Monday, January 14, 2008

Corruption and the World Bank's Health Care Projects in India

On this blog, since all our bloggers are based in the US, we tend to focus on health care corruption, conflicts of interest, and mismanagement within our own country. However, we know these problems are global. Anyone doubting that in the least should read the 2006 Global Corruption Report by Transparency International, which dealt solely with health care corruption. (For a quick summary, see our post here.) The report asserted that:

Corruption - alongside poverty, inequity, civil conflict, discrimination and violence - is a major issue that has not been adequately addressed.... It leads to the skewing of health spending priorities and the leaching of health budgets, resulting in the neglect of diseases and those communities affected by them; it also means that poor people often decide against life-saving treatment, because they cannot afford the fees charged for health services that should be free. Corruption in the health care sector affects people all over the world.

Corruption might mean the difference between life and death for those in need of urgent care. It is invariably the poor in society who are affected most by corruption because they often cannot afford bribes or private health care.

But the scale of corruption is vast in both rich and poor countries. Corruption deprives people of access to health care and can lead to the wrong treatments being administered.

Corruption in the health sector is not exclusive to any kind of health system. It occurs in systems whether they are predominantly public or private, well funded or poorly funded, and technically simple or sophisticated.

No other sector has the specific mix of uncertainty, asymmetric information and large numbers of dispersed actors that characterise the health sector. As a result, susceptibility to corruption is a systemic feature of health systems, and controlling it requires policies that address the sector as a whole.

Yet, it seems that the lackadaisical approach to health care corruption, conflicts of interest, mismanagement and related issues found in the US is not unusual.

For a reminder about the scope of global health care corruption and mismanagement, see an article in today's Wall Street Journal about the results of a recent investigation by the World Bank's Department of Institutional Integrity.

On Friday, the World Bank president announced in a press release that the bank had 'joined forces' with the government of India to 'fight fraud and corruption' in that country's health sector.

Corruption is an endemic problem in bank projects, swallowing unknown but significant chunks from its $30 billion-plus annual portfolio.

Yet nothing we've seen so far can compare to what has now been uncovered about five health projects in India, involving $569 million in loans. The projects were the subject of a 'Detailed Implementation Review,' a lengthy forensic examination undertaken by Ms. Folsom's Department of Institutional Integrity, known within the bank as INT. As of this writing the bank has not publicly released the review, though it's been shared with the bank's board. But we've seen a copy and are posting its executive summary on and (click here to see it). We are also posting photographs that show the real price that corruption in bank projects exacts on the poor. Here are some of the lowlights:

• In the $54 million 'Food and Drug Capacity Building Project,' for which money is still being disbursed, the INT found 'questionable procurement practices, some of which indicate fraud and corruption, in contracts representing 87 percent of the number of pieces and 88 percent of the total value of equipment procured.' That is nearly $9 of every $10 in aid funds.

• For the $194 million 'Second National AIDS Control Project,' the INT discovered that 'some of the test kits supplied by particular companies often performed poorly by producing erroneous or invalid results, potentially resulting in the further spread of disease.'

• In the $114 million 'Malaria Control Project,' the review found 'numerous indicators of poor product quality in the bed nets supplied by the firms.' And in the $125 million 'Tuberculosis Control Project,' the INT discovered 'bidders sharing the same address and telephone numbers, unit prices showing a common formula, and indicators of intent to split contract awards among several bidders.'

• After visiting 55 hospitals connected to the bank's $82 million 'Orissa Health Systems Development Project' (Orissa is one of India's poorest states), INT investigators found 'uninitiated and uncompleted work, severely leaking roofs, crumbling ceilings, molding walls, and non-functional water, sewage, and/or electrical systems.' It also found 'neonatal equipment that lacked adequate electrical grounding, potentially exposing babies and their medical staff to electrical shocks.'

All this would be bad enough if Indian companies or officials were making off with ill-gotten gains behind the backs of World Bank staff. Instead, the INT found evidence of the bank repeatedly looking the other way. In the case of Orissa's 55 'hospitals,' the INT found that the 'construction management consultants (CMCs) who supervised the work certified that 38 of these hospitals to be complete to project specifications.' In the AIDS Control Project, 'the bank appeared to pay scant attention to the performance and quality of the goods supplied to the blood banks and testing centers, instead focusing on the number of such facilities being erected.'

It's not a pretty picture. For some even less pretty pictures, the WSJ supplied a slide show of some of the more striking physical examples of deficiencies in health facilities covered by the report.

Such vivid anecdotes suggest the US and the world obviously need more capacity to investigate health care corruption. However, in my humble opinion, physicians and other health care professionals, sworn to put the needs of patients before all other concerns, should also be in forefront of the fight against health care corruption, conflicts of interest, and mismanagement, whether on a local or a global scale. We need more help from law enforcement, but we should not sit back and let law enforcement make the only efforts.

Of course, if physicians think that corruption, conflicts of interest, and mismanagement are only local problems, they may not be inclined to see the need for such efforts.

Thus, our goal for Health Care Renewal continues to be to make health care professionals aware of the scope and severity of these problems, in the hope that the resulting outrage will be a spur to action.

ADDENDUM (18 January, 2008) - The New York Times reported that the head of the World Bank anti-corruption unit, the Department of Institutional Integrity (INT), Suzanne Rich Folsom, has resigned, and that it was likely several of her aides would also resign. An anonymous World Bank official "said that many in the bank remained 'allergic' to efforts to prosecutie cases of fraud." Exposing vested financial interests in health care always seems to be a risky business, even, or maybe especially at a global level.

1 comment:

group benefits said...

The most essential field like health care is suffering from the biggest corruption. That includes not just unaffordable medicines and operations but the fact that instead of a proper treatment somebody tries to convince you to have term life insurance. There is nothing beyond the poetic term money and profit.