Finding the right mix of public and private funding

Whether it’s public or private, or a mix of both, citizens still look to those at the helm of leadership to provide the best for their medical needs.
 

Healthcare is complicated business, from providing services to far-flung areas to ensuring everyone has adequate insurance cover. The government’s responsibilities extend far beyond financing, and these include teaming up with the private sector to provide the best standard of care for the public.

Dr Lawrence Lai of the Hong Kong Hospital Authority has enumerated a number of concerns surrounding the healthcare industry and the government. These include the extent of healthcare government should directly provide, the issues surrounding public funding and whether or not the private enterprise is better at delivering healthcare than the government.

Healthcare systems in different countries show the varying extents of government involvement in healthcare, and how the state’s relationship with the private sector affects the quality of healthcare delivery in a country.
The United States, for example, has two main public health insurance programmes: Medicare for the old and Medicaid for the poor. “As baby-boomers age, the numbers hitting their 65th birthday, and thus qualifying for Medicare, are rising inexorably. As for the poor, another part of the Obamacare reforms will entitle million of lowincome families to join Medicaid for the first time. Add in the effect of a rising population, and the combined enrolments of Medicare and Medicaid will grow by around 30% by 2022, when one-third of the population will be on one scheme or the other,” says Dr. Luong Ngoc Khue from the Department of Medical Service Administration of Vietnam’s Ministry of Health. He adds that the steady privatisation of publicly funded health care in the United States could accelerate, if, for instance, Republicans succeeded in moving all of Medicare to a voucher system.

Government-funded healthcare

“However, for the insurer, having the government as their main customer is not without its perils. They are usually taking on all the risks of rising medical costs in return for fixed fees,” Khue says. UnitedHealth recently tried to exclude some doctors from its Medicare plans to save money, but a court ruled that it cannot.

“The government may at any time decide unilaterally to cut the prices it is prepared to pay; the insurers’ shares have swung wildly in reaction to officials’ talk of doing just that. Looking after state-funded patients is guaranteed to be a big business in the years to come; big profits are far from guaranteed,” he says. The socialist nation of Vietnam, on the other hand, gives all decisionmaking powers to the government in terms of healthcare management. 

However, Khue says the government does not have strong enough financial resources to improve the quality of care and treatment of illnesses including cardiovascular diseases, diabetes, muscuskeletal diseases and cancer, among others.

“Since then, the state direction is to raise awareness, enhance the leadership of the Communist Party and authorities at all levels in the implementation of innovation in operational mechanism, financial mechanism in the health sector, continue to fulfil the operational mechanism of the public health services towards the fair development of public sector as well as private one, and improve accessibility to high quality health services for Vietnamese people, in which implementing (public-private partnerships) is an inevitable solution,” Khue says.

Currently, in Vietnam, public healthcare is still the mainstream choice, with the state owning 90% of hospitals in the whole country.
“The operating trend of the Vietnamese healthcare system is that the government continues to own the majority of hospitals, while encouraging the development of private health, both in quantity and quality,” he says. The government is focused on the development of preventative medicine and encourages the private sector to occupy the segment of average to high income patients.

Working with the private sector

In the case of Canada, the country has a mixed public-private system where the private sector delivers healthcare services and the public sector is responsible for financing them. Khue says, however, that the Canadian system is not completely consistent with this model. The Canadian government exercises considerable authority over the delivery of services by the private sector, and while governments fund the large majority of services, the private sector plays an important secondary role in health care financing. Under the Canadian healthcare system, individual citizens are provided with preventative care and medical treatments from primary care physicians, as well as access to hospitals, dental surgery and additional medical services. With a few exceptions, all citizens qualify for health coverage regardless of medical history, personal income or standard of living.

“Canada’s healthcare system is the subject of much political controversy and debate in the country. Some question the efficiencies of the current system to deliver treatments in a timely fashion, and advocate adopting a private system similar to the United States. Conversely, there are worries that privatization would lead to the inequalities in the health system, with only the wealthy being able to afford certain treatments,” Khue says.

Regardless of this political debate, however, Canada boasts one of the highest life expectancies and lowest infant mortality rates among industrialized countries, which Khue says many attribute to the country’s healthcare system. In the Philippines, there seems to be a problem with how private health institutions operate within the regulations set by the government. “The problem is private hospitals are overregulated by government rules and regulations from the Department of Health, Department of Environment and Natural Resources, Bureau of Fire Protection, municipal tax, city rules and the Bureau of Internal Revenue. 

Hospitals are forced to lessen their expenses and charge higher to survive and continue giving good services to the poor patients,” says Dr. Rustico Jimenez, president of the Private Hospitals Association of the Philippines, Inc.Jimenez adds that Philhealth, which covers the majority of patients, pays hospitals by case rate. He says the rates, however, are lower and not properly studied. The government does not pay within 60 days, so hospitals suffer financial problems. 

“The Department of Health implemented a reclassification of hospitals in 2013 where most hospitals were downgraded to infirmary or clinic status. This also has an effect on the Philippine Health Insurance Corp. payments,” he says.

Is private better than public?

In Vietnam, the private sector operates the finances more efficiently than the public sector, Khue says.
“Operational mechanisms in public hospitals have a bias towards a subsidy regime which is not suitable for the socialist market economy. While investment in health is a long term one that is in need of huge capital, the current price of medical services is only counting the direct cost factors but not some other important factors such as staff cost and depreciation of fixed assets,” he says. Therefore, the revenue is not enough to reinvest in improving the quality of infrastructure and health workers. 

“Meanwhile, private hospitals are very decent investments, but not operational due to a lack of effective medical personnel who are experienced and skilled in clinical activity; besides, those hospitals have brand name in the healthcare market, so they cannot obtain trust from patients,” he says.

Currently, he says there is no provision in Vietnam allowing public servants and officers of public medical establishments to work in private health facilities within office hours. “Therefore, to address this issue, the government is considering the research in order to enact the proper policy,” he says.

The promise of PPP

In overcoming certain challenges in costs and investments, Khue says governments can turn to the private sector and form public-private partnerships. “When appropriately structured and executed, (the private sector) can help address specific cost and investment challenges, deliver improvements in efficiency and enhance service quality,” he says.