Informal Payments for Health Services

Informal Payments for Health Services

Problems and Policy Proposals

by

Ethan Joselow

A thesis submitted to the Hubert Department of Global Health

RollinsSchool of Public Health

EmoryUniversity

in partial fulfillment of the requirements

for the degree of Master of Public Health

April, 2007

Joselow1

Informal Payments for Health Services

Problems and Policy Proposals

Approved:

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Deborah McFarland, Ph.D., M.P.H.,

Thesis Advisor, Associate Professor, HubertDepartment of Global Health

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Date

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Matthew Archibald, Ph.D.,

Faculty Member, Assistant Professor, Sociology, EmoryUniversity

______

Date

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Roger Rochat, M.D., Director of Graduate Programs, HubertDepartment of Global Health

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Date

In presenting this thesis as a partial fulfillment of the requirements for an advanced degree from EmoryUniversity, I agree that the Rollins School of Public Health shall make it available for inspection and circulation in accordance with its regulations governing material of this type. I agree that permission to copy from, or to publish, this report may be granted by the professor under whose direction it was written, or, in his/her absence, by the Department Chair of the Hubert Department of Global Health when such copying or publication is solely for scholarly purposes and does not involve potential financial gain. It is understood that any copying from, or publication of, this report which involves potential financial gain will not be allowed without permission.

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Ethan Joselow

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Ethan Joselow

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Acknowledgements

I am indebted to EmoryUniversity’s Rollins School of Public Health for helping me to cultivate a deep respect for community participation in health care. In addition, Rollins School of Public Health enabled me to travel to India in 2005 as a recipient of Global Field Experience funding and support. The experience of living and conducting research in Indiamay have been the most valuable of any in my education. I would also like to thank Emory’s Center for Health, Culture and Society for selecting me as a fellow for the academic year 2005-06. Without this opportunity I could never have had the time or intellectual guidance necessary to develop the theoretical base from which this thesis draws. Special thanks to Drs. Sudarshan and Deb along with all the staff of Karuna Trust in Bangalore, India who made my visit to India comfortable and enjoyable— and my research possible. Thanks also to Dr. Matthew Archibald for his intellectual support in my time as a fellow, and as a thesis advisor, and to Dr. Deborah McFarland for her unwavering diligence and attention to detail in reviewing and commenting on seemingly unending drafts of this work. Last, many thanks to Dr. Peter Brown of the Center for Health, Culture and Society for encouraging my interest in informal payments and putting me in touch with others who share this interest.

Abstract

Informal Payments for Health Services

Problems and Policy Proposals

Informal payments, or bribery for health services, are common forms of corruption across the world. Unregulated and undue payments burden many of those in need of healthcare, especially the poor and uneducated. This thesis begins by reviewing sociological research relevant to informal payments, including white-collar crime, corruption, andorganizational theory. Drawing from various schools of thought, the thesis develops a conceptual framework that explains informal payments through the concepts of power, scarcity and morality as both causes and sources of solutions to problems of corruption and informal payments in health systems. A case study of users of health services in Karnataka, India, based on field research conducted by the author, explores backgrounds, perceptions, and experiences of health center users with informal payments through survey and focus group discussion results. The case study confirms findings from other health systems, principally that less educated, non-professional individuals are more likely to pay a bribe for health services than the more well-to-do. In the last section of the thesis, power, scarcity and morality are reintroduced to match the causes of informal payments for health care with possible solutions. Power-based policy suggestions are civic action for change of government services and the inclusion of local political bodies, such as village councils, in the management of local health services. Scarcity-based suggestions include improved fee and service information for patients, as well as using villagecouncils to allocate scarce resources more efficiently and to formulate targeted requests for further funding. Morality is then addressed with suggestions on the use of internal and peer regulation over standard law enforcement to reduce informal payments and other forms of corruption in health sectors.

Table of Contents

1. Introduction

2. Theoretical Discussion and Literature Review

2a. Power

2b. Scarcity

2c. Morality

3. Informal Payments for Health Services in Karnataka, India

3a. Primary Research Methodology

3b. Research Findings

3c. Research Discussion and Conclusions

4. Discussion and Policy Suggestions

4a. Power and Informal Payments: Challenging Hierarchies

4b. Scarcity and Informal Payments: Information as Action

4c. Morality and Informal Payments: Ethics Inside and Out

5. Conclusion

Appendix

1. Map of Transparency International's Corruption Perceptions Index

2. Health and Social Indicators for Karnataka State, India

3. Survey and Focus Group Discussion Tools

4. Map of India with Karnataka and Bangalore Outlined

5. Map of Karnataka State, Surveyed Districts Outlined

5. Map of Karnataka State, Surveyed Districts Outlined

6. Institutional Review Board Notification of Protocol Approval

Works Cited

List of Tables and Figures

Table 1: Irregularities in Indian Government Hospitals

Table 2: Summary of Districts and Facilities Visited

Table 3: Basic Demographics of Survey Participants (dependent variables)

Table 4: Frequency of Respondents Answering Always, Usually or Sometimes to Questions on Quality and Corruption

Table 5: Selected Survey Findings on Corruption

Table 6: Agreement on the Statement, "The medical care I have been receiving is just about perfect"

Table 7: Agreement on the Statement, "Doctors are good about explaining the reason for medical tests" with Reported Money Paid Directly to Doctors

Joselow1

“Society can and does execute its own mandates: and if it issues wrong mandates instead of right, or any mandates at all in things with which it ought not to meddle, it practises a social tyranny more formidable than many kinds of political oppression, since, though not usually upheld by such extreme penalties, it leaves fewer means for escape, penetrating much more deeply into the details of life, and enslaving the soul itself.”

John Stuart Mill, 1859

On Liberty

“Society must be able to marshal from within itself forces which will make as many of the faltering actors as possible revert to the behavior required for its proper functioning.”

Albert O. Hirschman, 1970

Exit, Voice and Loyalty

Joselow1

1. Introduction

Despite billions of dollars in aid projects, the measures of human and economic development indicators of many nations remain at a standstill, or even slipping backwards. In an age where the solutions for the major causes of human suffering are known, a plurality of the world’s citizens still live in conditions of rampant poverty, famine and disease. While far from the sole reason, corruption is both a cause and a consequence of this unfortunate fact. It is a cause in its tendency to move money and resources upwards, away from the powerless. It is a consequence when it is a reaction to larger structural factors that encourage such behaviors, as when health professionals ask for money as part of a “coping strategy” to supplement meager salaries, or because of low morale. Health sector corruption occurs with the tacit permission of the local culture of medical care, when medical and financial resources necessary for medical staff to function are lacking, and when there is a disparity between medical staff and the patient regarding information on the treatments, procedures and payments that are part of health care delivery.

Players, customs, and sums at stake may vary, but there are three concepts that undergird all corrupt acts. In the words of corruption researcher Jon S. T. Quah (2003), corruption occurs “at the convergence of scarcity, morality and power.” Each of these three conditions must be addressed in a policy package that is effective against corruption. The theoretical discussion of this thesis uses Quah’s conceptual framework of corruption, examining power, scarcity and morality through the individual, organizational, and political levels of society.

The delivery points of healthcare are logical placesfor corruption in the form of informal payments to occur. People are at their most vulnerable when they are in need of care. People are also more likely to interact with the health care system than other public sectors, such as police, railroads, or power companies (Transparency 2002). When combined with drastically reduced provider salaries and a monolithic, vertically-oriented entity in charge of the provision of a vital service, it is not surprising that many providers and institutions resort to the extraction of informal payments from their clientele. This paper will argue that salaries, firm competition, and individual or team performance incentives are relevant factors, but not the only factors in understanding corruption and informal payments for health services. There are additional social and economic components that dictate the basic ways that people conduct business. Without a transparent and democratic ethic to administration, people will be left to fend for themselves in their dealings with others. The power of information and social capital, between doctor and patient, or manager and employee, will dictate winners and losers. To truly change the culture of corruption, these structures must be altered, both through government and management intervention, as well asvia the will and actions of the citizens who are both victims of corruption, and recipients of health services. For real change to occur, rulebound reforms of government and administration must be matched by popular political action.

Corruption at the delivery level of otherwise free (or low-fee) health services is the final event in a chain of inefficiencies that hamper the efficiency of many public health interventions.Starting from a macroeconomic perspective, these inefficiencies often repeat themselves across many sectors of a nation’s economy. Data from 102 countries show that there is a high correlation(0.766) between the Human Development Index (HDI) and the Corruption Perceptions Index (CPI). Countries with low (poor) CPI scores also have a low (poor) HDI(Transparency India, 2002). In business literature, it has been demonstrated that the rate of bribery and firm growth are negatively correlated. One study shows that for every percentage point increase in the bribery rate (above that of the normal costs of business) there is a reduction in firm growth of three percentage points. This effect is three times greater than the impact that taxation has on firm growth (Reinikka & Svensson, 2003). This multiplier effect on business is especially hard felt for small to medium size enterprises, which are less apt to resist demands for bribes, having fewer means to do so. Much has been done to reduce the incidence of briberies in business. Foreign investors in developing economies have a vested interest in ensuring that their return expectations are met; they also have the money and influence to change the way that things are done. Governments throughout the world have also been responsive in addressing this major hurdle to doing business in their countries. Governments, foreign investors and large businesses have the ability to increase oversight of the activities they pay for, but smaller firms may be left behind.If the impact of these behaviors is proportionately greater on smaller businesses, the same is true of poor and underpowered individuals in need of basic health care. Such individuals have the least ability to gain access to the social and financial resources needed to change patterns of bribery.

This is a study of informal payments for health care. To go any further, it is necessary to define the term. According to Transparency International, informal payments in the health sector are common when health services are directly administered by government health programs. Informal payments can be defined as,“1) payments to individual and institutional providers, in kind or in cash, that are made outside official payment channels and 2) purchases that are meant to be covered by the health care system" (Lewis, 1999). Typically, charges are incurred for services or supplies that are supposed to be free or available at a nominal cost on an official fee schedule. Payments go to health care providers for examinations or surgeries, or to hospital staff for routine maintenance such as providing clean linens or meals. Patients may also be charged for drugs or medical supplies that should be free under government provided health care systems.(Transparency International, 2007) This definition may be useful in the context of understanding the legality of a certain set of behaviors, but it is not especially useful when it comes to understanding the complex moralities that policy makers and citizens must process and confront.

Another perspective is that informal payments must be understood in terms of their impacts on the efficiency and equity with which a policy objective is achieved (Gaal, Belli, McKee, & Szocska, 2006). If any coercion takes place (“internal or external pressure on patients”) then those payments could become barriers to care (Balabanova, McKee, Pomerlau, Haerpfer, & Haerpfer, 2004), since the poor cannot be formally exempted from such a payment. Second, if a service is not provided because a payment was not made to the satisfaction of the provider, or if it results in unnecessary services, then this also harms the efficiency of the service. Both of these arguments imply that a formal system designed to achieve equity and efficiency is one necessary part of eliminating the practice of informal payments.

Moving from the theory to practice in this field is difficult. While corruption at the procurement and administrative levels of government is a widely studied phenomenon, the practice of informal payments on the affordability and availability of basic health services has received considerably less attention. Cross-country comparisons are also difficult, given the varying manifestations of informal payments; even within nations, different studies can yield wide-ranging results. Furthermore,there is very little literature on this form of corruption that actually attempts to quantify the impact of informal payments on households and the welfare of individuals. One study from Tajikistan showed that payments were common, varying by income level at a level of about ten to one from the richest to the poorest quintile, while the difference in monthly income between those quintiles was closer to fifteen to one. Even without accounting for the amount of money needed for base subsistence, it is arithmetically clear that the impacts of payments are greater on the poor than on the rich. Such payments exceeded the poorest quintile’s mean monthly family income (Falkingham, 2004).

Many questions remain unanswered. No studies have been performed whose aim is to assess the ultimate impact that informal payments have on national policies for free basic healthcare, or whether informal payments affect the health of users. The basic facts can be difficult to categorize and quantify; people with little recourse are unlikely to be candid about their experiences, and may be hard to contact on an objective and systematic basis. Gaal et al. (2006) make reference to two surveys in Hungary in which the rate of informal payments were different by an order of magnitude. As a starting point in this discussion, below are a few examples of studies from various corners of the world that successfully gathered information on informal payments.

The non-governmental organization, Ética Moçambique reported in 2001 that Mozambique had one of the highest levels of crime and corruption in the world. According to the survey, bribes were most common in the health sector, followed by education. According to the data, 45% of instances of bribery were for between US$6 and $55, while an additional 22% were for $55 to $555 (Hanlon, 2002). For a nation where HIV/AIDS prevalence is at 13%, literacy rates are at 64%, and almost 40 percent of the population lives on under a dollar a day (UNDP Human Development Report, 2003), a six dollar bribe can make the difference between life and death. The impact of these payments on a nation’s health, social, economic, and political wellbeing has remained unmeasured, but should not be overlooked.

A study entitled, “When is Free Not So Free? Informal Payments for Basic Health Services in Bolivia” (Chakraborty, Gatti, Klugman, & G., 2002), was an extensive cross-sectional survey of informal payments for a nominally free maternal and child health program in Bolivia. This national survey was conducted to assess payments that occurred for care provided through the Bolivian government’s program, Seguro Materno Infantil enacted in 1996, where the national government addressed the nation’s infant and maternal mortality rates, some of the highest in the Western hemisphere. The survey found that inequalities in health care delivery can be explained in part by the occurrence of informal payments to the caregiver at the time of the delivery of service. The researchers gathered data on income, the type of facility, education of care recipients, and other variables in order to understand the patterns that these payments make. They found that payment-to-income ratios decreased with income, meaning that someone who was extremely poor would be responsible for a greater payment in proportion to their means than someone with more income.