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by EOS Intelligence EOS Intelligence No Comments

Thailand – Is Just 100% Universal Healthcare Access Good Enough?

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Thailand has a well-developed healthcare system, as compared with most of the Asian countries. Majority of the health-related Millennium Development Goals (MDG) have been achieved, though a rapidly ageing population and the burden of non-communicable diseases remains a challenge for the public healthcare system. A better disease prevention mechanism, health promotion, and adequate primary care are some of the priorities of the Thai government in the healthcare sector.

This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, Vietnam, Indonesia, and Thailand.

Thailand achieved Universal Healthcare Access (UHA) status in 2002 with the launch of health insurance benefits for 30% of the population that was outside the health insurance ambit till then.

Thailand boasts of world class medical facilities (especially in the private healthcare sector), and is among the world’s largest medical tourism markets. The government is looking to further develop Thailand into an “International Health Center for Excellence” under its second strategic five-year plan (2012-2016).

The plan focuses on four major areas: medical services, integrative wellness centers, development of Thai herbs, and traditional and alternative Thai medicines.

With almost 100% population already covered by UHA, and a reasonably developed healthcare infrastructure in place, the government’s focus is likely to be on improving the quality of healthcare services. This will create opportunities for the companies operating in the healthcare industry.

 

INFRASTRUCTURE
Key Stakeholders

  • The Ministry of Public Health (MoPH) is responsible for public healthcare services and for governing and regulating the healthcare industry, including healthcare-related NGOs, medical professionals, hospitals, and clinics. In a series of Decentralization Action Plan (1999, 2008, and 2012), responsibility for some of health facilities was delegated to local authorities at provincials (municipal and general hospitals) and sub-district level (health centres); However, the Thai healthcare system still remains highly centralized (and more dependent on public healthcare services).
Healthcare Service Delivery

  • Public healthcare service delivery system includes:

    • Primary Care: Community health posts and primary healthcare centres (village level) and health centres (sub-district level)
    • Secondary Care: Municipal health centres and community hospitals
    • Tertiary Care: Provincial and regional hospitals, and medical schools

  • At provincial and regional level, some of the hospitals are under the administration of other government bodies, such as the Army, Police, and Ministry of Education (MoE). All community hospitals and health centres in rural areas are operated by the MoPH. The healthcare infrastructure consist of the following:

    • Community Care Centers: ~50,000
    • Health Centers: ~10,000
    • Community Hospitals and Municipal Health Centers: ~ 1,000
    • Provincial Level Hospitals: ~ 200
    • Regional Level Hospitals: ~ 80
KEY CHALLENGES
Unequal Distribution of Services

  • Despite a well-developed healthcare infrastructure and almost 100% population coverage, inequalities still exist in terms of accessibility and quality of care

  • There is a variance in the geographical distribution of health workers and other resources; urban centres such as Bangkok have access to better quality healthcare as compared with the rural populace, which faces a shortage of clinical resources

Duplication of Efforts

  • Thailand’s healthcare sector consists of several stakeholders, including ministries, government agencies, and the local governments involved in management and financing of healthcare facilities. This has resulted in duplication of administrative systems (including payment, reporting, and monitoring), eventually leading to inefficiencies

 

DESIGN
Beneficiary Classification

  • In Thailand, the UHA covers the population not covered by

    • Civil Servant Medical Benefit Scheme (CSMBS) for government employees, pensioners, and their dependents
    • Compulsory Social Security Scheme (CSSS) for private employees or temporary public employees
    • Private Health Insurance (for individuals and private firms)
    • Once registered, people joining the UHA scheme receive a gold card to access services in their health district, and, if necessary, be referred for specialist treatment elsewhere
Healthcare Insurance Financing

  • Source of finances for different social health schemes is as follows:

    • UHA – general tax revenue
    • CSMBS – general tax
    • CSSS – premium (as a % of salary)
Payment System

  • The payment system varies according to the insurance scheme

    • UHA – The payment system is capitation-based for most of the services; and rest of the services, such as dental care are on fee-for-service basis; funding allocated to the contracting facilities for Primary Care are on a population basis
    • CSMBS – Outpatient services are on fee-for-service basis; inpatient services are on Diagnosis-related group (DRG) system (to classify hospital cases into groups to determine cost)
    • CSSS – the payment system is capitation-based for most of the services; and rest of the services, such as dental care are on fee-for-service basis
Benefits

  • The coverage is comprehensive in case of UHA and CSMBS and includes both inpatient and outpatient treatment. However, there are few conditions, such as:

    • UHA – Treatment available in contracted hospitals only; facilities, such as private bed and special nurses are not available
    • CSMBS – Private hospitals available in case of emergency care only; special nursing services not available
    • CSSS – Coverage is coverage is comprehensive except that it doesn’t include annual physical check-ups, and work-related illness and injuries
Co-payment (Reimbursement) System

  • At present no co-payment regime is applicable for UHA, however, 30-Baht co-payment (per service) is applicable to patients who receive prescriptions and are willing to pay. For the population covered by CSMBS and CSSS, co-payment system is applicable in case of emergency care.
Reimbursement System for Drugs

  • For UHA, CSMBS, and CSSS the drug benefit package is based on the National List of Essential Drugs (NELD), and the drugs can be reimbursed without any co-payment. Drugs used under CSMBS’ out-patient fee-for-service system, and not listed in NELD, are reimbursed.
KEY CHALLENGES
Absence of Unified Scheme

  • Theoretically, UHA is for the entire Thai population; however, two other health financing schemes for the government and formal sector private employees operate in parallel wherein the benefits differ from one another. E.g. variance in expenditure per patient, access to healthcare facilities, co-payment regime, and access to special care. It is a challenge for the government to achieve equality in the quality and range of services, which arise due to social health insurance specific policies

Funding Constraints

  • Due to changing disease profile (e.g. prevalence of chronic diseases and an aging population), Thailand is witnessing increasing cost of healthcare thereby putting burden on UHA, which is entirely funded through taxation. The government needs to look at the cost saving options e.g. payment system for healthcare facilities and procurement of drugs and equipment, to ensure the long term viability of UHA

 

Opportunities for Healthcare Companies

Healthcare Service Providers

  • Thailand has a better (as compared with most of the countries in Asia) developed healthcare system with a majority of the healthcare services being delivered by the public network. At present, it appears limited scope for the private providers, as they also are mostly concentrated in the urban centres while there is a greater need (at least at primary and secondary level) in non-urban areas

  • However, private providers can look for collaboration opportunities in areas/aspect that add value to pre-existing service set-up. For example in the field of mobile healthcare, telemedicine etc.

Medical Device Manufacturers

  • There is significant growth potential for the medical device companies, as the country’s universal healthcare system continues to support healthcare initiatives. Demand for medical devices is further anchored by the government’s efforts to develop the country into an Asian medical hub

  • Public hospitals continue to be the main user of medical equipment. Opening of new health facilities would also create demand for equipment and devices

Pharmaceuticals Companies

  • The government encourages the use of drugs listed in the National List of Essential Medicines, all of which are fully reimbursed by the three major public health insurance schemes

  • However, the government may review health expenditure pattern and reimbursement policies amid changing demographic profile (i.e. more senior citizens) leading to increased focus on cost-effective healthcare services. This may create better opportunities for generics and low-cost drugs

A Final Word

Thailand’s UHA scheme has largely been a success, and a model for other countries to follow. The scheme provides coverage to a large informal sector, which is a challenging task in itself. The benefit package, which includes curative as well as preventive services, is comprehensive.

The country has demonstrated efficiency in UHA implementation with satisfactory outcomes in terms of meeting healthcare needs of the society, and in attempts towards offering equitable health. A relatively better developed healthcare network and relevant administrative experience helped in achieving the desired results.

Leaving behind the past successes, UHA would be required to gear-up for the challenges ahead. For instance, the country needs to plan for changing disease profile i.e. an increased burden from Non-communicable Diseases (NCDs). This may have cost implications for UHA (and opportunities for the healthcare industry participants) in terms of accommodating suitable interventions and planning for adequate preventive measures at primary, secondary, and tertiary care level. It is expected that the country will witness more activity with respect to qualitative improvement in healthcare services, as compared with geographical expansion of services.

A comparative with other countries in the region should provide a better perspective on the actual potential of Thailand as a prospective destination for devices and drugs companies alike.

by EOS Intelligence EOS Intelligence No Comments

Indonesia – Public and Private Participation in Universal Healthcare

1.8kviews

Under its National Health Strategic Plan (NHSP), Indonesia is continuously focusing on improving the quality and accessibility of its public healthcare system. NHSP (2010-2014) aims to enhance health status through involvement of private sector and civil society. It also focuses on the prevention and cure of health problems faced by the community through availability of comprehensive and equitable health services and health resources, supported by good governance.

This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, Vietnam, Indonesia, and Thailand.

The Indonesian government is planning to cover every Indonesian under Universal Health Insurance (UHI) by 2019 under a new scheme called Jaminan Kesehatan Nasional (JKN). As of January 2014, about 120 million Indonesians (government servants, police and army personnel, and poor) were automatically included under this scheme. The government has already allocated about 20 trillion rupiah (US$1.6 billion) to cover health insurance premiums for the poor in 2014.

Indonesia UHC

One of the features of the Indonesian UHI is the participation of the private sector wherein a number of hospitals and clinics have signed-up under the JKN.

When implemented fully, UHI is expected to create significant demand for companies operating in the industry, as the scope of the services is bound to increase. However, uncertainties exist regarding the smooth transition of the social health insurance mechanism from the current (prior to 2014) multiple-scheme-based system to a single system. The foundation design and the support infrastructure would determine the long term success of UHI.

 

INFRASTRUCTURE
Key Stakeholders

  • Indonesia has a decentralized administrative system since early 2000s wherein each of the 33 provinces is divided into districts and each district is further divided into sub-districts. District Governments are the direct authority in prioritizing the sectors (including health) for development
Healthcare Service Delivery

  • Public healthcare service delivery is based on a hierarchical referral system, which includes primary health clinics (PHC), district and provincial hospitals (secondary care) and specialty hospitals (tertiary care). Secondary health care is further classified as (Kabupaten (rural) and Kotamadya (urban)

  • Depending on the range and quality of healthcare services, hospitals are classified in to four categories

    • Level D – District-level hospital headed by a General Practitioner (GP) and provides some basic inpatient care. These are just one step above the primary health center
    • Level C – District-level hospital, which provides four basic specialties (surgery, internal medicine, pediatrics, and OBGYN services) and three supporting specialties (anesthesia, radiology, and pathology)
    • Level B – Provincial level hospital providing more specialist services as compared with level C hospitals. Specialist medical clinics, including pulmonary clinics and eye clinics, and medical supporting care are also included
    • Level A – These are described as ‘Centers of Excellence’ with sophisticated equipment with state-of-the-art facilities. This level includes specialist hospitals, such as Maternal and Child Hospital, Cancer Hospital, Coronary Hospital
KEY CHALLENGES
Capacity Constraints

  • Indonesia faces capacity constraint in terms of the number of hospitals as well as resources (qualified doctors, nurses and other staff). Public healthcare system is characterized with high occupancy rate at hospitals, and the situation is likely to worsen as more people come under the coverage of the government-sponsored health insurance scheme

  • Though a three-tier referral system exists, there is a lack of integration resulting in the by-passing of the lower-tier facilities and overcrowding at the secondary and tertiary level

Uneven Concentration of Healthcare Personnel

  • Indonesia has 25 health workers per 10,000 people (against WHOs minimum benchmark of 23); however, most of them are concentrated in urban centers, leaving rest of the country (especially the rural area) without sufficient number of health personnel

  • Healthcare professionals need to be compensated adequately to create a pool of resources large enough to meet the demand of a healthcare system catering to about 250 million people

 

DESIGN
Beneficiary Classification

Prior to the implementation of UHI in January 2014, certain sections of the population were already covered under different schemes, such as:

  • Askes (for civil servants and pensioners)
  • Jamkesmas (poor and near poor)
  • Jamsostek (private formal sector workers)
  • Jamkesda (district-level schemes for near-poor)
Healthcare Insurance Financing

  • Expenditure on public healthcare services under UHI is provided through taxation revenues and member contribution

  • Formal sector employees (both public and private) will pay 5% of the salary as premium wherein the employer will makes 4% contribution. Informal workers, the self-employed and investors, will pay monthly premiums of between Rp 25,500 (US$2.15) and Rp 59,500 (US$5.1) each

  • The government would be paying for the premiums of the rest of the groups (mentioned in ‘Beneficiary Classification’)
Payment System

  • For primary health care, the payment system is to be based on monthly capitation (based on registered users), and the Diagnosis-related group (DRG) system (to classify hospital cases into groups to determine cost) would be applicable for hospitals

  • Amount under DRG system will be fixed on the basis of negotiations with the hospital associations in various regions
Benefits

  • The UHI covers comprehensive benefits, including the treatment of commonly occurring illness, such as influenza as well as expensive medical treatment, such as heart surgery, dialysis, and cancer therapies
Co-payment (Reimbursement) System

  • At present no co-payment regime has been planned at the point of care. Healthcare services are to be fully reimbursed to the healthcare facilities on behalf of the patients
Reimbursement System for Drugs

  • Drugs specified under the formulary list are covered under the social sector health insurance plan. As mentioned above, the drugs used for the treatment are covered by the zero-co-payment system
KEY CHALLENGES
Concern about Quality

  • There are apprehensions that the quality of health services may suffer under the current provisions of the universal healthcare schemes

    • According to the Indonesian Medical Association, the government is paying substantially low amount for the poor, which may not be able to cover expensive treatment, such as cancer therapies. Hospital may struggle to cover costs due to lower reimbursement rates, which may discourage private hospitals from participating in the UHI. This would lead to overburdened state-run hospitals (and hence erosion of quality)

Ensuring Comprehensive Coverage

  • A large population comprising informal sector is yet to be covered under UHI. It would be a challenge for the government to motivate this section of population to be a part of the scheme. Contribution from the informal sector in the form of premium is crucial, as the Indonesian UHI would primarily draw its finances its expenses through it (along with the contribution from the formal sector employees)

Addressing the Grey Areas

  • There is lack of clarity about the role of private insurance after the implementation of UHI, as several private employers who have obtained private insurance for their employees may end-up paying double premium

Opportunities for Healthcare Companies

Healthcare Service Providers

  • The current set-up does not provide enough incentives for the private sector healthcare providers; however, the UHI policy envisages a space for private players. Also, the government has indicated about increasing the premium paid for the poor gradually, therefore private clinics and hospitals have significant opportunities to increase their business as well as to fill the resource gap in the Indonesian healthcare system

Medical Device Manufacturers

  • Irrespective of the implementation of the UHI, there was significant growth potential for the medical device companies due to years of under investment in the hospital equipment and devices such as MRI, Tomography scanners, mammography etc. A wider UHI coverage would require purchase of such equipment, to cater to the increasing demand

  • It is expected that new health facilities would come up in the regions where the newly insured population resides i.e. outside Java and other large cities. This would boost the demand for equipment and devices

Pharmaceuticals Companies

  • UHI is expected to create additional demand for medicines, as the population that was previously unable to purchase medicines comes under the coverage. Demand for generic medicines is expected to increase, as the government focuses on procuring low-cost medicines to keep the cost of UHI down

A Final Word

Considerable ground needs to be covered before Indonesia realizes the goal of 100% healthcare access coverage. The current state of the healthcare infrastructure as well as the healthcare benefits that have been designed (for the population under coverage as of January 2014) pose challenge in creating a working (and efficient) UHI system.

Success of UHI primarily hinges on the inclusion of informal sector population. Introducing an informal sector-specific mechanism for the premium contribution, attractive enough to ensure participation, would be the key in this direction. More clarity about the role of private insurance will help towards creating a system capable enough to cater to 250 million plus population.

Size of the Indonesian healthcare market already presents ample opportunities for pharmaceutical as well medical device manufacturers. 100% coverage under UHI will further boost the prospects of these firms. The expected expansion of healthcare infrastructure beyond the developed regions (cities) is likely to create demand for equipment as well as medicines.

Existing capacity constraints in the public healthcare system may augur well for the private health care service providers. As of now, given the geographical challenges and regional disparity in healthcare services, the goal of 100% coverage under UHI looks a distant dream without the participation of private sector. Therefore a workable payment system needs to be devised to ensure greater participation of the private sector players.

by EOS Intelligence EOS Intelligence No Comments

Vietnam’s Social Health Insurance – Strong Foundation, Lacking in Support Infrastructure

1.3kviews

Vietnam is a lower-middle income country (GNI per capita US$1,550 as of 2012) with a population of about 89 million (14th most populous country as of 2012). Entitlement of healthcare to every citizen is imbibed in Vietnam’s constitution, and the country has taken steps to achieve it. National Strategy on Protection and Care of the People’s Health (2001) increased the state’s role in ensuring basic healthcare services to all Vietnamese. The Law on Health Insurance (2008) was formulated with the objective of achieving universal health insurance coverage.

This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, Vietnam, Indonesia, and Thailand.

As of 2011, more than 60% population were covered under the Social Health Insurance (SHI) scheme. The government is aiming to cover rest of the population (primarily the people from the informal sector) by 2014.

If achieved, Vietnam would be among few Asian countries with 100% Universal Health Care (UHC) coverage for its citizen. For a private sector player (pharmaceutical company, medical device manufacturer, or a healthcare service provider), this should materialize in to increased sales, as the number of customers (which otherwise are faced with financial constraints to avail healthcare services/products) grow.

Vietnam UHC

However, from a long term perspective, sales prospect are likely to depend on the government’s ability to maintain service levels, to tackle emerging healthcare challenges within UHC mandate, and to ensure availability of finances for SHI. The current design and the support infrastructure would determine the long term success of SHI (and hence the prospects of the companies from healthcare industry).

 

INFRASTRUCTURE
Key Stakeholders

  • The Ministry of Health (MOH) is responsible for developing programs and policies, budgeting, personnel allocation, direction and supervision of national institutions

  • The Provincial Health Bureau administers the provincial healthcare care system. Each province consists of District Health Bureau responsible for district level administration of the healthcare services

  • The Commune Health Station (CHS) in each district provide healthcare services at Commune Level. District People’s Committee is responsible for the funding of the healthcare services in each district
Healthcare Service Delivery

  • CHS providing primary healthcare services is the entry point in the public healthcare system in Vietnam

  • District hospitals offer basic inpatient treatment, emergency services, and pre-natal and delivery services. Provincial hospitals (including specialty clinics) provide outpatient and inpatient services

  • National hospitals are the most advanced with specialties such as oncology, endocrinology etc.

  • Current hospital infrastructure:

    • HC: ~11,000
    • District Hospitals: ~1,300
    • Provincial Hospitals: ~ 500
    • National Hospitals: ~ 45
    • Private Hospitals: ~ 1,00
KEY CHALLENGES
Regulatory Framework for Private Healthcare

  • Private healthcare infrastructure has flourished in Vietnam as the government intended to reduce burden from the public healthcare system. However, due to lack of regulations, the private system has failed to complement the public one as expected

Burdened Public Healthcare

  • People mostly rely on private system for outpatient care, though they may prefer to visit the public system for inpatient services. Therefore, healthcare at primary level has not developed as expected, putting more pressure on secondary and tertiary healthcare infrastructure

Uneven Concentration of Healthcare Personnel

  • Distribution of human resources is not even, as most of the doctors and support staff is concentrated in the urban centers. Due to it, rural population may not be able to avail the benefits of social health protection, despite being under coverage

 

DESIGN
Beneficiary Classification

SHI members are classified in to the following six groups:

  • Civil servants and formal sector workers
  • Pensioners, meritorious people, beneficiaries of social security/protection allowances, and veterans
  • The poor and near-poor
  • Children under six years of age
  • School children and students
  • All remaining population
Healthcare Insurance Financing

  • SHI is funded through government budget, employer and employee contribution, and Vietnam Social Security (VSS). The ‘Healthcare Fund’ for SHI is managed by the VSS.

  • SHI premium is fixed at 4.5% of the salary/pension/protection allowance/unemployment benefit wherever applicable. The government pays for the premium of poor, children under six years, and meritorious people. For unemployed and pensioners, VSS pays the premium. Group 5 (from above) is eligible for 30% subsidy in the premium, fully paid by the government
Payment System

  • SHI member are enrolled either at CHS or district hospitals. Capitation system covers all the costs incurred by CHS and district hospitals for providing healthcare services to SHI members.

    • There is a provision for the refund of capitation payment in case the funds are not fully utilized by CHS/District Hospital in a particular year.

    • In case of deficit of funds (i.e. more SHI members than planned avail services in a particular year), the provincial social security office reimburses CHS/District Hospitals

  • Secondary and tertiary hospitals are covered by fee-for-service payment system.
Benefits

  • Inpatient Service – Birth Delivery, Emergency Services, Other inpatient Services (nursing, tests, catering, pharmaceutical)

  • Outpatient – Public health services, primary care services, specialist services, pharmaceuticals, tests, and scans

  • Other Services – Dental care, mental care, dialysis, and transplants
Co-payment (Reimbursement) System

  • For Inpatient Services – Pensioners, poor, and members receiving social protection allowance (5%), others (20%)

  • For Outpatient Services – No co-payment for services at CHS; for others, same as applicable for inpatient services

  • Other Services – Same as applicable for inpatient services
Reimbursement System for Drugs

  • Drugs specified under the reimbursement list (consisting of more than 800 pharmaceutical products as of now) qualify for co-payment system (mentioned above).

  • SHI members can avail co-payment benefit only if the required drug is available at the CH/Hospital they are registered at. There is no reimbursement if the drug is purchased from a private drug store
KEY CHALLENGES
Enrollment of People still Outside the SHI Coverage

  • While there is clarity in the Vietnamese social health insurance beneficiary classification system, a large population still remains outside its ambit. The government needs to introduce a better mechanism to ensure enrollment of the section of the population (e.g. informal sector) who have less incentives to join the scheme (at present), as compared with other groups

Corruption

  • Due to rampant corruption in the public hospitals, the patients have to pay extra despite a well defined payment mechanism, or else the services are alleged to be unavailable despite being under social health insurance coverage.

Adequate Funding Mechanism to Ensure Long-term Viability of SHI

  • As the population under coverage increases, the government may need a better taxation policy to fund the services or else the Health Fund is expected to fall short to meet expenses. In 2013, VSS proposed the government to increase health insurance premiums from 4% to 6%, which the government declined in view of the weak economic condition.

Opportunities for Healthcare Companies

Healthcare Service Providers

  • Contractual healthcare services are not a popular trend in Vietnam; however, subjected to a robust regulatory framework with respect to its linkage with the social healthcare insurance system, private players have considerable opportunities to complement the overburdened public healthcare system in the country

Medical Device Manufacturers

  • There is a critical shortage of medical devices, such as MRI, Tomography scanners, mammography, etc. in public hospitals. With the SHI, public hospitals would need to purchase such equipment, to cater to the increasing demand, this providing a platform for medical device manufacturers in the country

  • There is a provision for private investment in public hospitals for the purchase of medical equipment. Greater opportunity lies in provincial hospitals, which lack medical equipment despite witnessing a large number of patient visits every year

Pharmaceuticals Companies

  • Vietnam is among few countries, which cover outpatient cases under the social health insurance system

  • Pharmaceutical companies have significant potential to increase sales as a result of wider coverage (once SHI is implemented), and by focusing marketing and sales efforts on the inclusion of their drugs in the reimbursement list

A Final Word

One of the key priorities for the Vietnamese government is to meet the target of 100% population coverage. For a populous country, such as Vietnam, the public healthcare system is hamstrung by the lack of infrastructure (a crucial factor in determining the success of UHC in the long term), which is aggravated by the concentration of healthcare in specific regions (e.g. urban centers). Design of Vietnamese UHC appears to be robust in terms of clarity in beneficiary classification and wider coverage of healthcare services (e.g. outpatient services). However, to ensure success, the government would be required to bring the informal sector population within the UHC ambit.

For healthcare industry participants, there are opportunities for pharmaceutical as well medical device manufacturers, with the expected expansion of public healthcare services in Vietnam. There may be a case for healthcare service providers as well in case the government decides to experiment with contractual healthcare services (to compensate for the lack of public healthcare infrastructure).

A comparative with other countries in the region should provide a better perspective on the actual potential of Vietnam as a prospective destination for devices and drugs companies alike.

by EOS Intelligence EOS Intelligence No Comments

Cambodian Healthcare – In Need of Strong Government Support

1.1kviews

Cambodia is a low income country (GNI per capita US$880 as of 2012) with a population of about 15 million (67th most populous country as of 2012). Though the country has witnessed concentrated efforts towards better healthcare infrastructure and services since gaining independence in 1953, the major push came only in 1993 after the establishment of a dedicated Ministry of Health (MOH). The MOH has been consistently working to overcome major healthcare-related challenges, such as widespread malnutrition, high mortalities from communicable diseases, and low access to healthcare. MOH’s Health Sector Plan (HSP) (2008-2015) focuses on developing healthcare infrastructure and ensuring that healthcare services reach the entire population.

This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, Vietnam, Indonesia, and Thailand.

Social Health Insurance (SHI) is still in early stages of implementation, and will take some years before it is firmly established. The SHI Master Plan was launched in 2003 with an aim to develop a stable financing system, and to promote equity in healthcare access. Currently, people from poorer sections of the society and informal sector are covered through Health Equity Funds (HEF) and Community-based Health Insurance (CBHI) Plans. The government plans to introduce a single health financing system by 2015.

Cambodia UHC

About 2.5 million poor and more than 500,000 individuals from the informal sector are covered by HEF and CBHI plans, respectively.

When implemented fully, SHI is expected to provide healthcare protection to urban and rural poor (among others). The success of SHI would depend on the government’s ability in establishing healthcare infrastructure in places where it is currently unavailable, devising a suitable taxation/financing mechanism to support it, and in ensuring an optimum coverage of health conditions. The current design and support infrastructure would determine the long term success of SHI.

 

INFRASTRUCTURE
Key Stakeholders
  • The Ministry of Health (MOH) is responsible for health policy and planning, coordinating among various sectors within the healthcare sector, and for securing external aid
  • The Provincial Health Department (PHD) connects the MOH to operational districts (OD) through the implementation of policies in the HSP via the annual operations plan (AOP)
  • OD is the primary entry point of the population into the health system; Each OD, comprising a network of health centers and a referral hospital, covers a population between 100,000 to 200,000; health centers are geographically located so as to serve a catchment area of between 8,000 and 12,000 people
Healthcare Service Delivery
  • Public healthcare service delivery is designed to offer services at two levels — a) minimum package of activity, available at health centres; b) complementary package of activity (CPA), available at referral hospitals
  • Minimum package includes (among others) initial consultations, primary diagnosis, emergency first aid, chronic disease care, and maternal and child care
  • Based on the CPA offered, referral hospitals are categorised into:
    • CPA1: Basic obstetric services, provided mostly by district hospitals
    • CPA2: Basic obstetric services, large scale surgery, ICU facility, and other specialized services, such as ENT, dental, etc.; services are primarily provided by district hospitals and a few provincial hospitals
    • CPA3: More advanced than CPA2 with a wider range of specialty services; all national hospitals and most provincial hospitals come under this category
  • Current hospital infrastructure:
    • Health Centres: ~1,100
    • CPA1: ~33
    • CPA2: ~ 31
    • CPA3: ~ 26
    • Private Clinics: ~ 1,500
KEY CHALLENGES
Lower Adoption of Public Healthcare Services

  • Despite an established referral system with primary care facilities, private clinics are the first point of contact for Cambodians. Poor access and inadequate service delivery have been major issues affecting the adoption of the public healthcare system
    • Level of expertise is still low among public sector healthcare workforce; this is one of the key focus areas for the government if it intends to improve adoption of public facilities
    • Cambodia has successfully experimented with the outsourcing of healthcare services; this can be continued to achieve efficiency at primary and secondary level, while investing public resources on tertiary level services

Less Efficient Procurement System

  • SHI may not serve the purpose if medicines covered under it are not available and patients continue to rely on private pharmacies; the procurement system needs to be overhauled with better demand estimation and/or more autonomy for purchase at the OD level
  • Bringing in technology into the procurement system should help in developing an efficient system

 

DESIGN
Beneficiary Classification
  • At the launch of SHI Master Plan, following four groups were envisaged:
    • Wealthy (5% of the population)
    • Urban Formal Sector (10% of the population)
    • Urban and Rural Near Poor (50% of the population)
    • Rural and Urban Poor (35% of the population)
Healthcare Insurance Financing
  • The expenditure on public healthcare services is provided through taxation revenues and external aid; MOH also funds (partially) the HEFs and CBHI schemes
Payment System
  • Cambodia follows a user-fee model for the payment of healthcare services; all public healthcare facilities charge user-fee for the provision of services
  • In case of HEFs, user-fee has been standardized across all ODs where the scheme has been implemented
  • CBHI pays to health centers/hospitals on either case per basis or on the basis of capitation system, depending on the arrangement with local OD
Benefits
  • Current health insurance schemes cover minimum and complementary packages offered by the public healthcare system
Co-payment (Reimbursement) System
  • The government subsidizes minimum and complementary packages (for equipment, facilities, and staff salaries) and medicines (covering essential medicines); service users have to pay for the consultation and treatment fee, and out of stock medicines
  • HEF covers partial or full costs of access to services for poor, including user-fees and cost of transportation
  • CBHI covers full cost of access to services for the informal sector population under coverage, including user-fees, cost of transportation, and the cost of referral and admission in provincial hospitals
Reimbursement System for Drugs
  • Drugs specified under the reimbursement list managed by the MOH are reimbursed; MOH is responsible for the procurement and distribution of drugs to the referral hospitals and health centers at operational districts
  • Drugs mostly covered are for in-patient services; for OPD patients, there is no such provision, except for the prescription of a cost-effective generic formulation
KEY CHALLENGES
Lack of Funding Mechanism to Ensure Long-term Viability of SHI

  • Success of the SHI would largely depend on its funding mechanism, which at present depends on taxation revenue and external aid; the government will have to look for increased funding for SHI, which may be in the form of a) increased healthcare budget allocation (from current 1% of the GDP), b) SHI-specific tax/surcharge, c) introduction of premium for top 15% (income-wise) of SHI beneficiaries
  • Participation of informal sector (with no fixed income) is crucial for the success of SHI – a review is required to assess what additional incentives that can be added to the current CBHI scheme (for informal sector) to encourage participation; this may be helpful once a unified financing system is implemented in 2015 (as planned)

Opportunities for Healthcare Companies

Healthcare Service Providers

  • Outsourcing healthcare services has proven to be an effective way to improve the performance of the healthcare system in Cambodia. Therefore, the outsourcing of services may continue in the future as well, providing opportunities to healthcare service providers

  • Experienced service contractors help in fulfilling the goals set-out in HSP (2008-2015, especially the Millennium Development Goals) where the country appears to be lagging

Medical Device Manufacturers

  • There is severe lack of medical devices, such as MRI, tomography scanners, mammography, etc. in public hospitals. SHI aims at providing such facilities, even if outsourced to private players

  • Increased in-patient coverage is likely to result in demand for devices such as patient monitoring equipment

Pharmaceuticals Companies

  • SHI implementation may not bring any additional benefits to pharmaceutical companies, as OPD drugs are not included as part of the benefits

  • Demand for in-patient drugs is likely to increase; the focus of pharmaceutical companies would remain on the inclusion of their drugs in the reimbursement list

A Final Word

The SHI system is still in early stages of development in Cambodia and the government needs to work on both infrastructure and design to ensure success of the scheme. SHI will be effective only if the people under coverage avail healthcare services through it, for which government healthcare services need to be at par with the private system. Provision of OPD services under SHI coverage will also help in greater adoption of the scheme.

Participation of the informal sector population is key to the success of the scheme from a financial perspective (ensuring adequate funds and lower reliance on foreign aid), and for meeting the key objective of ‘healthcare to all’.

From the perspective of healthcare industry participants, Cambodian healthcare service providers are likely to gain the most if the government expands services to a larger set of population (based on positive outcome from previous experiments). On one hand, lack of adequate equipment provides a strong opportunity for medical devices companies, while on the other hand, the expansion of in-patient services (as more people are covered by SHI) should provide an impetus to pharmaceuticals companies. For pharmaceuticals companies, the growth potential may not be fully realized unless OPD services are also covered under SHI.

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Notes:

  1. Health Equity Fund (HEF) are schemes to support vulnerable groups, supported by the Health Sector Support Program and funds from various development partners and the national budget
  2. Community-based Health Insurance is a voluntary, community-based and not-for-profit health insurance
  3. About 35% of the total population lives below the poverty line, earning US$0.45-0.60 per day
by EOS Intelligence EOS Intelligence No Comments

Philippines’ Universal Healthcare – A Promising System Plagued by Inconsistent Quality of Service Delivery

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Over the years, governments across emerging markets have realised how critical universal healthcare coverage is for their population. While some countries have taken the challenge head-on, others have followed a wait-and-watch policy to see how such systems are being implemented, and gradually adopted a system that is based on the good practices of several healthcare plans.

In recent years, several Southeast Asian countries have adopted different forms of universal healthcare plans for their countries. Universal healthcare-related policies and delivery mechanisms were largely based on existing healthcare systems, a result of gradual development (based on local factors and priorities). Therefore, while theoretically universal healthcare exists (wherever applicable), it differs in terms of the actual benefits (e.g. quality and range of services and monetary advantage to patients).

We review these plans across a few Southeast Asian countries, to understand their infrastructure and design, and available opportunities for healthcare service providers, medical device manufacturers and pharmaceuticals companies. As part of this series, we start with Philippines, where about 80% of the population is currently covered under the universal healthcare plan, called PhilHealth.

This article is part of a series focusing on universal healthcare plans across selected Southeast Asian countries. The series also includes a look into the plans in The Philippines, Cambodia, Vietnam, Indonesia, and Thailand.

The Philippines is a lower-middle income country with a population of about 97 million. In spite of a strong focus on healthcare services, inequality in terms of healthcare access to various socio-economic groups and regions remains a persistent issue. Achieving universal healthcare access for all its citizens is a key objective of the government’s National Objectives for Health (2011-2016) program, and the government aims to fulfil three primary goals through this program – 1) financial risk protection; 2) better health outcome; 3) responsive healthcare system.

The first step towards universal healthcare was the launch of Medicare (1969), which provided health insurance to formal sector (public and private) employees. Coverage was extended to the poorer section of the population and the informal sector with the creation of PhilHealth (Medicare was merged with it) in 1995.

As of 2013, more than 80% of the country’s population was covered under the national health insurance program PhilHealth. The government aims to provide 100% coverage by 2016.

Philippines UHC

For a private sector healthcare player (pharmaceutical company, medical device manufacturer, or healthcare service provider), a country with 100% insured population presents strong incentives in form of greater access to diverse sections of the population with varied service and product needs, which will inevitably drive sales. However, to maintain the effectiveness of universal healthcare coverage, the government needs to work beyond simply the numerical (on paper) coverage of its population under the health cover to ensuring informal sector participation in the scheme, consistency in service delivery at primary care level, and adequate coverage of diseases.

The long-term success of social health insurance (and related with it, the prospects for healthcare sector stakeholders) will be determined primarily by how PhilHealth has been designed and what emphasis is being laid on infrastructure.

We take a closer look at these two critical aspects of the universal healthcare program.

INFRASTRUCTURE
Key Stakeholders
  • The Department of Health (DOH) is responsible for developing programs and policies, monitoring standards, and provision of specialized and tertiary level care
  • DOH is represented at the regional level by centres for health and development (CHD), which link national programs with local government units (LGU); provincial administration (including hospitals and primary care) fall under each LGU
  • LGU administers healthcare services through Health Boards at the provincial (led by the governor), city (led by the mayor), and municipal (led by municipal mayor) levels
  • Barangay (village) is the smallest administrative unit with primary health station/health centre
Healthcare Service Delivery
  • Public hospitals account for about 40% of approximately 1,800 hospitals in the Philippines
  • Based on the range and quality of services offered, hospitals are classified into four levels:
    • Level 1: general hospital with maternity ward, dental clinics, 1st level X-ray, secondary clinical laboratory with consulting pathologist and blood station, and pharmacy
    • Level 2: Level 1 facilities + respiratory units, ICU, NICU, HRPU, tertiary clinical laboratory, and 2nd level X-ray facility
    • Level 3: Level 2 facilities + plus teaching/training, physical medicine and rehabilitation, ambulatory surgery, dialysis, tertiary laboratory, blood bank, and 3rd level X-ray
    • Level 4: Specialty hospitals with treatment facilities for health conditions such as bones, heart, lungs, etc.
  • Current hospital infrastructure:
    • Level 1: ~ 352
    • Level 2: ~ 276
    • Level 3: ~ 41
    • Level 4: ~ 51
    • Private Hospitals: ~ 1,120
KEY CHALLENGES
Overlaps in the referral system

  • Despite a highly decentralized healthcare delivery system, there are overlaps in the referral system in which district hospitals also act as the entry point into the country’s healthcare system. This may result in overcrowding of district hospitals, under-utilization of primary care centres, and loss of efficiency (patients being referred back to their local villages)

Variance in quality of healthcare service delivery

  • Provision and quality of services largely depend on the LGU administration, where local funding plays a crucial role. Healthcare is one of several areas that fall under the administrative regime of an LGU; it has been observed that healthcare prioritization varies by LGU, implying that the quality of healthcare service delivery by LGU, leading to variance in service levels across the country

 

DESIGN
Beneficiary Classification
  • PhilHealth members are classified into four groups
    • Group 1: Formal sector employees
    • Group 2: Self-employed professionals, members of the agricultural sector, and members of the informal sector
    • Group 3: Retirees and pensioners who are at least 60 years old and have made 120 monthly contributions to PhilHealth
    • Group 4: Poorest segment, belonging to the lowest 25% of the Philippine population and families listed in the National Household Targeting System for Poverty Reduction (NHTS-PR)
Healthcare Insurance Financing
  • PhilHealth is mainly funded through government taxation, and employer and employee contribution
  • Premium is fixed at 2.5% for formal sector employees (Group 1)
  • Group 2 members fall under the individual paying program – those with less than P 25,000 monthly income pay P 2,400 as yearly premium, and those with over P 25,000 cut-off pay P 3,600 annually
  • Group 3 and 4 are not required to pay any premium
Payment System
  • Hospitals work under fee-for-service system, and are paid by PhilHealth for a defined set of services; reimbursements are paid directly to service providers
  • DOH has identified 25 health conditions under case-payment (covers total cost per case) for PhilHealth cardholders
Benefits
  • A defined set of services at pre-determined rates are covered by the PhilHealth scheme, and patients are required to pay out-of-pocket beyond the rate ceiling; coverage includes cost of medicines, supplies, and diagnostics during hospitalisation
  • Outpatient consultations are not covered under PhilHealth; only a handful of health conditions, such as asthma, gastroenteritis, upper respiratory tract infection, and pneumonia qualify for treatment under the insurance plan
Co-payment (Reimbursement) System
  • The PhilHealth system does not work on the principle of fixed-percentage co-payment system; patients (irrespective of the beneficiary group it belongs to) are required to pay the balance if the cost-of-service goes beyond a pre-determined ceiling for a particular service
  • Ceiling rates may vary for the same service; higher ceiling rates are applicable for patients visiting specialty level hospital facilities
  • For the 25 health conditions under the case-payment system, baseline benefits can range from 50% to 100%; DOH is also implementing a zero co-payment policy for beneficiaries under the sponsored program (Group 4 beneficiaries) for the 25 disease defined under case payment
Reimbursement System for Drugs
  • Drugs, listed in the Philippine National Drugs Formulary, and required during hospitalisation are covered under PhilHealth; minimum ceiling rates (for single confinement period) for medicines according to the hospital level are the following:
    • Level 1: P2,700
    • Level 2: P3,360
    • Level 3: P4,200
KEY CHALLENGES
Enrolment and recognition of actual beneficiaries by group

  • Enrolment of population representing the informal sector into PhilHealth is a challenge, as due to their irregular income levels, beneficiaries under this category do not enrol or pay the mandated premium
  • Also, identification of the poorest segment of the population, forming the sponsored category, is a grey area as the system is unable to ensure clear distinction between the entitled population versus those from other groups

Inadequate monitoring of service delivery

  • PhilHealth mainly provides in-patient benefit with low financial protection due to the ceiling system
  • Due to apparent lack of check on the fees charged by hospitals, even higher ceilings do not benefit patients, as hospitals raise their cost of services; consequently, the actual number of people availing its services appears to be significantly low
    • For instance, in 2011, PhilHealth’s share in the country’s total healthcare expenditure was only 9.1% vis-à-vis out-of-pocket share at 52.7%; the rest 38% was government’s expenditure on healthcare other than PhilHealth

Opportunities for Healthcare Companies

Healthcare Service Providers

  • Significant Public Private Partnership (PPP) opportunities in exist in Philippines’ healthcare sector, to raise the level of services and to extend the coverage

  • Currently, only a 700-bed orthopaedic centre is being operated under the PPP model, and according to Philippine’s Health Secretary, there is significant opportunity for the PPP model in all DOH managed hospitals

  • The only roadblock for the adoption of PPP model is the perception of it being a move towards privatization of healthcare services (given that private sector already dominates the healthcare space in Philippines)

Medical Device Manufacturers

  • Public hospitals (especially those under LGU administration) usually are short of resources for the procurement of medical devices (mostly imported), which constraints them in providing patients with critical diagnostic services; this remains an area of concern as available devices will be inadequate to meet the 100% population coverage target of PhilHealth

  • At the same time, the demand for devices remains robust, and growth is expected on account of increase in the number of people under coverage as well as greater availability of healthcare services across the country. In order to further boost demand, medical device companies could explore ways to finance the purchase, so as to motivate hospitals to purchase equipment

  • The DOH has also hinted that critical equipment, such as CT scans and MRI machines, can be procured under a PPP model, providing an alternative option for device manufacturers to widen their presence

Pharmaceuticals Companies

  • In the current scenario, scope for pharmaceuticals companies is limited to medicines used for inpatient treatment. Sales potential is likely to increase as the government introduces zero co-payment policy for 25 health conditions for the sponsored category beneficiaries

  • Also, with the proposed widening of treatment coverage to include conditions such as hypertension and diabetes (was expected to come into effect in October 2013) which affect about 20% of the adult population, sales prospects is likely to improve

A Final Word

Philippines’ universal healthcare plan, PhilHealth, provides a strong foundation for access and quality enhancement of healthcare services to its population. With coverage of about 80% of its population currently, the country’s healthcare policy has tried to provide equality of service delivery to its citizens, and covers a range of common diseases and inpatient treatments. While there are obvious concerns around inadequate hospital facilities and diagnostics equipment, issues with accurate entitlement of benefits and inadequate monitoring of service delivery, the country’s healthcare administration is working with private partners to strengthen the system and focus on providing quality healthcare to its citizens.

From the perspective of healthcare industry participants, hospital services companies perhaps have a higher potential for growth in view of the shortage of hospital facilities across the country, while drugs companies must continue to rely on limited access to inpatient treatment facilities, providing drugs for the most common diseases (perhaps, also the cheaper product variants of their portfolio).

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