Commodification of health: the challenge facing health systems

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Despite variations - mainly due to differences in how they have evolved - health systems in most countries are today confronted with similar problems closely linked with the increasing commodification of health.

By Sebastian Franco (Alter Summit)

This text is taken from a booklet downloadable on the following link:

The WHO defines a health system in a country as the sum of all the organizations, resources and people whose main objective is to improve health.

Health systems are generally composed of subsystems: a public system financed by taxes or social contributions; a private not-for-profit system (run by associations, charities, NGOs, etc.); and (in most countries) a private profit-making or commercial system. In some contexts they also include systems of traditional medicine and the informal sector (see box).

One characteristic of most health systems is the large number of actors and interest groups: political authorities and national, regional or local public institutions; users/patients; citizen taxpayers; health professionals (doctors, nurses, other health workers, chemists, technicians, and administrative staff); enterprises and insurance companies; and charities or non-profit-making organizations.

Despite variations - mainly due to differences in how they have evolved - health systems in most countries are today confronted with similar problems closely linked with the increasing commodification of health.

While health has been converted into a commodity that is transacted through the medium of the market, this has also led to an increase in human and financial resources dedicated to healthcare. Expenditure on health represents around 10% of the global GDP - more than 7,000 billion dollars. The proportion of public expenditure on health is about 60% of this amount [1].

There are several powerful actors that benefit from the commodification of health, including big pharmaceutical corporations, private facilities providing medical care (private hospitals, clinics and laboratories), and even investment funds and banks. Those who benefit have pushed forwards local, national and international policies and legislations that promote the commoditization of health.

The strategy employed to push for further commodification of health works at two levels:

1. Through the commodification of various dimensions of health and social needs, influencing both health and healthcare.

2. Through the capture of public or socialized resources by for-profit care providers, commercial insurance companies and private investors.

Commodification and privatization

Today, sustained propaganda by the votaries of neoliberalism seeks to promote a vision of the human body and of health which is rooted in the principle that all human activities can be converted into market-based contractual relations of a commercial nature. The process of commodification extends beyond healthcare to include other social aspects which determine health [2]. By such a strategy, working at the cultural and ideological planes, institutional processes and healthcare practices are being transformed.

Consequently, new practices and concepts that help convert health and healthcare into a commodity, have taken shape. These include, for example, ‘standardization’ of medical interventions (through hospital ‘reform’ policies, ‘pay-as-you-go’ principle, etc.); promotion of the notion that ill health and disease are merely individual conditions and influenced only by medical factors; and management techniques (human resources management, training, creation of indicators). These are transforming care into a commercial relationship between a supplier (health professional, care institution) and a buyer (patient or ‘client’) [3].

Private capital, as a result, is continuously increasing its ‘market share’ in activities related to provision of healthcare. This is happening, for example, through the promotion of private insurance (basic cover or complementary insurances), through the supply of care by commercial enterprises (by outsourcing activities in hospitals such as cleaning, catering or imaging services), through the encouragement of private investments in healthcare services (public-private partnerships), and by aggressively creating markets for different medical products. Above all, in order to establish complete control over the ‘market’ for health, fundamental changes in health systems are being instituted through legislative changes, which are designed to minimize the role of the State and of not-for-profit healthcare providers [4].

Further, the globalization of the world’s economy and global governance mechanisms (covenants, international laws, trade agreements) are having a profound impact on health even at local levels. Issues related to health and healthcare are captive to global governance structures and mechanisms which are dominated by powerful commercial actors (transnational companies, banks, investment funds) that are provided political support at the highest levels.

‘Shock therapy’

There is evidence that private capital stands to gain when social and health systems are in crisis and there is increased economic hardship.

In such situations, the State and public institutions find it difficult to maintain necessary financial support for comprehensive healthcare services. Neither are they able to increase support necessary for addressing new pathologies, needs of an ageing population, life style related conditions, or for the use of new medical and pharmaceutical technologies.

As a result commercial, for-profit entities move in to areas that are now not supported by the State. Private enterprises thus ‘compete’ in providing services with public providers in a ‘market’ for healthcare services. In the market, private providers have several advantages as they are able to curtail costs borne by providers by reducing wages and by resorting to unscrupulous practices such as compromising on quality of care. They also push unnecessary interventions and medical products, and thus actually increase the cost of care to be borne by patients. Patients often lack the knowledge and the information to be able to make a choice between private and public interventions and are lured by the (often unethical) marketing tactics employed by private institutions. Over time private providers garner larger and larger proportion of the ‘market share’ and in many situations end up by becoming the dominant provider of services.

It needs to be emphasized that the under-financing of healthcare services by the State, which opens up opportunities for private enterprises, is often a deliberate ploy employed by States under the influence of neoliberal policies. Neoliberal polices encourage decrease in social contributions and taxes paid by corporations and the rich, and are lenient towards fiscal fraud and tax evasion by the richest strata. Corruption in public services and poor management practices also undermine their efficiency. The sum total of these influences is a reduction in State budget for public services. This opens up opportunities for institutionalization of a system that converts health into a commodity, encourages commercialization of healthcare and benefits private health management organizations, insurance companies and pharmaceutical companies [5].

Phases of Privatization [6]

We identify three phases in the penetration of private capital in health systems:

• In developing countries since the early 1980s after the sovereign debt crisis. International institutions (International Monetary Fund, World Bank) oversee national economic and budgetary policies and through the structural adjustment programs (SAPs), promote the entry of commercial operators into the health sector.

The health systems resulting from decolonization processes are characterized by limited access to care, the strong presence of an informal sector and a public system generally centred on hospitals. They have a structural presence of international NGOs compensating for the shortcomings of a largely underfunded system. Colonial care systems imported Western methods, rejecting the benefits of local practices and know-how;

• In the former communist countries in the early 1990s following the fall of the Berlin Wall. The health systems of the communist countries were characterized by a high degree of centralization of health activities, public funding, entirely State-run health services, and the predominance of hospitals over primary care. In the 1990s, major reforms were introduced allowing private healthcare structures and a decentralization of the entire system.

• In ’Western’ countries following the economic and financial crisis of 2008 and the ensuing ‘austerity’ policies. These ’Western’ systems are usually operated by public or non-profit operators. However, since the 1980s they have gradually opened up to commercial operators. Since the financial and economic crisis of 2007/2008, this trend has accelerated rapidly.

These three phases highlight a strategy for the penetration of private capital in crises affecting individual States. Economic difficulties are used to institutionalize a market vision of health and its practices.

The limits to privatization

There are, for obvious reasons, limits to the ability the commercial sector to provide comprehensive and accessible care to all citizens. People needing care the most – old people, young children, the mentally or chronically ill, often poor – cannot generally afford the ‘market price’.

In order to be profitable, the commercial sector needs public or socialized financing in order to broaden its scope of operations beyond a minority of wealthy individuals who can afford the full cost of private care. Thus, the commercial sector, while competing for ‘market share’ with public services, also accesses support through public or socialized financing.

Moreover, the commercial sector is loathe to provide comprehensive services to all patients, given that avenues for profit maximization are variable because of the inability of most people to pay full costs of private care and the fact that many medical procedures are likely to be less profitable. For example it is far more profitable to run a private clinic rather than an Accidents and Emergency Ward.

It is therefore in the interest of the commercial sector to promote a ‘segmentation’ of the health system. In such an approach ‘centres of excellence’ are set apart and privatized as they are likely to provide opportunities for higher profits.

Experiences from the ground

The multiplicity of operators in the health system, brought about by privatization, fragments care systems, making it even more difficult to manage and plan in a coherent and integrated manner. New costs are generated: running costs, advertising and promotion costs, profits to distributors and proprietors, etc.

Commercial dynamics modify the distribution of resources in favour of the needs for profit-maximization and to the detriment of the true social needs of health (thus, for example, the pharmaceutical industry would rather not invest in finding solutions for malaria which affects mainly poor and debt ridden populations). This pattern fosters the development of skewed priorities, and the poor, the aged, the most vulnerable, migrants, etc. are denied care as it is more expensive (and not profitable) to have systems in place that can reach out to them.

Commodification and its contractual view of care challenge the aspirations and principles of health professionals for whom caring with dignity (and efficiently) for a human being is a prime objective. Besides, a Taylorist approach (designed to improve economic efficiency, in other words to maximize profits) to care compromises the ability of staff in the health sector to apply rational and scientific principles of care, and to show solidarity and initiative when confronted with difficult situations.

In the health sector, working conditions are deteriorating. In its frantic attempts to abolish ‘superfluous’ costs, the sector is putting pressure on wages, working hours, social benefits, etc. Poor and insecure working conditions have an obvious negative impact on the quality of care.

Most patients are unable to afford comprehensive healthcare services – they are available to only those who can pay. This leads to the creation of a multi-tiered health system, which caters selectively to patients based on their capacity to pay cost of treatment [7].

Finally, commodification of healthcare is changing the relationship between users (patients) and health professionals. A shift towards a dehumanized relationship is leading to a feeling of unease at work for health professionals (with increasing incidence of depression, suicides, etc.). The changed relationship also alienates the user(patient) from his or her health, since it is now a product, mediated through a commercial relationship.

Towards health & democracy

Public health needs to be based on the principles of solidarity and separated from relations based on the market. Citizens must have the right to collectively define the objectives, priorities and needs of their health system. Further, health systems and all involved actors should be bound by clear and democratically defined objectives which foster the common good [8]. The anticipation of collective health needs in the light of the evolution in life-style and pathologies, the state of the planet, society and its populations, must also be at the core of health policies.

Our analysis and local experiences show that commercial interests run contrary to public health interests and more generally to the right to health. This is true at a practical level as regards efficient management of a health system in relation to the fair allocation of financial resources, and also at a philosophical, cultural and political level given how dehumanizing the commercial approach to health is.

It is thus essential and urgent to reject the commercial and mercantile logic being pursued in most regions as regards the health sector. It is no mere coincidence that several struggles across the world are making this demand.

LIENS (différentes langues)
Semi victory at Rouvray hostpital:
Lyon: strike at A&E on February 15:
Nancy: strike at CHU
Toulouse, professionals made a video to show their struggle
(more informations:,,

Movements and strikes demanding more staff:
Campaign for more jobs in hospitals:


[1These figures may differ significantly from one country to another. They enable us, however, to get an idea of the size of the health sector and consequently a measure of its strategic relevance. It should be noted that there are large inequalities in health between countries and within countries.

[2While quality and accessibility to a care system are essential, the latter contributes only a quarter to health. Social aspects (income, education, food, housing) and environmental factors determine the other three quarters.

[3These trends are more marked in hospitals given the size of these institutions, the diversity of health professions, the specialism of practices and the sizeable financing needed to access expensive medical and pharmaceutical technologies.

[4For more details on process and forms of privatisation, see: We also invite you to complete the privatisations database at

[5For a discussion on the strategy of ‘shock’, refer to Naomi Klein’s The Shock Doctrine: The Rise of Disaster Capitalism, 2007.

[7It has been noted that nowadays, even in the most ‘advanced’ health systems a considerable number of people postpone or abandon treatment. At least 400 millions people in the world do not have access to one or several essential health services. Each year, 100 million people are thrown into poverty and 150 million people are in financial difficulties due to personal expenses incurred while accessing health care.

[8On the basis of certain principles such as: 1) financial, geographic or cultural accessibility to healthcare for all and particularly for the poorest and marginalised populations 2) health prevention and promotional policies together with an efficient front line system (community health, see Alma Ata Declaration by the World Health Organisation) and 3) to make available to all best-adapted and resourced medical techniques (with a diversity of medical practices) thus ensuring the fastest, most efficient and dignified treatment access.