Preserving “free health” under Sri Lanka’s privatisation policy - By Ramya Kumar
The Sunday Times
08 Feb 2015

An unprecedented expansion of private healthcare has occurred over the last decade or so in Sri Lanka. As private health facilities mushroom across the island, full page advertisements invite us to access “cutting-edge” diagnostic services in private hospitals together with various promotional health insurance packages offered to help us “consume” these services. According to data from the Institute for Health Policy, the number of private hospitals rose from 83 to 125 between 2000 and 2011, and the number of private hospital beds grew by about 50 per cent during the same period. Reflecting this growth, the private share of total health expenditure rose from 52 to 58 per cent within this period (IHP 2011 and 2013). At present, over 80 per cent of private spending on health is financed out-of-pocket (WHO 2014).

Yet, until quite recently, the public health system dominated the healthcare arena in Sri Lanka, whether in terms of reliability, the introduction of new technologies and services, or providing access to a highly skilled health workforce. In fact, most healthcare workers, including specialist doctors, opted to work in the public health system for these very reasons. In this respect, Sri Lanka’s public health system has been upheld as a model of equitable healthcare. However, this situation is fast-changing.

The waiting list for coronary-artery bypass grafting exceeds 5000 patients in the public sector while such procedures are easily accessible for those who can afford them in private hospitals. Dialysis for chronic kidney disease, rampant in the rural North Central and Uva Provinces, while often not readily available to these patients, may be purchased quite easily through private facilities in urban areas.

The only bone-marrow transplant unit in Sri Lanka is housed today in a private hospital in Colombo. And many more advanced surgical and imaging technologies, including safer, non-invasive procedures, are available only to the wealthy through the private health sector. As a result, private health companies are now able to attract specialist doctors (trained through the public system) for fulltime work, creating a vacuum in state health facilities.


How did we reach this inequitable situation? Public and private health services have co-existed in the country ever since health services were institutionalised under the British in the late 19th century. Public healthcare infrastructure expanded rapidly in the aftermath of independence, and “free health” was established as government policy in 1951 when user-fees were eliminated from the public health system.

For the greater part of the 1960s and 70s, health professionals in the public sector were banned from engaging in private practice. By the 1970s, Sri Lanka was allocating almost a quarter of its budget to social security and welfare. In 1971, faced by a recession, the incumbent government introduced a user-fee of 25 cents for out-patient services.

This charge was subsequently removed when the UNP came into power in 1977, but with the adoption of open economic policies there was a conspicuous shift toward privatisation and various incentives were provided to expand private healthcare while curbing government expenditure on health.

The private health sector has relied heavily on public subsidy for its expansion since 1977. All governments, irrespective of party makeup, have subsidized private health companies in a number of ways, for instance, by providing incentives to purchase state lands for private hospital construction, loans for the expansion of private facilities, and duty free facilities for importing biomedical equipment, and by permitting public health sector workers to work part-time in private facilities. In fact, the vast majority of private sector healthcare providers are public health sector employees who enjoy the prestige, job security and other benefits of public sector employment.

Public sector expansion

The high level of growth of the private health sector has not been matched by a similar expansion of government health services. With insufficient investment, government health facilities have not been able to address the growing demand for healthcare, particularly for non-communicable diseases.

The repercussions of a stagnating public health system are mostly felt by the less advantaged and marginalised sections of the population who access the system.

Patients are frequently directed to the private health sector for medicines and clinical tests owing to the shortfall of drugs and equipment in government facilities.

As specialists and medical officers at government hospitals divide their time between these hospitals and private practice, many patients are compelled to access private channeling centers to gain entry, and, at times, obtain preferential treatment, in overcrowded wards in government hospitals.

All this happens while VIPs and those connected to hospital staff navigate the system to their advantage, making the most of “free health”. Notably, the 2014 budget saw a major increase in public investment in the health sector.

This sudden increase in the budgetary allocation for healthcare may be linked to the World Bank’s efforts in “health sector reform” in Sri Lanka. The second World Bank-sponsored Health Sector Development Project (2013-2018), valued at US$5 billion, is currently under implementation. This project has been formulated to address three thematic areas: maternal and child health and nutrition and communicable diseases;prevention and control of non-communicable diseases and; health systems improvement measures. However, it fails to address the rising burden of out-of-pocket expenditures on healthcare in a meaningful way. While pointing to the shortfall of services in the public sector, the World Bank suggests that increasing private health sector “collaboration” in the provision of health services could address this deficiency (World Bank 2013 and 2014).

The World Bank’s influence on the health sector is clear in the previous government’s National Health Development Plan 2013-2017 (NHDP). Among other plans, the NHDP troublingly proposed to: outsource identified services including cleaning, laundry, security, ambulance and other transport services; develop sections dedicated to medical tourism in government and private sector hospitals; introduce performance-based planning and budgeting; and introduce social insurance and fee-for-services. Some of these plans have already been implemented: security services and some aspects of building maintenance have been contracted out to private companies; paying wards have been constructed at the National Hospital of Sri Lanka; and many private hospitals have initiated numerous medical tourism ventures.

Encouraging proposals

The proposals for healthcare in President Maithripala Sirisena’s election manifesto are quite encouraging in this context. There is a clearly articulated commitment to strengthen state health services. For instance, the President pledges to increase government expenditure on health as a percentage of GDP from 1.8 to 3 per cent; implement the long-awaited national drug policy; address the shortfall of medicines and clinical testing facilities in state institutions; strengthen the referral system; reduce wait-times for surgical procedures in government hospitals; and keep OPDs open till 10 pm. In addition, the pledge to ensure a “full meal” for everyone suggests that health is understood not just in relation to the health system but as a product of social and economic wellbeing.

The proposals included in the recently unveiled budget are also quite promising: the pledge to increase government expenditure on health is reiterated, and assistance made available to pregnant women and patients with chronic kidney disease. But these proposals do not address the elephant in the room: privatisation.

What will be the new government’s position on this issue? Unfortunately, the UNP cannot be relied on for progressive policy changes given its support of healthcare privatisation in the past.

In addition to the reactionary programme embarked upon in 1977, the private share of capital expenditure on healthcare reached an all-time high when the UNP was in government (IHP 2011).

Protecting public sector systems

We must be vigilant of the increasing acceptance of market-based approaches to healthcare within health policy circles, evidenced by calls for “public-private partnerships” or the expansion of health insurance in Sri Lanka.

Both these strategies have been used in other countries to make way for private sector “collaboration” in healthcare provision. Lessons from other low- and middle-income countries tell us that collaborating with the private sector weakens public health systems. For instance, national health insurance schemes, which often involve a mix of services from public and private providers, do not cover all types of diseases, and place various conditions that limit on insurance claims. Most importantly, these strategies have failed to effectively expand access to the most disadvantaged social groups.

Thus it is important that we protect our public health system, a system that still allows many of us to walk into a government health facility and receive a reasonable standard of care.

We can ensure this by: 1) increasing government investment in the public system; 2) eliminating user-charges and hidden fees (on drugs, equipment, tests etc.) in government facilities; 3) preventing ongoing attempts to privatize clinical and non-clinical services; 4) regulating private health services, including placing caps on the costs of these services, and addressing conflicts of interest that emerge when healthcare professionals working in government hospitals engage in private practice; and 4) ending the various forms of hidden subsidies provided to private healthcare. What contribution can we expect from the new coalition to preserving “free health” in Sri Lanka? And how can we as concerned citizens work together to make sure that this happens?