Social Insight

According to this U4 Brief on corruption in the health industry, hospitals spend a great deal of money on supplies and have been the object of a wide range of scams, including kickbacks and delivery of expired and substandard products, all of which can make the difference between an equipped facility and one that cannot offer life-saving treatments. Argentina and Bolivia have both attempted to curb corruption in procurement of hospital supplies. With varying degrees of success, their experiences tell a lesson: unless there are consequences attached to identified malpractice, monitoring, and publicising information will not guarantee sustained gains.

The Brief describes an experiment by the City’s Health Secretariat in Buenos Aires, Argentina, which collected information about prices paid for a wide range of non-pharmaceutical medical supplies commonly purchased by hospitals and announced that it would report this information back to the city’s purchasing managers. The data revealed very wide dispersion (10 times higher in some cases) in prices paid for very simple and homogeneous products. Data collected by the Secretariat showed that the dispersion of prices, as well as the average price, fell quite dramatically in the first months of the experiment (and, in fact, had fallen after the initial announcement of data collection in anticipation of the procurement records being public information). One explanation for the decline in prices could be that corrupt procurement officers feared being discovered; but it could also reflect the response of honest procurement officers who may have been ill-informed about the prices available in the market. However, the data show that the procurement behaviours were transitory and declined after procurement officers became accustomed to the process of reporting and noted the absence of consequences for "poor performance".

In the case of hospitals in Bolivia, similar price disparities were found in medicine procurement. However, the data showed that a public sector reform in the mid 1990's had impact on price differences. "In that period, Bolivia implemented a national law that devolved numerous responsibilities to municipalities and to representative bodies that included local citizens. Most health care facilities were handed over to municipalities and supervised by newly created 'Local Health Directorates'. These directorates included local government officials as well as citizen representatives....[Researchers] found, for example, that hospitals that were supervised by active directorates paid 40% less on average for 5% dextrose solution [than those supervised by directorates which rarely met or acted.]....In this particular case, local supervision appeared to be more effective at controlling corruption than the standard 'vertical' controls embedded in the management and administrative channels of the public health system."

The Brief concludes that:
* "corruption was common wherever impunity was the rule. This applied to graft in procurement as well as to absenteeism, theft, and charging illegal fees.”
* "shining light in dark corners can modify behaviors initially, but unless publicizing information has some consequences - whether through convictions, loss of employment, disciplinary actions or moral disapprobation - the gains from publicizing corruption may be short-lived."
* "active local oversight can modify behaviors."
* "collecting data and comparing facilities can provide hard facts that not only assist in detecting corruption but also in understanding how it responds to different strategies."

U4 Brief May 2008 - No. 7.