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Reforming hospitals in East Asia — engagement by development partners wanted

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ImageHealth systems are under pressure in Asia. Epidemiological and demographic transitions are taking place much faster than in Europe and America, in the span of a single generation. With the transition comes the non-communicable disease (NCD) epidemic that requires more sophisticated and expensive interventions provided by hospitals, inpatient or outpatient. Rapid economic development in Asia has lifted millions out of poverty and raised peoples’ expectations for services. Between China, India, Thailand, Philippines, Indonesia and Vietnam, expansion of health insurance coverage during the last decade has reached an additional one billion people, making services more affordable and thus increasing demand. Advancing medical technology eagerly awaited by specialist doctors sitting on top of health professional hierarchies further expands possibilities for treatment. The middle class votes with their feet and takes their health problems to medical tourism meccas like those in Bangkok and Singapore, voiding their own countries of additional income to health care providers. Policymakers are scrambling to expand hospital capacity, boost the pay of health professionals, and encourage investment to meet the demand.   

But governments do not wait. They are exploring hospital autonomy, decentralization, user fees and private sector participation. These policies often pose risks that need to be mitigated by policies and institutional arrangements. For example, health care providers sometimes order unnecessary procedures to earn additional revenue, thanks to the powerful incentive of the fee-for-service payment mechanism and information asymmetry between the patient and health care provider. This can mean financial ruin for both the patient and new, relatively weak health insurance agencies.

Despite these challenges, hospitals aren’t high on the international health development agenda, save a few initiatives to improve quality and provider payment reform. Is it because of the focus on MDGs, where most gains would come from strengthened primary health care? But in many East Asian countries further gains to reduce child mortality depend on improvements in more sophisticated neonatal care often provided in hospitals. Or, is it because hospital engagement is more expensive and less cost-effective than primary health and public health interventions? True, but even when these interventions help to prevent disease and better manage chronic diseases, the demand for sophisticated care will still increase. Or, is the hospital sector too complex and subject to powerful industry interests that make policy dialogue and support difficult? The answer is probably a mix of all of the above.  

We need to conceptually frame the hospital reform debate, and be cognizant of policy measures and institutional arrangements to strengthen and mitigate risks. Lessons for Hospital Autonomy Implementation in Vietnam from International Experience examines this through the lens of Vietnam’s hospital reforms. Vietnam has the confluence of the factors described above. Those who can travel to other countries for care to avoid Vietnam’s overcrowded hospitals, where many perceive a lack of treatment options for NCDs. As a result, Vietnam is losing billions of dollars to medical tourism. 

To address this challenge, the government introduced reform to increase autonomy of public service providers to improve responsiveness and flexibility to respond to local needs, created opportunities for "social mobilization" to facilitate private-public partnerships between public hospitals and the private sector, and set a goal to increase the share of private hospital beds from the current 5% to 20% by 2020. In several dimensions, the reform has been successful: There is more investment, more services are provided, and hospitals’ financial positions have improved. But drawing from international experience and based on early studies of Vietnam's experience, the report also outlines short- and medium-term policy options and some of the risks for financial-incentive-driven inappropriate care, cost escalation, and new types of management and technical capacity needed to manage the reformed system.

The report, a collaborative effort of the World Bank and the Vietnam Ministry of Health, is now Ministry-of-Health-mandated reading for the directors of 1,100+ hospitals in Vietnam. I hope that all will read and learn from the report, and help lead the charge for continued reform.



Lessons for Hospital Autonomy Implementation in Vietnam from International Experience

World Bank: East Asia and Pacific

World Bank: Vietnam


Toomas Palu

Adviser on Global Health Coordination in the World Bank office in Geneva

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