The Dying Breed - Healthcare in Eastern Europe
Also published by United Press International (UPI)
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Transition has trimmed Russian life expectancy by well over a decade. People lead brutish and nasty lives only to expire in their prime, often inebriated. In the republics of former Yugoslavia, respiratory and digestive tract diseases run amok. Stress and pollution conspire to reap a grim harvest throughout the wastelands of eastern Europe. The rate of Tuberculosis in Romania exceeds that of sub-Saharan Africa.
As income deteriorated, plunging people into abject poverty, they found it increasingly difficult to maintain a healthy lifestyle. Crumbling healthcare systems, ridden by corruption and cronyism, ceased to provide even the appearance of rudimentary health services. The number of women who die at - ever rarer - childbirth skyrocketed.
Healthcare under communism was a public good, equitably provided by benevolent governments. At least in theory. Reality was drearier and drabber. Doctors often extorted bribes from hapless patients in return for accelerated or better medical treatment.
Country folk were forced to travel hundreds of miles to the nearest city to receive the most basic care. Medical degrees were - and still are - up for sale to the highest, or most well-connected, bidder. Management was venal and amateurish, as it has remained to this very day.
Hospital beds were abundant - not so preventive medicine and ambulatory care. One notable exception is Estonia where the law requires scheduled prophylactic exams and environmental assessment of health measures in the workplace.
Even before the demise of central healthcare provision, some countries in east Europe experimented with medical insurance schemes, or with universal healthcare insurance. Others provided healthcare only through and at the workplace. But as national output and government budgets imploded, even this ceased abruptly.
Hospitals and other facilities are left to rot for lack of maintenance or shut down altogether. The much slashed government paid remuneration of over-worked medical staff was devoured by hyperinflation and stagnated ever since. Equipment falls into disrepair. Libraries stock on tattered archaic tomes.
Medicines and other substances - from cultures to vaccines to immunological markers - are no longer affordable and thus permanently in short supply. The rich monopolize the little that is left, or travel abroad in search of cure. The poor languish and die.
Healthcare provision in east Europe is irrational. In the healthcare chapter of a report prepared by IRIS Center in the University of Maryland for USAID, it says:
"In view of the fall in income and government revenue, there is a need for more accurate targeting of health care (for instance, more emphasis on preventive and primary care, rather than tertiary care), and generally more efficient use of benefits (e.g., financing spa attendance by Russian workers can be cut in favor of more widespread vaccination and public education). As the formal privatization (much is already informally privatized) of health care proceeds, and health insurance systems are developed, health care access for poverty-stricken groups and individuals needs to be provided in a more reliable and systematic way."
But this is hard to achieve when even the token salaries of healthcare workers go unpaid for months. Interfax reported on March 9 that 41 of Russia's 89 regions owe their healthcare force back wages. Unions are bereft of resources and singularly inefficacious.
The outcomes of a mere 6 percent of national level consultations in Lithuania were influenced by the health unions. Their membership fell to 20 percent of eligible workers, the same as in Poland and only a shade less than the Czech Republic (with 32 percent).
No wonder that "under the table" "facilitation fees" are common and constitute between 40 and 50 percent of the total income of medical professionals. In countries like the Czech Republic, Croatia, and chaotic Belarus, the income of doctors has diverged upwards compared to other curative vocations. It is not possible to obtain any kind of free medical care in the central Asian republics.
This officially tolerated mixture of quasi-free services and for-pay care is labeled "state-regulated corruption" by Maxim Rybakov from Central European University in his article "Shadow Cost-sharing in Russian Healthcare".
As though to defy this label, the Russian Ministry of Health is conducting - together with the Audit Chamber and the Ministry of the Interior - a criminal investigation against healthcare professionals. The Russian "Rossiiskaya Gazeta" quoted in Radio Liberty/Radio Free Europe:
"According to Shevchenko (the Russian minister of health), there are some 600,000 doctors and 3 million nurses working in Russia today; of this total around 500 medical workers are currently being investigated on suspicion of a variety of offenses such as taking bribes, using fake medical certificates, and reselling medicine at a profit. Shevchenko also stated that the State Duma will soon adopt a law on state regulation of private medical activities, which he said will put the process of commercializing medical establishments on a more legal footing."
The UN's ILO (International Labour Organization) warned, in a December 2001 press release, of a "crisis in care". According to a new survey by the ILO and Public Services International (PSI):
"The economic and social situation in several East European countries has resulted in the near collapse of some health care systems and afflicted health sector workers with high stress, poor working conditions and salaries at or below minimum wage - if and when they are paid."
Guy Standing, the ILO Director of the Socio-Economic Security Program and coordinator of the studies added:
"Rapidly increasing rates of sexually-transmitted diseases,
HIV/AIDS, tuberculosis and numerous chronic diseases have created a crisis of
care made all the more dramatic by diminishing public health structures, lack of
training of health care professionals and general de-skilling of the workforce.
All of this has surely contributed to the catastrophic fall in life expectancy
rates in Russia, Ukraine and some other countries in the region."
The situation is dismal even in the more prosperous and peaceful
countries of central Europe. In another survey, also conducted by the ILO
("People's Security Survey"), 82 percent of families in Hungary claimed to be
unable to afford even basic care.
This is not much better than Ukraine where 88 percent of all families share this predicament. Agreements signed in the last two years between Hungarian hospitals and cash-plan insurers further removed health care from the financial reach of most Hungarians.
Healthcare workers in all surveyed countries - from the Czech Republic to Moldova - complained of earning less than the national average and of crippling wage arrears. In some countries - Armenia, Moldova, Kyrgyzstan - few bother to clock in anymore. In others - Poland and Latvia, for instance - a much abbreviated working week and temporary labor contracts are imposed on the reluctant and restive healthcare workers.
One in twenty hospitals in Poland had to close between 1998-2001. In an impolitic spat of fiscal devolution, ill-prepared local authorities throughout the region were left to administer and finance the shambolic health services within their jurisdictions.
The governments of east Europe tried to cope with this unfolding calamity in a variety of ways.
Consider Romania. Half the population claim to be "very satisfied" with its health services.
In Romania, the 1997 Health Insurance Law shifted revenue collection and provider payments to a maze-like coalition of 41 district health insurance houses (HIH) headed by a National Health Insurance House. Romanian citizens are forced to foot one third of their health bills in a country which spends a mere 3 percent of GDP on the salubrity of its citizens - the equivalent of $100 per year per capita. Only a small part of this coerced co-financing is formal and legal.
About 70 percent of the meager state budget is derived from erratic payroll health insurance fund contributions, now set at 14 percent of wages. The national budget supplements the rest. Some of the contributions are distributed among the poorest regions to narrow the inequality between urban and rural areas.
The HIH's pay health care providers, such as hospitals based on capitation, or a projected global budget. They are experimenting now with fee-for-service reimbursement methods. All these payment systems, inevitably, are open to abuse. Monitoring and auditing are poor and relations are incestuous.
The Ministry of Health still makes all major procurement decisions. Many government organs - the Ministry of the Interior, the transport system, the Army - all maintain their wastefully parallel care provision networks. Donor funds, multilateral financing, and government money have all vanished into this insatiable sink of venality.
The only rays of light are private dental and medical clinics, laboratories, and polyclinics working side by side with private pharmacies and apothecaries. These cater to the well-to-do. But the government emulated them and "privatized" the institution of the family physician (general practitioner).
GP's now receive, on a contractual basis, payment per socially-insured patient treated. They make rent-free use of clinics and equipment in their workplace. Many of these doctors now borrow small amounts from willing banks - a scarcity in Romania - to open their own practice.
In an article published on March 2000 in "Central Europe Review" and titled "Trying our Patients", Professor Pavel Pafko, Head of the Third Surgery Department, Charles University Faculty Hospital, Prague, lamented the state of Czech medicine:
"After the 1989 Velvet Revolution, there were fundamental changes in the health service: the market was opened to manufacturers of medical equipment, aids and medicines, and Parliament announced the right for everyone to choose their own doctor. In my opinion, the health service was not sufficiently prepared for these fundamental changes.
In the public's mind the idea of 'free health care' survived
and continues to survive from the Communist period, as does the idea that all of
us are equal as long as we are healthy. The sick man in many cases loses this
equality and cannot himself pay by legal means for what the state, or rather the
insurance companies, have no resources to provide."
Expenditure on health amounted in the 1990's to c. 7 percent of GDP per year
(compared to 14 percent of a much larger GDP in OECD countries). But medical
insurance firms cannot cope with vertiginous prices of imported medicines.
Hospitals now receive insufficient lump-sum payments rather than getting
reimbursed for procedures and treatments carried out. Naturally, most of these
go towards staff wages. Little is left for medical care.
Poland is in no better shape. Its embattled minister of health, Mariusz Lapinski, stumbles from crisis to criticism in his doomed effort to reform a ramshackle system. The two current scandals involve heavily and unsustainably subsidized drugs and a new health bill, fiercely opposed by progressive interests, such as medical doctors and nurses. The Polish weekly, Wprost, went as far as comparing Poland's healthcare to Egypt's, Turkey's, and Mexico's.
The World Bank discovered in 1998 that 78 percent of Poles had to pay illicitly to obtain basic care. Lapinski intends to dissolve the regional state health funds and resurrect them in the form of a national edition. But state-run hospitals in Poland are insolvent. Naturally, healthcare workers have little faith in the management skills of the state.
They are calling for open competition among teams of commercial health insurance funds and health care providers. They would also like to increase health insurance contributions to allow Poland to spend on health more than the current 5.5 percent of GDP.
UPI reported recently ("Shock Therapy in Macedonian Healthcare") about a strike of medics in Macedonia as typical of the problems facing the healthcare systems of all countries in transition: privatization, the involvement of the state, and Western influence of the reform process. The transition to the western General Practitioner (GP) model is hotly debated. As far as doctors are concerned, it is a lucrative proposition. But it could exclude poorer patients from medical care altogether.
Still, the main problem is the gap between grandiose expectations and self-image - and shabby reality. East European medicine harbors fantastic pretensions to west European standards of quality and service. But it is encumbered with African financing and Vietnamese infrastructure. Someone must bridge this abyss with loads of cash. Either the government, or the consumer must cough up the funds. The sooner everyone come to terms with this stressful truth - the healthier.
Appendix - Healthcare Legislation
Healthcare legislation in countries in transition, emerging economic, and developing countries should permit - and use economic incentives to encourage - a structural reform of the sector, including its partial privatization.
Private health insurance plans - including franchises of overseas insurance plans - should be allowed, subject to rigorous procedures of inspection and to satisfying financial and governance requirements. Such competition is bound to shake the inefficient and corrupt state Health Fund and reshape it.
Procurement of medicines - should be transferred to an autonomous central purchasing agency. Both this body and its tenders will be supervised by a public committee aided by outside auditors.
The Approved List of Medicines - will be recomposed to include generic drugs whenever possible and to exclude expensive brands where generics exist. This should be a requirement in the law.
To maintain their license to practice medicine, medical stuff - from nurses to doctors - would be required to acquire continuing education and to publish in peer reviewed papers. To prevent nepotism and corruption in appointments of doctors to jobs in clinics and hospitals, all positions from ward doctor upwards will be subject to periodic review and open, public tenders.
The law should explicitly allow for the following arrangements with the private sector for the provision of healthcare:
Service Contract (Dominican Republic)
The government pays private entities - including doctors - to
perform specific healthcare tasks, or to provide specific healthcare services
under a contract. The private service providers can make use of state-owned
facilities, if they wish - or operate from their own premises.
Payments by the government are usually based on
capitation (a fixed fee for a list of services to be provided to a single
patient in a given period, payable even if the services were not consumed)
adjusted for the patients' demographic data and reimbursement for
fee-for-service items.
Management Contract (Cambodia)
The government pays private entities to manage and operate public
health care facilities, like clinics, or hospitals.
Lease (Romania since 1994)
Private entities - including doctors - pay the government a lump
sum or monthly fees to use specific state-owned equipment, state-employed
manpower, clinics, or complete public health care facilities.
The private entity is entitled to all revenues from its operations but also bears all commercial risks, is responsible for management and operations and liable for malpractice and accidents.
The state is still responsible to make capital
investments in the leased facility or equipment - but maintenance costs are
borne by the private entity.
Concession and Build-Operate-Transfer (BOT) (Costa Rica)
Concession is exactly like a lease arrangement (see above) with
one exception: the private entity is responsible for capital investment. In
return, the contract period is extended and can be voided only with a
considerable pre-advice.
In BOT (Build-Operate-Transfer) and ROT
(Rehabilitate-Operate-Transfer) the capital investment involves the construction
or renovation/upgrade of new healthcare facilities. The private entity uses the
constructed facility to provide services. After a prescribed period of time has
elapsed, ownership is transferred to the government.
Divestiture and Build-Own-Operate (BOO) (Texas, USA)
The law should permit the outright sale of state- owned health
care facilities to a qualified private entity.
Another possibility is a BOO scheme, in which the
private entity contractually undertakes to add facilities, improve services,
purchase equipment, or all three.
Free entry
The law should allow qualified private providers to operate
freely. Though regulated, these private firms will have no other relationship
with the state.
Such entities would have to be licensed, certified, overseen, and accredited for expertise, safety, hygiene, maintenance, track record, liability insurance, and so on.
The state may choose to encourage such providers to locate in specific regions, to cater to poor clients, or to provide specific healthcare tasks or services by offering tax incentives, free training, access to public facilities, etc.
Franchising (Kenya, Pakistan, Philippines)
A private firm (franchisee) acquires a license from and shares profits with the franchisor (a domestic, or, more often, foreign firm). The franchisee uses the brand name, trademarks, marketing materials, management techniques, designs, media access, access to approved suppliers at bulk (discounted) prices, and training offered by the franchisor. The franchisor monitors the performance and quality of service of the franchisee.
This model works mainly in preventive care, family planning, and reproductive health.
The World Bank ("Public Policy for the Private Sector", Note number 263, dated June 2003):
"Franchisers in the health sector, often supported by international donors and nongovernmental organizations (NGOs), establish protocols, provide training for health workers, certify those who qualify, monitor the performance of franchisees, and provide bulk procurement and brand marketing."
Hospital Management
The law should allow:
I. Colocation of private wing within or beside public hospital
II. Outsourcing non-clinical support services
III. Outsourcing clinical support services
IV. Outsourcing specialized clinical services
V. Private management of public hospital
VI. Private financing, construction, and leaseback of new public hospital
VII. Private financing, construction, and operation of new public hospital
VIII. Sale of public hospital as going concern
IX. Sale of public hospital for alternative use
X. Consolidation of redundant public healthcare facilities by merging them or closing down some of them
Private Sector Healthcare Monitoring and Regulatory Agency
The law should provide for the establishment of an agency to monitor and regulate private sector healthcare provision: compliance with contracts, servicing the indigent and the uninsured, imposing sanctions or "step-in" rights, and dispute resolution.
Voucher System (Nicaragua)
The law should allow for experimenting with novel payment and resource allocation techniques, such as vouchers distributed to needy populations and guaranteeing free basic service packages provided by a limited list of clinics or other healthcare facilities. Such schemes can also be managed by the private sector.
Medical Savings Accounts (Singapore)
Contributions by employers and employees accumulate over time and are used, tax-free, to pay for hospital expenses in public and private hospitals, national supplementary health insurance premiums, special procedures (including abroad), and expensive outpatient treatment and drugs for the saver and his immediate family.
Consumer Organizations
The law should encourage the formation of consumer organizations in the healthcare field (such as buyers' clubs or Health Maintenance Organizations-HMOs).
These groups will shop and tender for the best, most reasonably priced, and most efficient healthcare services for their members.
Devolution
Responsibility for the provision of some types of healthcare services and the allocation of inputs should be devolved to local authorities (municipalities).
Performance and Payments
The central authority should impose minimum performance targets in performance agreements on all healthcare facilities, both public and private. All payments - wages included - will be tied to these targets and their attainment.
Payment options should include:
Capitation - A fixed fee for a list of services to be provided to a single patient in a given period, payable even if the services were not consumed, adjusted for the patients' demographic data and reimbursement for fee-for-service items.
Diagnosis Related Group (DRG)
Resource-based Relative Value (RBRV)
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