Co-operatives and the Health Sector (Note 6)

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   This document has been made available in electronic format
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                                  Background Information Note 6

         THE INTERNATIONAL CO-OPERATIVE MOVEMENT AND 
            THE WORLD SUMMIT FOR SOCIAL DEVELOPMENT  


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             CO-OPERATIVES IN THE HEALTH SECTOR 
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    RECOGNITION BY THE UNITED NATIONS OF THE RELEVANCE OF
    CO-OPERATIVE ENTERPRISES AND THE CO-OPERATIVE MOVEMENT

In his latest report to the General Assembly of the United
Nations on co-operatives (document A/49/213 of 1 July 1994), the
Secretary-General concluded that "co-operative enterprises
provide the organizational means whereby a significant proportion
of humanity is able to take into its own hands the tasks of
creating productive employment, overcoming poverty and achieving 
social integration". The General Assembly (resolution 49/155 of
23 December 1994) also recognized the important contribution and
potential of all forms of co-operatives to the preparations and
follow-up of the World Summit, which was reflected in the Summit
Declaration which commits itself to utilize and develop fully the
potential and contribution of co-operatives for the  attainment
of social development goals.  

     CO-OPERATIVES AND THE ACHIEVEMENT OF HEALTH GOALS  

In an increasing number of countries women and men are seeking
to improve their health by establishing health co-operatives.
They do so where there is inadequate provision by public health
services and where non-co-operatively  organized private practice
is not available or too costly.   

User-or client-owned health co-operatives are set up by
individuals in  the same community to help them meet their own
health care needs. Member-users determine goals and practices,
thereby enabling ordinary citizens to empower themselves with
respect to health care. Members and owners each contribute 
shares of capital and subsequently contribute to operating costs,
usually by prepaid premiums, and appoint managers to negotiate
contracts with health insurance and health care providers. Often
these co-operatives purchase and operate hospitals and other
facilities, and hire professional and other staff. Services range
from simple preventive care and basic insurance to advanced 
curative and rehabilitative interventions.   

In the United States a number of such user-controlled health
co-operatives operate as "health maintenance organizations". The
largest is the Group Health Co-operative of Puget Sound
(Seattle), bringing together 478,000 persons in 1993, of whom 1
in 6 are full members and participated the control process.  The
co-operative provides comprehensive medical care including
preventive services for a fixed prepaid fee with minimal
payments. It is acknowledged to be an innovator in developing new
services for its members and independent reviews have shown the
quality of services to be among the best in the country. Special
health care needs are also provided for by user-owned health 
co-operatives. For example, the United Seniors Health Co-
operative (Washington, DC, USA) provides the 9,000 elderly
persons who are its owner-members means to gain access to high
quality, affordable health and long-term care services.   

Institutions and organizations, such as trade unions, and
co-operative movements, may also set up user-owned health
co-operatives. In Singapore, for  example, the National Trade
Union Congress established a health co-operative  in 1992 on
behalf of members of 52 trade unions.   

Many agricultural supply and marketing, community development,
housing and  insurance co-operatives have also expanded their
activities to the provision of health services to members. The
most comprehensive user-owned health co-operative systems are
operating in Japan: one established by the Japanese Consumers'
Co-operative Union (organized by its Medical Co-operative 
Committee) and a second set up by the agricultural co-operatives
system (organized through the National Welfare Federation of
Agricultural Co-operatives). Each developed at a time and in
areas where public services were inadequate and private practices
beyond the financial reach of most members. While providing
curative and rehabilitative services, both emphasize preventive
services including comprehensive and life-long approaches to 
healthy living, of increasingly relevance to the rapidly aging
Japanese  population. Members receive special training and act
in their communities as para-professionals engaged in the
diffusion of knowledge relevant to healthy living. Health
co-operatives also have taken the lead in resolving problems 
arising from conflict between medical professionals and patients,
and have supported since 1987 the right of patients to
participate in decision-making concerning treatment. In March
1992, the consumer co-operative system had 1.5 million members,
employed 1,704 doctors and 18,192 other staff and operated 81 
hospitals and 207 clinics with 12,916 beds. The agricultural
co-operative system had 3,570 doctors, 17,594 nurses, 4,922
medical technicians, 115 hospitals with 37,841 beds, 42 clinics.

In Sweden, insurance co-operative enterprises expanded into the
health care sector in 1992, buying a medium-sized hospital and
creating ten new rehabilitation centres. In the early 1990s, the
Medikoop Model, a model for consumer-owned co-operative medical
care centres, was developed on behalf of the housing and
insurance co-operatives. It provided co-operative partners for 
local government authorities, increasingly interested in
contracting out responsibility for services and facilities.  

In some developing countries user-owned health co-operatives
(often  established in fact by small groups of concerned doctors)
have developed in close association with other types of
co-operatives: for example, with the thrift and savings
co-operative movement in Sri Lanka, and with the co-operative
rural bank system in Mindanao, Philippines. In addition, there
are many examples of co-operatives including health care in the
benefits provided to their members, either in the co-operatives'
own facilities, or by arrangement with private doctors and
hospitals. For example sugar producers' supply, processing and
marketing co-operatives in Maharashtra State, India, set up rural
hospitals and dispensaries throughout the region of its 
operation.   

Governments too, have developed partnerships with user-owned
health co-operatives. In the United States in 1994, there were
900 democratically governed and community-owned Community and
Migrant Health Centres established mostly in rural areas and
inner cities serving low-income communities. Funding for 500 of
these was provided by the United States Public Health Services.
In Italy, many local governments support community-based health
and social service co-operatives. In Canada, a study undertaken
by federal and provincial  governments and the national
co-operative movement showed that co-operative community health
centres were a cost-effective alternative to private practice 
because they operated at lower costs per patient and offered more
preventive and health promotion services and were more accessible
to disadvantaged persons.  

Provider-owned health co-operatives have also been formed -
usually by  doctors - in both developed and developing countries.
They exist in Benin, Brazil, India, Malaysia and the United
Kingdom. The advantages of a co-operative organization of this
type are bulk purchasing, shared administrative and technical
services, and the bringing together within a single network a 
variety of specialists which strengthen the range of services
jointly offered within a community. The co-operatives can be
formed by a small group of doctors practising within the same
community or by co-operatives operating jointly-owned facilities
such as hospitals and can extend throughout a country.   

One of the largest provider-owned co-operatives was founded in
Brazil in 1967: the National Confederation of Medical
Co-operatives (Unimed do Brasil). By 1994, its member-owners
comprised 60,000 independently practising doctors: one third of
the national total. Members practised in 70 per cent of local 
authority areas. Individual users, as well as 30,000 enterprises
providing  health insurance to their employees, had contracts and
could obtain agreed services from any member doctor anywhere in
Brazil. The Unimed system has established subsidiary enterprises
providing life and business insurance, a complementary system of
savings and loans co-operatives, a computerized nation-wide
administrative and medical data information system, a system-wide
satellite telecommunication system, and a research and
development centre.  

User-owned co-operatives can also fuse with provider-owned
co-operatives when  the group of professionals has been
particularly interested both in co-operative organization and in
the need to meet gaps in health service coverage left by public
and private for-profit sectors. In Spain, the Integral Health
Care Co-operative System developed in Catalonia by the Espriu
Foundation is of this type: in 1992 it had over one million
user-members. Similar co-operatives, operating at the community
level also exist in Italy. In Malaysia, doctors and Government
are exploring means to set up a comprehensive national 
co-operative health care system, comprising complementary systems
of provider-owned and user-owned co-operatives.   

Health sector input supply, purchasing, common service provision 
and marketing co-operatives benefit from group buying, discounts
on inputs and reduced operating costs. In the US, the largest
health sector purchasing co-operative is the nation-wide system
of the Voluntary Hospitals of America.   

  TRENDS IN THE CO-OPERATIVE ORGANIZATION OF THE HEALTH SECTOR

Health co-operatives are nationally significant in Japan and in
Brazil; they are regionally important in Spain (particularly in
Catalonia) and in the United States of America (particularly in
the North-West, Mid-West and North-East regions); and they exist
in some areas in Benin, Canada, Chile, Colombia, El Salvador,
India, Malaysia, Mexico, Panama, Philippines, Sri Lanka, Sweden 
and the United Kingdom. It is estimated that there are 250 health
co-operatives in Asia. However, in none of these countries has
there yet been  established a national level representative
organization of health co-operatives.  

At the global and regional level, a series of meetings have taken
place. Given member demand, the International Co-operative
Alliance is considering setting up a specialized body on
co-operatives in the health sector.  


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This Note has been prepared for the information of participants
at the World  Summit jointly by the International Co-operative
Alliance and the United  Nations Department for Policy Co-
ordination and Sustainable Development. For further information
contact the ICA at 15, Route des Morillons, 1218 Grand Saconnex,
Geneva, Switzerland. Tel: +41 22 929 8888, Fax: 798 4122,
E-mail: icageneva@gn.apc.org. 
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                                             March, 1995