Healthcare Financing

Aceso Global Policy Working Paper - Health Policy Challenges in Health Economics and Finance in Latin America

Latin American and Caribbean (LAC) countries have achieved a great deal in healthcare over the past few decades, reflecting early investment as well as creativity and experimentation at a level and scope beyond much of what has occurred in other regions. The mixed public-private system serving much of the region, the experience with social health insurance (SHI) and private insurance, and experiments with health service delivery and financing provide lessons that deserve further attention and implementation. Importantly, the rallying cry regarding insufficient spending captures only part of the challenge. Better organization, financing and delivery grounded in targeted incentives and accountabilities could have a major impact on raising access, quality and efficiency.

Regionally the health financing mix entails high reliance on out of pocket payments (OOP) and private insurance. Only 12 countries benefit from over 50 percent of public financing. Waiting time, and time-intensive requirements to access care within publicly financed systems pose high costs to patients. Even the poor turn to private alternatives.

Shortcomings in the quality and efficiency of services to date have received little attention or investment. Quality measures are scarce and no consensus exists on standards; facility management is weak; few studies that touch on relative productivity to measure efficiency; and, costs are largely unknown.

Over the coming decades, the rapidly shifting demographic, social and epidemiological patterns in the region will affect both public revenues and the demand for healthcare. The aging population and the rise of NCDs both have serious implications for healthcare costs in both the public and private sectors, and for the type of care required, e.g. more preventive services, long-term management of chronic conditions, integrated care and palliative care.

Health policy reforms in LAC deserve to be driven by sustainability. Integrated healthcare offers a solution to fragmentation in delivery and financing, and involves reliance on effective information technology that tracks performance and patients, and provider payment reforms that incentivize efficiency and quality, among other initiatives. Maintaining the coexistence of different health systems (SHI, public financing and delivery, private health insurance by employers or individuals) can be supported by the integration of medical records, adherence to protocols and clinical pathways, establishment of health networks built around primary care, along with harmonized incentives and payment systems affecting both hospitals and primary care. These restructuring initiatives can reinvigorate healthcare systems and prepare them for success and sustainability in the 21st Century. They offer a direction for reform that allows adapting to existing circumstances and institutions, but with updated objectives, infrastructure and processes.

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“It’s Complicated”: A Take on the Healthcare Industry in Brazil

Aceso Global CEO Maureen Lewis shares her take on the Brazilian healthcare system. See here for a link to the original article, which is reproduced below.

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What Makes Brazil’s Healthcare system so different? Prof. Maureen Lewis of FGV-EAESP shares her take on the unique mixed public and private health system in the country.

At a glance

Brazil, a country adored all over the world for its coffee, samba, football and Jiu-jitsu, is certainly not just another ‘BRIC’ in the wall. With a population of roughly 200 Million, the country is unique not only through its inclusion into the OECD club and economic tug-of-war between boom and recession, but also by its distinct Healthcare sector. Composed of around 6,800 public and private hospitals, 195,000 service units and almost 500,000 hospital beds (Industry Report, Healthcare: Brazil, The Economist Intelligence Unit, September 2014), the health sector counts for ~9% of Brazil’s GDP (2015), with a health expenditure per capita of almost USD 705 (OECD). Divided into private and public components, the healthcare system consists of everything ranging from small, low quality hospitals to world-class research hospitals.

To cover the costs incurred by the citizens at these units, the Federal, State and Municipal governments have put into place the Single Unified Health System (SUS), the funding for healthcare facilities is provided via the federal prospective reimbursement system, the AIH (Authorization for Hospital Admission). Moreover, there are 6 private high-complexity Centres of Excellence all over the country which provide free health care to the citizens in return for tax breaks from government.

Caught between private and public funding

Lately, a trend has been observed in the spending of the SUS – an increase in funds for public-owned facilities and a sharp decline in funds in privately owned hospitals. The SUS under-reimburses for care for non-public providers, leading to the closure of several philanthropic facilities. This has generated increased demand for private insurance for people to benefit from care at public hospitals.

Such divergence runs a risk of reducing engagement and support for improved healthcare performance by the growing middle and upper-class population who are increasingly relying on private insurers and providers.

As such, middle and upper-class citizens are benefiting from private insurance through their own pockets or those of their employers and at the same time paying for the SUS through taxation.

The economics of healthcare

What makes things even more interesting is that a rise in chronic conditions and diseases across Brazil has influenced a shift in the demand for hospitals towards more specialty care than general hospitalization. This is costing the average Brazilian more than the traditional remedies at hand. As suggested by a private sector report, a decline in the mortality rate can be seen for several diseases and illnesses credited to improved living conditions, rising levels of education and improved preventive measures. The same cannot be said for illnesses such as cancer, cardiovascular disease and perinatal disorders which seem to have replaced the more easily treated illnesses. This has, in a way, led to a sharp increase in the average costs to state for diagnosis and treatment.

But not all of this cost expense can be attributed to the change in disease complexity. An argument can be made towards the heavy investments that Brazil is making in technology in healthcare. Interestingly, Brazil has more MRIs and CT Scanners than several of the developed countries such as the UK and almost three times more than Mexico.

Another factor that can be attributed is the demographic of the private insurance enrolees. It is seen that that over 45% of the age groups that use this type of insurance hail from either the under 18 or the over 59 categories, both of which are generally non-performing categories that are highly susceptible to illnesses. The increase in life expectancy rates of the country is ironically, only adding to its woes.

In the face of these high costs and expenditure, it has been imperative for the Brazilian healthcare industry to keep its revenues high. But the recent trends discussed above have led to a reduction in hospitalisations, pushing the healthcare industry towards a risk of loss. Loss ratios have been increasing substantially over the past few years. To gain control over spending and to improve the overall efficiency of the healthcare industry, financing seems to pose a challenge for the Brazilian administration for the years to come.

Complex problems – simpler fixes

The picture is clear. Despite having made efforts to establish a single healthcare system, Brazil’s can at best be described as mixed and fragmented. The government funded SUS finances less than half of all healthcare, with the balance being covered by private insurers and through self payment.

Despite financial malpractices and several other irregularities associated with it, the AIH remains the preferred method of hospital payment, which suggests the need for drastically improving and optimizing its application. In the same vein, amends need to be made towards the cross disparity between public and private sectors of insurance and healthcare providers to ensure that the services are rightly paid for.

The imbalance between inflation rates will eventually become an issue for insurers and the insured, the implications of which could inflict damage to the image and economic health of private hospitals.

A part of the solution could be to close low-volume, high-cost small hospitals. Brazil should further focus on improving management, efficiency and added value, and also adhere to protocols in order to boost productivity and enhance quality. Stricter accreditation norms and keen oversight could help identify waste and promote improved performance, which in turn could lower costs.

Finally, the consumers and patients should be given bigger roles to play in order to facilitate improved hospital function and network performance as part of the country’s agenda for the future. It cannot be denied that the healthcare system is going through a rough patch, but it is certainly worth saving. As the saying goes – it’s always darkest before dawn.

Mapping CSO Funding Options for HIV & Tuberculosis in the Dominican Republic

This report maps out and provides detailed analysis of the domestic financing mechanisms available to civil society organizations (CSOs) in the Dominican Republic that are involved in the national responses to HIV and tuberculosis (TB). It identifies the barriers CSOs face when attempting to access and execute public and private domestic funds, and also highlights areas of opportunity, providing specific recommendations for government and international donors to support expanded grant-giving to CSOs. The report’s annexes contain step-by-step training materials to guide CSOs through the at times complex and confusing processes required to access public funding.

Aceso Global completed this report for The Global Fund to Fight AIDS, Tuberculosis and Malaria as part of the organization’s ongoing efforts to ensure the sustainability of the Dominican Republic’s national disease programs. CSOs play a critical role in ensuring access to prevention and treatment services for HIV and TB, especially for vulnerable and marginalized groups, but are largely reliant on international support. In the context of reduced external funding, this report positions CSOs to better compete for domestic resources.

DOWNLOAD THE REPORT HERE (SPANISH)

Ensuring the Long-term Sustainability of the National HIV Program in the Dominican Republic: Civil Society Organizations are the Answer!

Aquí para la versión en español de esta publicación.

Building on a previous transition readiness assessment, Aceso Global recently worked with civil society organizations (CSOs) in the Dominican Republic on understanding the public funding landscape, and building their capacity to compete for public grants and other funding. Anna Bonfert, Health Economist, summarizes our main findings and suggestions for moving forward.

The Dominican Republic has made important strides towards an AIDS-free generation . While HIV prevalence in the Dominican Republic continues to be almost double the average for the Latin America and Caribbean countries, it has fallen rapidly over the last 15 years from the peak in the early 2000s.

A key success factor has been the active engagement of CSOs. Since many of these organizations are born out of the very communities that are affected by HIV, they have evolved to be at the heart of the national response. The Dominican Republic has seen the rise of specialized CSOs working with vulnerable and marginalized groups, those that are often disproportionally burdened by the HIV epidemic and face stigma. Because they can build trust and work on the ground with their peers, CSOs have access to communities that would otherwise not be reached by the national HIV program, such as sex workers, trans people, gay and other men who have sex with men, injecting drug users and Haitian migrants. CSOs serve as an interface between public services and these groups, and use differentiated approaches that reflect their diversity.

Over the last 15 years, the civil society space has flourished as donor funds for HIV-related activities abounded. These funds have often been contingent on CSO engagement and advocacy to ensure that the voices of affected communities are being heard, and their needs effectively addressed. Combating stigma and defending human rights are core competencies of CSOs, but many of them also engage in outreach, prevention and access to treatment.

At the same time, the government of the Dominican Republic has started to recognize the important work performed by the more than 200 CSOs currently involved in the HIV response. This recognition came in the form of updates to the legal code as well as financial commitments to fund CSO operations. In fact, there are now more than a dozen sources of public funding available to CSOs working on HIV. These range from the Center for CSO Promotion, a government institution dedicated to grant-making to CSOs, to agreements with Provincial Governments, to co-management arrangements with the Ministry of Health

Despite these positive strides, the country is still grappling with how to put the work of CSOs on a sustainable path moving forward. This question is increasingly pressing as several international donors currently supporting the national disease program have announced their gradual withdrawal, potentially leading to disruptions in HIV programming and services provided by the CSOs, who thus far have benefitted from, and in some cases relied on, external monies. At the same time, despite the numerous public funding sources that have emerged, access can be difficult.

As CSOs explore ways to stay afloat, they find themselves scratching their heads: if all of these public funding sources are available, then why is it so hard to actually receive funding from the government? And why is there no guidance on how to compete for public funding? To address these challenges, Aceso Global in partnership with the Global Fund to Fight AIDS, Tuberculosis and Malaria worked with CSOs in the Dominican Republic on understanding the public funding landscape, and building their capacity to compete for public grants and other funding.

First, we examined how the qualification and application processes for public funding actually work in the Dominican Republic. Which documents do CSOs need to submit, when and where? What are the different steps involved, and their timelines? Where can CSOs go for additional information? Ask government officials, and you will likely get different answers. As we soon discovered, the necessary information exists, but is scattered across different websites, departments within the Ministry of Health and even individuals in charge of specific processes. Often, relevant information is not available in a user-friendly format at all. We also noticed that there are many repetitive steps required to apply for funding, and that some guidelines are contradictory.

Our Mapping document and its accompanying factsheets (in Spanish) organized the scattered information in one readily accessible location, and streamlined existing guidelines into an easily digestible format. It provides the CSOs with a clear picture of the administrative steps required to qualify for public funding.

During the process, we also became keenly aware that CSOs range considerably in their experience and capacity. While some already compete successfully for public funding, others are just beginning to set up the systems and structures required to comply with public funding requirements. Further capacity building can improve CSOs’ competitiveness for public funds. How do you write a compelling proposal? What are do’s and don’ts in project planning and execution? How do you set up the M&E systems to show what you have accomplished through government funding? Is there a more effective way to promote your services, both to government entities and other domestic funders? These are some of the questions CSOs are facing, and training in these areas based on our material will allow CSOs to move from being passive recipients of donor funding to active promoters who can effectively sell their services to the government and other sources of support.

These organizations provide valuable services in healthcare and human rights, beyond what government is able to provide on its own. They are critical to the long-term sustainability of the national response to HIV/AIDS and deserve a boost from training and support to strengthen their leadership role in the Dominican Republic.

 DOWNLOAD THE REPORT HERE (SPANISH)

Innovative Financing and its Role in Global Health

There is often confusion surrounding discussions on innovative financing in the context of global health. This summary of a past CUGH conference session on the subject clarifies what is meant by global health specialists when they debate “innovative payment mechanisms” and challenges associated to it. Aceso Global’s CEO Maureen Lewis opened the session with a presentation on the emergence of new actors in global health financing and the shifts in donor priorities away from disease specific programs towards more integrated programs, which could be financed by innovative financing mechanisms. Click here for the full post.

Dominican Republic Transition Readiness Assessment Country Report

This report summarizes the findings of the Transition Readiness Assessment for the Dominican Republic carried out by Aceso Global and APMG Health, with financial and technical support from the Global Fund to Fight AIDS, Tuberculosis and Malaria. It aims to support the Dominican Republic to undertake transition planning as the Global Fund winds down its financial support for the national tuberculosis and HIV/AIDS responses.

Specifically, the report: 1) summarizes the Global Fund's financial and non-financial support to the country; 2) describes the epidemiological situation as well as the national response in the Dominican Republic; 3) provides a background on the institutional and enabling environments, human rights and gender situation; 4) overviews the Dominican Republic's health system and analyzes healthcare financing and fiscal space issues; 5) analyzes delivery system enablers and barriers to transition, including supply chain, information systems and the health workforce; and 6) assesses the current and future role of civil society organizations in the national disease responses. The report concludes with recommendations on the pathway forward to facilitate a smooth and sustainable transition.

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Combating Corruption in Global Health

In the past 20 years, the international community has begun to fully recognize the devastating effect of corruption on global health. Poor governance, marked by weak institutions, absence of rule of law, and lax enforcement of health policy, creates conditions for corruption to thrive. This can contribute to health system failure and deprive citizens of access to even basic health services. This paper explores the extent of corruption in health services, as well as  emerging anti-corruption tools and inter-agency frameworks that could prove effective in limiting corruption in global health. While corruption has gained attention in the international sphere, more action is needed in the specific context of global health. This paper was co-written by Maureen Lewis (CEO of Aceso Global), Tim K. Mackey, Jillian Kohler and Taryn Vian.

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Measuring Public Hospital Costs: Empirical Evidence from the Dominican Republic

This paper presents a methodology and analysis to determine the actual costs of inpatient, emergency and outpatient services in a Dominican hospital. By developing and applying a set of survey instruments to a large sample of patients, the authors were able to measure and cost all hospital staff time, in-kind goods, overhead and the depreciated value of plant and equipment related to the treatment of each patient. The study finds that the hospital budget was 50 percent higher than actual costs of services. Further, while spending on personnel comprised the vast majority of the total hospital budget, actual personnel costs for patient treatment were low. Based on these results, the authors suggest that the hospital suffers from gross inefficiency, chaotic medical care organization and poor management.

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Better Hospitals, Better Health Systems, Better Health

Despite their central role in healthcare delivery and their consumption of the lion’s share of national health budgets, hospitals in many emerging markets remain poorly governed, underfunded, and unevaluated. Hospitals have long been neglected by external stakeholders such as donors and multilateral institutions, and considered “black holes” by government ministries that fund facilities but provide limited governance or accountability. Historically, patients have borne the brunt of this negligence, shouldering high costs for poor quality of care.

This report proposes a Global Hospital Collaborative to transform the emerging market hospital landscape by promoting knowledge sharing, research, and cooperation between global experts and stakeholders in hospital governance, management, financing, and related fields. It was produced by the Hospitals for Health Working Group housed at the Center for Global Development, in collaboration with Aceso Global CEO Maureen Lewis and CTO Gerard La Forgia.

The proposed Collaborative would synthesize and centralize the vast but fragmented knowledge, research, and best practices related to hospital management and financing, as well as integration with the broader health system, and add to this knowledge base through additional research. The Collaborative is imagined as a forum for exchange that can lead to concrete improvements in health on the ground. Potential projects and products could include a web-based knowledge clearinghouse, conferences and webinars, data measurement and analysis, peer-to-peer learning exchanges, and in-country technical assistance. 

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