Is quality of care better in the private sector? Evidence from an audit study in South Africa

Because of the information asymmetries between patients and providers, it is difficult for patients to determine the quality of care they receive. Therefore, market-based delivery of health care is often unlikely to lead to socially inefficient outcomes. This is especially the case when optimal care requires denying patients of services that they value (such as antibiotics), as market-based health care may over-respond to demand. To compare the quality of care provided in the private and public sectors, we conduct an audit study in a representative sample of private and public providers in Johannesburg. In South Africa, the poorer majority of the population relies on free public primary care delivered in clinics staffed mostly by nurses. Meanwhile, those who can afford it or have private health insurance can consult General Practitioners (GPs).

We use standardised (fake) patients (SPs), that is, healthy subjects trained to accurately and consistently portray a particular clinical case (following a detailed rehearsed script), and to subsequently record pre-specified aspects of the consultation. In this study, SPs portray a patient suffering from acute bronchitis, a common viral infection whose management should only consist of symptomatic relief treatment, to the exclusion of antibiotics. From the 227 interactions between patients and providers, we capture very rich information about the consultations, including duration of the consultation, whether the provider asked essential questions and undertook essential examinations necessarily to arrive to a correct diagnosis, and what treatment they recommended. Based on the drugs dispensed or prescribed, we also calculate the cost of the treatment given and compare it to the most cost-effective option recommended by experts.

We find that private providers exerted significantly more effort than public providers, conducting longer (10 minutes vs. 7.8 minutes) and more thorough consultations, completing more items on a checklist of essential history and examination items (45% vs. 34%). They were also less likely to prescribe unnecessary antibiotics (62% vs. 78% of public providers). This is consistent with higher levels of qualification and better clinical knowledge of private providers. However, the average cost of the drugs prescribed was 4.5 times more expensive in the private sector compared to the public sector. The results hold even after controlling for patient workload and waiting times, and after including market fixed effects.

Although the performance of private providers is higher, the results generally show low levels of quality of care and worrying levels of unnecessary prescribing of antibiotics in both sectors. Even though the study design does not allow us to fully isolate the effect of practising in the private sector holding provider characteristics constant, it suggests that private delivery of healthcare leads to more over-treatment and socially inefficient outcomes.