Inverting the pyramid

16 World Health • SOth Year, No. 5, September-October 1997 Inverting the pyramid Michael Borowitz & Sheila O'Dougherty Two regions in Central Asia are instituting reforms that will shift resources from expensive hospital care to cost-effective primary care. Strong primary care groups are becoming the clinical and financial foundation of health care. Market place in Almaty, Kazakstan. The country has started extensive health reforms which will give the population a greater freedom of choice in health care. Photo Panos Pictures/). Spau/1 © I n the Central Asian Republics of the former Soviet Union, a steep decline in the gross national prod- uct has led to a dramatic fall in public funding for the health sector. Health spending has decreased from about 6% to only 3% of GNP and per capita spending has declined by almost half. Public resources can no longer pay for the extensive delivery system, particularly the large, ineffi- cient hospital sector. Judging by the statistics of industrialized countries, there are too many hospitals and hospital beds, hospital admissions are too numerous and hospital stays are too long. The inefficient hospital sector has led to a fundamental imbalance in health sector financing, with hospitals consuming over 70% of health spending compared with 30% for public health and primary care. In Central Asia, the Zhezkazgan region in Kazakstan and the Issyk- Kul region in Kyrgyzstan are at- tempting to invert the pyramid so as to shift from expensive hospital care to cost-effective primary care. The reforms integrate changes in the organization of primary care with new payment systems to providers that offer incentives to increase efficiency. The reforms consist of reorganizing primary care into Family Group Practices (FGPs), new incentive-based payment methods, and a health fund which pools all health resources into a single sourc~. To shift care out of the hospitals requires a strong system of primary care which did not exist under the Soviet health system. Historically, primary care services were frag- mented into separate polyclinics for children, women and men, whose clients were defined by geographical catchment areas. Patients had no choice of polyclinic or of primary care physician. First contact primary care physicians had limited clinical capabilities owing to inadequate equipment and insufficient training. A primary care physician might frequently refer children with an ear infection to a specialist because the physician did not have an otoscope or clinical training in diagnosing and treating ear infections. Furthermore, since polyclinics were financed from budgets based on the numbers of staff and attendances, there was no incentive to reduce referrals , and primary care physicians functioned as indifferent dispatchers rather than gatekeepers. Free choice and competition The goal of providing comprehen- sive primary care with free choice led to a strategy of combining the separate polyclinics into independent FGPs consisting of a small number of paediatricians, internists, gynae- cologists, nurses and a practice manager. With free choice and com- petition in mind, a large number of World Health • SOth Year, No. 5, September-October 1997 these have been formed, some within polyclinics and others dispersed throughout the community. The FGPs have been provided with the necessary equipment (such as oto- scopes) and intensive clinical train- ing. An on-going clinical training programme is transforming current narrow specialists into general prac- titioners who can provide integrated, comprehensive primary care. FGPs will be paid using a method known as fundholding. Total health care spending is divided by the population to create an amount per person (capitated rate). Patients are free to enrol in any FGP, and the number of patients enrolled deter- mjnes the budget. From this budget, FGPs will purchase ancillary ser- vices such as specialty consultations, laboratory tests and hospital services. Fundholding requires the practices to function as businesses and thi s has created a new specialist who can manage the new financial systems - the practice manager. The combina- tion of free choice and fundholding creates economic incentives for FGPs to provide rugh quality care for their patients but also to serve as a gatekeeper, reducing referrals for more specialized services such as hospital care. As an example of the new approach, one practice in Zhezkazgan has moved to an apart- ment and is now open late in the evenings and at weekends for the convenjence of patients. Patient sati sfaction has increased while hospital referrals have decreased. FGPs pay hospitals for each case treated using a simplified system analogous to the diagnosis- related groups used by the United States Medicare programme. Hospitals are paid the average cost for each clini- cal group regardless of length of stay. This not only ensures stable pay- ments for FGPs, but creates an incen- tive to shorten hospital stays and increase turnover. Ancillary services will be paid on a fee schedule and FGPs have the right to purchase from any provider. Thjs creates competi- tion for ancillary services, thus improving quality and increasing efficiency. Choose your practice The most dramatic part of the reform process has been the patients' choice of their own FGPs. In Issyk-Kul , an eight-month consumer choice cam- paign educated the population about the advantages of FGPs, and culmi- nated in patients actively selecting their own FGP. In one week, over 80% of the inhabitants of the re- gional capital city enrolled. Exit interviews conducted during the enrolment period revealed that con- Schoolchildren in Kazokstan absorbed in their lesson. Primary health care is tailored to respond to every individual's needs. Photo Panos Pictures/}. Spau/1 © sumers took seriously the opportu- njty to choose their practices and to be more actively involved in their own health care. 17 The final component of the reforms is to construct a single payer system which pools all of the health care resources in the region. This is needed to set the capitation rate for FGP fundholding, to determine the fee schedule for ancillary services, and to set the rates for paying hospi- tals by diagnosis-related groups. In Zhezkazgan, the single payer is an independent health insurance fund which combines budget funds and health insurance premiums based on an employer payroll tax. In Issyk- Kul, the fund is part of the health department. In these two regions the result of the web of health reforms known as primary care fundholding has been to invert the pyramid of funding for health. Health resources are srufting to strong primary care groups, which are more responsive to their patients' needs and are becoming the clinical and financial foundation of health care. Patients now have the opportu- nity to choose their physicians and take a more active role in decisions about health care. Almost al I the components of this complex mechanism of reform have been developed and many are already in action. Significant im- provements in patient satisfaction are apparent because of more re- sponsive and more competent pri- mary care. The hospital sector is decreasing in size but increasing its efficiency. Even under the con- straints of chronic under-financing, these reforms show that it is possible to improve the health system signifi- cantly by using existing resources more effectively. • Dr Michael Barawitz is Director for Central Asia of the USAID ZdravReform Pro;ect and Ms Sheila O'Dougherty is the Deputy Director. Their address is Abt. Associates Inc. , Zhibek Zholy 60, #7 , Almaty, Kazakstan 480064.