Healthcare Reform in The Republic of Georgia A Healthcare Reform Roadmap For Post Semashko Countries and Beyond PDF

Copyright 2014 Bendukidze, Roeder, Tanner, Urushadze
All rights reserved

ISBN: 1497422000
ISBN-13: 978-1497422001
!"!#CAT#$%&
This 'ook is dedi(ated to all those )ho had to su**er under (entralized
state+run ,e-ashko health syste-s and ai-s to li'erate people.s health in
those pla(es )here ,e-ashko is still in pla(e
Foreword: The Georgian Model: Market-Based Healthcare as
a Game-Changer in Developing Economies................................ 6
Chapter 1: Initial Situation of the Georgian Health System....10
The Way Out from Soviet Healthcare............................................. 10
Corruption.......................................................................................... 12
Quality of Care .................................................................................. 13
Health Outcomes................................................................................ 13
First Wave of Health Reforms, 1995-2000......................................15
Economic Context.............................................................................. 15
Reform Context.................................................................................. 15
State of Hospitals............................................................................... 18
Need for Reforms............................................................................... 20
Chapter 2: Chronicle of the Georgian Healthcare Reforms....24
Privatization of Public Hospitals...................................................... 25
Hospital Planning .............................................................................. 26
Tender Requirements........................................................................ 26
The War.............................................................................................. 27
Restart of the Reforms...................................................................... 27
Reforming Health Financing............................................................ 28
Mobilizing Resources......................................................................... 28
Health and Insurance Vouchers....................................................... 29
Targeting the Poor............................................................................. 30
Equal Access Clause.......................................................................... 31
Improving Eligibility......................................................................... 31
Developing Private Health Insurance ............................................. 32
Consumer Protection: Mediation Services...................................... 33
Fighting Corruption Through Institutional Redesign.................... 34
Reforming Georgian Pharmaceutical Market ...............................34
Liberalization of the Drug Market................................................... 35
Competition Reduced Pharmacies Margins.................................... 36
Results of the Reforms....................................................................... 36
Chapter 3: Georgias Health Reforms in a European Context
........................................................................................................39
Rationing ........................................................................................... 40
4
Healthcare Reform in the Republic of Georgia: From Soviet Debris to Market-
Based Healthcare
Georgias Reforms............................................................................. 41
A Model for Reform?........................................................................ 43
Chapter 4: An Interview with Kakha Bendukidze, Former
Georgian Minister for Reform Coordination............................45
About the Authors:...................................................................... 59
Endnotes........................................................................................61
/
Bendukidze, Roeder, Tanner, Urushadze
Foreword: The Georgian Model: Marke-
Ba!ed "ealh#are a! a Ga$e-%hanger in
&e'elo(ing )#ono$ie!
*+ Frederik %+r,! -oeder
0ealth(are e1penditures are rising glo'ally, and poli(y -akers are
looking *or a (ure #n -ost (ases, either -ore (entralization or rationing
have 'een pres(ri'ed to ta(kle this pro'le-
%ations )ith -ore planned e(ono-ies are espe(ially struggling to ad2ust
their do-esti( health syste-s to -arket realities 3ost post+(o--unist
(ountries still lag 'ehind the industrialized )orld in health out(o-es and
also e1perien(e a high degree o* (orruption and in*or-al pay-ents
$ver the (ourse o* the past eight years, the Repu'li( o* 4eorgia.s health
syste- developed a uni5ue approa(h to)ards health re*or- and has
e1perien(ed great su((ess so *ar 6or-erly one o* the -ost dys*un(tional
and (orrupt (ountries to re(eive (are in "urope, 4eorgia has e-erged as
the leading health syste- in the sphere o* post+,oviet po)ers
4eorgia 'roke the old re*or- paradig- o* gradual (hange and instead
introdu(ed 'old, -arket+'ased re*or-s in a short ti-e period that the
(ountry.s health(are syste- largely hadn.t seen 'e*ore
7ost+(o--unist (ountries provide a good (ase study on ho) a 'ig
govern-ent stake in health(are a**e(ts the availa'ility and a**orda'ility
o* servi(es Centralized and so+(alled 8*ree9 health syste-s tend to have
glo'al 'udgets *or servi(es ,u(h e1+ante allo(ation o* *unds (auses a
-isallo(ation o* resour(es and thus shortages in -any areas o* (are This
results in the long 5ueues that (an 'e seen not only in -any "astern
"uropean health syste-s 'ut also in the single+payer syste-s o* the
United :ingdo- and Canada The a'sen(e o* private property and la(k
o* in(entives gives rise to highly disengaged -edi(al and nursing
personnel
These (onditions o*ten leave patients in a situation )here they don.t
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Based Healthcare
re(eive the 8*ree9 (are they need As a result, patients are -otived to
look *or )ays to in(entivize do(tors and other providers to treat the-
,u(h in(entives usually have a -onetary (hara(ter and are either (alled
8in*or-al pay-ents9 or 8'ri'es9
A very illustrative e1a-ple o* ho) e1pensive 8*ree9 health(are (an
'e(o-e is the Ro-anian health syste- The <orld Bank esti-ates that
Ro-anians spend =/> o* their entire *a-ily.s -onthly in(o-e *or
in*or-al pay-ents during a hospital stay $ne #3A, -arket resear(h
survey sho)ed that ?/> o* Ro-anians 'elieve they )on.t re(eive
standard (are i* they don.t 'ri'e the -edi(al sta** 7rivate health(are
providers )ith -odern )ards and superior (are o*ten (harge patients less
than (orrupt do(tors in 8*ree9 hospitals do As a result, a parallel private
hospital syste- e-erged that o**ers patients -u(h 'etter (are *or the
sa-e a-ount o* -oney or less
"astern "uropean poli(y -akers @ -ost pro-inently in 7oland,
,lovakia, and the Cze(h Repu'li( @ have (o-e to understand the
de*i(ien(ies o* govern-ent+run health(are and appre(iate the gro)ing
i-portan(e o* private health(are provision and *unding
The Repu'li( o* 4eorgia re(ently under)ent one o* the )orld.s -ost
radi(al health re*or-s, all )ithin 2ust a (ouple o* years The <orld
0ealth $rganization on(e ranked the 4eorgian health syste- a-ong the
)orst in the )orld The provision o* 8*ree9 health(are )as shaped 'y
u'i5uitous (orruption Re*or-ers led 'y then 3inister o* "(ono-i(s,
:akha Bendukidze, de(ided to a'olish the dys*un(tional ,oviet+style
single+payer syste-
#nsuran(e vou(hers *or the poor and elderly repla(ed govern-ent health
insuran(e These vou(hers (over the pur(hase pri(e o* a 'asi( 'ene*it
pa(kage *ro- a private health insuran(e (o-pany 7rivate health
insuran(e (o-panies (o-pete *or these patients and the re-aining
population )ho (an either pur(hase insuran(e or (an re-ain uninsured
There is no individual -andate As a result o* these -arket re*or-s,
private insuran(e (o-panies and hospital (hains have 'uilt -ore than
100 -odern inpatients *a(ilities )ithin the last three years
=
<ithin hal* a de(ade, 4eorgia.s total restart o* its health(are syste-
(reated positive results *or patients 0ealth indi(ators su(h as in*ant
-ortality and li*e e1pe(tan(y rose dra-ati(ally #n*or-al pay-ents )ent
do)n *ro- 40> o* the (ountry.s health e1penditures to 'elo) />
4eorgian hospital e1perts esti-ate that pri(es )ent do)n 'y 40> due to
the re*or-s Co-petition and private enterprise (reated a diverse
lands(ape o* hospitals, health -aintenan(e organizations, insuran(e
plans, and *reedo- o* (hoi(e This pluralisti( (o-petitive syste- allo)s
ongoing innovation driven 'y patients. needs The li'eralization o* the
4eorgian health syste- attra(ted *oreign investors that didn.t solely
in2e(t (apital into the syste- 'ut also 'rought kno)+ho) *ro- a'road
#t.s not 2ust transitioning e(ono-ies that are -oving to)ards -ore
private health(are ,)eden and 4er-any, o*ten seen as de-o(rati(
so(ialist role -odels, have *a(ilitated a huge surge o* private health(are
in the last *e) years A*ter t)o de(ades o* privatization, *or+pro*it
(o-panies o)n al-ost 40> o* 4er-an hospitals By (ontrast, the
A-eri(an 0ospital Asso(iation esti-ates that -erely 20> o* hospitals in
the U, are *or+pro*it 7rivatization o* hospitals allo)ed signi*i(ant
i-prove-ents in 5uality o* (are "**i(ien(y gains redu(ed treat-ent
(osts, providing 'etter (are at a lo)er (ost
The sad truth is (ountries that e1peri-ent )ith so(ialized -edi(ine o*ten
e1perien(e (atastrophi( levels o* (are, high levels o* (orruption, and a
-isallo(ation o* s(ar(e resour(es Ti-e and again, patients )ill try to
opt+out o* those syste-s or pay *or parallel private servi(es #n response,
-any (ountries have started i-ple-enting poli(ies to strengthen the
private se(tor, introdu(e -ore *reedo- o* (hoi(e, and allo) (o-petition
The results have 'een a vast i-prove-ent in the availa'ility and 5uality
o* health(are *or (itizens
This 'ook sho)(ases the e1perien(es o* t)o leading health(are
re*or-ers *ro- 4eorgia, *or-er 3inister o* "(ono-i(s :akha
Bendukidze and *or-er 3inister o* 0ealth Andria Urushadze 3i(hael
! Tanner *ro- the Cato #nstitute in <ashington, !C also (ontri'utes
his e1ternal vie) on the 4eorgian re*or-s These e1perts. e1perien(es
)ritten do)n in this pu'li(ation shall serve as a road-ap *or
poli(y-akers to ena(t su((ess*ul health(are re*or- in "astern "urope
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and 'eyond
A
%ha(er 1: Iniial Si,aion o. he Georgian
"ealh S+!e$
*+ /ndrew 0r,!had1e
The 2a+ 3, .ro$ So'ie "ealh#are
$ver the last *e) de(ades, the 4eorgian health syste- has e1perien(ed
several di**erent stages o* trans*or-ation 4eorgia 'e(a-e an
independent nation )ith the dissolution o* the ,oviet Union in 1AA1, 'ut
un*ortunately still has the roots o* -any pro'le-s o* the past
Be*ore 1AA1, 4eorgia.s health syste- operated on a ,oviet -odel, )here
(are )as supposedly *ree and universal Un*ortunately, -any 4eorgians
today *oster *alse nostalgia *or the supposedly s)eet ,oviet ti-es,
'elieving that health(are syste- )as )ell+*unded at no (harge to
patients, provided e5ual opportunity *or treat-ent, and -aintained high
-oral standards
6or -any years, ,oviet propaganda tru-peted the supposed superiority
o* so(ialized -edi(ine and the inevita'ility o* its triu-ph over the
(apitalist order Today, a -ore a((urate analysis o* health data illustrates
that the stagnation o* 4eorgia.s e(ono-y and pro'le-s )ith its health
se(tor had started long 'e*ore its independen(e in 1AA1
,oviet sy-pathizers )ill (lai- that health(are )as a-ong -ain poli(y
priorities o* the Union o* ,oviet ,o(ialist Repu'li(s BU,,RC, 'ut the
reality is that the health syste- )as deteriorating and in(reasingly
su**ered *ro- la(k o* *unds 'e*ore 1AA1 6or -any years, the U,,R )as
the only industrialized (ountry )here the per(entage o* gross do-esti(
produ(t B4!7C 'eing spent on the health o* its people de(reased
!uring the period o* stagnation under 4eneral ,e(retary Deonid
Brezhnev.s regi-e, the health syste- )as plagued 'y a series o*
in(reasingly serious pro'le-s that espe(ially (a-e to attention during the
perestroika restru(turing period o* the late 1A?0s #n the *inal years o* the
U,,R, national health(are e1penditures )ere -erely E> to 4> o* 4!7
This )as only hal* the average o* (ountries in the $rganisation *or
"(ono-i( Co+operation and !evelop-ent B$"C!C at the ti-e 0ealth
10
Based Healthcare
e1penditures as a share o* the national 'udget *ell *ro- A?> in 1A// to
;;> in 1A;/, then *ro- /2> in 1A=? to 4E> in 1A?;
1
A*ter the
U,,R.s dis'and-ent, the ne)ly independent satellite states inherited
-edi(al (are syste-s that )ere in a (hroni( state o* disarray
Be(ause o* (ontinual under*unding, 4eorgia.s health(are syste- slipped
into (riti(al (ondition and (ontinued to deteriorate !espite the *a(t that
over hal* o* the health *a(ilities had 'een 'uilt 'e*ore 1A40, the
govern-ent allo(ated *unds to)ards the (onstru(tion o* ne) *a(ilities
instead o* upgrading or even -aintaining e1isting ones #n 1A??, 11/
*a(ilities )ere under (onstru(tion, -ost o* )hi(h re-ain un*inished
today
The la(k o* ne(essary -edi(al e5uip-ent and -isuse o* hu-an resour(es
also 'e(a-e an a(ute pro'le- in the years 'e*ore re*or- 4eorgia had
over 120,000 persons e-ployed in the health se(tor The density o*
do(tors )as one o* the highest in the )orld at 1 physi(ian per 1A=
inha'itants Undertrained, under+utilized, and inade5uately -anaged
health(are pro*essionals greatly inhi'ited the e**i(ien(y and e**e(tiveness
o* 4eorgia.s health(are servi(es
2
The notion o* e5uity in health is (losely linked )ith the idea o* so(ial
2usti(e grounded in redistri'utionist prin(iples
E
A((ording to ,oviet
legislation, every (itizen had e5ual a((ess to treat-ent #n a(tuality, as
-u(h as hal* o* (entral health 'udget o* the U,,R )as allo(ated to
*inan(e a so+(alled 8*ourth depart-ent9 o* the 0ealth 3inistry that
provided (are e1(lusively to politi(al elites )ho a((ounted *or less than
1> o* the population The re-aining AA> had to survive in a health
syste- that -erely spent 1/> to 2> o* 4!7 @ a *ra(tion o* the total E
o* /> o* 4!7 in total health spending over the last years o* so(ialist
-edi(ine
"ven in 2001, *unding allo(ations *or the health *a(ilities o* 4eorgian
3inistry o* #nternal A**airs )as al-ost three ti-es -ore than *or general
pu'li( (lini(s The 'ureau re(eived *unds in a 'loated, 'udget+ite- 'asis,
2ust like they did in the U,,R A((ording to the appli(a'le rules and
regulations, these *unds (ould 'e utilized *or the needs o* -inistry
personnel and, in so-e (ases, their *a-ily -e-'ers as )ell
4
A((ording to the e(ono-ist Furi 3altsev, govern-ent 'ureau(rats and

Co--unist 7arty o**i(ials realized that the U,,R.s supposedly
egalitarian health syste- )as not e**i(ient at providing (are to the
11
-asses as early as 1A21, only three years a*ter Denin.s nationalization o*
-edi(al (are ,o, as in all (ountries )ith so(ialized -edi(ine, a t)o+tier
syste- )as (reated @ one *or the -asses and the other *or the
'ureau(rats and their intelle(tual servants )ith -u(h 'etter servi(e #n
the U,,R, it )as o*ten the (ase that )hile )orkers and peasants )ould
die in state hospitals, the -edi(ine and e5uip-ent that (ould save their
lives )as sitting unused in *a(ilities reserved *or the govern-ent elite
/
The sad truth is that under the supposedly egalitarian ,oviet syste-,
so-e patients )ere -ore e5ual than others
%orr,(ion
The U,,R.s ine**i(ient 'ureau(ra(y and per-anent *is(al de*i(it )ere
*ruit*ul ground *or (orruption and (reated a shado) e(ono-y,
parti(ularly in the health(are syste-
3edi(al servi(es )ere o**i(ially *ree o* (harge, 'ut )ere nonetheless
a((o-panied 'y a )ell+developed syste- o* in*or-al pay-ents to ensure
proper (are ,u(h tipping )as not per(eived as (orruption, as it )as
a((epted 'y 'oth patients and do(tors 6or ideologi(al reasons, the
salaries o* -edi(al pro*essionals )ere lo)er than other spe(ialists, so
in*or-al pay-ents had to (o-pensate the di**eren(e #n so-e (ases,
rei-'urse-ents to hospital sta** )ere -ade 'y patients returning *avors
through various kinds o* gi*ts By pulling -edi(al resour(es out o*
(ir(ulation, the shado) e(ono-y )orked pre(isely against the very
people )ho need help -ost @ the poor
This in*or-al e(ono-y o* health(are )as un*ortunately the nor- in -ost
,oviet repu'li(s 3ost physi(ians in ,oviet "stonia also re(eived e1tra
pay-ents *ro- their patients in the *or- o* gi*ts or (ash tips on a *airly
regular 'asis
;
#n Russia, these types o* supple-ental pay-ents to
physi(ians )ere (alled 8thank you -oney9 #n Asian repu'li(s,
(orruption in health *a(ilities )as a((epted as a )ay o* li*e
6ro- a <estern perspe(tive, su(h pay-ents to physi(ians are easily seen
as 'ri'es to o'tain pre*erential a((ess to (are #n reality, these in*or-al
pay-ents )ere essentially an uno**i(ial *ee+*or+servi(e -e(hanis- that
developed under the *or-er ,oviet syste-
=
0o)ever, illegal pay-ents )ere not the only *or- o* (orruption Budget
*unds to provide health(are, pur(hase ne) e5uip-ent, hire ne)
personnel, and -aintain a su**i(ient supply o* -edi(ine )ere driven 'y
'ri'es and gi*ts
12
Based Healthcare
"ven in post+soviet 4eorgia, these pra(ti(es )ere largely e1tended and
partly get legiti-ization
4,ali+ o. %are
As i* the 'ureau(rati( trou'les )ith the ,oviet health(are syste- )eren.t
'ad enough, the U,,R.s approa(h to -edi(ine )as very di**erent than
<estern, eviden(e+'ased -edi(ine !iagnosti( (riteria )ere o*ten
di**erent, and -any drug treat-ents and physi(al therapies )ere unheard
o* in the <est
4enerally, treat-ent -ethods *ro- ,oviet ti-es o*ten involved o'solete
drugs, long treat-ents, lots o* in2e(tions, and lo) thresholds *or hospital
ad-ission and surgery ,u(h a (ulture o* over+diagnosis put patients.
health at risk, strengthened drug resistan(e, -ade health(are less
a**orda'le, and (ontri'uted to the -edi(al poverty trap
Beginning )ith the suspension o* the 0ippo(rati( $ath at the 'eginning
o* the Russian revolution in 1A1=, the ,oviet state 8de+pro*essionalized9
-edi(ine, e-phasizing the do(tor.s duty to de*end the interest o* the
state rather than o* the individual <hen the ,oviet e-pire (ollapsed,
so-e do(tors )el(o-ed the opportunity *or (hange Un*ortunately, -any
others @ espe(ially those )ith sanitary epide-iologi(al training Bthe
,oviet e5uivalent to pu'li( healthC @ have re-ained nostalgi( a'out the
old -ethods that assured e**i(ient disease (ontrol at the e1pense o*
hu-an rights
?
"ealh 3,#o$e!
Do) invest-ent, poor -orale, and ine**e(tive e**orts to i-prove the
health se(tor.s per*or-an(e
resulted in great stagnation and deterioration o* health out(o-es during
the last de(ades o* the U,,R
0ealth (onditions in the U,,R )orsened steadily sin(e the -id+1A;0s5
A((ording to 1AA0 data, the health status o* the population in 4eorgia
)as relatively poor (o-pared to the rest o* "urope Di*e e1pe(tan(y )as
;?1 years *or -en and =/= *or )o-en, (o-pared to =1 years *or -en
and =? *or )o-en in <estern "urope
The in*ant -ortality rate B#3RC de(lined 'y /0> over the previous E0
years, yet re-ained t)i(e as high as in <estern "uropean (ountries 7oor
prenatal and neonatal (are resulted in one+third o* all in*ant deaths
1E
o((urring in the *irst three days o* li*e The -aternal -ortality rate
B33RC )as esti-ated to 'e -ore than *our ti-es that in <estern
"urope
A

#n April 1AA1, 4eorgia o**i(ially de(lared its independen(e *ro- the
U,,R The (ountry inherited a health(are syste- that *a(ed a prolonged
pro*essional and *inan(ial (risis The e(ono-i( trou'les dire(tly
*ollo)ing the U,,R.s (ollapse only )orsened the e1isting pro'le-s in
the health se(tor
!uring the *irst years o* its independen(e, 4eorgia *or-ally retained the
prin(iple o* 8*ree9 a((ess to health(are inherited *ro- ,oviet period $*
(ourse, su(h *ree health )as only illusion a*ter the (ollapse o* planned
e(ono-y This led to a rapid de(line in pu'li( spending and li-ited
allo(ation o* resour(es to the health se(tor By the end o* 1AAE, e(ono-i(
output *ell 'y up to =?>, as the e(ono-i( (risis resulted in the (ollapse
o* govern-ent revenues that also a**e(ted resour(es *or the health se(tor
that *ell to U,! 0? perG(apita per annu-
10
4overn-ent revenues )ere
no longer a'le to sustain highly ine**i(ient, state+run so(ialized -edi(ine
!uring the *irst years o* independen(e, health servi(es )ere *or-ally
*unded 'y general revenues Un*ortunately, the e(ono-y )as in a
(ondition o* total (ollapse, resulting in (hroni( under*unding o* the
health syste- As the result o* shortages in the ele(tri(ity supply,
-edi(al *a(ilities e1perien(ed long periods )ithout po)er, heating, and
)ater The pu'li( salaries paid to -edi(al personnel )ere largely
sy-'oli(, as their annual in(o-e )as less than the esti-ate -onthly (ost
living -ini-u- in the (ountry 7rivate spending 'e(a-e the -a2or
sour(e o* health se(tor *inan(ing 7atients )ere o'liged to pay the *ull
(osts *or -any servi(es A((ording to several reports, the population in
4eorgia paid 'et)een ;;+?=> o* the national health 'ill 7reventive
servi(es also 'roke do)n, in(luding the virtual (ollapse in the national
i--unization progra- in the early 1AA0s
11

A*ter 1AA1, the health status o* the (ountry (ontinued to deteriorate The
#3R rate had risen 'y 1E>, rea(hing an esti-ated 214 deaths per 1,000
'irths in 1AAE The 33R like)ise in(reased due to an in(reasing
nu-'er o* ho-e deliveries !eaths (aused 'y (ardiovas(ular diseases
in(reased 'y E/>, and the overall age ad2usted -ortality rate rose 'y
1?>
12
14
Based Healthcare
Fir! 2a'e o. "ealh -e.or$!6 1997-2000
A*ter years o* hostilities and so(ial unrest, the parlia-entary ele(tions in
1AA4 and adoption o* a ne) (onstitution (reated politi(al and e(ono-i(
sta'ility #n response to the harsh *inan(ial (risis, in 1AA/ govern-ent
introdu(ed ne) health re*or-s, in(luding so(ial insuran(e, user *ees, and
ne) provider pay-ents The re*or-s largely (on(entrated on generating
revenue to the desperately under*unded syste-
3a2or re*or-s in(luded a -ove to -ore pluralisti( syste-s o* 'oth
*unding and delivery 7ri-ary health (are )as strengthened, privatized,
and hospitals )ere strea-lined, introdu(ing ne) arrange-ents on
pur(hasing and rei-'urse-ent o* health servi(es ,o(ial servi(es and
health(are )ere 'rought (loser together through the -erger o* the
3inistries o* 0ealth and ,o(ial <el*are in 1AAA
)#ono$i# %one8
6ro- 1AAE to 1AA4, 4eorgia started to e1perien(e so-e e(ono-i(
re(overy like -ost *or-er ,oviet po)ers Un*ortunately, the (ountry
5ui(kly *ound itsel* trapped in another period o* e(ono-i( tur'ulen(e
*ro- 1AA= to 1AA? Russia.s (ontinuing (ivil stri*e and e(ono-i( (risis
thre) 4eorgia 'a(k into e(ono-i( stagnation and so(ial unrest that did
not end until 2001 Conse5uently, the e(ono-i( re(ession in 4eorgia )as
deeper and longer than other transitioning e(ono-ies
A nu-'er o* *a(tors (ontri'uted to the starkly di**ering e(ono-i(
evolution 'et)een *or-er ,oviet satellites and other "astern "uropean
(ountries during the transition years @ na-ely, (orruption, -is-anaged
privatization, a la(kluster rule o* la), and geographi(al distan(e *ro- the
"uropean Union <orking together, these *a(tors led to e(ono-i(
'reakdo)n and rendered the health re*or-s o* the 1AA0s a (o-plete
*ailure
-e.or$ %one8
6ee+*or+servi(e re*or-s )ere soon endorsed in the hope that in*or-al
pay-ents )ould de(rease 7ay-ents *or servi(es not in the Basi( Bene*it
7a(kage BBB7C )ere legalized and (o+pay-ents *or so-e BB7 servi(es
*or-alized #nitially, the BB7 (onsisted o* nine *ederal and *ive
(o-pulsory -uni(ipal health progra-s ,in(e then, this pa(kage has
gradually e1panded to 2? *ederal and ? -uni(ipal progra-s 0o)ever,
the e1pansion )as not a((o-panied 'y a (orresponding in(rease in
1/
*unding As su(h, all the state health progra-s )ere severely
under*unded on(e again
#n order to respond to the general 'udget short*alls and in2e(t additional
resour(es in the health syste-, the 4eorgian govern-ent instituted a
0ealth+7rogra- *ra-ed health syste-, (o+*unded 'y a so(ial insuran(e
-odel The 'urden o* the ta1 )as to 'e shared 'y e-ployers and
e-ployees BE> H1>C ,o(ial insuran(e de*i(its )ere supposed to 'e
(overed 'y trans*ers *ro- general govern-ent revenues 3uni(ipal
health *unds re(eived additional revenues *ro- (ity 'udgets
Contri'utions to the -uni(ipal health *unds )ere (al(ulated 'ased on a
*lat rate per person, depending on the nu-'er o* people living in the (ity,
'ut they had to 'e at least 2/ 4el
1E
Un*ortunately, )hen the -a2ority o*
the population is une-ployed or sel*+e-ployed and the revenue
ad-inistration is (orrupt, ta1 (olle(tion is nearly i-possi'le
7u'li( health e1penditures as a per(entage o* 4!7 dropped su'stantially
*ro- 2ust over 4> in 1AA1 to 0=0> in 1AA?, and *urther do)n to 0/A>
in 1AAA There )ere si-ilarly lo) real allo(ations to the health 'udget
*ro- 1AA/ to 1AA? $nly //> o* the health se(tor 'udget )as e1e(uted
in 1AA=
14
#n 2000, appro1i-ately I11 per person )as 'udgeted *or
annual state spending on health, although -u(h less )as re(eived than
pledged The *unds allo(ated to on(ologi(al servi(es in 1AAA (overed
only a'out =00 patients, )hen around 2100 patients )ere e1pe(ted to
re5uire su(h servi(es
1/

Do) o**i(ial rei-'urse-ent rates and una)areness o* o**i(ial hospital
(osts (reated an environ-ent (ondu(tive to shi*ting the -a2or part o* the
real hospital (osts onto patients, resulting in a high level o* in*or-al
pay-ents yet again
A((ording to the <orld Bank, only a'out 22> o* all health(are
e1penditures in 1AAA (a-e *ro- govern-ent 'udgets or insuran(e *unds
The health se(tor re-ained dependent on private spending paid 'y
patients at the ti-e o* servi(e <ith an esti-ated ?=> o* all health
spending (o-ing out o* po(ket, 4eorgia had the highest rate o* private
spending in the region These high pri(es (aused -any *a-ilies to slip
into poverty
1;
Based Healthcare
7u'li( vs 7rivate 0ealth "1penditures in the C#,+= in 1AA?&
1;
,hi*ting the -a2or *inan(ial 'urden o* health e1penditure to)ards private
households (aused a signi*i(ant *all in a**orda'ility and utilization o*
health servi(es $nly 4;> o* those )ho )ere si(k sought pro*essional
treat-ent, and 20> o* those that sel*+treated the-selves did so 'e(ause
they (ould not a**ord pro*essional treat-ent
1=
#n the autu-n o* 2001, 5uantitative (ross+se(tional surveys )ere
(ondu(ted in eight *or-er U,,R satellites to assess the pro'a'ility o*
attending a health pro*essional the previous year 4eorgia had the
poorest a((ess to health(are in a (o-parative assess-ent o* eight *or-er
,oviet repu'li(s
1?
#n 4eorgia, al-ost ==/> o* individuals reported )ere
una'le to a**ord or attend a skilled health )orker and paid the highest
per(entage o* in*or-al pay-ents during (onsultations
#n *a(t, in*or-al pay-ents to do(tors and nurses )ere ingrained in the
-edi(al tradition o* *or-er U,,R (ountries, dating 'a(k to (o--unist
ti-es #t is not until the last de(ade that this pra(ti(e has largely ended
But they do not see- to have 'een a -atter a (on(ern until the last
de(ade The highest pro'a'ility o* -aking an out+o*+po(ket pay-ent or a
gi*t )as in 4eorgia at ;/>
7er(entage o* 7atients 7aying #n*or-ally or 3aking 4i*t during 3ost
Re(ent Consultation 2001&
1=
1A
The sa-e study sho)ed that *inan(ing 'arriers a**e(ted the patterns o*
ad-issions to hospitals The annual nu-'er o* ad-issions and average
length o* stay de(reased dra-ati(ally over a short period o* ti-e, *ro-
1/E in 1AA1 to A? *or a(ute (are 'eds in 1AA= Conse5uently, the
(apa(ity o* the hospital net)ork (reated in the (ountry during the ,oviet
ti-es 'e(a-e highly e1(essive $((upan(y rates 'e(a-e alar-ingly lo)
at 2=;>
A study a-ongst 41 hospitals in 1AAA revealed that -ost patients )ere
a)are o* the o**i(ial servi(e rates in hospitals 'e(ause the -ain part o*
pay-ents )as in*or-al at a'out ;0> #n *a(t, only 20> o* 4eorgians
kne) that state *und partially paid *or their health(are
20

Sae o. "o!(ial!
4eorgia inherited a 'ulky and o'solete health in*rastru(ture a*ter the
(ollapse o* the ,oviet Union The need *or strea-lining hospitals in
4eorgia )as o'vious The highly ine**i(ient, resour(e+intensive -odel
*orged 'y ,oviet 'ureau(rats like %ikolai ,e-ashko )as too rigid to
sustain in a -arket+'ased e(ono-y
Co--unist leaders -easured -edi(al a(hieve-ents 'y the nu-'er o*
'eds and personnel As a result, an e1(essive nu-'er o* 'eds and
-edi(al sta** )ere (o--onpla(e 7rovider pay-ents )ere also 'ased on
inputs rather than health status or out(o-es
The syste- )as ske)ed to)ards se(ondary (are, )ith a do-inant role
*or hospitals and a proli*eration o* outpatient spe(ialists )orking
1?
Based Healthcare
alongside poorly trained generalists in the pri-ary (are setting 3edi(al
*a(ilities )ere all pu'li(ly o)ned There )ere no in(entives *or
e**i(ien(y, 5uality o* (are, or responsiveness to patients #n a highly
(entralized syste-, -anagerial autono-y and -anage-ent skills )ere
li-ited and health personnel )ere narro)ly trained
The nu-'er o* hospital 'eds and sta** dee-ed ne(essary *or a lo(al
population )as relatively high (o-pared to <estern "urope To a large
e1tent, this pheno-enon re*le(ted the *a(t that la'or )as (heap and
easily availa'le, 'ut -ostly, 'e(ause o* the nature o* the syste-
The transitioning years have sho)ed on(e again that the health se(tor is
an integral part o* the so(io+e(ono-i( stru(ture and that it is illusionary
to 'elieve that it (an re-ain untou(hed during persistent e(ono-i(
re(ession and so(ial degradation
The *or-er ,oviet po)ers. e(ono-i( (risis led to su'stantial (uts in the
provider net)ork The total nu-'er o* hospitals de(lined greatly *ro-
402 in 1A?? to 2=2 in 1AA? as a result o* (hroni( under*unding 6ro-
1AA?+AA alone, the a(tual nu-'er o* do(tors dropped 'y -ore than 20>
and the nu-'er o* nurses 'y /0> %evertheless, 4eorgia had -ore
do(tors per (apita in 1AA? at E?; per 1,000 than other Central "uropean
and ne)ly independent (ountries B24A and E=2 respe(tivelyC
Although the nu-'er o* hospitals )as (ut 'y so-e 40> a*ter the *irst 10
years o* independen(e, the nu-'er o* hospitals per 100,000 inha'itants
)as still a'out t)i(e that o* the "uropean Union
#n T'ilisi, there )ere al-ost 11,000 'eds in /1 hospitals serving a
population o* 12? -illion A si-ilarly sized population (overed 'y an
A-eri(an health(are plan )ould re5uire only E,000 'eds !espite the
surplus o* 'eds, the -a2ority o* 4eorgian -edi(al *a(ilities )ere una'le
to provide good 5uality o* (are The 'uildings and stru(tures )ere -ostly
depre(iated and 'adly suited *or -edi(al purposes
"ven as late as 200=, 4eorgia had one o* the lo)est a(ute (are hospital
ad-ission rates in the <orld 0ealth $rganization.s B<0$C "uropean
Region at 2ust ;E per 100 people 3ean)hile, the average *or the "U
)as 1= per 100 and 20= per 100 a-ong (ountries in the Co--on)ealth
o* #ndependent ,tates BC#,C
21
The average length o* stay in a(ute (are
hospitals in 4eorgia )as /= days in 200=, )hi(h is 'elo) the 200; "U
1A
average o* ;/ days and (onsidera'ly lo)er than the 200= C#, average o*
11 days
22
Do) utilization rates, signi*i(ant e1(ess o* -edi(al personnel, and
s(ar(ity o* *inan(ial resour(es to support the in*lated in*rastru(ture (alled
*or i--ediate and radi(al a(tions *or restru(turing o* the -edi(al syste-
A((ording to the T# 4eorgia report on 4eorgian 0ospital ,e(tor B2012C
the -ost *re5uently -entioned pro'le-s prior to privatization )ere&
$utdated in*rastru(ture
A non+(o-petitive environ-ent
#nade5ua(y and lo) 5uality o* servi(es
<eak regulation and en*or(e-ent
0igh level o* out+o*+po(ket pay-ents and (orruption
Une5ual distri'ution o* health(are servi(es throughout the
(ountry
#n order to opti-ize the hospital se(tor nation)ide and a(hieve the
a((epta'le o((upan(y rates o* =/+?0>, the only plausi'le strategy )as
li5uidating e1(ess 'eds 'y 4/+/0> and opti-izing the nu-'er and
lo(ation o* -edi(al *a(ilities
6ro- 1AA? to 2000, several e**orts )ere to strea-line the nu-'er o*
(lini(s 0o)ever, it )as naJve to think that su(h re*or-s )ould 'e
i--ediately e**e(tive (onsidering (orruption )as deeply rooted in the
syste- and the -ain stakeholders )ere uninterested in (hanging the
situation
Need .or -e.or$!
The need *or re*or-s in the early 2000s )as o'vious The health status o*
the population during the 10 years o* independen(e had severely
)orsened 4eorgia )as one o* the *e) (ountries in the C#, )here the
i-portant 3illenniu- !evelop-ent 4oals o* redu(ing early (hildhood
-ortality and -aternal -ortality did not e1hi'it a positive trend
The <0$ esti-ated
2E
that a person 'orn in 4eorgia in 200E (an e1pe(t
to live =1 years on average @ =/ years i* *e-ale and ;= years i* -ale
20
Based Healthcare
The o**i(ial national *igure *or the population average is =;1 years o*
li*e e1pe(tan(y as o* 2001 @ =?= years i* *e-ale and =E/ years i* -ale
The di**eren(e 'et)een <0$ esti-ates and national *igures is due
-ostly to under+registration o* (hild -ortality
!ata sho)ed that regularly reported rate o* *ive -ortalities per 1,000 live
'irths in 4eorgia )as a'out hal* o* the esti-ated a(tual rate ,adly, this
)as si-ilar to the underreporting levels in the other (ountries o* the
south Cau(asus As under+registration o* (hild deaths o((urs -ostly
'e*ore the age o* one, this dis(repan(y indi(ated that in*ant -ortality and
neonatal -ortality -ust 'e underesti-ated as )ell
Based on nationally reported deaths and 'irths in 2001, there is a
pro'a'ility that o* every 1,000 live 'irths in 4eorgia, a'out 2=; (hildren
)ould die 'e*ore age *ive Ad2usting *or the kno)n 'iases in national
data su(h as underreporting o* vital statisti(s, the <0$ esti-ated
4eorgia.s latest pro'a'ility to 'e 4/ deaths o* (hildren under *ive per
1,000 live 'irths
#n addition, <0$ esti-ated that the -ortality rate o* (hildren under *ive
did not (hanged *ro- 2000 to 200E The respe(tive rate *or the "uropean
Region as a )hole de(reased at an average annual rate o* a'out E/>
24
Bet)een 1AA0 and 2002, 4eorgia.s 33R in(reased 'y al-ost ?0>,
peaking in 1AA= A*ter that year, the rate *ell 'y 22> until 2002 To
a(hieve its 3illenniu- !evelop-ent 4oal B3!4C in 201/, 4eorgia.s
33R )ould have to *all another ?;> a((ording to the <0$
#n 1AA?, a %ational 0ealth "1penditures 3atri1 )as developed *or
4eorgia 'y (onsultants *ro- the United ,tates. A(tuarial Resear(h
Corporation, using 1AA= as the 'ase year )ith pro2e(tions *or the year
2000
21
3$RB#!#TF A%! 3$RTAD#TF RAT", #% !#66"R"%T #%C$3",
4R$U7, B1AA=C
AK"RA4" 3$%T0DF
#%C$3"
3$RB#!#TF D"K"DG1000 3$RTAD#TF
D"K"DG1000
L E0 4"D ?2 E;
E0+/0 4"D 2= 2=
/0 M 4"D ? 2
The preli-inary -atri(es sho)ed national spending o* E12 -illion 4"D
in 1AA=, ?=> o* )hi(h (onsisted o* out+o*+po(ket spending $ut+o*+
po(ket spending in(luded (ost+sharing *or govern-ent progra-s, dire(t
pay-ents *or servi(es not (overed 'y the govern-ent.s progra-s, and
in*or-al pay-ents de-anded 'y providers *or servi(es (overed 'y
govern-ent progra-s
The results o* a 2000 survey 'y the ,tate !epart-ent *or ,tatisti(s has
sho)n around ;/> o* -edi(al (are in 4eorgia is either sel*+treat-ent or
provided *ree+o*+(harge *ro- relatives or neigh'orhood do(tors E> is
e-ergen(y outpatient (are, 14A> is regular outpatient (are, and /=> is
inpatient (are The private se(tor a((ounts *or 104> The volu-e o*
servi(es provided 'y the state is rather li-ited, e5uating to 24;>
#n 4eorgia o* those )ho )ere hospitalized, the poor paid =0> o* their
-onthly household e1penditure on the treat-ent episode and the non+
poor paid ;0> 40> o* the households in the poorest 5uintile have
reported having to 'orro) *unds or sell their property to *inan(e health
e1penditures
#n short, a great ine5uality o* health in(o-es arose in the 1AA0s Do)+
in(o-e individuals )ere e1posed to unreasona'le levels o* -or'idity
and -ortality, as seen in the ta'le 'elo)
4eorgia had the lo)est level o* health servi(e utilization in the "urope
and Central Asia Region )ith less than t)o outpatient visits per (apita
and *ive inpatient visits per 100 people Being ill in(reased the
pro'a'ility o* 'e(o-ing poor, as 10> -ore individuals *ell 'elo) the
poverty line a*ter in(urring hospitalization e1penditure
A*ter the *ailure o* the *irst )ave o* health re*or-s, 4eorgia.s poorly
-anaged health syste- )as in a (ondition o* severe (ollapse 7u'li(
enthusias- *or (hange in the health syste- )as repla(ed 'y
disillusion-ent
Georgian "ealh 9ro.ile 2002
Maernal $orali+ rae! in#rea!ed *+ a((ro8i$ael+ 47: *eween
1990 and 1997
&eah! #a,!ed *+ #ardio'a!#,lar di!ea!e in#rea!ed *+ 37:
The o'erall age-ad;,!ed $orali+ rae in#rea!ed *+ 18:
22
Based Healthcare
&e#lining li.e e8(e#an#+
In#rea!ed in.an $orali+ .ro$ 75< in 1980 o 2051 in 2002
In#rea!ed $aernal $orali+ .ro$ 3<50 ,( o 4<5< in 2002
80-87: o,-o.-(o#ke (a+$en!
)8#e!!i'e and o*!olee healh in.ra!r,#,re6 wih 971 o,(aien
.a#iliie!6 114 o,(aien ho!(ial de(ar$en!6 and 712 $idwi.e (o!!
in 1998 = o. whi#h 7: o. a$*,laorie! had *a!i# e>,i($en
262491 ho!(ial *ed! ?48867 *ed! (er 100 000 (eo(le6 740 *ed! (er
1006000 (eo(le in T*ili!i@ in 19996 wih 28: o##,(an#+ rae! in
ho!(ial! in 199<-97
152 (aien! a da+ (er (h+!i#ian
0ne>,al a##e!!i*ili+ o healh !er'i#e! in r,ral and ,r*an area! .or he
di..eren !o#ial gro,(!
&i!!ai!.ied and di!>,ali.ied $edi#al (er!onnel6 re#ei'ing wage! o. ,(
o 20 G)AB$onh in 2003 ?C10@ and large de(enden#e on in.or$al
(a+$en!
2E
%ha(er 2: %hroni#le o. he Georgian
"ealh#are -e.or$!
*+ /ndrew 0r,!had1e
To paraphrase 4ra** Tolstoy, every health syste- is unhealthy in its o)n
)ay "ven )hen di**erent health syste-s share the sa-e pro'le-s Beg
e5uity, e**i(ien(y, 5uality, sa*ety, e**e(tiveness o* (areC, ea(h (ountry has
its o)n solution 'ased on uni5ue so(ial, e(ono-i(, politi(al, and (ultural
'a(kgrounds
Be*ore 200E, 4eorgia.s health syste- )ent through a nu-'er o* )ell+
intentioned 'ut poorly i-ple-ented re*or-s They see-ed *ine in theory,
'ut not so -u(h in pra(ti(e The sad reality is that the early years o*
4eorgia.s independen(e *ro- the U,,R in the 1AA0s *ailed to i-prove
the poor health out(o-es o* the ,oviet era
!espite the plethora o* eviden(e de-onstrating so(ialized -edi(ine.s
ills, opponents o* re*or- stu''ornly (ontinued to -ake anti+-arket
argu-ents 87rivatization o* health(are is not 2ust )rong,9 they )ould
say, 8it.s inhu-ane and i--oral 7eople.s health should not 'e su'2e(t
to the pro*it -otive9 6ortunately, poli(y -akers sa) through the
)eakness o* this argu-ent
<ithin a very short period o* ti-e, the old ,oviet syste- that so severely
da-aged the (ountry.s health had 'een repla(ed )ith ne)ly (onstru(ted,
)ell+e5uipped -odern (lini(s A private health insuran(e syste- 5ui(kly
e-erged hal* o* 4eorgians re(eive state *unded health insuran(e
4overn-ent has radi(ally trans*or-ed the health syste-, -oving rapidly
*ro- 'udget+*unded dire(t provision o* -edi(al (are in pu'li( *a(ilities
to vou(her+'ased dire(t (usto-er *inan(ing in -ostly private *a(ilities
The health se(tor has sin(e evolved 'ased on (o-petition a-ong private+
se(tor health insurers and providers seeking to -a1i-ize their pro*its 'y
providing 5uality (are
By -ini-izing the govern-ent.s role in the daily ad-inistration o*
health servi(e providers, the 3inistry o* 0ealth has drasti(ally de(reased
24
Based Healthcare
the (ost o* the health syste-.s 'ureau(ra(y and -arginalized (orruption
in the health se(tor A sta'le regulatory environ-ent has repla(ed
o'solete li(ensing rules
,oon, the govern-ent 'egan tightening its 'elt, de(reasing ad-inistrative
(osts sharply 3ost state agen(ies )ere -erged or li5uidated, de(reasing
-inisterial sta** 'y ;0> to -ini-ize 'ureau(ra(y All health agen(ies
-oved into one 'uilding, *reeing up thousands o* 5uadrati( -eters o*
state+o)ned o**i(es in the (apital, T'ilisi, *or (o--er(ial use
The ne) health(are syste- re*le(ts the nu-erous re-arka'le e(ono-i(
and politi(al (hanges arising out o* the Rose Revolution The health
se(tor.s progress )as part o* the (ountry.s 'old li'eral re*or-s that *reed
it *ro- govern-ent -onopoly and allo)ed it to 'ene*it *ro- pu'li(N
private partnerships #ndeed, the health se(tor.s su((ess*ul trans*or-ation
)as 2ust one o* several su((ess*ul re*or-s the 4eorgian govern-ent
i-ple-ented to (reate a ne) so(ial+e(ono-i( order o* prosperous -arket
(o-petition
9ri'ai1aion o. 9,*li# "o!(ial!
The 4eorgian govern-ent.s 8100 %e) 0ospitals9 plan o* Oanuary 200=
had the e**e(t o* a 'o-' e1plosion in (hanging the health lands(ape The
proposed solution o* (o-pletely privatizing the hospital se(tor )as truly
sho(k therapy *or the (ountry.s nearly (ollapsed hospital in*rastru(ture
A*ter years o* inde(isiveness, the govern-ent in*or-ed stakeholders that
it )as (o--itted to (reating 'etter hospital servi(es
The 0ospital Re*or- 7lan, prepared 'y ,tate 3inister o* Re*or-s
Coordination :akha Bendukidze.s o**i(e )as short and (lear&
We have an excessive and obsolete medical infrastructure, an
inefficient financing model, and an inadequate regulatory
system. Doctor Patient - Society - all are dissatisfied with the
existing situation. here is !ublic consensus on necessity of
radical change. "## new hos!itals countrywide, im!roved access
to high quality health services, im!roved health of the
!o!ulation that we are ex!ecting after the $ years of
im!lementation.
%&

'r. (endu)id*e !ro!osed a !lan to fundamentally resha!e
healthcare services throughout the country. +anding the
healthcare industry over to the !rivate sector, he argued, would
2/
lead to increased com!etition, increased !atient choice, and ,
corres!ondingly, the !rovision of higher quality healthcare
services.
%-

"o!(ial 9lanning
#n Oanuary 200=, the 4eorgian govern-ent approved the 0ospital
!evelop-ent 3aster 7lan The plan (alled *or the (o-plete repla(e-ent
o* the e1isting hospital in*rastru(ture )ithin a three+year period *ro-
200= to 200A 'y trans*erring *ull o)nership rights *ro- the state to the
private se(tor A((ording to the ter-s o* the (urrent plan, private
investors )ere to supply 4eorgia 100 ne) hospitals and =,?00 ne) 'eds
B4,1?/ in T'ilisi and E,;1/ in the regionsC
This plan -arked the *irst ti-e the govern-ent not 2ust announ(ed the
'eginning o* the re*or-s 'ut also presented *inan(ial and te(hni(al
details o* its i-ple-entation An esti-ated 200 -illion U,! )ere
e1pe(ted to 'e invested in hospital real estate during *irst t)o years and
up to =00 -illion U,! in the *ollo)ing *ive The total esti-ated
invest-ent needed *or a *ull re*ur'ish-ent o* the hospital se(tor )as 1
'illion U,!, )hi(h a-ounted to al-ost 10> o* 4eorgia.s 4!7 in 200=
The -aster plan deter-ined 4eorgia.s total hospital (apa(ity and the
opti-al lo(ation *or inpatient *a(ilities 'ased on geographi( a((essi'ility
in a 4/+-inute radius %e) standards *or li(ensing hospitals )ere also
approved 'y the govern-ent
2=
"1isting o'solete per-ission rules )ere
repla(ed )ith a predi(ta'le regulation environ-ent supportive o* pu'li(
heath The nu-'er o* 'usiness a(tivities su'2e(t to li(ensing and per-it
regi-es )as redu(ed 'y ?4>
2?
Tender -e>,ire$en!
0ospitals )ere e1pe(ted to di**er in size, )ith 1/ to 2/ 'eds in the
Rayons
2A
and over 100 -ore in regional (enters and 'ig (ities The
-ini-u- re5uire-ents )ere /0 s5uare -eters per 'ed in s-all hospitals
and =/

s5uare -eters per 'ed in larger hospitals These -ini-u-
re5uire-ents ai-ed to avoid e1(essive invest-ents in hospital se(tor and
to ensure (ost sta'ility o* the privatized syste-
3ost i-portantly, the govern-ent did not ai- to *inan(ially 'ene*it *ro-
the privatization o* the hospital se(tor #nvestors took over e1isting
hospitals in T'ilisi and the regional (enters to (reate a -ini-u- nu-'er
o* 'eds a((ording to the tender (onditions #nvestors )ould then o)n the
i-proved hospitals and )ere o'liged to keep an agreed port*olio o*
2;
Based Healthcare
-edi(al servi(es *or no less than seven years A*ter -eeting the
o'ligations o* the tender agree-ent, investors (ould utilize any unused
property and the 'uildings o* the old hospital *or (o--er(ial purposes
The 2ar
The RussianN4eorgian <ar o* August 200? ne(essitated signi*i(ant
(hanges in the privatization plans The (osts o* the )ar and the
su'se5uent e(ono-i( do)nturn led -any original investors to de*ault
3ost *ailed to *ind su**i(ient *inan(ial resour(es to 'uild ne) hospitals in
the ravaged (ountry
$n investor in the %e) 0ospital, :akha $kriashvili, re(alled these dark
ti-es, 8#n August, during the days o* Russian -ilitary intervention, #
asked a )ork-an in a (rane to keep )orking # kno) that i* )e )ill stop
)orking, it )ill sho) pani( a-ong all the *a-ilies living near to hospital
(onstru(tion area9
%e) 0ospital, a -odern (lini( )ith 4/0 'eds in T'ilisi and a *ashiona'le
outpatient depart-ent, )as one o* the *e) pro2e(ts that su((eeded during
the *irst stage o* privatization 3ore than 20 -illion "UR had 'een
invested 'y the private (o-pany 7,7 4eorgia to re'uild the dilapidated
*or-er 'uilding o* the #nstitute o* %eurology and "ye !iseases
The )ar.s e1ternal sho(k, *ollo)ed 'y a re(ession (aused 'y (ontra(tion
o* *oreign invest-ent, -ade hospital privatization *ail
-e!ar o. he -e.or$!
#n April 2010, the hospital privatization pro(ess had 'een redesigned
The govern-ent (hanged the ter-s and (onditions o* state+*unded health
insuran(e
E0
The (ountry outside o* the (apital )as divided into 2;
health(are distri(ts, and insuran(e (o-panies )ere invited to (o-pete *or
the opportunity to provide plans to the eligi'le poor *or a period o* three
years in ea(h o* the distri(ts #nsurers )ho e1pressed a )illingness to
parti(ipate in state insuran(e progra-s )ere o'liged to renovate, 'uild,
and operate hospitals in their health distri(ts
By the end o* 201E, up to 1/0 ne) hospitals o* all sizes had 'een 'uilt
and opened *or operation, -ost o* )hi(h )as (onstru(ted through private
invest-ent *ro- 4eorgia and other (ountries su(h as Austria, Canada,
#srael, the Cze(h Repu'li(, and the United :ingdo-
2=
-e.or$ing "ealh Finan#ing
#n the early 2000s, 4eorgia.s health syste- )as on the verge o* (ollapse
*or the se(ond ti-e in ten years #n -any (ases, do(tors have had to ask
patients to 'ring their o)n -edi(al supplies )ith the- 'e(ause they did
not have su**i(ient *unds to resto(k The salaries o* -edi(al sta** )ere
*rozen, in(luding pensions and other so(ial pay-ents, 'e(ause o*
e(ono-i( stagnation and a gro)ing 'udget de*i(it A((ording to data 'y
the %ational 0ealth(are Asso(iation, 4eorgia.s per(entage o* private
spending as a share o* total health e1penditures gre) *ro- ?4> to ??>
*ro- 2001 to 200E As seen in the ta'le 'elo), (entral 'udget allo(ations
as the per(entage o* total health spending de(reased *ro- ;4> in 2002 to
4A> in 200E 7rivate pay-ent -e(hanis-s )ere too )eak to play any
(onsidera'le role in the health syste- The private insuran(e -arket
re-ained undeveloped and did not (ontri'ute signi*i(antly to health(are
e1penditures
Mo*ili1ing -e!o,r#e!
The ter-ination o* the so(ial insuran(e ta1 )as the *irst step in the (hain
o* health *unding re*or-s The payroll ta1 (overed less than /: o* total
health e1penditures, as health(are )as predo-inantly *unded 'y out+o*+
po(ket pay-ents
0igh une-ploy-ent and lo) )ages, (oupled )ith lo) ta1 rates, resulted
in a thin revenue 'ase, parti(ularly sin(e a large proportion o* the
population )as involved in in*or-al a(tivities These *a(tors )ere
(atalyzed *urther 'y prevalent (orruption in the pu'li( se(tor and a )eak
ad-inistrative (apa(ity to en*or(e ta1 (olle(tion $nly *ive years a*ter its
introdu(tion, the govern-ent sa) no reason to (ontinue the statutory
so(ial insuran(e and its payroll (ontri'utions
2?
Based Healthcare
#n 200/, govern-ent (ontri'utions to -edi(al insuran(e )ere re-oved
altogether along )ith a general overhaul o* the ta1 (ode To i-prove its
'usiness (li-ate and en(ourage invest-ent, 4eorgia drasti(ally redu(ed
the nu-'er o* ta1es (olle(ted Today, there are only si1 ta1es, giving
4eorgia the *ourth lo)est ta1 'urden in the )orld
The govern-ent.s su((ess in (o-'ating (orruption and en(ouraging
e(ono-i( gro)th 5ui(kly produ(ed results The stagnation in health
*inan(ing and delays o* pu'li( pay-ents that plagued the (ountry *or
years soon 'e(a-e history
,tarting in 2004, the govern-ent 'egan dra-ati(ally in(reasing its health
se(tor spending, though it re-ained lo) as a per(entage o* 4!7
(o-pared to other developed (ountries #n 200E, pu'li( spending on
health (onstituted 2ust 0;> o* 4!7 By 2010, the *igure rea(hed 1?>
Total per (apita health e1penditure in(reased *ro- =4 U,! in 200E to
2/; U,! in 200A
E1
"ealh and In!,ran#e Do,#her!
$n Oune 2A, 200=, the 7arlia-ent o* 4eorgia -ade -ore -a2or re*or-s
'y introdu(ing vou(hers as an instru-ent to *und individual health
servi(es Kou(her+'ased *inan(ing su'stituted state pur(hasing as the
pri-ary instru-ent 'y )hi(h individuals a((ess govern-ent+*inan(ed
health(are
The health vou(her )as an ear-arked a((ount tied to ea(h (itizen to
pur(hase entitled health servi(es either online or in person The la)
de*ined the -ain prin(iples and (hara(teristi(s o* vou(her+'ased
*inan(ing as *ollo)s&
2A
7ersonalization
Do,#her *ene.i#iarie! #an *e a (er!on or a gro,( o. (er!on!
!,#h a! a .a$il+5
6reedo- o* (hoi(e
Do,#her *ene.i#iarie! ha'e he righ o #hoo!e a $edi#al
!er'i#e !,((lier or in!,ran#e #o$(an+
%ondis(ri-ination
Do,#her *ene.i#iarie! ha'e he righ o o*ain $edi#al
in!,ran#e !er'i#e wiho, di!#ri$inaion *a!ed on (roe#ed
#la!!e! !,#h a! wel.are6 age6 or healh !a,!5
Targeing he 9oor
The de**i(ien(y o* pu'li( *unds and ine**i(ien(ies in ad-inistration
rendered state health progra-s ine**e(tive at a(hieving its -ain o'2e(tive
o* se(uring patients *ro- (atastrophi( health(are (osts !ue to
)idespread a((eptan(e o* illegal pay-ents, poor *a-ilies su**ered -u(h
-ore than others that )ere 'etter o**
#n 200;, the govern-ent introdu(ed a nu-'er o* health *inan(ing
re*or-s to rea(h the poor 6irst, a pro1y -eans test )as esta'lished to
target pu'li( health su'sidies *or the neediest ,e(ondly, traditional
supply+side su'sidies that *inan(ed the pu'li( health(are net)ork )ere
trans*or-ed into de-and+side su'sidies that lo)er individual insuran(e
pre-iu-s *or the vulnera'le population Thirdly, health servi(e delivery
)as (ontra(ted out to the private se(tor in the spirit o* privatization
The *irst 'ene*i(iaries o* *ree insuran(e vou(hers )ere (hosen 'ased on
)el*are s(ores derived *ro- the pro1y -eans test The develop-ent o*
target so(ial assistan(e and -onetization o* so(ial 'ene*its )as the
produ(t o* so(ial )el*are re*or-s the 4eorgian govern-ent had
introdu(ed 'et)een 2004 and 200;
E2
#ndeed, these re*or-s )ere part o*
a larger push to alleviate poverty through )el*are re*or- (alled the
4overn-ent "(ono-i( !evelop-ent and 7overty Redu(tion 7rogra-
#n Ouly 200=, the 4eorgian 7ri-e 3inister signed a de(ree setting
(onditions o* insuran(e vou(hers *or (itizens 'elo) the poverty line in
T'ilisi and #-ereti
EE
This de(ree served as a starting point *or the
govern-ent to i-prove *inan(ial a((ess to health servi(es and prote(t
*a-ilies under poverty line *ro- health+related *inan(ial risks
Under de(ree, -ore than 1?0,000 'ene*i(iaries got state+*unded health
insuran(e vou(hers )ith an overall 'udget o* 1= -illion 4"D
E4
The
E0
Based Healthcare
purpose o* the pilot progra- )as to test the appropriateness and
ad-inistrative -e(hanis-s o* insuran(e (overage 'e*ore laun(hing the
progra- a(ross the (ountry
Any insurer )ith a li(ense B)ith the e1(eption o* li*e insurersC (ould
parti(ipate in these progra-s #n order to do so, an insuran(e (o-pany
had to -ake an o**i(ial state-ent that it )ould a(t in a((ordan(e )ith the
govern-ent resolution
The govern-ent resolution de*ined the entry pro(edure and
responsi'ilities o* insuran(e organizations to parti(ipate in the progra-
This )as done to -itigate the (o--on risks health syste-s e1perien(e in
(olla'orating )ith *or+pro*it insuran(e (o-panies
)>,al /##e!! %la,!e
Under 4eorgian la), insuran(e organizations have to ensure
'ene*i(iaries e5ual a((essi'ility to insuran(e )ithout any dis(ri-ination
#t is prohi'ited *or insurers to re*use issuing insuran(e to the 'ene*i(iary
*or any reason, to re*use prolonging an insuran(e (ontra(t *or any reason,
to ter-inate a poli(y during an (ontra(t ter-, and to re*use to *ul*ill its
o'ligations
#nsuran(e organizations (annot add any additional pre-iu-s or other
pay-ents in the insuran(e (ontra(t period #nsurers are not allo)ed to
provide poli(yholders )ith less (onditions than those set 'y this de(ree,
'ut are *ree to o**er -ore
Thanks to the re*or-s, *or-erly vague pro-ises o* govern-ent health
progra-s )ere repla(ed )ith (learly de*ined regulations governing )hat
is (overed and )hat is not To ensure *air *unding, the insuran(e
pre-iu- )as (al(ulated 'ased on the re(o--endations o* the 4eorgian
A(tuarial Asso(iation
The nu-'er o* 'ene*i(iaries (overed 'y govern-ent+provided health
insuran(e )as al-ost A00,000 in 2010 Thanks to health re*or- in
4eorgia, a((ess to essential health(are servi(es *or vulnera'le
populations has signi*i(antly i-proved
I$(ro'ing )ligi*ili+
6ro- 200= to 2011, state+*unded health insuran(e (overage e1panded to
*a-ilies o* #nternally !ispla(ed 7ersons, pu'li( s(hool tea(hers,
poli(e-en, and soldiers
$n ,epte-'er 1st, 2012, the govern-ent laun(hed an e1tension o* state+
*unded health insuran(e *or an additional one -illion (itizens @ na-ely,
E1
retirees, university students, (hildren under si1, and under 1? )ith
disa'ilities Co-'ined )ith the population that )as already insured, the
total share o* 4eorgians (overed 'y state+*unded insuran(e a((ounted *or
/0> the population The share o* pre+paid servi(es in health(are gre)
*ro- /> to 4/>
E/

&e'elo(ing 9ri'ae "ealh In!,ran#e
The develop-ent o* state+*unded insuran(e 'rought ne) (hallenges and
opportunities to the 4eorgian insuran(e industry 0ealth insuran(e
'e(a-e the *astest gro)ing line o* 'usiness 7rior to 200;, private health
insuran(e only played a -arginal role in the health(are syste- 3erely
40,000 4eorgians had private health insuran(e, -ost o* )hi(h )ere
enrolled in group insuran(e poli(ies
#n 200A, the so+(alled 8Cheap / Dari #nsuran(e9 progra- )as introdu(ed
and su'sidized 'y the govern-ent *or the population not (overed 'y the
state insuran(e progra- The progra- ai-ed to 8i-prove the *inan(ial
a((essi'ility o* health servi(es to 4eorgian (itizens 'y in(reasing their
enroll-ent in a voluntary health insuran(e9
E;
#t (overed the (osts o*
urgent (are in the (ase o* a((idents, /0> o* urgent non+a((ident inpatient
(are (osts, urgent outpatient (are, unli-ited visits to a pri-ary health(are
physi(ian, and li-ited la'oratory and diagnosti( tests at the 70C level
!rugs )ere not in(luded The annual pre-iu- )as ;0 4"D
E=
, )ith t)o+
thirds or 40 4"D *unded 'y the govern-ent and one+third 'y the
individual Citizens and residents o* 4eorgia 'et)een the ages o* three
and ;/ )ere eligi'le to parti(ipate The govern-ent e1pe(ted that
E00,000 to /00,000 people )ould sign up *or the progra- #n reality,
-erely 122,000 people @ E> o* population @ pur(hased the insuran(e
produ(t The progra- proved to 'e largely unappealing, -ainly due to
poor (overage and )idespread distrust o* the insuran(e industry
6ortunately, this proved to 'e a (han(e *or private insurers to pilot
individual insuran(e plans
6ro- 200A to 2012, private health insuran(e 'e(a-e one o* the -ost
dyna-i( -arkets $ver that ti-e period, insuran(e enroll-ent )itnessed
an in(rease o* (overage *ro- 40,000 to 4/0,000
,hare o* the population )ith health insuran(e&
E2
Based Healthcare
%on!,$er 9roe#ion: Mediaion Ser'i#e!
The trans*er o* *inan(ing health(are through private insuran(e re5uired
govern-ent regulators to -onitor the per*or-an(e o* private insuran(e
(o-panies and ensure the prote(tion o* pu'li( interests
A rapid s)it(h *ro- traditional state+ad-inistered so(ial health progra-s
to a private insuran(e -odel (ould have su'stantially in(reased the
nu-'er o* (lai- disputes 4iven lo) insuran(e litera(y a-ong the
population, -any (on*li(ts arose *ro- (on*usion a'out poli(ies.
language 3oreover, 'rining these (lai-s to (ourt (an 'e (ostly and
ti-e+(onsu-ing, parti(ularly those 'elo) the poverty line To address
these issues, the govern-ent esta'lished a -ediation servi(e and (all
(enter to respond to (usto-er 5uestions 'eginning in 3ay 200?
#n 2012, the -ediation servi(e B33,C )as esta'lished as a dispute
resolution 'ody 'y the 3inistry o* Da'or, 0ealth and ,o(ial A**airs
E?
The 33, hears disputes that originated a*ter 3ar(h 1
st
, 2012 'et)een
patients and insuran(e organizations, insuran(e organizations, and
health(are providers, as )ell as 'et)een patients and health(are
providers
The disputes -ust relate to the provision o* -edi(al (are, )hi(h is
(arried out through state and lo(al 'udgets under the relevant health(are
progra-s The 33, hears disputes upon the agree-ent o* the parties
EE
33, de(isions are 'inding upon the parties involved and (an 'e
appealed to (ourt in a((ordan(e )ith 4eorgian la)
4eorgia, like all *or-er U,,R (ountries, inherited an ine**i(ient ,oviet+
style epide-iologi(al syste-, trou'led )ith (orruption and un-otivated
and unskilled personal 3ost pu'li( health la'oratories )ere poorly
e5uipped and deteriorated 'e(ause o* (hroni( under*unding
Fighing %orr,(ion Thro,gh In!i,ional -ede!ign
#n 200=, the 4eorgian govern-ent introdu(ed ne) pu'li( health re*or-s
to upgrade the ,oviet sanitary -odel to 21st+(entury standards #n 200;,
the ,tate ,anitary ,upervision #nspe(tion B,,,#C )as a'olished The
,,,# )as the -ost (orrupt 'ran(h o* the 3inistry o* 0ealth, having 'een
*or-ally responsi'le *or inspe(ting the sanitarian standards o* -arkets
and 'usiness enterprises #ts inspe(tors )ere notorious *or (olle(ting
'ri'es *ro- 'usiness o)ners
A*ter 200=, pu'li( health responsi'ilities have 'een delegated to
-uni(ipalities, paid 'y ear-arked trans*ers *ro- the state 'udget Under
this arrange-ent, lo(al pu'li( health institutions are still -anaged 'y
-uni(ipal govern-ents, )hile -a2or pu'li( health *un(tions su(h as
inspe(tions are paid *or 'y the (entral govern-ent #t is )orth
-entioning that a-ong post+,oviet (ountries, only 4eorgia has taken up
this -odelP all others have retained the 'ureau(rati( syste- o* the U,,R
)ithout -a2or organizational (hanges
EA
-e.or$ing Georgian 9har$a#e,i#al Marke
#n 4eorgia, a((ess to -edi(ation is *ar *ro- universal The a'ility to pay
*or drugs is one o* the -ost (o--on pro'le-s reported 'y 4eorgian
households %evertheless, phar-a(euti(al (o-panies greatly 'ene*ited
*ro- the -arket+oriented re*or-s The 4eorgian phar-a(euti(al -arket
gre) dra-ati(ally, *ro- appro1i-ately /= -illion U,! in 2001 to 24/
-illion U,! in 2011
The gro)th o* the phar-a(euti(al industry )as a((o-panied 'y a steep
in(rease in households. phar-a(euti(al e1penditures The share o*
household in(o-e spent on phar-a(euti(als is higher in 4eorgia than in
-ost develop (ountries 0ousehold spending in(reased 'y ?/> per
(apita, rising *ro- 10/ to 1A4 4"D *ro- 200= to 2010
40
The pur(hase
o* -edi(al goods a((ounted *or ;0> o* the total health(are e1penditures
per household in 2010 This a-ount is *our ti-es higher than the average
rate a-ong -ost $"C! (ountries, )hi(h is a'out 1/>
41
4eorgia
E4
Based Healthcare
(urrently spends 4> o* its 4!7 on phar-a(euti(als This *ra(tion is
dou'le that o* the U,, a (ountry kno)n *or its high e1penditures on
phar-a(euti(als 6urther-ore, retail per (apita (onsu-ption o*
phar-a(euti(als in 4eorgia is 5uite lo), at E/ U,! per year, (o-pared
to ;2 U,! in Ukraine, AA U,! in Russia, and a range o* 200 to 400 U,!
in "urope
42
A((ording to a 2010 study (ondu(ted 'y the Curatio #nternational
6oundation on the availa'ility and a**orda'ility o* phar-a(euti(als in
4eorgia, 'rand na-e drugs )ere typi(ally -ore e1pensive in the (ountry
than in the "U, usually 'y a )ide -argin At the sa-e ti-e, -ost generi(
drugs )ere (heaper in 4eorgia than the rest o* the "U
A *e) (o-panies. -arket do-inan(e led to high -arkups *or -edi(ine,
)hi(h e1plain the high pri(es and e1penditures *or phar-a(euti(als A
nu-'er o* additional *a(tors (ontri'uted to the pro'le-s in
phar-a(euti(al -arket, in(luding high levels o* sel*+treat-ent, and
do(tors re(eiving *inan(ial in(entives *ro- large phar-a(euti(al
(o-panies to overpres(ri'e
Ai*erali1aion o. he &r,g Marke
#n %ove-'er 200A, the govern-ent 'egan taking proa(tive -easures to
address the issue o* una**orda'le phar-a(euti(al pri(es A-end-ents to
the Da) on !rugs and 7har-a(euti(al Regulation )ere introdu(ed to
in(rease (o-petition in the -arket and e1pand i-port opportunities *or
(o-panies 'y re-oving trade 'arriers
The ne) phar-a(euti(al poli(y had three -ain o'2e(tives 6irst, to ease
the i-port o* drugs on approved lists in other industrialized (ountries
,e(ond, to -ake it easier *or ne) -arket a(tors to i-port drugs dire(tly
to hospitals, do(tors, and insurers Third, to loosen regulations regarding
retail phar-a(y spa(e so as to allo) super-arkets and others venders to
sell -edi(ine
#-port opportunities )ere also e1panded through the so+(alled
8re(ognition poli(y9 and 'y allo)ing parallel i-ports o*
phar-a(euti(als Co-ple1 and overly 'ureau(rati( registration
pro(edures )ere si-pli*ied 'y introdu(ing auto-ati( registration *or
produ(ts re(ognized 'y the "uropean 3edi(ine Agen(y B"3AC, the
United ,tates. 6ood and !rugs Ad-inistration B6!AC, and other
internationally re(ognized phar-a(euti(al regulatory 'odies These ne)
i-port opportunities also -ade it possi'le *or e1isting i-porters to ship
E/
-edi(ine dire(tly *ro- the "uropean -arket, )here they are o*ten
(heaper than 4eorgia and C#, (ountries
,in(e the 'eginning o* 2011, the 4eorgian 7arlia-ent 'anned do(tors
*ro- pres(ri'ing drugs on ready letterheads and re(o--ending spe(i*i(
produ(ts to patients o* phar-a(euti(al (o-panies 6or the *irst violation
o* the nor-s the do(tor is )aiting *or a *ine o* /=1 dollars, *or the se(ond
+ the a-ount is dou'led
#n April 2010, ne) outpatient drug 'ene*its )ere added to the 3edi(al
#nsuran(e 7rogra- *or the 7oor 7rogra- enrollees )ere allo)ed to
pur(hase approved essential drugs )ith /0> (o+pay-ent 'y the 3inistry
o* 0ealth and an annual li-it o* /0 4"D #n 2012, the annual li-it rose
to 200 4"D *or the state insuran(e progra- *or pensioners
%o$(eiion -ed,#ed 9har$a#ie! Margin!
As a result o* the ne) -arket+oriented re*or-s, phar-a(euti(al pri(es
started to de(line in 200A *or the *irst ti-e in the post+,oviet era #n
2012, the Curatio #nternational 6oundation pu'lished (o-prehensive
statisti(al resear(h a'out phar-a(euti(al -arkups 'et)een 200A and
2011 and dis(overed that the average pri(es dropped 'y E0> 7ri(e
redu(tions )ere -ost pro*ound *or original 'rands in the 7,7GAversiG
47C net)ork, a -a2or player in the -arket, 'e(ause o* in(reased
(o-petition
A((ording to study.s -ain *indings, -arket (o-petition dropped the
-arkup o* original 'rands 'y =/> through 2012 3ark+up redu(tions *or
$Bs )ere -ost dra-ati( )ithin 7,7GAversiG47C B*ro- A0=> to 21/>C
than other (o-peting phar-a(y net)orks
As a result, the (ost o* re(eiving phar-a(euti(al treat-ent has de(lined
drasti(ally over the last *our years #n 2012, the standard pri(e o*
treat-ent )as /0>+;0> less than 200A
4E
4ranted, the pri(es and availa'ility o* pres(ri'ed -edi(ines is still a
pro'le- *or -ost 4eorgians, and *urther e**orts to enhan(e *ree
(o-petition and 5uality o* (are are needed 0o)ever, the initial results
have 'een pro-ising
-e!,l! o. he -e.or$!
0ealth re*or- lead to huge i-prove-ents o* 4eorgians. )ell+'eing and
E;
Based Healthcare
trans*or-ed (itizens. -edi(al spending to one o* the lo)est levels in
"urope
#n 2011, 4eorgians. li*e e1pe(tan(y at 'irth rate e1(eeded that o* the C#,
(ountries and is (lose to the indi(ator o* the "uropean region a((ording
to the <0$ data Today, 4eorgians (an e1pe(t to live =4/ years,
(o-pared to =1 in 2000
44

A((ording to the %ational ,tatisti(s ,ervi(e, the -ain sour(e o* -ortality
data in 4eorgia, under / -ortality has 'een de(lining sin(e 200E
4/

Under+*ive -ortality rates per 1 000 live 'irths, 4eorgia, 2000+2011&
,in(e 200E, 4eorgia has e1perien(e a de(line o* the in*ant -ortality rate
A((ording to the survey data, the average in*ant -ortality rate de(reased
'y ;;1> *ro- 1AA/ to 200A
,in(e 200E, the -aternal -ortality rate has also de(lined $ne
(o-prehensive -aternal -ortality study )as (ondu(ted in 2011 that
tra(ked all hospital deaths o* )o-en aged 1/N4A in 2010 The results
)ere (lose to o**i(ial statisti(s
7reventive i--unization (overage is (lose to the level o* (overage seen
in "U #n 2011, it )as A1>
The proportion o* 'irths attended 'y skilled -edi(al personnel rea(hed
E=
its highest point o* AA?> in 2011 Antenatal and postnatal (are is one o*
the (entral (o-ponents o* 4eorgia.s (hild health syste- ,in(e 2000,
(overage )ith 4 (o-plete antenatal visits has 'een in(reasing and it
e1(eeded the <0$ glo'al indi(ator
4eorgia has a lo) prevalen(e 0#K at 'elo) 001> o* the population
,igni*i(ant progress has 'een -ade in preventative treat-ent The Ooint
United %ations 7rogra- on 0#KGA#!, re(ognizes 4eorgia as a (ountry
that provides universal a((ess to Anti+Retroviral Therapy !espite )ide
availa'ility o* treat-ent, 4eorgia still has one o* the highest rates o*
A#!, in "urope at 41 in 100,000 people, (o-pared to an average o* 1/
in "astern "urope as a )hole
4eorgia has e1perien(ed a huge redu(tion o* tu'er(ulosis BTBC sin(e
200A #n 2010, the in(iden(e rate de(reased 'y 2?> *ro- the previous
year, and in 2011 it de(reased 'y another 4/> !espite these positive
results, TB re-ains 5uite prevalent in 4eorgia (o-pared to other
(ountries Tests and treat-ents *or TB patients, in(luding -edi(al devi(e
reporting *or-s, are provided 'y the govern-ent *ree o* (harge
#n 200/, the treat-ent su((ess rate o* s-ear positive pul-onary TB )as
;4> By 2011, it in(reased to =;> #n 2011, there )ere no signi*i(ant
(hanges in general in(idents o* -easles and ru'ella #n(iden(e o* -easles
in (hildren de(reased 'y 1=4> )hile in(iden(es o* ru'ella dropped 'y
=E>
$ther (ountries, 'oth ri(h and poor, (an learn *ro- 4eorgia.s health
re*or-s to rethink the role o* govern-ent and pu'li(+private partnerships
in the health se(tor
E?
Based Healthcare
Chapter 3: Georgias Health Reforms in a
European Context
B+ Mi#hael Tanner6 %ao In!i,e
#* rising pension (osts are the 'iggest threat to the -odern )el*are state,
the rising (ost o* health(are is a (lose se(ond This see-s parti(ularly
ironi( sin(e so -any A-eri(an (o--entators have (alled *or the United
,tates to adopt a "uropean -odel *or delivering health(are #ndeed, it
(an 'e argued that the U,.s latest e**ort at health(are re*or-, the 7atient
7rote(tion and A**orda'le Care A(t, re-akes -u(h o* our health(are
syste- in a "uropean -anner
Fet, "urope (learly has not solved the (onundru- o* trying to e1pand
a((ess )hile (ontrolling (osts Although every "uropean (ountry spends
less on health(are than the U,, the (ost o* (are is nonetheless rising
*aster in nearly all "U (ountries than the level o* *unding availa'le to pay
*or the- As the Wall Street .ournal notes, 8"uropeansQ*a(e steeper
-edi(al 'ills in the *uture in their (ash+strapped govern-ents9 At the
sa-e ti-e, "uropean e**orts at (ost (ontrol have *re5uently resulted in
dire(t or indire(t rationing that -akes their nations pro-ises o* universal
(overage ring in(reasingly hollo)
6a(ing the )orst o* 'oth )orlds @ rising (osts and rationed a((ess @
-any "uropean (ountries have 'egun to introdu(e -arket -e(hanis-s
into their syste-s Thus, )hile the U, has shi*ted to)ard -ore o* a
"uropean+style health syste- over the past *e) years, "urope is shi*ting
to)ard a syste- that looks -ore like the U, But, su(h re*or-s have
'een tentative to date, and -any -ay )ell end up 'eing too little, too
late
The #nternational 3onetary 6und esti-ates that on average, health(are
spending 'y "uropean govern-ents )ill in(rease 'y t)o per(entage
points o* 4!7 'y 20E0 and -ore than E per(entage points o* 4!7 in
Austria, 4reat Britain, 4ree(e, #(eland, Du1e-'ourg, 7ortugal, and
,)itzerland <hile that -ight not see- a great deal at *irst glan(e, it is
e1tre-ely signi*i(ant )hen one (onsiders ho) high govern-ent
spending as a per(ent o* 4!7 already is in those (ountries "uropean
(ountries si-ply don.t have the lee)ay to a'sor' the in(rease Dooking
*urther out in the *uture, the in(rease gro)s )orse By 20/0, the average
EA
in(rease is e1pe(ted to e1(eed ;/ per(ent o* 4!7 That alone )ould
drive govern-ent spending in the average "U (ountry to -ore than /A>
o* 4!7
<hile the relationship 'et)een age and health e1penditures is not
si-ple, the 'ody o* eviden(e suggests that the elderly are in(reasingly
(onsu-ing intensive health(are "uropeans aged ;/ and over a((ount *or
as -u(h as 40 per(ent o* health(are spending in the "U @ *ar -ore than
any other de-ographi( group Donger li*e e1pe(tan(ies do not
ne(essarily translate dire(tly into -ore years o* healthy li*e #n *a(t,
healthy li*e e1pe(tan(y, de*ined as the nu-'er o* years that a person (an
e1pe(t to live )ithout having a -a2or disease or in2ury, is generally = to
10 years less than li*e e1pe(tan(y itsel*
6or e1a-ple, 'y so-e esti-ates, (hroni( diseases a((ount *or as -u(h as
=0> o* health(are (osts The elderly are -ore likely to have at least one
(hroni( disease, i* *or no other reason than the *a(t that a longer li*espan
provides -ore ti-e *or a 'ody.s natural geneti( 'reakdo)n to o((ur
Already, nearly one+third o* "urope.s population has a (hroni( disease or
(ondition As the nu-'er o* senior (itizens rises, so too )ill the (ost o*
(aring *or the-
<hen patients do not dire(tly 'ear the (ost o* their health(are
(onsu-ption, they have an in(entive to over+(onsu-e <hen a de-and
un(onstrained 'y pri(e -eets a *inite supply o* health(are goods and
servi(es, it is a re(ipe *or o'vious pro'le-s
-aioning
<hile *ighting a losing 'attle against rising health(are (osts, -any
"uropean (ountries have atte-pted to (ontrol e1penditures 'y li-iting
the availa'ility o* (ertain drugs and te(hnologies or 'y restri(ting a((ess
to various providers and pro(edures #n other )ords, they have restored
to rationing
Although A-eri(ans tend to re(oil at any hint o* rationing, it is i-portant
to understand that it is not intrinsi(ally 'ad, and, indeed, is inevita'le in
so-e *or- 0ealth(are is a (o--odity @ and a *inite one at that There
are only so -any do(tors, hospitals, and, -ost i-portantly, -oney to go
around Fet, at the sa-e ti-e, no one )ants to die #* a treat-ent (an
save lives or in(rease 5uality o* li*e, people generally )ant it A*ter all,
in the long run, the only )ay to spend less on health(are is to (onsu-e
less o* it ,o-eone has to say 8no9
40
Based Healthcare
GeorgiaE! -e.or$!
4eorgia.s health syste- 'e*ore the Rose Revolution )as a (entralized
syste- al-ost (o-pletely (ontrolled and planned 'y the govern-ent #t
strove to provide (o-prehensive, *ree, and a((essi'le (are *or everyone
!espite these stated intentions, the syste- )as drasti(ally under*unded,
the health(are it provided )as inade5uate, and a((ess to (are )as *ar
*ro- universal <hile the (entralized syste- had so-e su((ess in the
(ontrol o* (o--uni(a'le diseases, it )as insu**i(iently *le1i'le to keep
pa(e )ith evolving health(are needs
#n the post+,oviet period, the 4eorgian syste- had 'een stu(k in a -i1 o*
(entralized, state+*unded health(are )ith a s-all degree o* privatization
*or (itizens )ho (ould a**ord 'etter (are The (ollapse o* the ,oviet
Union and the (entrally planned e(ono-i( syste- )ith it le*t a large
proportion o* 4eorgians in poverty #n(re-ental steps to re*or- the
health syste- had seen (osts (ontinue to rise )hile doing little to
i-prove health(are out(o-es As a result, -any 4eorgians (ontinued to
su**er
<idespread dissatis*a(tion )ith the slo) progress o* the post+,oviet
period ushered in the Rose Revolution and a ne) govern-ent *o(used on
reorienting the 4eorgian e(ono-y and *altering health(are syste-
to)ards the *ree -arket 3andatory so(ial health insuran(e, introdu(ed
in the 1AA0.s and plagued 'y ine**i(ien(y, )as a'olished ,tate health
*a(ilities )ere privatized, and health )orkers )ere no longer govern-ent
e-ployees
#n keeping )ith the 'roader re*or-s o* the Rose Revolution, )hi(h
pla(ed a strong 'elie* in the *ree -arket, the regulatory role o* the state
in health(are has 'een greatly di-inished #nstead, the *o(us shi*ted to
allo)ing -arket -e(hanis-s to regulate the syste- in the hope that the
-ost ne(essary and e**i(ient regulations )ould evolve through the
intera(tions 'et)een individuals, providers, and pu'li( authorities
The re*or-s have 'een e**e(tive in keeping health(are (osts do)n,
espe(ially (o-pared to the gro)th in health spending in the developed
(ountries o* "urope and the U, Total health e1penditure only in(reased
as a per(entage o* 4!7 *ro- ?/> in 200E to only AA> in 2011 The
e**e(ts o* the re(ession e1plain -u(h o* this in(rease, as total health
e1penditures 2u-ped *ro- A> o* 4!7 in 200? to 102 per(ent in 200A
,in(e this initial spike, they have a(tually de(lined, returning to levels
'elo) 10 per(ent o* 4!7
41
3ean)hile, the govern-ent share o* health e1penditures has re-ained
relatively steady over the sa-e period <hile this is a higher a-ount
than -any o* its neigh'ors, it re*le(ts 'oth 4eorgia.s *aster e(ono-i(
gro)th than other *or-er C#, (ountries and the *a(t that that the (ountry
does not rely on (entralized (ost (ontrols to keep health(are spending
do)n
The proportion o* the population living 'elo) the national poverty line
)as a'ove 24> in 200A, in part 'e(ause o* the glo'al re(ession, and in
part due to the lingering e**e(ts o* transitioning a)ay *ro- the ,oviet
e(ono-y By international standards de*ining poverty as those living on
less than I12/ a day Bad2usted *or pur(hasing po)er parityC, the poverty
rate )as roughly 1/> in 200A 4eorgia has devised a )ay to provide
targeted assistan(e to people )ho )ould other)ise *a(e adverse health
out(o-es due to la(k o* (are )hile, at the sa-e ti-e, -ini-izing -arket
distortions and 'olstering its *ledgling insuran(e industry ,in(e 200?,
4eorgians living 'elo) the poverty line have 'een provided )ith
vou(hers to pur(hase private health insuran(e plans Through this
-e(hanis-, as opposed to a state health insuran(e s(he-e, 4eorgia
pla(es the de(ision+-aking po)er in the hands o* individual (onsu-ers
and en(ourages (o-petition a-ong insuran(e providers Consu-ers are
not insulated *ro- the (osts o* health(are, and providers (o-pete *or
lo)er (osts and i-prove 5uality in order to attra(t (usto-ers
4eorgians not living 'elo) the poverty line are e1pe(ted to pur(hase
their o)n private health insuran(e voluntarily or pay out o* po(ket *or
servi(es The very targeted and li-ited govern-ent intervention in
health(are, restri(ted to those 'elo) the poverty line, has allo)ed the
4eorgian health syste- to su**er *ro- *ar less -arket distortion than
-ost developed (ountries in "urope and the U,
<hile the health(are syste- has -arkedly i-proved over the syste- in
pla(e prior to the Rose Revolution, there re-ains so-e roo- *or
i-prove-ent $ut+o*+po(ket pay-ents still (o-prise a large proportion
o* health e1penditures, and these people not (overed 'y prepaid private
health insuran(e are sus(epti'le to (atastrophi( health(are (osts The path
*or)ard *or 4eorgia is *or out+o*+po(ket pay-ents to 'e *or-alized and a
siza'le portion to 'e trans*erred to pre+paid private s(he-es, there'y
redu(ing the share o* out+o*+po(ket pay-ents in total health
e1penditures A greater relian(e on private health insuran(e )ould
i-prove prote(tion against (atastrophi( health(are (osts, and the health
out(o-es *or the (ountry.s (itizenry )ould i-prove <hile seeking to
42
Based Healthcare
pro-ote the role o* the private insuran(e industry, the 4eorgian
govern-ent -ust resist the te-ptation to e1pand its regulatory role and
introdu(e additional -arket distortions that (ould derail its e-erging
health insuran(e industry 7rogress is 'eing -ade already, and the
insuran(e syste- is starting to take hold as the nu-'er o* insured people
has rea(hed 1/ -illion, -ore than a third o* the population
4eorgia.s *o(us on *ree+-arket -e(hanis-s to reshape it health(are
syste- (an serve as a *ra-e)ork to other *or-er C#, (ountries in the
region, )hose -ore (entralized syste-s have struggled to keep pa(e
<hile there are dou'tlessly -ore areas to i-prove, su(h as de(reasing
relian(e on out+o*+po(ket pay-ents and gro)ing the role o* the private
health insuran(e industry, the 4eorgian health(are syste- that has
e-erged *ro- the Rose Revolution has -anaged to i-prove health(are
out(o-es, rein in the gro)th o* health(are (osts, and given the syste-
the *le1i'ility it needs to the (hanging health(are needs o* an aging
de-ography <hile there is still )ork to 'e done, the *ree -arket
innovations in 4eorgia.s health(are syste- have resulted in -arked
i-prove-ents and, in -any )ays, (an serve as a te-plate *or other
(ountries in the region
/ Model .or -e.or$F
"urope.s )el*are states are learning a si-ple 'ut i-portant lesson that
there is no su(h thing as *ree health(are #n *a(t, not only is health(are
not *ree, the rapidly rising (ost o* "uropean health(are is adding
enor-ously to their 'udget )oes
As a result, -ost "uropean (ountries have 'egun in(hing to)ard re*or-,
re-oving so-e pri(e (ontrols and re5uiring patients to pay a larger
proportion o* their health(are 'ills But, *or the -ost part, )hile su(h
re*or-s have (reated an un-istaka'le trend to)ard *reer -arkets in
health(are, they have so *ar 'een little -ore than 'a'y steps They -ay
'e too little, too late to avoid *urther rationing and (ontinued 'udgetary
pressures
4eorgia, on the other hand, has 'een -u(h -ore aggressive a'out
i-ple-enting -arket+'ased health(are re*or- #t is, o* (ourse, *ar too
early to deter-ine the su((ess o* su(h re*or-s, 'ut the initial results are
pro-ising #* su(h trends (ontinue, 4eorgia (ould end up as a -odel *or
"uropean health re*or-
4E
44
Based Healthcare
%ha(er 4: /n Iner'iew wih Gakha
Bend,kid1e6 For$er Georgian Mini!er .or
-e.or$ %oordinaion
HI ,nder!ood ha hi! i! he #r,#ial $o$en5 I. I #an kill hi! idea6
hen we ha'e a #han#e o go o a (ri'ae !+!e$5I
/0 So, initially 1 would be interested in what you see as the most
im!ortant ste!s of the 2eorgian health reforms. 1f you could !oint out
the main ste!s which, in your o!inion, were crucial for setting u! the
right institutions.
:B& # think li'eralizing the syste- 'y allo)ing that the private providers
and private insuran(e )ere very i-portant steps in order to get rid o* the
single payer and single provider syste-
The 5uestion is )hat is the produ(t o* health (are 0ealth (are is -ainly
selling a servi(e o* getting healthy Fou 'e(o-e ill, you go to the do(tor,
and have the servi(es provided to you But this understanding is deeply
)rong #t.s not the servi(e )hi(h health(are is selling 0ealth(are is
selling 'eing healthy servi(e ,o, # read -any years ago ho) health(are
)as organized in An(ient Chinese villages They have a do(tor, and this
do(tor )as paid one egg or (hi(ken 'y ea(h *a-ily )hen ea(h *a-ily
-e-'er )as healthy <hen so-ething goes )rong, they stop paying ,o
the do(tor )as -otivated not to spend -oney *or healing 'ut to spend
-oney *or preventing disease This the produ(t Fou should organize the
syste- that )ay The syste- as a )hole is setting the produ(t o*
-aintaining health
#t.s a three+pillar syste- Fou have patient, you have provider, and you
have insurer The patient 'y de*inition is a private person Fou have
private hospitals and state *unding, state single a((ount, state (o-pany
#t.s an unavoida'le the (ollusion o* t)o private parties to (heat non+
4/
private parties #* you have private insuran(e (o-panies, private patients
and state health(are providers, it.s an unavoida'le (ollusion o* t)o
private parties against the state party #t )ill happen, and there is a )ay to
(ontrol it 'ut it is 5uite e1pensive ,o, it.s i-portant to have all three
parts private #* they are (o-peting *or the resour(es, they are
e1(hanging in*or-ation 'ased on their o)n interests, )hi(h is only
natural, and their 'alan(ing the in*or-ation asy--etry 'y having their
o)n private interests That.s the -ost i-portant thing
#n 4eorgia it )as very si-ple 'e(ause the syste- )as totally rotten <e
had -any several hundred providers, A?> o* the- state+o)ned, and )e
had 100> a state+*unded universal health(are syste- The results )ere
(o-pletely insu**i(ient and no'ody )as happy
The *unny thing is the 4eorgian population )as sure that there is no
universal (overage %o'ody 'elieved that there )as a(tually a universal
health syste- The pro'le- )as in that syste- it )as un(ertain )hat )ill
happen #t )as preventing the develop-ent o* private se(tor The *e)
private hospitals )e had )ere not very (o-petitive They )ere a little 'it
'etter, they provide 'etter (are, 'ut the in*rastru(ture )as
underdeveloped 'e(ause no'ody )anted to invest This universal
(overage )as not )orking and the a(tual (overage in the universal
(overage )as 'elo) 2/> o* (ases, so usually state *unding (o-es on a
-onthly 'asis That (aused that one )eek per -onth a pro(edure )as
(overed and three )eeks a -onth they )ere taking -oney *or the sa-e
pro(edure This )as a(tually legal
/0 Did doctors and nurses also as) for bribes3
:B& $*ten do(tors )ere taking -oney, the nurses )ere taking -oney,
et( This is ho) the universal (overage )ould )ork& Be#a,!e hi! i! a
!+!e$ ha ha((en! >,ie .re>,enl+ when +o, wan o ha'e !o$e
good !o#ial ;,!i#e hing! +o, wan o .igh (o'er+5 The re!,l i! no
.ighing (o'er+ *, .ighing (oor (eo(le and hel(ing ri#h (eo(le5
#-agine you have li-ited a-ount o* *unds in (apital (ity and you kno)
that you (annot use these *unds *or everyone ,o, you are (hie* operating
o**i(er or C"$ o* hospital, so )hat )ill 'e your de(ision& 6or )ho- to
4;
Based Healthcare
use these *undsR The politi(al situation and setup o* so(ial net)orks give
you an ans)er& you should use these *unds *or K#7s Be(ause, *irst o* all
'e*ore you have universal (overage and so-e 3e-'er o* 7arlia-ent
(o-es to your hospital <hy should you take -oney *ro- hi-R 0e )ill
'e unhappy, he -ay'e kno)s that there is universal (overage, he )ill say
it.s illegal Q you )ant hi- to 'e happy, and also you )ill use this
-oney -ay'e *or so-e really loud (ases ,o this is ho) it )as )orking
And in reality it )as -aintaining huge politi(al po)er o* these guys in
the syste- ,o, the 3inister o* 0ealth(are )as a very i-portant politi(al
player and the (hie* do(tors, the heads o* hospitals )ere very i-portant
'e(ause this 2ust helped you solve -edi(al pro'le- N *ree o* (harge
This )as also 'red )ith a lot o* overregulation, )hi(h has nothing to do
)ith 5uality # (an tell you several ane(dotes @ it sounds like a 2oke
/0 hat would be great.
:B& ,o, *irst o* all, ho) # get involved in health(are re*or-& 6irst year #
)as serving 3inister *or "(ono-y and in the se(ond year, # )as 3inister
*or Re*or-s Coordination )ith very s-all o**i(e 'ut a 5uite )ide s(ope
o* )ork and a )ide -andate #n early 200/ )e )ere dealing )ith
li(ensing syste- in general and # )as holding -eetings )ith di**erent
-inistries, dis(ussing )hat their li(ensing looks like and ho) it.s done,
and )e )ant to -ake a uni*ied li(ensing la) )hi(h )ill (over all legal
)ays o* ho) things )ill 'e li(ensed like the one+stop+shop <e also
ai-ed to (ut the nu-'er o* li(enses In 2007 we had e8a#l+ 16024
li#en!e! in healh#are5
/0 1n healthcare3
:B& Feah #n(luding so-e like li(ense to per*or- kidney surgery *or
kids )as another, like li(ense to per*or- kidney surgery *or adults )as
separate These li(enses )ere granted to the hospitals, and )e have
several *unny li(enses like using S(os-i( )aves., like traditional
-edi(ine, so-ething very )eird
<e )ere dis(ussing at least (onsolidating li(enses and there )as
opposition *ro- the 3inister o* 0ealth(are And at this -o-ent -y
sister (alls -e and says, 8<e have pro'le- )ith a -other so-ething
4=
)ith heart and she.s hospitalized in that hospital9 And it )as a private
hospital near the house )here she )as living # spent -y li*e outside
4eorgia, so # don.t kno) the in*rastru(ture )ell ,o, # told these people
#.ll go to -y -other *or -ay'e like 40 -inutes, please go take so-e
(o**ee and #.ll 'e 'a(k, 'e(ause it.s part o* the parlia-entary hearing in
t)o )eeks # go to see -y -o- and # ask -y driver, do you kno) )here
this isR 0e says, 8yeah yeah yeah, # kno)9, and a*ter t)enty -inutes )e
are -oving through so-e piles o* trash, and # tell hi- okay you don.t
kno) dire(tion ask so-eone And he says, 8%o, no, no, that.s the
dire(tion9 And )e stopped 'et)een several piles o* trash and that.s the
hospital #t )as an ugly, hal* de-olished 'uilding # sa) -y sister
looking *ro- the 'uilding ,he says, 8Co-e to *ourth *loor9 There )as a
strange elevator and it )as -ore or less (lean there "verything )as ok
)ith -y -other
<hen # )ent 'a(k to -y o**i(e, # tell these people at the -inistry, 8Are
you (razyR <hi(h positive regulations are you talking a'outR9 Be(ause
)hen # )as going to hospital, # thought this )ould 'e so-e ni(e green
garden and there )ould 'e s-all 'uilding in this garden and it )ould 'e
(lean and ni(e servi(es, and instead o* it # sa) this 'uilding The
'ureau(rats told -e 8Feah, yeah, this syste- o* li(ense isn.t )orking
properly9 And # said, 8$kay, i* it.s not )orking properly, it should 'e
a'olished9 But not to (ause a lot o* pro'le-s, 2ust let (onsolidate and
redu(e the li(enses to /= in total
That )as ho) # entered health(are and # understood that this syste-
(annot *i1 itsel* $ne o* the pro'le-s )as that this syste- )as
(o-pletely -anaged 'y do(tors, and # -ade so-e resear(h in "uropean
(ountries on )ho are the -inisters o* health(are and # *ound in hal* o* the
(ases there )as non-edi(al sta** # )ent to the 7ri-e 3inister and said,
8Dook, )e need to do so-ething 'e(ause this guys B3inisters o* 0ealthC
)ill never (hange the situation 'e(ause they (an do very good, they are
very progressive, 'ut they are thinking in ter-s o* not only ho) they
)ould tea(h the ,e-ashko syste-, 'ut they also have a pro'le- )ith
dealing )ith other people Be(ause he )as his s(hool-ate he )as his
(lass-ate, he )as his student, he )as his pro*essor, so they.re all
(onne(ted # had a !eputy 3inister o* 0ealth(are )orking (losely )ith
4?
Based Healthcare
-e and )e did lots o* )ork together 'ut he kno)s everyone 'e(ause he
)as pro*essor o* -edi(al university and he has lots o* students and i*
do(tor )as young he )as his student i* do(tor )as old he )as his
tea(her
And 'e(ause the idea o* having private providers )as )eird at that
-o-ent ,o, # )as talking a lot )ith 3inister o* 0ealth, ho) to privatize,
-ay'e like giving o)nership to -edi(al personnel, 'ut to (ri'ai1e6
(ri'ai1e6 (ri'ai1e5
Also the 3inister had Andria Urushadze as an advisor, )ho 'e(a-e
3inister o* 0ealth so-e years later 0e )as supportive o* the idea o*
privatizing, 'ut he )as not sure and s(ared o* )hat )ould happen And
)hat helped -e, there )as <orld Bank resear(h on ho) to re*or-
4eorgian health(are $* (ourse their *indings )ere nothing spe(ial And
it )as a design 'ased on (al(ulations, )hi(h )ere not )rong, and the
result )as in 4eorgia )e should have only three hospitals And totally,
)e need E,;00 -odern 'eds so )e (an have several hospitals They set
the lo(ations o* these hospitals, and the <orld Bank )as ready to *und
this <e have a govern-ent -eeting dis(ussing that at (razy length #
)as sure that it (annot )ork
6irst o* all, )e.ll 'uild these hospitals 'ut no'ody )ould (lose the old
hospitals And also, )hen # talk )ith 3inistry o* 0ealth(are o**i(ials,
they )ere saying, 8$kay, they )ill die 'y the-selves9
# understood that this is the (ru(ial -o-ent #* # (an kill this idea, then
)e have a (han(e to go to a private syste- And # tell the govern-ent, #
think the -ost i-portant argu-ent is in the ,e-ashko syste- in ea(h
region, and in 4eorgia )e have -ore than si1ty region, )e have at least
one hospital "veryone kno)s that there.s a hospital in their (ity ,o,
)hat.s our politi(al -essageR 6orget that your lo(al hospital %o) you
need to go to another (ity 1/0 kilo-eters *ro- here to get hospital
servi(es And the govern-ent.s rea(tion to this s(enario )as that it.s
politi(ally una((epta'le <e (annot de(lare that you )ill not have lo(al
hospitals
# said, 8That -eans that )e need to have so-e ready plan ho) to re*or-
4A
these hospitals9 And everyone understands that )e have ;0, =0, or 200
s-all hospitals s(attered around the (ity, you (annot (entrally -anage
those ,o, the only )ay is to privatize it
And # re-e-'er the 7ri-e 3inister asked the 3inister o* 0ealth(are&
8$h, (an you tell us, is there real private hospitals e1isting anypla(e in
)orldR9 And he said, 8Feah *or e1a-ple 3ayo Clini( is private
hospital9 ,o, that )as the 'ig a(hieve-ent A*ter )e designed the plan,
)hi(h )as (alled The 0ospital ,e(tor Re*or- 4eneral 3aster 7lan, #
agreed )ith the <orld Bank esti-ation that )e need not -ore than E,000
so-ething 'eds $**i(ially 4eorgia had 12,000 'eds
Feah, they )ere underutilized Big e-pty 'uilding, there is no patients
and 2ust so-e physi(al 'eds
Also it )as (lear that the patients are one+*ourth in (apital (ity and three+
*ourths outside o* the (apitol But, you (annot design a syste- that )ay
Fou (an have )hat.s (alled (o--unity hospital, and the idea )as not
let.s design a plan )hi(h )ill 'e part o* this (,*li#-(ri'ae (arner!hi(
idea6 and he (ri'ae !e#or !ho,ld *,ild6 o(erae6 and own he!e
ho!(ial! 3ay'e )e )ill have so-e e1(ess o* 'eds, 'ut not huge e1(ess
<e designed a plan to redu(e the a-ount o* 'eds 'y /0 per(ent
#t )as not very radi(al And the plan allo(ated A0> o* 'eds to (apital (ity
and several 'ig (ities, and only 10> o* the 'eds to the (o--unity
hospitals / he !a$e i$e we he (ro*le$ ha here wa! a
#o$(leel+ ,nde'elo(ed healh in!,ran#e $arke in Georgia
!ue to the -arginal role o* private insuran(e -arkets in 4eorgia, )e
kne) that private health(are insuran(e )ould not a(hieve very high
per*or-an(e *or several years The idea )as that )e have private
providers and private insuran(e (o-panies #n order to (over the poor in
su(h a syste- )e -oved *ro- a universal (overage to -eans+'ased
(overage 'y providing health(are vou(her to people 'elo) the poverty
line The plan )as that this (overs hal* o* the population )ith vou(hers
*ro- govern-ent and the- using the vou(hers *or pur(hasing
/0 So, one question regarding the !rivati*ation of the hos!itals. 4m 1
right that you basically gave the hos!itals away under the conditions
/0
Based Healthcare
that the new owners invest in them3 5ou didn6t sell them, but you
basically gave them away.
:B& Feah, politi(al (onstraint )hi(h )as arti(ulated 'y the 7ri-e
3inister <e (annot, at that -o-ent, privatize hospitals *or (ash 'e(ause
that )ill -ean govern-ent )as -aking -oney on people.s health(are #n
other )ords, histori(ally hospitals in the 'iggest part o* hospitals in
T'ilisi, they )ere lo(ated in the old part o* (ity )here the real estate
pri(e )as really high And they )ere not re*le(ted the real distri'ution o*
patients in the (ity They )ere s-all and not very e**e(tive 'uildings #n
a )ay, these 'uildings )ould not )ork properly ,o-e o* the- )ere
'uilt 1/0 years ago The idea )as let.s set a (onditional (o-petitive
pro(ess
,o, you get this hospital, )hi(h is (entrally lo(ated, not very *un(tional,
'ut -ay'e, a highly valued real estate #nstead o* -aintaining the
dys*un(tional hospital in the old to)n )e -ade (ontra(ts )ith the ne)
o)ners that allo)ed the- to sell the highly valued real estate )hen
guaranteeing that they )ill 'uild a ne) hospital in T'ilisi and 'uild
several (o--unity hospitals in the Rayons
,o the idea )as that you )ill have several hospital (hains, and there are
several 'ig hospitals and several satellite hospitals They )ill have their
o)n re*erral syste- The pro(ess o* privatization (oin(ided )ith the
glo'al *inan(ial (risis and the )ar )ith Russia
Today 4eorgia is a (ountry )here private providers provide the -a2ority
o* 'eds <e have several state+o)ned hospitals # think the (urrent
govern-ent )ill in(rease the nu-'er o* state+o)ned 'eds, 'ut in general
the syste- is at least -i1ed )ith do-inan(e o* private hospitals, and #
think that there is healthy (o-petition in the syste-
/0 7ne technical question regarding these !ac)ages or bundles of
hos!itals0 Was it the 'inistry of +ealth or 8conomics basically bundled
hos!itals with another3 4nd were same 1nvestors able or allowed to buy
a number of !ac)ages or bundles3
:B& #t )as # )orking )ith 3inister o* 0ealth(are and investors )ere
a'le to o'tain various 'undles in a (o-petitive pro(ess 6irst o* all, there
/1
)ill 'e sort o* (reative destru(tion even )ithin the 'undles Fou -ay
have, several t)enty+'ed hospitals in the region ,o-e (hains )ill
trans*or- the regional outlets to a-'ulan(es and *o(us on )ell+
developed day (are in the Regions and -ove *or the surgery to the
hospital (hain.s -ain hospital This sort o* port*olio (onsolidation
happens on the -arket
,e(ond, ne) investors )ill (o-e and invest Be(ause they )ill
understand that this is a (ountry )ith a private health(are syste-, and it
happens, there is signi*i(ant (onstru(tion o* private hospitals in 4eorgia
A'out 1,000 ne) 'eds have 'een (onstru(ted sin(e the privatization
,o-e Azeri 'usiness-an *ro- Baku (a-e to T'ilisi and sa) the
opportunity to invest in the hospital se(tor 0is 2/0+'ed private hospital
is under (onstru(tion near to -y University
$* (ourse, the -ain 'a(k'one o* syste-, are still the 'ro)n*ield
invest-ent that )ere given a)ay )ith the 'undles 'ut also s-aller
green*ield invest-ents (an 'e seen in the 4eorgian health(are -arket #n
ea(h regional (enter, there is -ore than one s-all (o--unity hospital,
and this syste- is )orking that )ay $* (ourse, the initial idea )as 'ased
on (o-plete (o-petition in every )ay The govern-ent is providing
vou(hers to people 'elo) so-e level o* poverty and those people are
(hoosing )hi(h insuran(e (o-pany they )ant to 'e (overed 'y And
then the respe(tive insuran(e (o-pany deals )ith hospital ho) they )ant
that patient to 'e servi(ed
/0 he healthcare service !ricing 9ust ha!!ens on the mar)et, right3
:B& Feah, )e.re 2ust providing the vou(her that is ad2usted to -arket+
'ased esti-ation o* )hat is the pre-iu- This also depends on )ho-
you are providing insuran(e
/0 So, 1 thin) that6s very com!rehensive regarding !rivati*ation. 1 thin)
what would be most interesting for readers from other !ost-soviet
countries is how you successfully managed to crush the resistance of
doctors. +ow you basically too) health !olicy away from doctors.
:B& That )as the 'iggest (hallenge, as # e1plained, and the good thing
)as that the syste- )as (o-pletely dis(redited %o'ody 'elieved that it
/2
Based Healthcare
)ill )ork as it is Also, -any do(tors *ound that they (an 'e su((ess*ul
in this ne) syste- 'e(ause they (an deal )ith investors, they (an help
investors in the health syste- /l!o6 we added !o$e !weeener!& #n
health(are you have so-e key persons Det.s say pro*essors in (harge o*
so-e )hatever+ology 3ost o* the- they )ere heading so-e
dys*un(tional *or-er e1isting health(are institution <e o**ered the-
so-e s-all pre-ises that they (an privatize (heaply like 100 dollar per
s5uare -eter And then they (an 'uild their o)n, s-all, private )hatever
they )ant and that pre-ises And that )as one o* this part o* plan and the
do(tors )ere happy 'e(ause they got their o)n (lini(s
/0 1 thin) that6s very valuable. Probably we should move on to the
liberali*ation of the !harmaceutical mar)et
:B& #t )as very (lear that )e need to open the phar-a(euti(al -arket,
'ut it takes several years to do )hat )as (lear in the 'eginning I ook
.o,r !e(! in order o o(en he (har$a#e,i#al $arke5
The initial part took pla(e )hen )e )ere dealing )ith the li(ensing issue
,o, # *ound that there )ere (o-pli(ated li(enses in per-it issue to open a
drug store, you need a spe(ial per-it, a general li(ense and there )as
*irst, se(ond, and third type o* drug store The *irst (lass o* drug store
)hi(h (an sell anything needs hundred *orty s5uare -eters o* pre-ises,
t)o independent entran(es Also, there )as restri(tion that you (annot
have a drug store )ithin the hospital 'uilding Also, you had li(ensing
*or phar-a(euti(al i-port 0ospitals )ere surrounded 'y drug stores
'e(ause everyone )ant to 'uild the- there
<e (an(eled the li(ensing o* i-port 6or testa'ility, )holesalers 2ust
have to in*or- the 3inistry that they have pur(hased a (ertain drug At
that -o-ent 4eorgia had three phar-a(euti(al (hains, t)o 'ig and one
s-aller These (hains they )ere running phar-a(ies, they had so-e
'listering a(tivities, and they )ere the -ain i-porters o* drugs And also
there )as a syste- o* registration o* any phar-a(euti(al like in any
(ountry, it )as *ive+year registration #t (ost not a lot (o-pared to other
(ountries, (o-pared to *or-er ,oviet (ountries, it )as I2,000 or
so-ething like that
/E
The registration o* drugs in 4eorgia dis+in(entivized -any large drug
-anu*a(turers to enter the 4eorgian -arket #-agine you are a large
phar-a(euti(al (o-pany and you )ant to register a drug in a s-all
(ountry like 4eorgia They kno) that registering drugs in s-all
developing (ountries is o*ten (o-'ined )ith 'ri'es That.s )hy 'ig
phar-a(euti(al (o-panies gave e1(lusive distri'ution li(enses to
4eorgian )holesalers and phar-a(y (hains This registration hurdle
(reated leverage *or i-porters due to the e1(lusivity they are granted
)ith That kept pri(es 5uite high
<e needed to *irst si-pli*y ho) phar-a(ies are )orking and allo) also
selling phar-a(euti(als in regular shops ,e(ond, it.s (lear that )e need
to dis+'undle this registration issue Aspirin )as invented (lose to 100
years ago and nothing )ill happen in ter-s o* sa*ety or une1pe(ted
e**e(ts B, wha he hell we need o regi!er on#e in .i'e +ear!
/!(iring in GeorgiaF 2ha good are we #reaing ha wa+F 2ha
#o,ld ha((en wih /!(irinF
#t )as (lear that i* you have drugs that )ere produ(ed in (ountries like
4er-any or ,)itzerland und they are approved in those (ountries the
drugs (an also 'e used in 4eorgia )ithout additional registration
/l!o we li*erali1ed dr,g!E i$(or! #o$(leel+ and allowed (arallel
i$(or! ,o, )hat )ere the (onse5uen(esR 6irst, -ost o* the 'ig
phar-a(euti(al (o-panies esta'lished )arehouses in 4eorgia Fou (an
sell your drugs to so-e 'ig hospital Fou (ut out the unneeded
-iddle-an *ro- the (hain
<e got t)o additional phar-a(y (hains in 4eorgia ,o, no) there are
*ive The -arket shares o* these (hains are less than they )ere 'e*ore
The *irst redu(tion o* the -arket share o* 'ig (hains )as *irst happening
in 200/ )hen )e redu(ed the re5uire-ents o* ho) to start a phar-a(y
,o, it )as the *irst 'oost o* s-all phar-a(ies around the (ountry The
(ri#e! .or $o! o. he dr,g! wen down6 *, he $o! inere!ing and
.,nn+ hing i! ha he (ro.i! o. (har$a#e,i#al #o$(anie! wen ,(5
Be(ause allo)ing the parallel i-port (reated leverage *or i-porters to
talk )ith produ(ers a'out pri(es #-porters (an no) pur(hase drugs *ro-
/4
Based Healthcare
-arkets )here drugs are sold very (heap Beg 4ree(eC That redu(ed
pur(hasing e1penses o* i-porters 4eorgia
#n so-e (ountries, there are govern-ent su'sidies *or drugs, they go
so-eti-es dire(tly to the )holesaler There )as 'ig resistan(e 'y
4eorgian phar-a(y (hains They )ere opposing the re*or-s A*ter )e
li'eralized parallel i-ports and a'olished registration rules it took a'out
eight -onths *or the -arket to ad2ust and to provide (onsu-ers )ith
(heaper drugs at the sa-e 5uality
/0 So, 1 thin) we can come to your current assessment of what ha!!ened
to the health system since fall %#"% and what your current outloo) is.
Will the mar)et-based character of the 2eorgian health system !revail3
:B& $* (ourse, nothing lasts *orever $nly the pyra-ids, -ay'e 6ro-
$(to'er 2012 on )e have ne) govern-ent, a very populist govern-ent
And he *irst 7ri-e 3inister o* that govern-ent appointed a 3inister o*
0ealth )ho )as running the heavily *unded hospital in the 7ri-e
3inister.s ho-eto)n This state+o)ned hospital is *ully *unded 'y the
*or-er 7ri-e 3inister 6ully+*unded 'ased on )orse (ase ,e-ashko
syste- ,o, let.s say that average stay o* patients )hi(h in "uropean
(ountries )as *our days, in 4eorgia )as *ive days N in this hospital it )as
thirty+days Be(ause, )ho (ares, you have unli-ited *unding, you have
ne)ly re*ur'ished hospital, you (an stay there one -onth #t is good *or
the do(tor 'e(ause nothing 'ad happens to patient, and it.s good *or
patient 'e(ause he (o-es *ro- a re-ote village and is no) sitting in a
good and -odern environ-ent
,o the *or-er head o* this hospital is no) 3inister o* 0ealth(are 0e.s
-ore aggressive than other -inisters trying to de-olish the syste- The
dire(tion is -ore or less (lear so they )ant to -ake the syste- -u(h
-ore regulated in(luding regulation o* (osts, )hi(h is i-possi'le
a(tually, 'ut he thinks that he (an regulate (osts in ea(h hospital They
)ant to go to universal (overage, they de(lared it, 'ut there is not enough
-oney *or universal (overage, and they Bthe stateC )ant to run so-e
hospitals, )hi(h # think they )ill
But, the good part o* the story is there is not enough *unding *or
//
universal health(are ,o, reality is that there is no universal health(are
At the sa-e ti-e, you have private providers, so-e o* the- 5uiet 'ig
Fou have private insuran(e (o-panies )ho have kno)ledge o* private
insuran(e, and these insuran(e (o-panies are trying to provide the tiny
part that is (overed 'y pseudo+universal insuran(e and the additional
(overage that they are selling, supple-entary insuran(e ,upple-entary
insuran(e is -u(h 'igger than the 'asi( 'ene*it pa(kage de*ined 'y the
ne) govern-ent
/0 7)ay, so the universal coverage is already introduced3
:B& Feah, it.s introdu(ed, 'ut it.s not universal There )as so-ething
(alled 8universal (overage,9 'ut is not universal (overage 'e(ause there
is no -oney *or universal (overage Universal (overage is -ay'e 40> o*
needs + so ;0> are out+o*+po(ket or health(are insuran(e pay-ents
depending on ho) e**e(tive health insuran(e is The (urrent govern-ent
also )ants to tighten regulation in the phar-a(euti(al -arket #t looks
like )e )ill have so-e sort o* (o-pro-ise
,o, the i-portant part o* the story is that the -eans+tested syste- is very
unpopular #t takes huge politi(al )ill to (onsider -eans+tested syste-
'e(ause )hen you have a loud -inority )hi(h is (lose to -eans+tested
part and a little 'it a'ove and they are unhappy 'e(ause they are not
re(eiving this aid #n 4eorgia the syste- )as (o-pletely dys*un(tional N
This helped us to introdu(e a totally ne) and private syste-
$* (ourse, there )ere -istakes also 6or e1a-ple, govern-ent in 200A
de(ided to e5uip the insuran(e (o-panies )ith te-porary regional
-onopolies and thus taking the *reedo- o* (hoi(e a)ay *ro- the
patients There is nothing 'ad )ith in -onopolies as long as -onopolies
are 'ased on -arket *or(es But 4overn-ent is the (reator o* 'ad
-onopolies
Another 5uestion is that, 'ig 5uestion that people raise, is the syste- o*
private greed+'ased insuran(e (o-panies 'etter *or providing servi(es
)hi(h are *unded 'y govern-ent 'e(ause they are (aring a'out pro*it
#t.s not (lear that single 'ig govern-ent insuran(e (o-pany (an do the
sa-e )ith less -oney $* (ourse, i* you go to so-e si-plisti( -odeling
/;
Based Healthcare
and *ind that you (an have ten insuran(e (o-panies and -erge the- in
one and also tell the- that you don.t (are a'out pro*it, you (an
signi*i(antly redu(e overhead and signi*i(antly redu(e (ost
But that.s the pri(e that )e are paying *or sta'ility o* the syste- or
(o-petitiveness o* the syste- <hen you have 2ust a single insuran(e
you don.t have a 'en(h-ark
But not only )e have ne) hospitals 'ut )e have (o-pletely ne)
insuran(e (o-panies arising (o-ing *ro- (ountries su(h as Austria and
#srael And )as it very su((ess*ulR %o Fou also have (reative
destru(tion 'e(ause one insuran(e (o-pany )ent 'ankrupt Be(ause this
insuran(e (o-pany )as ine**e(tive And, also )hat happens )ith this
private providers& A(tually so-e o* the- look really su((ess*ul They
-erge and a(5uire other private providers, so the largest private provider
today in 4eorgia has so-ething like 1,200 'eds all over 4eorgia, so it.s a
real net)ork and an insuran(e (o-pany o)ns the-, so they.re providing
integrated servi(es The situation is (o-petitive and they.re looking to
have an #7$ in Dondon this year
# think that.s a very good story #t )as 'ased on -arketing )hi(h (an rise
(apital, 'e(ause that )as one o* the 5uestions& 0o) (an the syste-
develop )hen it.s private using this sort o* *unding using the -arket,
)hi(h is not availa'le )hen health(are is state+*unded Also, it.s (lear
that )hen you have several 'ig providers (hains o* hospitals you (an
realize e**i(ien(ies
There are lo! o. legend! in healh#are and he *igge! are ha i i!
no a $arke6 iE! no (ri#e-!en!ii'e6 he $arke law! are no
working here6 iE! a re!(on!i*ili+ o. go'ern$en o (ro'ide
e'er+hing6 e#5
#n reality, )e kno) that i* a servi(e shall 'e produ(ed in an e**e(tive
-anner, it should go to so-eone )ho (ondu(ts lots o* it And # hope in
4eorgia )e have so-e healthy *oundation *or the private providers #*
govern-ent )ill not do really (razy things, the private hospital se(tor
)ill (ontinue to develop
/=
/?
Based Healthcare
/*o, he /,hor!:
/ndria 0r,!had1e: Urushadze served as the 3inister o* 0ealth,
Da'our and ,o(ial A**airs o* 4eorgia *ro- ,epte-'er 10, 2010 to 3ar(h
1/, 2012 0e )as 'orn on April 2/, 1A;? in T'ilisi, 4eorgia #n 1AAE, he
graduated *ro- the 4eneral 3edi(ine !epart-ent o* T'ilisi ,tate
3edi(al University #n 1AAE+1AA4, he took post graduate (ourses in
"ndo(rinology at the sa-e institution #n 1AA=, he (o-pleted studies at
the ,(hool o* 4overnan(e 0e then (o-pleted ,pe(ial Training Course
*or "1e(utive 3anagers o* #nsuran(e Co-panies in ,)itzerland in 1AA?
6ro- 1AAE through 1AA/, he )as the Ki(e+7resident o* 4eorgian Fouth
#nternational 6oundation #n 1AA/+1AA=, Urushadze )as the head o* the
#nternational 7rogra-s #-ple-entation Bureau at the ,tate Chan(ellery
o* 4eorgia 6ro- 1AA= until 200/, he )as the "1e(utive !ire(tor o* an
insuran(e (o-pany
Gakha Bend,kid1e: Bendukidze is a 4eorgian politi(ian and
'usiness-an A*ter the Rose Revolution, he served as 4eorgian 3inister
o* "(ono-y BOuneN!e(e-'er 2004C, 3inister *or Re*or- Coordination
B!e(e-'er 2004 + Oanuary 200?C and 0ead o* the Chan(ellery o*
4overn-ent o* 4eorgia B6e'ruary 200? + 6e'ruary 200AC Bendukidze
graduated *ro- the !epart-ent o* Biology o* T'ilisi ,tate University in
1A== and *ro- the 7ostgraduate ,(hool o* the 3os(o) ,tate University
in 1A?0 6ro- 1A?1 to 1A?/, he )orked *or the #nstitute o* Biology and
7hysiology o* 3i(roorganis-s in 7us(hino 6ro- 1A?/ to 1A??, he
)orked as the head o* the Da'oratory *or 3ole(ular 4eneti(s at #nstitute
o* Biote(hnology
Mi#hael &5 Tanner: Tanner is a senior *ello) at the Cato #nstitute in
<ashington !C, heading resear(h into a variety o* do-esti( poli(ies
)ith parti(ular e-phasis on health (are re*or-, )el*are poli(y, and
,o(ial ,e(urity 0is -ost re(ent )hite paper, TBad 3edi(ine& A 4uide to
the Real Costs and Conse5uen(es o* the %e) 0ealth Care Da),T
provides a detailed e1a-ination o* the 7atient 7rote(tion and A**orda'le
Care A(t B$'a-a(areC and )hat it -eans to ta1payers, )orkers,
physi(ians, and patients
/A
Frederik %+r,! -oeder: Roeder is a 4er-an health e(ono-ist and
-anaging dire(tor o* 0ealth(are ,olutions )orking in the *ield o*
health(are syste-s in transition 0e serves as a Kisiting 7ro*essor *or
0ealth 3anage-ent at the Dithuanian University o* 0ealth ,(ien(es,
:aunas Dithuania and as a Kisiting 7ro*essor *or 0ealth(are
3anage-ent and "(ono-i( at #lia ,tate University, T'ilisi 4eorgia 0e
appeared in di**erent international 2ournals and -edia outlets on various
health(are related topi(s 0e is an Asso(iated Resear(her at the 3ontreal
"(ono-i( #nstitute
;0
Based Healthcare
Endnotes
;1
1
Ri(hard :au*-an and Oohn 0ardt The 6or-er ,oviet Union in Transition edited *or the United ,tates Congress Ooint
"(ono-i( Co--ittee 1AAE
2
Gzirishvili 1998
3
P Braveman. 2003
4
TNO report. 2001
5
Y. Maltsev. What soviet medicine teaches us? 2012
6
see& in*or-al pay-ents in ,oviet "stonia
7
!onald Bar
8
Tido von ,(hoen+Angerer Understanding health (are in the south Cau(asus& e1a-ples *ro- Ar-enia 1AAA
9
4zirishvili 3ataradze 0ealth(are re*or-s in 4eorgia 1AA?
10
<orld Bank 1AA;
11
4a-krelidze 2002
12
4zirishvili, 3ataradze 1AA?
13
4a-krelidze 2002
14
Cha)la 2001
15
4akrelidze 2002
16
World Health Report 2002, WHO.
17
Falkingham and Hemming, 1999
18
Georgia, Armenia, Kazakhstan, Ukraine, Moldova, Kyrgyzstan, Russia, and Belarus
19
0ealth ,ervi(e Utilization in the 6or-er ,oviet Union& "viden(e *ro- "ight Countries Bala'anova, 3(:ee, et al
B2004C
20
Oor'enadze, Uoidze and others 0ealth re*or- and hospital *inan(ing in 4eorgia 1AAA
21
<0$ Regional $**i(e *or "urope 200A
22
<0$ Regional $**i(e *or "urope 200A
23
see <0$ (ountry pro*ile 200E
24
<0$, 200/
25
6ro- the spee(h o* 4eorgian 7ri-e 3inister U %ogaideli Oan 200=
26
Transparen(y #nternational 4eorgia $ne hundred ne) hospitals *or 4eorgia& ho) long )ill they lastR 200?
27
The resolution of the Government of Georgia #11 as of January 26, 2007
28
HiT Georgia. 2009
29
A rayon (pl. raiony) is a type of administrative unit of several post-Soviet countries (such as part of an oblast).
30
The resolution o* the 4overn-ent o* 4eorgia V110 as o* April 10, 2010
31
World Bank
32
<B 4eorgia 7overty Assess-ent 2011
33
The resolution o* the 4overn-ent o* 4eorgia V1;;, Ouly 200=
34
10 million USD
35
HSPA. 2012
36
The resolution of the Government of Georgia #33 February, 2009
37
appox. 38 USD
38
The $rder o* the 3inister o* 0ealth W01+1?Gn, 4 April 2012
39
George Gotsadze and others. Reforming sanitary-epidemiological service in Central and Eastern Europe and the former
Soviet Union: an exploratory study. 2010
40
The Georgia Health Utilization and Expenditure Study 2010
41
OECD
42
Opportunities in Georgias Pharmaceutical Sector. 2012
43
see Curatio. Main highlights of pharmaceutical price and availability in Georgia 2009-2012
44
for females 78.7; for males 70.0
45
Georgia NCDC yearbook, 2011

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