Globalization, National Identity, and Health System Impacts Bruce Fried, PhD Department of Health Policy & Administration University of North Carolina.

Globalization, National Identity, and Health System Impacts

Bruce Fried, PhDDepartment of Health Policy & Administration

University of North Carolina at Chapel HilMay 28, 2008

What is Globalization?(some explanations)

• A phenomenon by which economic agents in any given part of the world are much more affected by events elsewhere in the world than before (Anne Kreuger, IMF, 2000)

• Increasing integration of markets across political boundaries

• Falling government-imposed barriers to international flow of goods, services, and capital

• Global spread of market-oriented policies in both the domestic and international spheres

Globalization

• A major force with broad impacts on health, health systems, and (potentially) national identity

• A great deal of writing on globalization, but little on the relationships among globalization and: – Population health– Health systems– National identity

• Population health: broad outcome measures including the distribution and burden of disease

• Health system: the formal infrastructure established to deliver and sustain health services including:– Financing mechanisms– Payment for services– Services delivery– Regulation– Health resources and infrastructure

• National identify: because the values of a society are embedded in the health system, we refer to the autonomy of nations to make health policy decisions

How might globalization affect health, health systems, and decision-making?

Three Pathways

• Impact on general economic performance

• Reduced barriers to trade

• Increase in risk factors for disease

Pathway 1: Impact on General Economic

Performance

Does globalization lead to economic improvements and subsequent improvements in population health?

(the evidence is weak)

The impact of globalization on health

Evidence: Globalizing is good for economies: GDP Increased among “Globalizers”

Evidence: Globalizing is good: Per capita GDP

growth increased among globalizers

This might suggest that at least in some cases, the poor are not “left out” of a country’s economic growth.

Change in per capita income seems to be related to change in the income of the poorest.

Globalization and Inequality:The Gini Coefficient

• The Gini coefficient is a measure of inequality of income or inequality of wealth distribution.

• It is defined as a ratio with values between 0 and 1.

Increased trade not associated with greater inequality

Gini Coefficient is not related to increased trade.

Case Study: Vietnam

But do data tell the whole story?

The Contradictions of Globalization

Is China a Globalization winner?

Shanghai, China

Or a loser?

Is India a Globalization

Winner?

Bangalore, India – Night Life

Bangalore call center

Or a loser?

Washing clothes by a road in Mumbai, India  Photo Antônio Milena/ABr

Calcutta

Another view of winners and losers

In some cases, globalization has . . .

• Led to increased spread of knowledge

• Fostered international environmental movements

• Improved GDP and brought millions out of poverty

• Improved the plight of women

• Increased communication about treatment of disease

In other cases, globalization has led to . . .

• Unemployment and political and social instability

• Decreased government revenues because trade agreements discourage tariffs

• Deterioration of public programs and safety nets because of conditionality requirements

• Countries spending significant portions of GDP on debt servicing

• The alarming spread of disease

Bogota Workers Union

. . . and environmental impacts

• Looser environmental regulation

• Unmanaged economic growth

• Forest depletion

• Invasive species

• Collapse of ocean fisheries

• Environmental refugees

. . and social impacts

• Increased disparities

• Collapse of traditional social systems

• Loss of highly-trained people (the brain drain)

Pathway 2: Reduced Barriers to Trade and

Health

Two possible scenarios

The Impact of globalization on health

Reduced Trade Barriers: Positive Outcomes

• Trade in health-related goods and, allowing greater access to needed resources

• Flow of people – patients and professionals• Flow of capital and ideas (intellectual capital),

telemedicine• Greater opportunity to export products

– but can exports can compete with government-subsidized industries in developed countries?

Free Trade and Low (or no) Tariffs may also mean:

• Greater availability (and lower prices) for harmful substances (e.g., tobacco, handguns)

• Open borders may mean that industries lose out to foreign exports

Liberal (or free) TradeIncrease in Personal

WealthEconomic

Development

Poverty Reduction

Personal choicesand public policies

that promotepopulation-wide

health and well-being

Reduced Barriers to Trade and Health:Story Line 1

But there is another possible scenario to consider

Free Trade and Health:

Story Line 2

Liberal (or free) TradeDecrease in Government

Regulatory AuthorityEconomic Development

Economic Benefits for theElite

Regulations to ProtectPublic Health are Relaxed

or Eliminated

Decreased Tariffs Lead toLower Government

Revenues

Domestic IndustryDestroyed by CompetitionHigher Prices for Imports

Increased PovertyIncreased Unemployment

Unsafe Working ConditionsSocial and Political UnrestDecimated Industries and

Reduced Investment inHealth

Poor Population HealthOutcomes

Pathway 3:Globalization and Increased Risk

Factors

(see Frenk & Gómez-Dántes, 2002)

The Impact of globalization on health

Increased Transfer of Risk

• Transmission of communicable diseases• HIV/AIDS• Influenza pandemic of 1918• Peruvian outbreak of cholera in early 1990s• Drug-Resistant Tuberculosis• SARS

This is not new: what is new is the scale and speed of “microbial traffic”

But the transfer of risk is more than microbial

Source: NATO

Misuse of antibiotics in the U.S.

Globalization and the National Identity of Health Systems

Globalization makes national boundaries less relevant.

Will globalization also make national values less relevant?

Major Issues

• Are international agencies encouraging a breakdown of healthcare systems through structural adjustment programs and privatization schemes?

• Are countries being encouraged to downsize their public sector inappropriately?

• Will GATS enable foreign investors to open up healthcare facilities in other countries?

• What are the implications of open borders for health systems and the healthcare workforce?

“The potential for trade in health services has expanded rapidly over recent decades. The technological and economic forces workings towards global market integration are unlikely to leave the health sector unaffected.”

R. Adlung & A. Carzaniga. “Health services under the General Agreement on Trade in Services.” Bulletin of the World Health Organization 79, no. 4 (2001): 352-364.

How GATS categorizes “Trading” in Health Services

• Mode1: Cross-border delivery of trade goods

• Mode 2: Consumption of health services abroad

• Mode 3: Commercial presence

• Mode 4: Movement of health personnel

See Blouin, Drager, & Smith. International Trade in Health Services and the GATS. The World Bank, 2006

Mode 1: Cross-border delivery of trade goods

• Telemedicine and e-health

• Health services over the Internet including education and training of health workers

• E-commerce and e-business practices for health management and health systems

Mode 2: Consumption of health services abroad

• Consumers traveling abroad seeking care (medical tourism)

• Tourists who need medical care abroad• Retirees abroad• Temporary or migrant workers• Cross-border commuters with multinational

coverage options

Hasmat Hospital

Bangalore, India

Workforce Concerns with Medical Tourism

• Will the most talented healthcare providers gravitate to facilities that serve the wealthy from abroad?

• Will this lead to an internal brain drain?

Incentives for US Hospitals to Recruit Patients from Abroad

• Potentially easy money: the wealthiest patients pay the bill, or the host government pays the bill

• International patients represent a higher percentage of total revenue than they do total patient volume

• International patients pay at least 80 percent of full charges, often in advance, resulting in margins of 20 percent or more

• No pre-authorization or utilization management issues

Mode 3: Commercial presence

• Foreign investment in health services enterprises

• Establishment or acquisition of firms offering insurance

India’s Apollo group of hospitals, opening facilities in Sri Lanka, Nepal, Malaysia

Chindex International, US company providing medical equipment and supplies and clinical care in China

Advantages to the Host Country (1)

• Generate additional resources for investment in and upgrading health care infrastructure and technologies

• Create employment; reduce unemployment of health personnel

• Provide expensive and specialized medical services

Advantages to Host Country (2)

• Availability of private capital can reduce total burden on government resources, helping to reallocate government expenditures towards the public health sector

• Affiliations and partnerships with health service institutions can help to improve service facilities in developing countries and introduce superior management techniques and information systems.

Potential Disadvantages to Host Country

• Large initial public investments may be required to attract foreign direct investment

• If specialty corporate hospitals are established using public funds and subsidies, these funds may be diverted from the public health system

• Two-tiered health system likely:– corporate sector specializing in high technology

services, located in large cities– public sector and rural services underfunded

Disadvantages to host country (2)

• “Internal brain drain” as better-quality health professionals migrate to corporate sector– A particular problem in Thailand, with an

outflow of providers to the private sector in response to joint ventures between private hospitals and foreign companies

Mode 4: Movement of health personnel

• Self-employed or independent service providers (paid by host country)

• Employees of a foreign company who are sent to fulfill a contract with a host country client

• Health services traded through movement of health professionals to another country

The Global Health Workforce Picture

Health Workforce Scarcity

• About 37 of 47 sub-Saharan countries have less than 20 doctors per 100,000 people (OECD countries average 222 physicians per 100,000 population)

• Malawi filled only 28 percent of vacancy nursing positions in 2003

• South Africa had up to 4,000 doctor vacancies and 32,000 nurse vacancies in 2003

The relationship between the density of health workers and health outcomes

Global Health Workforce Density

The issue is one of massive global inequities.

Evidence of flows: doctors and nurses trained abroad working in OECD countries

In the United States, 27% of doctors were trained abroad.

Exit routes from the Health Workforce

• Migration within the home country from rural to urban regions or to another country

• Risk of violence, illness, or death• Change of occupation or activity (e.g.,

unemployment, part-time employment, or work outside the health sector

• Retirement (at statutory age or by early retirement)

Why do Nurses Emigrate?

• Lack of jobs in their own country

• Poor wages

• Economic instability

• Poorly funded health systems

• Burden and risk of AIDS

• Safety concerns

Why do health workers leave developing countries? Evidence from four African countries

Top five reasons: better remuneration, safer environment, living conditions, lack of facilities

Why do Physicians Emigrate?

• Salary– Monthly physician salaries range from US$50

in Sierra Leone to US$1,242 in South Africa– Wages in Canada and Australia are about

four times South African wages

• Poor work environment; heavy workload

• Lack of supervision

• Limited organizational capacity

The Mobile Workforce: Importing Health Professionals

• The US has about 2,202,000 RNs in the workforce, with a predicted shortfall in 2010 of 275,000

• About 90,000 US nurses are foreign-trained, representing 4 percent of employed nurses

• Doubling the percentage of foreign-trained nurses to 8 percent, about 100,000 nurses would be recruited from the Caribbean and elsewhere (this would still not close the shortfall)

International Medical Graduates in the US, Canada, and Australia

In the United States, 25% of physicians are IMGs; 60.2% of these IMGs are from lower-income countries.

In the UK, over 28% of physicians are IMGs; 75% of these IMGs are from lower-income countries.

Physician Emigration

Higher emigration factors indicate higher levels of physician emigration

Sub-Saharan emigration factor = 13.9

Preserving National Identity

Major Cautions about Trade in Health Services

Major Issues and Decision Points

• Role of the private sector– National budget priorities– Desire to increase available resources– Ensuring that public policy objectives are met– What government should provide and how

costs should be shared among groups in the society

• Private suppliers– Desire to increase efficiency by exposing

domestic providers to competition– The use of foreign suppliers to meet

shortages in the short, medium, or long term– Desire to have access to new technology– Desire to increase services available to

consumers

• Liberalization is not the same as deregulation– Liberalization and open borders requires

increased regulation or re-regulation– Regulation should be in place prior to opening

markets– The challenge of regulatory capacity

Globalization:Thinking beyond trade and

economic growth

The Need for Global Health Governance

Global Health Governance

• An era of global mutual vulnerability – globalization of disease

• Global health is a multilateral business; problems need to be addressed by multiple countries

• Is it useful to organize health services on a national level, or should we be thinking more in terms of global or regional governance and organization of health systems?

• Can we have global health governance co-existing with autonomous health systems?

Globalization may have positive and negative impacts on health

and health systems.

But advances in technology create opportunities for unprecedented levels

of cooperation in addressing global health problems.

Obrigado

I welcome questions and discussion.