Abstract
Public provision of health and education in developing countries is often insufficient and inefficient. There is thus a call for a greater involvement of private providers to supply affordable and high-quality services to the population. In particular, it is often suggested that not-for-profit institutions should play a larger role, given their social mission. But do not-for-profits really behave differently from for-profit institutions? The literature does not provide a clear answer to this question. The present contribution offers evidence based on a simple theoretical model and price data from health care providers in Uganda with different governance structures. Using differences in market structure as source of variation, we find that not-for-profits indeed behave differently from for-profit institutions, with a pricing behavior that is consistent with an emphasis on health impact and not just profit maximization. Our results thus provide an argument for a policy trying to attract not-for-profit health clinics to fill the gap of an inefficient public health provision.
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Notes
For example, Chaudhury et al. (2006) find that the degree of absenteeism among health workers is 40 % in India, and the number for Uganda may be as high as 50 % (Björkman and Svensson 2009). In Bangladesh, Chaudhury and Hammer (2004) document an absenteeism rate of 74 % among doctors. See also Leonard (2009) for an analysis of the choice between traditional healers and formal health clinics in rural Cameroun.
Among the private clinics in our data with another clinic in their catchment area, 75 % state that this is a government clinic.
This results holds irrespective of whether the not-for-profit clinic is a pure or impure altruist (Andreoni 1990): Neither a pure altruist, which cares only about the outcome, nor an impure, or “warm-glow” altruist, which cares about the act of giving, would find it in its interest to cater to the population in a village where a government clinic is located.
See Reinikka and Svensson (2010) for details about the sampling strategy and survey design. The sample was designed so that the proportion of facilities drawn from different regions and ownership categories broadly mirrors the population of facilities.
Ugandan shillings 1000 correrspond to around USD 0.72.
The in-charge was asked whether the clinic faced competition from other similar clinics in the area. The in-charge was also asked about the price for general outpatient service if that was not publicly listed. The vector of geographical covariates include distance (in kilometers) to the nearest telephone, distance to the nearest postal service, and distance to the nearest source of a newspaper.
The variable \({ POP}\) is the estimated catchment population (size of the population that could be served by the clinic) as reported by the in-charge, measured in 1000 inhabitants.
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Bjorvatn, K., Svensson, J. Are not-for-profits different? Theory and evidence on the pricing of health services in Uganda. Econ Gov 17, 1–10 (2016). https://doi.org/10.1007/s10101-015-0164-y
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DOI: https://doi.org/10.1007/s10101-015-0164-y