Corruption in health spending

Every year, global health spending amounts to some $3 trillion. Given the huge sums in question, the large numbers of actors and the complex, interconnected health systems in most countries, it is not surprising that corruption is frequent in this industry. Of course exact numbers are not known, but some estimates are staggering. By one count nearly a third of Kenya’s annual budget is lost through corruption and embezzlement; in Cambodia an estimated 5% of health spending is lost to corruption before it even leaves the central government; one study in Ghana indicated that 89% of funding for procurement and operational costs was lost due to corruption. Corruption takes place throughout healthcare systems, including embezzlement, theft of equipment or drugs, corruption in procurement (bribes, kickbacks, etc), and corruption in payment systems (individuals paying too much or too little for health services, or paying bribes just to see a doctor or skip a long waiting list).

Donors and taxpayers can be quick to pinpoint this as a developing country problem, and declare that funding for global public health is pointless – the money will just end up in the hands of corrupt officials and will not make a difference in healthcare and services for the individuals who need it the most.

First of all, however, it is important to note that corruption in public services is hardly just a developing country problem. According to Transparency International, the United States loses 5%-10% of their budget each year due to “overpayment” in the Medicare and Medicaid systems. Corruption is also a concern in the pharmaceutical industry, with billions spent every year marketing drugs to doctors. Although doctors claim that such marketing does not make a different in their behavior and that they prescribe what they believe to be best for their patients, research has shown that doctors are far more likely to prescribe medicine which has been marketed to them by pharmaceutical representatives. Corruption is an issue in developed countries in Europe and Asia as well.

Given that corruption in healthcare, then, is a global problem, developing countries cannot be expected to eradicate their health systems of corruption overnight – and funding for healthcare is still necessary, even if some portion of that is lost. That being said, however, all nations – developed and developing – should take significant steps to reduce and eliminate corruption. Research indicates that even small investments in monitoring and prosecution can make a significant difference, and the money saved can more than make up for the costs involved.

In addition to the much-needed localized and small-scale interventions described in an earlier post on this blog, national governments must also take steps to reduce corruption at higher levels. Transparency International indicates a number of steps that can be taken. Transparency is one key – health budgets at the national, regional, local, and hospital level must be published, as well as the result of independent audits. Procurement procedures and selection criteria should be publicized, as well as the results of large-scale public procurement. Pay scales for doctors, nurses, and other health workers should be set at a level which will allow staff to support themselves and their families without relying on bribes or other informal fees. Finally, whistleblowers should be protected, and individuals involved in corruption should be prosecuted, regardless of their political or economic position.

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