Health financing in Vietnam: Current reforms, achievements, challenges

1
Health financing in Vietnam Current reforms,
achievements, challenges

• Sarah Bales
• Health Policy Unit
• Vietnamese Ministry of Health

2
Contents

• Current health financing situation
• Planned and on-going reforms
• Challenges to these reforms

3
National economic/political context

• Recent high inflation (20 in 2008) -gt reluctance
  to increase user fees for any public services
• Reduced GDP growth rate (6.23 in 2008, down from
  8.48 2007) due to global downturn, low state
  budget revenues and therefore slow increase in
  funds for health, requirement to reduce operating
  budget 10
• Political concern about disadvantaged groups
  having access to health services.

4
Recent government reforms

• Financial and managerial autonomy of state
  fee-collecting units -gt considering
  corporatizing (essentially privatizing) state
  hospitals
• Social mobilization (i.e. rely less on state
  budget and more on funds mobilized from society)
  -gt De facto privatizing of parts of state
  hospital operations, especially diagnostic
  services.
• Decentralization of public financing -gt less
  control over whether state health budget
  allocation is actually spent on health, and how
  it is spent.

5
Ministry of Health political context

• Ministry of Health has difficulty to push forward
  its national agendas and reforms
• Ministry of Health is dependent on other
  Ministries for approvals
• Pushed towards reforms perceived as inappropriate
  in the health sector (corporatization of
  hospitals).
• Crisis response rather than strategic planning.

6
Structure of health system

7
Health financing situation

8
Health financing trends in Vietnam
2006, US45 per capita on health from all sources
9
Sources of funds for health
10
Current partial user fee policy

• Issued in 1994
• Patients and health insurance fund officially pay
  fee-for-service for the following items
• Bed fees (set in 1994) and not increased.
• Consultation fee (only 2000 VND about 3.8 baht
  per consultation)
• Drugs and materials at market cost (no profit
  margin for the hospital)
• Diagnostic services according to government set
  fee schedule set in 1994, with newer high-tech
  services added in 2006

11
Recent reforms to user fee policy

• Same fee schedule still in effect for basic
  services in1994 list.
• In 2006, fee schedule set up for services
  introduced since 1994, primarily high tech
  services with high fees.
• Surgeries and procedure fees introduced in 2006
  with substantial potential surplus

12
Problems with user fee policy

• User fees not set based on careful costing
  exercise
• Partial fees do not cover labor, overhead,
  depreciation costs
• Fees in some cases do not not even cover material
  costs
• Distortions due to higher potential revenue
  surplus from high-tech services leads to overuse
  (and overinvestment), which are leading to
  unaffordability of the health system to the
  general population

13
Health insurance

• Population coverage rate (42 of the population)
• Expenditure coverage rate (9 of total health
  expenditures, 16 of hospital revenues)
• Fee-for-service payment mechanism
• 64.5 of total contributions to health insurance
  from state budget in the form of assistance to
  the poor, retirees, employer contributions for
  state workers. The rest come from non-state
  entreprises and voluntary insurance contributions.

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Problems with health insurance

• Many people with no financial protection as they
  are not yet covered by health insurance
• Low coverage and compliance among wage workers
• Adverse selection among non-wage sector
• Near poor required to pay half of contribution,
  many unwilling to do so
• Health insurance fund balance at risk-
• Expenditures high and growing faster than
  revenues
• Inappropriate fee-for-service payment mechanism,
  little control over purchasing
• Adverse selection in voluntary scheme
• High co-payments (formal and informal) by insured
  people making insurance less attractive
• Health insurance not purchaser, only payer

15
New Health Insurance Law

• Measure to achieve universal coverage
• Unfunded mandates for coverage of various
  uninsured groups
• Measure to reduce escalating expenditures
• Allows use of alternative payment mechanisms
  other than fee-for service
• Problems Contribution rate increased from 3 to
  6 of salary to help balance health insurance
  fund likely to reduce compliance and coverage
• Little progress on developing more efficient
  case-based or capitation payment mechanisms in
  the Vietnamese context.
• Little power to health insurance agency to
  purchase services, ensure quality

16
Health Care for the Poor

• Initiated starting in 2003
• State budget purchase free health insurance cards
  for people officially identified as poor
• Initial low premium levels set to ensure
  affordability to state budget
• Increased utilization of health services, mixed
  results on expenditures as people went to higher
  level facilities

17
Health care for the poor reforms

• Institutionalized into Health Insurance Law 2008
• Premiums increased gradually over time
• Still no official monitoring mechanism to ensure
  rights of the poor, continue to make high
  co-payments
• New concern about the near poor, but they are
  required to contribute part of HI contribution
• Many still fall through the cracks

18
Autonomous health facility policy

• Initiated in 2002 (Decree 10), revised in 2006
  (Decree 43)
• Encourages revenue generation and cost savings to
  generate a revenue surplus
• Surplus can be used for
• Investments in equipment/buildings
• Additional income to staff
• Various welfare, income stabilization funds.
• Mobilization of private capital for investments,
  including capital of hospital staff, or joint
  ventures with private investors is strongly
  encouraged.

19
Problems with autonomous hospitals

• Most facility managers have little management
  training and weak management skills.
• Policy more strongly encourages revenue
  generation than cost savings because of fee-for
  service mechanism, greater attention to providing
  high-tech services.
• Policy discourages essential hospital services
  that cost money or bring in few revenues such as
  infection control, palliative care, preventive
  health activities, training, mentoring of lower
  level facilities
• Conflict of interest of private investments in
  equipment by facility staff exacerbates the
  incentives for overuse of diagnostic services.
  Some hospitals no longer have much state invested
  equipment and are thus semi-public.
• Little autonomy in recruitment of staff, or
  setting of remuneration, and little surplus to
  boost staff income

20
Staff remuneration

• Official salary, allowances (govt. pay scale)
• 24 hour shift (19 to 86 baht depending on level
  of facility, with multiples up to 1.8 times for
  holidays)
• Additional income (from surplus earned by
  facility)
• Profits from investments in equipment at facility
• Private practice
• Pharmacy representatives
• Envelopes

21
Sources to pay remuneration
22
Perverse incentives due to remuneration system

• Over provide drugs, diagnostic and treatment
  services
• Provide poor quality service, delay care unless
  envelopes are paid in advance
• Reserve more time for private practice than
  public practice
• Refer public patients to own more expensive
  private practice, private hospital for care

23
Health Management Information System

• Relies largely on self-reporting by facilities
  and national health programs
• Hospital inventory
• Health Statistics Yearbook
• National Health Accounts
• Medisoft statistical reporting software
• Occasional small scale surveys of households or
  providers

24
HMIS

• Almost no statistical reporting from private
  sector
• Data are reported by facilities to show that
  quotas, norms, goals have been met, not to
  identify problems
• Data entered by facilities, but not accessible to
  facilities through Medisoft, little verification
  of data to ensure accuracy, consistency
• Computerized billing systems not in place in most
  facilities
• Health insurance information systems also lacking
  case by case data in electronic form, and
  information is incomplete as many co-payments are
  not entered into records.

25
Quality assurance efforts

• Upgrading equipment
• Self-reporting on 140 indicators each year
• Standards for becoming special, standard I, II,
  III hospitals
• Occasional training/retraining
• Occasional medical audits
• Investigation after death occurs with
  penalties/compensation to family
• Slow development and updating of clinical
  guidelines
• Inspections not regular, focus on administrative
  aspects
• Considering ISO standards

26
Structure of official hospital spending
27
Source of funds
28
Structure of official hospital financing sources
29
Hospital payment mechanisms
30
Government budget allocation

• Government budget pays per bed based on available
  funds. Lower amount for lower level facilities.
• For example in Hanoi, district hospitals get
  about US5.4 per day (186 baht) per bed. Standard
  I provincial hospital gets US6.9 per day per bed
  (239 baht).
• This is insufficient to cover labor, maintenance,
  infection control, administrative overhead,
  utilities, and depreciation.

31
Health insurance and formal out-of-pocket patient
payments

• Fee-for-service
• Drugs
• Materials (excluding those included in surgery,
  procedures, diagnostic services)
• Diagnostic services
• Surgeries and procedures
• Bed days

32
Other out-of-pocket payments

• Elective medical services
• Elective hotel services
• Envelopes
• Special drugs or materials not available in
  hospital pharmacy
• Charge patients the balance between what health
  insurance pays and the hospitals estimate of cost
  for some services

33
Officially proposed reforms

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Financial reform areas

• Autonomous hospitals
• State budget allocation mechanism
• Salary reforms
• User fee reforms

35
Autonomy

• Autonomy in operations, within the framework of
• government plans,
• professional regulations,
• in line with the functions assigned to the
  facility
• increased state management of service quality

36
State management of autonomous facilities

• MOH will develop
• norms
• investment standards
• price schedules
• Strengthen supervision and checking and penalties
  for violation of regulations
• Attempt to reduce abuse in the form of private
  over investments in public hospitals and in
  overprovision of services

37
Public health spending

• Switch from direct subsidies to facilities per
  bed towards subsidies for patients through paying
  health insurance contributions
• State focus investments on preventive medicine,
  district hospitals/commune health stations,
  facilities in disadvantaged areas or in neglected
  specializations like TB, pediatrics,...

38
Public health spending

• Reserve recurrent spending for preventive
  medicine, salary supplements for staff in
  disadvantaged areas or neglected specialties.
• State budget spending on curative care to cover
  items not allowed to be covered in user fees
  (part of labor costs, training, research,
  participate in epidemic control, exemptions for
  needy cases).
• Develop performance related budget allocations
  with a focus on quality
• Improve quality of care and efficiency through
  use of health insurance mechanism

39
User fees

• Gradually recover full cost of health care
  services (drugs, materials, labs, imaging, labor,
  operating costs, depreciation of socially
  mobilized equipment) excluding actual state
  budget allocations to facilities and depreciation
  on state-invested equipment.
• State budget allocations for labor costs higher
  in district level and lower at provincial and
  central levels.
• State will purchase health insurance for the
  disadvantaged to ensure they can still afford
  care at the higher user fees.

40
Proposed health worker remuneration reforms

• State budget will ensure full official salaries
  of preventive medicine, commune/village health
  workers, population/family planning workers.
• Full labor costs recovered in user fees or state
  budget subsidies.
• Facilities continue to have opportunities to gain
  surplus to redistribute to workers

41
Proposed health worker remuneration reforms

• Increase health worker salary supplement for
  health workers in direct contact with patients
• Reform the 24/24 hour shift pay, allowing
  facilities to determine number of staff and
  amount to be paid, but pay should be proportional
  to minimum salary.
• Increase additional income that can be paid to
  health workers to meet market salary rates, but
  within budget constraint of the facility

42
Proposed payment reforms

• Considering allowing health insurance a greater
  purchasing role with quality control aspects
• Gradually move towards case-based package
  payments or capitation
• Eventually develop a DRG system

43
Options currently being studied in Vietnam

• Use of care pathways as a standard for quality of
  care and basis for calculating package prices
• Pilot of case-based package payments for 4
  conditions at 2 hospitals.

44
Issues brought up as barriers to DRG system

• Currently there is no global budget to be
  allocated to hospitals by a single purchaser,
  state budget and health insurance are relatively
  fixed, but out-of-pocket spending is considered
  as ultimately expandable.

45
Issues brought up as barriers to DRG system

• Unclear how to cost package of services to ensure
  cost recovery by hospital
• Different equipment, qualifications of staff to
  provide the same package of care, should the
  price be different? E.g. appendectomy at central
  versus district hospital.
• Regulations on user fees that dont allow
  inclusion of labor costs into user fees,
  difficulties in raising user fees.

46
Issues brought up as barriers to DRG system

• How should user-fee paying patients pay under a
  DRG system?
• Who will ensure user-fee paying patients quality
  of care under a DRG system?
• How to reduce risk of abuse by upcoding or
  admitting patients unnecessarily? (Other
  countries use global budget or quotas on number
  of cases combined with DRG)

47
Issues brought up as barriers to DRG system

• Currently inaccurate coding of diagnoses in
  Vietnamese hospitals due to lack of equipment for
  proper lab tests
• Concern about potential for reduced quality with
  package payments
• General fear of responsibility for any change
• Requirement for approvals and consensus from
  everybody before taking action, even pilot
  testing.
• Weak information systems to monitor outcomes,
  quality of care, resource utilization...

48
Potential areas of Thai-Vietnam collaboration to
be discussed

• Step-by-step introduction of DRG system including
  political actions
• Quality control system for hospital services
  under DRG and capitation without universal
  coverage sharing experience with care pathways
  in Vietnam
• Methods for costing of hospital services
• Information system development
• Remuneration system for health workers
• Affordable health care for all (universal
  coverage)
• Developing greater integration between primary
  care and hospitals?