More Bucks Don’t Mean More Bangs: The Diminishing Return of Health Supply

At 2008 Global Health Supply Chain Summit, Helene Moeller of WHO Essential Medicine and Pharmaceutical Department presented an interesting finding on children’s mortality rate as a function of total health expenditure per capita (THE) in 2006 for seven developing countries: Oman, Mongolia, Morocco, Tajikistan, India, Madagascar, and Zambia. These countries were chosen specifically for having similar children mortality rate in 1976 (≥ 150 death / 1000). Thirty years later, with the exception of Zambia, the other six countries showed much decreased on mortality rate (≤100 death/1000). While the overall trend is that more money spent into health expenditure, the more we better health quality we can expect out of people (Oman had the highest THE and also the lowest child mortality). There are, however, anomalies: India’s THE is much higher than Tajikistan, but its children mortality rate is still much higher; Morocco is spending almost twice as much THE as oppose to Mongolia, yet the child mortality rate of the two countries are about the same. This pattern is repeated in many other developing countries. It seems that we may expect a lot of results by over-saturating the health economy with money. The cost of doing, however, would be too high.

I suspect this disparity roots in the lack of coordination within each nation’s government. First, in order to efficiently provide health service to population, a country, especially a low income country, need have a strong coordination. Coordination and logistics for the distribution of health supply itself contribute a large part to THE. This was especially mentioned by Moeller in her presentation. For certain health service, anti-biotic medicine for example, if this medicine is supplied through private sector, it would meant that distribution has to go through distributors, wholesalers and retailer before it can reach the consumers. The alternative could be directly distribution to public health facility. This would not only cut down the time of distribution, but also the cost of maintenance. Because in the global health market, there are many actors provide separate but similar service, this means the less participants a country engage, the less the country could spend less overall.

An extension of the lack of coordination is the fluctuation in human health resource. Human health resource is the most dynamic and often most costly aspect of THE. While medical drugs and equipments can be purchased (and thus a problem of money), the health quality of the population depends on the application of fixed resources. Reported indicated that health quality of a population is positively correlated with the density of the medical personnel within a population. Because the training of medical professionals is costly, therefore, in low income and low middle-income nations, the medical professionals have a strong tendency to migrate to wealthier region to practice. If government can sponsor and maintain health professional training under contracts, they could secure a very sizeable number of human resources.

Lastly, there is also the need to increase the transparency between demands and supply. The medical demands vary from region to region, country to country. By understanding the need of the different regions, we could macro-manage and setup a concerted plan that would ultimately benefit everyone. This is essentially the synergy of many separate supply and demand. This is also why a government need to maintain a strong presence in its health market since they are most equipped to monitor the health quality of its population.


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