with weak regulation and policies specifically related to health financing schemes and strategies; and a poor environment in terms of ease of doing business in Africa.”
Respondent 13: “to better attract foreign investment, we need to establish well functioning legal institutions that support market transactions, protect property rights as well as laws that protect investors in times of upheavals or any sudden changes in the legal and economic environment”
Respondent 14: “like the case in Turkey, developing effective health financing mechanisms (PPP etc.) and harnessing the strengths of the private health sector are key strategies to address the increasingly complex health challenges in the developing countries” |
Findings/ Discussion
In seeking to analyze how health impacts on the economic growth of a country, it is essential to consider the results from the interview, which highlighted three key themes. Hence, this section will address the themes through the analysis of the responses and the opinions of the individuals concerning this theme.
- Challenge for securing funds for health initiatives
Based on the data collected in the interviews, it is clear that the funding of health interventions is a challenge for both the public and private stakeholders. Respondent 1 stated that funding of the health care sector was not considered a priority, and given the improvements in health outcomes, investors shifted their focus from the health sector to other areas such as climate. The respondent stated that, “We observed significant improvements in health outcome. With this success, it is tempting for policymakers to shift their investments away from the health sector and toward other sectors, such as climate” A report by the Institute of Medicine (2012, 48) further affirms that a country determines the health care of its citizens based on the allocation of resources to the sector. Therefore, the shifting focus of investments in health care affects the overall health of the populations and contributes to decreased quality of care (Institute of Medicine 2012, 48).
The second challenge identified in securing funding is the output of economic growth whereby independent parties make decisions regarding the planning, budgeting, and execution, which creates a misalignment in the distribution of funds. Respondent 3 and 4 agreed that there is limited spending on health care and that developing countries hardly see health care as a priority. Instead, they assume that the health of the population will improve naturally with better economic conditions. Hence, the focus is on economic growth and little concern over the population health. Respondent 3 in particular stated that “Conventional understanding is that population health will improve naturally when economic conditions reach a certain threshold, not the other way around. So why should developing countries with limited resources see healthcare as a priority?”
On the contrary, Farag, Nandakumar, Wallack, Hodgkin, Gaumer, and Erbil (2013, 37), argue that good governance contributes to effective spending, particularly in the health sector. Therefore, proper allocation of funds with a focus on the health sector is paramount in economic development as the countries eliminate preventable diseases, which in turn reduces the amount spend in treating these diseases (Farag et al., 2013, 38). Respondent 2 pointed out that health care is the second largest area of public spending; hence it is always in the financial spotlight. He stated that, “Healthcare is the second largest area of public expenditure; as a consequence, it is put in the financial spotlight. After the financial crisis some European regions led to reducing health spending growth”
From the research, it also became apparent that private investors desist from investing in health care as it is a less profitable venture, and the profits take longer to manifest. Respondent 4 pointed out that health policymakers face challenges when they seek finances for health care. The respondent further mentioned that, “People like us (health policy makers) face skepticism when seeking for additional financing. People with the money (financial policy makers) will question how it will help the country to meet key economic and fiscal objectives and it’s difficult to put a dollar sign in all of the initiatives”
Respondents 5 and 6 agreed that securing funds for healthcare is a challenge due to the delayed results of the investment. Respondent 5 further pointed out that it is worse for developing countries due to the political instability in these countries. According to Islam and Biswas (2014, 371), political instability leads to unrest, which affects the economy. Hence, an unstable economy limits investment in the health sector (Islam and Biswas, 2014, 371).
Respondent 8 also pointed out that profitability in Greenfield hospitals takes time and the profits are delayed. The respondent mentioned that, “Greenfield hospital projects take longer to see return. I built a hospital in Ghana and I haven’t seen profit for the last four years” Respondent 10 highlighted that the income obtained in the hospitals is in the form of the local currency, which limits the potential of accessing foreign currency loans. Respondent 7 and 9 pointed out that supporting infrastructure is vital in the effective running of hospitals. In particular respondent 9 stated that, “Running a hospital is complicated and a lot of revenue leakage happens down the road. Regulators, investors, insurers, clinicians, suppliers, you name it. They all have different interests. Stakeholder dynamics is complex. Planning and execution take time. It is not as simple”. Hence, the profitability of the venture is compromised, which results in low investment in the sector.
- Focused areas to prioritize health investment
An analysis of the results revealed that developing countries stress the importance of prioritizing scarce capital to scale impact on public health matters in three key areas. The first of which is Non-communicable Disease (NCD), which is one of the greatest threats to the developing countries. According to the World Health Organization (2011, 33), the burden of NCDs in developing countries is increased by the adverse effects of globalization and sedentary lifestyles. Therefore, the key to the prevention of these diseases is the adoption of preventive measures to prevent the economic burden of dealing with NCDs in the future (World Health Organization, 2011, 33).
Secondly, Primary Health Care capital is used for hospitals offering advanced care, which is unsuitable for the developing countries due to affordability and accessibility. Therefore, the participants stressed the importance of primary health care services closer to the communities, which would be more economical compared to hospital admissions. The third area of focus is the need for the adoption of affordable, sustainable, and accessible financing models to provide Universal Health Coverage (UHC). Countries such as Brazil, China, Thailand, and Turkey invested majorly in universal health coverage.
In this case, respondent 1 highlighted the need to allocate and utilize resources in the developing countries which face challenges such as limited administrative capacity and competing priorities. The respondent mentioned that, “Allocating and prioritizing resources (budget) is even a greater importance to developing countries with severe resource constraints, limited administrative capacity, and numerous competing critical priorities pose serious challenges “
Frenk and Moon (2013, 938) also argued that the health sector is affected by decisions in policy-making arenas on a global scale, which affects the investment in the health sectors in the developing countries. Respondent 2 pointed out the percentages of death reported annually, “NCDs kill 41 million people each year. This is more than 70% of all deaths globally. NCDs lead to huge costs that fall heaviest on the low income countries that can least afford them.” Respondent 3 and 4 highlighted the decline in the life expectancy rates, especially in China and the developing countries, mainly attributed to bad lifestyle choices.
As further argued by the Institute of Medicine (2012,33) chronic diseases are expected to increase due to bad lifestyle choices and the increase in age of the population; hence, tackling these issues may be a problem in the future. Respondent 6; a clinician, pointed out that investment in health is focused on building fancy hospitals that are not affordable, especially for people in developing countries. The respondent stated that, “It is unfortunate to see that health investment especially in the developing countries is focused around building fancy tertiary care hospitals. A lot of them remain empty, because its neither affordable or accessible for the local population” These sentiments were supported by respondent 5 stating that, “Countries in the Asia Pacific spend, on average, 8% of GDP on health. A lot of that money goes to care provided in hospitals. In many cases, the money could be better spent by focusing on primary health care”
In addition to this, respondent 7 and 8 who are also clinicians pointed out that the integrated care system is expensive; hence, the lack of sufficient resources to finance treatment in low-income countries makes access to health care a luxury in these areas. Respondent 10 also supported the sentiments stating that, “Countries in the Asia Pacific spend, on average, 8% of GDP on health. A lot of that money goes to care provided in hospitals. In many cases, the money could be better spent by focusing on primary health care”
Respondent 11 used the case of Japan, arguing that “After World War II, half of Japan was living near the poverty line. The government set a goal to double economic growth and established universal health insurance in 1961. Household incomes doubled between 1960 and 1967 and health outcomes also improved drastically. Many believe equitable access to quality basic health care played a major role in helping the country achieve economic success.” Respondent 9 other respondent stressed the importance of investment in the primary health care system to improve access to health services. The respondent stated that, “We need to invest in the basics. Countries need to invest in a resilient primary health care system to improve access and manage health care costs”
- Political implication
From the findings, it is evident that the investment decisions should be focused on the geopolitical, epidemiological, and socioeconomic conditions. Hence, three issues emerge from the interviews. The first issue is the need to structure spending on health care to minimize the problems faced. A study by Novignon, Olakojo, and Nonvignon (2012, 22) reveals that a majority of the developing countries rely on donor funds for health care, which is unreliable and unsustainable. Secondly, countries should develop effective models of health care to cater to their needs. Finally, there is little investment in the private sector, specifically in areas such as pharmaceuticals, medical education, and digital technologies.
Therefore, respondent 8 and 13 identified the need for foreign direct investment stating that they need to be protected from changes in the legal and economic environment. Respondent 13 in particular stated that “to better attract foreign investment, we need to establish well-functioning legal institutions that support market transactions, protect property rights as well as laws that protect investors in times of upheavals or any sudden changes in the legal and economic environment” Chanda (2010, 122) argues that domestic constraints such as establishment costs, expensive medical equipment, and regulatory policies affect the inflow of Foreign Direct Investments in the health sectors in India. Reiter and Steensma (2010, 1679) also stress the need for liberal policies to facilitate FDI inflows, which in turn lead to an improvement in human development. Respondent 8 further also pointed out corruption as the cause of misallocated resources, “All health systems have numerous examples of misallocated resources and waste, and in some cases elements of corruption.” According to Mackey and Liang (2012), corruption threatens global health outcomes, which also creates varied consequences in the health sector.
From the research, it is also evident that economic evidence can be used to support policy decisions to fund interventions for non-communicable diseases. Hence, health authorities can use economics to communicate challenges and solutions in line with other sectors. Therefore, respondent 4 believes that, “Health-policy-makers must be proactive in demonstrating that – in addition to their core objectives of improving population health – health systems also have direct and indirect favourable effects which are aligned with such economic objectives or social benefits.” (Respondent 4)
The findings also reveal that the determinants of health lie outside the health system; hence improvements in health can be achieved through programs targeted at behavioral risk factors. For instance, respondent 6 suggests that, “preventive medicine, health promotion activities can be further incentivized (taxation) to tackle behavioral life-style issues contributing to NCD.”
An analysis of the results also reveals that creating an environment to promote private sector engagement and FDI in low-income countries through the establishment of institutions that foster investor-friendly policies is a solution to the issues faced. Respondent 7 pointed out that this can be achieved by working with governments to increase private sector investments, which are focused on achieving health-related Sustainable Development Goals.
Finally, the results reveal that diversification of the health investment portfolio into pharmaceutical goods will serve as a solution and will create a more significant impact and scalability. Therefore, respondent 9, 10 and 14 pointed out the need to move from hospital building projects to other areas, the identification of innovative sources such as Development Impact Bonds and the debt-to healthy swaps, and the development of effective health financing mechanisms. Respondent 14 in particular stated that, “like the case in Turkey, developing effective health financing mechanisms (PPP etc.) and harnessing the strengths of the private health sector are key strategies to address the increasingly complex health challenges in the developing countries” Hence, these strategies will limit the sole dependence on health investments and introduce financing options that will improve the state of health care in the countries.
Strengths and Limitations
The strength of the paper lies in the methodology, data collection methods, and analysis that validated the research. The articulation of the transcripts with the audio recordings and field notes, together with feedback, also enhanced the validity of the study. However, the research was limited by recording a majority of the interviews conducted as field notes. Therefore, the inability to record all the interviews limited the perceptions and nuances of the respondents. Given the nature of the responses, recording all the interviews on tape would capture all the issues mentioned by the respondents compared to relying on field notes.
Conclusions
Participants highlighted that several factors in both the private and public sectors hindered access to capital funding for health initiatives.
Additionally, three key areas were identified for priority allocation of capital. These areas are non-communicable diseases, primary healthcare services, and universal health coverage, particularly for developing countries.
Finally, the policy implications provide guidance for policymakers to direct efforts towards funding health care projects and engaging stakeholders for effective intervention. They also provide guidelines for the creation of business-friendly environments to attract both private and foreign investment and diversify investment to scale up the impact.
