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Health Economics

Session 01

9/28/2013

EMHAn , 2013 Resource : Dr. Kithsiri Edirisinghe

Role of Private Sector in Health Development; Looking Beyond the Boundaries


Dr. Kithsiri Edirisinghe
MBBS , MSc, MD ( Medical Administration ) Master Trainer ( Australia ) TAE ( Australia ) Cert. IVLP ( USA)

Deputy Chairman , International Institute of Health Sciences Managing Director , Green Health care pvt Ltd .
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Session Outcomes
At the end of the session you are expected to achieve the following :
Introduce Health development Basic understanding of major players in health systems Over view of the local health systems and current issues & role of Private sector Future private sector , looking beyond the boundaries
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Readings
Role of Private sector in Public health http://csis.org/files/publication/120131_Sturchio_Privat eSectorRole_Web.pdf PRIVATE SECTOR PARTICIPATION IN HEALTH, Institute for Health Sector Development, London EC1V 9HL, United Kingdom, www.ihsd.org The World Health Report ,2010 http://www.resultsfordevelopment.org/knowledgecenter/innovative-health-service-delivery-models-lowand-middle-income-countries Few handouts
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IS HEALTH CARE A RIGHT?

Yes? No?
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The General Assembly of the United Nations adopted and proclaimed these principles in 1948 Article 25
Everyone has the right to a standard of living

THE UNIVERSAL DECLARATION OF HUMAN RIGHTS

adequate for the health and well-being of himself

and of his family, including food, clothing, housing


and medical care and necessary social services, and the right to security in the event of unemployment,

sickness, disability, widowhood, old age or other lack


of livelihood in circumstances beyond his control.
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What is health development ?

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Health
Health is a state of complete physical, mental and social well-being Health is not simply absence of disease and infirmity - World Health Organization-

Health statistics generally measure morbidity (Sickness) and mortality (Deaths)


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Development
Growth Expansion Progress Increase Maturity Improvement

So , It is always the future ..!


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Health and development ?


Better health is central to human happiness and well-being. It also makes an important contribution to economic progress, as healthy populations live longer, are more productive, and save more.

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Health and development


Health increases human potentialities of all kinds Everyone can benefit from better health in the present, and improved health for the young will lead to healthier population in the future Better child health and nutrition promotes future productivity growth directly by helping children develop into stronger and healthier adults
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So who are the major players


Many factors influence health status and a country's ability to provide quality health services for its people. Ministries of health are important actors, but so are other government departments, donor organizations, civil society groups and communities themselves. For example: investments in roads can improve access to health services; inflation targets can constrain health spending; and civil service reform can create opportunities - or limits - to hiring more health workers.

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Read health development PP 02 and HO 10

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So who are the major players


Many factors influence health status and a country's ability to provide quality health services for its people. Ministries of health are important actors, but so are other government departments, donor organizations, civil society groups and communities themselves. For example: investments in roads can improve access to health services; inflation targets can constrain health spending; and civil service reform can create opportunities - or limits - to hiring more health workers.

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Health systems in the world


What is our model ?

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Main systems
1. THE BISMARCK MODEL 2. THE BEVERIDGE MODEL 3. THE NATIONAL HEALTH - INSURANCE MODEL 4. THE OUT-OF-POCKET MODEL

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1. THE BISMARCK MODEL


Characteristics:

Providers and payers are private financed Private insurance plans ( financed jointly by employers and employees through payroll deduction) Tight regulation of medical services and fees (cost control) by the government The plans cover everyone and do not make a profit

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Germany, Japan, France, Belgium, Switzerland, Japan, and Latin America EMHAn , 2013 Resource : Dr. Kithsiri
Edirisinghe

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2. THE BEVERIDGE MODEL


Characteristics:

Healthcare is provided and financed by the government, through tax payments There are no medical bills Medical treatment is a public service Providers can be government employees Lows costs b/c the government controls costs as the sole payer Named after William Beveridge inspired Britains NHS Great Britain, Italy, Spain, Cuba, and the U.S. Department of Veteran Affairs
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3. THE NATIONAL HEALTH INSURANCE MODEL


Characteristics: Providers are private Payer is a government-run insurance program that every citizen pays into; has considerable market power to negotiate lower prices National insurance collects monthly premiums and pays medical bills Plans tend to be cheaper and much simpler administratively than American-style insurance Can control costs by: (1) limiting the medical services they will pay for or (2) making patients wait to be treated

Canada, Taiwan, South Korea


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4. THE OUT-OF-POCKET MODEL


Characteristics:

Only the rich get medical care; the poor stay sick or die Most medical care is paid for by the patient, out-of-pocket No insurance or government plan
Rural regions of Africa, India, China, and South America no-system countries
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COMMON PRINCIPLES OF ALL MODELS


Coverage
Coverage for every resident (old or young, rich or poor) Moral principle of all developed countries except for US Every country rations care not everything is covered!

Quality
Other developed countries produce better quality results than U.S.

Cost
All other systems are cheaper than in the US Foreign employers pay far less for health coverage than US companies Effect?

Choice
Many countries offer greater choice than most Americans have

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Read health development HO 10 and Movie Sicko

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Watch Video 01
Activity 01

Organize a mind map of the current role of Private sector healthcare

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1. The Regulator; controlling unpredictability of healthcare services

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Main roles of the regulator


Controlling unpredictability of healthcare services Availability, accessibility , equality , efficiency , effectiveness , affordability , sustainability Provision of safety net for fees and Medical mishaps Planning , implementing , monitoring and evaluation of healthcare services & outcomes
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Regulator
Ministry of health, Sri Lanka Private sector health development Private health services regulatory council Private health services regulatory act 2006 Respective regulatory acts Respective legislative acts of welfare Professional boards , councils ( SLMC, NC) Civil law , Criminal law Patient rights
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Private sector
Cooperates and Companies Health care services providers Healthcare suppliers Insurance Community Patients International and national NGOs
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The Challenge
Throughout the developing world, most health systems are characterized by mixed public and private financing and delivery of care. Greater quality and access calls for further thinking on the role of the private sector into health systems and a broader systems perspective on how public and private sectors can work together to address the challenges of affordability, quality, and availability of care.
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Private sector role in regulation ??


Collaborative effect on Policy making Currently totally ignoring private sector Government has become a solo player but expects Private sector contribute to national wealth and health Private sector ignores policies / regulations organized without their concurrence Ignoring world trends Ignoring other contributory disciplines of health ( all are work in isolation ) Highly accepts/ respects the trade union & political view
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Private sector role in regulation ??


Areas to focus on policy / regulation :

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Medical / nursing education Registration of health professionals Quality standards Multidisciplinary approach in policy making Cultures World trends Patient rights OHS occupation health & safety PPP policy Others . Information system
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2. The Payer ; financing of health expenditure

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The Payer Financing


Total expenditure on health goods and services and capital formation in Sri Lanka Rs. 154 billion ( 2008) The ratio of Sri Lankas health expenditure to GDP (health to GDP ratio) 3.5% of GDP in 2008 Compare our indices with other systems

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The Payer The Description


Government financing of health expenditure
Rs. 73 billion 47.3% of total financing in the health sector in 2008

Private sources
Amounted to Rs. 80 billion in 2008 private sector financing 1.8 % in 1990

Source ; Sri Lanka Health Accounts, 2008


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Government sector spending , 2008


Local governments ETF -2% - 0%

Central government - 65% Provincial councils - 33%


Source ; Sri Lanka Health Accounts, 2008

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Description of Private sector spending , 2008


Private sector financing consists of household out-of pocket expenditure over 82% Private companies providing healthcare and medical benefits to their employees - 8% . Private health insurance - 5% The non-profit sector 2% Private healthcare providers principally for new capital investment in hospital services. 2-3% Source ; Sri Lanka Health Accounts, 2008
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The cost drivers


Poor implementation of regulations and lack of protection of the consumer Drugs and devices Defensive medicine Demands
Patient related Physician related---? Fee for service!

Administrative costs Market driven healthcare


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How could the financing in health in Sri Lanka could be improved?


Stringent control of the fee structure Eliminating monopoly and let market forces takes over Insurance funding Mandatory workers insurance Social insurance Protecting the most needy expanding the health net Health information systems/ e health Improving quality / standards and accreditations Proper implementation of regulations
Source ; Sri Lanka Health Accounts,- 2008
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3. The Provider; Healthcare services and suppliers


Watch video 02

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A. Healthcare service provision


Curative health services Public health services ( 99% government ) free

at the point of delivery


Other related welfare services Future needs
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Insight to the local hospital services

Provision of healthcare to the community has been a prioritized responsibility of the respective governments, worldwide

Source : Health Sector Report , 2005


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The Development of the government sector


Description of Private Hospitals 2006 Number of Institutions 1001 Year % 91.6 2012 1001

Number of beds

61,835

94.5

62,000

Source: Institute for Health Policy (http://www.ihp.lk/) and Annual Health Bulleting 2003
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The Development of the private sector


Description of Private Hospitals 1990 Number of Institutions 48 Year 2006 92 2012

120
Number of beds 928 3269 5000*

Source: Institute for Health Policy (http://www.ihp.lk/) and Annual Health Bulleting 2003 * Estimate, unpublished data 9/28/2013
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Regional comparison
Table 16: Life expectancy and bed capacity in the Asian region
Country Sri Lanka Singapore Malaysia India Pakistan Bangladesh Nepal Beds per 10,000 34 28 19 7 7 3 2 Year 2006 2004 2003 2003 1998 2001 2001 HALE* 61.5 70.0 63.5 53.5 53.0 54.0 51.5

H ealth A ctive L ife E xpectancy: The average number o f years that a fit perso n o f a given age can be expected to have befo re experiencing disability

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The Utilization pattern

Facility

Outdoor care Patients (Million) 1991 2002 45.0 (54%) 37 .0 (46%)

Inward care Patients (Million) 1991 3 .0 (96%) 0.069 (4%) 2002 4 .0 (93%) 0.303 (7%)

Government

32.0 (64%)

Private

17 .0 (34%)

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Source : Annual health bulletin s,2002 EMHAn

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Private sector service provision


Market driven healthcare Manly curative care Primary healthcare
Mainly out door care GP practice

Investigative care Minimal preventative care and less inward care Medical surgical Interventions Minimal emergency and trauma care Ambulatory care Gate way to government services
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b. The suppliers
Medical Equipments- 99% private Consumables 90% private Drugs and devices manly private Monopoly Regulations Quality Ethics
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C. Clinicians
Consultant specialists Visiting Control admission, treatment, prescription and payment Uncontrollable charging system Ask for latest technology Ethics ? Prescribing and bad practices Defensive medicine
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d. Nurses & others


Dependence for senior sisters from government sector No proper registration method Technical quality No affinity for reading CNE Poor working culture Risks to staff Highly volatile environment Untrained mangers with little clinical sense Unqualified staff, licensed and unlicensed pharmacies and general shops selling pharmaceuticals.
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e. Infrastructure
Excellent services quality Needs special requirements Patient flow Infection control Risk management Regulatory norms High cost of construction - taxes - VAT in hospital development Lack of specialists for hospital projects
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Improving Technical quality through accreditations and other actions Collaborative use of facilities PPP Fluffing the Training need Removing monopoly Fulltime staff , including doctors Regulation of the suppliers & eliminating mafia & correuptions
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How can we improve the effectiveness of provision of services in the private sector ?

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4. The Consumer ; patient

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The Consumer
Exorbitant charging Main funder- Out of pocket expenditure by households Most of that money is spent in the private sector is mostly on primary care and pharmaceuticals Households get poor value for their money .

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How can you protect and safe guard the patients ?


Safety net

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Activities to improve knoewdlge


1. What do people spend on private sector health care? 2. What do we know about the health care seeking behavior of the poor? 3. What are the formal frameworks for public engagement with the private sector? 4. Are governments prepared to make a significant shift of resources to the private sector?
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Read HO 01 to 07 in Pvt sector role in healthcare folder

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Current issues

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Issues
Poor Regulation
Use of poorly trained staff . No registration system for Pvt. Nurses Standards of care Infrastructure Unlicensed practitioners unlicensed pharmacies poor quality of supplies . Reporting systems
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Issues
Ministries of Health and their provincial and district offices do not have the capacity to work with the private sector to improve standards. Political and Trade union influence Lack of interest in the private sector

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Recognition
Governments have failed to recognize that the public health sector is often a smaller funder than the private sector.

Cost of care
Services no MPI Drugs and equipments Low insurance coverage

Quality
Technical Services quality Medical mishaps Lack of interest in the sector
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Poor coordination
Most international development agencies have either worked with the public sector to strengthen its delivery role or have worked directly with the not for profit private sector, bypassing government. They have generally not worked with governments helping them implement strategies for public private partnership(PPP) Development agencies have also failed to recognize that the public health sector is typically now a smaller funder and provider than the private sector. Because there is insufficient funding for the public sector, governments tend to be disinclined to use the limited funds to contract with the private sector.
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Innovation Use of IT in healthcare services Expansion of the economy National health plan

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Improving private sector involvement in health development the future , beyond boundaries.
Activity 03 - Organize a mind map 02 For the future role in Private sector role in healthcare services
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Activity 03 - Organize a mind map 02 For the suggested future role in Private sector role in healthcare services

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Control and facilitate the Pvt. Health services


Regulation Provision Funding Consuming

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Regulation and facilitation


Formal frameworks for public engagement with the private sector
Protection of the consumer safety nets Tort Reform Quality Assurance Services
Technical -Policies and protocols _ GCPs Service quality

Drugs and services Infrastructure Training government sponsored


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Regulation and facilitation


Formal frameworks for public engagement with the private sector
Protection of the consumer QA Services
Technical -Policies and protocols _ GCPs Service quality

Drugs and services Infrastructure Training government sponsored


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Managing demand and supply


Introduction to demand and supply led mechanisms Demand side:
Voucher schemes Insurance and other risk pooling schemes

Supply side:
Social franchising Social marketing Contracting with private providers Improving care from unlicensed providers Public-private partnerships for developing infrastructure Controlling cost and the quality of goods and services

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Cost management
Evidence based medicine Use of protocol and guidelines Reduction of administrative costs Managing demand Management of chronic diseases Promotion of healthier living Use of HIS Uniformity of Healthcare Safety nets Funding systems insurance , employer sponsorships Cooperate funds Tax exemptions MPI Insurance cover
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Others
Accessibility
PPP , NGOs, Partnerships of utilization of care Managing health seeking behavior

Expansion of pvt. services to other areas Make a significant shift of government resources to the private sector and vise versa

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Life is not about waiting for the storms to passits about learning to dance in the rain!
-Vivian Greene Thank You!
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Assignment
You have been assign the task by his Excellency the president to give an effective proposal for the future role in Private sector healthcare services. He also have instructed you to critically assess the health system and how best this could improve by enhancing the role of the private sector healthcare in health industry .

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