Regulation is the 4th control knob for people who want to improve system performance. It is the use of coercive power of the state to shape the behaviour of individuals and organizations in the health sector. Economists use market as a way of allocating resources. In the competitive market, to increase one person’s utility is by decreasing another person’s own.

            The government that wants to use the market system 1st uses regulation to ensure honest and open exchange to avoid the most powerful taking all. Secondly regulation is used to ensure a more equitable outcome. Thirdly, Government use regulation to improve on the markets that do not function well on their own. Fourthly government uses regulation to advance moral norms that markets can not be relied upon.
            It can be seen that regulation is a major control knob in the health sector. It is used by those who want to improve on their system performance e.g using rules to protect consumers against poor quality drugs and incompetent doctors can improve health status and satisfaction. Regulation frequently relates with other control knobs in the health sector; for the other control knobs to be effective, they must be accompanied by appropriate regulation.

What is regulation and why regulation?
1st Regulation is the Government’s use of its excessive power to impose constraints on individuals and organizations. It includes the legal instruments (laws, decrees, orders, codes, guidelines.  Administrative rules) whether issued by the government or by non governmental bodies to which the government has delegated regulatory power. The rules and requirements imposed on purchasers of health insurance is not regulation but rather contracts.
            Regulations is used by the government in the health sector to establish the obligations and responsibilities of both buyers (patients, consumers) and sellers (doctors, nurses, pharmacists, hospitals, insurers) to ensure that agreed upon transactions are honest, transparent and reliably executed.
            Regulation is used to promote more equal access to health care and improve the distribution of health status. E.g poor people get fewer services on hospitals organized on market principles, and also few doctors are posted in depressed rural areas with depressed economic opportunities.
            Regulation arises because health sector markets often do not possess the requisite conditions for reasonable effective competition and as such consumers may not be able to judge the quality of the goods or services they consume. In view of these, they may be victimized by unqualified doctors or prone use substandard drugs.
            Regulation is used to promote some philosophical behaviour. Some individual behaviours are regulated to improve health out comes e.g quarantining recalcitrant HIV-infected individuals who engage in unsafe sex.

How does regulation influence the performance of the health system?
            Regulations that have an impact on a population health or provide financial risk-protection can directory affect the performance goal e.g ensuring the safety and purity of water, food and drugs will influence the over all health status.
-           Compulsory enrollment in social insurance plans can ensure that all eligible persons have financial risk-protection.
-           Regulations aimed at improving the quality of health services can lead to improved health outcomes and increased public satisfaction.
-           Regulation aimed at correcting market failure will improve efficiency, lower health costs, make health services affordable, increase service use and in turn improve heath status.
-           Regulating monopolistic pricing will lower the prices of health services this will lead to availability of health services, positive health outcome and patient satisfaction.

3.         What are the major determinants of regulatory success?
Effective regulation demands the combination of technical expertise, administrative capacity and political support that is not always easy for nations to provide. Experience show that successful regulatory efforts depend on three key aspects of each nation’s situation: cultural attitude, government competence and political support.

Cultural attitude
            There are two types of cultural attitude general and specific. General involves the views the citizens have towards government and their overall pattern of reaction to state actions.
            These attitude vary around the world; some countries have law-abiding citizens who see government regulations trustworthy, fair and are needy to abide by it e.g Denmark and Singapore. In contrast some other cultures look for ways to avoid rather than comply with regulations. In the same vein, some governments impose harsh penalties while some impose less on violators of government regulations.
            Regulators and regulatees react differently depending on whether they agree with the goal expressed by the regulation. When legal restrictions are more compatible with social beliefs citizens are more likely to comply; otherwise the regulated may try to evade the regulation.

Government competence
            The success a country has in carrying out regulation depends in part on the organizational capacity of its government. A country with a high quality civil service, well-functioning police and court systems, effective tax- reporting etc, the task of establishing a working regulatory agency is much easier. Many low and middle income countries lack the technical expertise, administrative capacity and information system to promulgate regulations. They have few regulations that are focused on dramatic situations where bad behaviour can directory impair public safety. Here enforcement of regulation are marred by corruption and favoritism. Private health care and private insurance markets have less regulation in such countries. High income countries are in better way to enforce workable regulations.

Political support
            All regulations, whether legislated or decreed by executive order are enacted through political process. In designing regulations, political skills are of great importance. All nations have organized interest groups no matter the type of government. These interest groups are very powerful in influencing decisions. Political support is required both for instituting a regulatory process and for ensuring its effective implementation.

Major types of regulation in the health sector
            There are two major types of regulation in the health sector-regulation of the Health care sector and Regulation of the health insurance system.

Regulation of the health care sector
Equity – Nations use regulation to ensure equitable access to health care e.g some countries make it mandatory that fresh graduates of medical and nursing schools must serve for a period of time in undeserved areas.
-           correct market failure
When there is market failure, the government uses regulation to protect consumers/patients against substandard medical services.
-           Help consumers make informed choice
            Buyers/consumers most of the time do not know the content of what they are buying. Regulation protects buyers against substandard products, and from poor quality service.
-           Drug approval
            Government use regulation to make drug manufacturers demonstrate drugs efficacy and safety before it enters the circulation. They also mandate them provide possible adverse reactions, contraindication, and interaction with other drugs.

            These are used to ensure quality health care especially in low and middle income countries. Graduates of medical, nursing and other allied health courses most show evidence of satisfactory completion of required course and good in character before they are licensed. Accreditation ensures that proper equipments and structure are put in a place.
            Licensing and accreditation assure a basic level of quality focused in inputs raging from education to capital investments. 

Regulation on manpower
            Government put regulation on manpower by having control for example on the number of candidates to be admitted into the medical school and other allied health courses.
-           Regulation of capital investment
            This is a process of evaluating new technologies and avoids obsolete equipments.
-           Monopoly
Both private and public monopolies exploit patient, private for gains and public for ways that will interest private practitioners

How can regulations be used effectively
-           Incentives
Combining regulation with incentives will make rules Moro flexible and increase voluntary compliance.
-           Less corruption
            If there less corruption, functioning bureaucracy, effective police system, regulation would be better accepted.

Reformers should bear both the rich and poor in mind. The poor uneducated and socially marginalized are usually the most exploited in the market system. To benefit the poor, reformers should at least regulate the retail price of drugs and ensure the provision of safe drugs.

In summary, regulation as a control knob in the health sector can be an effective measure to improve performance especially when combined with incentives, behaviour and suitable organizational change.
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