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Tue Oct 25 12:18:04 EST 2011
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From: *Global Health Check* <oxfamblogs at gmail.com <mailto:oxfamblogs at gmail.com>>
Date: Mon, Oct 24, 2011 at 6:40 AM
Subject: [Global Health Check] Vietnam's healthcare system suffers on policy failure
To: oxfamblogs at gmail.com <mailto:oxfamblogs at gmail.com>
Global Health Check has posted a new item, 'Vietnam's healthcare system suffers
on policy failure'
This article has been reproduced with permission from Oxford Analytica.
Reproduced and adapted with permission from Oxford Analytica. Original article
published in the Oxford Analytica Daily Brief on September 27, 2011
Commercialisation of healthcare services in public hospitals in Vietnam since
the late 1980s has embraced private investment in public services and thereby
shifted a large part of the fiscal burden of healthcare from the state onto
individuals. Against this backdrop, the health sector is facing fundamental
challenges in terms of access, quality and effectiveness.
At the arrival of market-oriented economic reform in 1986, Vietnam had extremely
limited economic resources. Still, the country posted strong health outcomes. It
had a strong network of primary care at the commune level and promoted social
equity and free access to basic healthcare as a universal right. Following
reform, social services were rapidly commercialised: the health sector began
charging fees and privatised drug sales. In 1989, private practices were
In many respects for some social groups, healthcare provision in Vietnam is
better than it was in 1989. Most notably, treatment standards have improved.
According to official data, health indicators on issues such as life expectancy,
child mortality and incidence of tuberculosis are also improving.
However, these benefits have not been shared equally - the main beneficiaries of
commercialisation continue to be affluent social groups. The share of
out-of-pocket payments in total health financing increased from an estimated 59%
in 1989 to 80.5% in 1998. According to official figures, this fell to 52% in
2008, though other sources estimated the level at above 70%. In either case,
this suggests that together with Bangladesh, China and India, Vietnam has among
the world's highest levels of private health financing. Furthermore, this share
excludes informal fees, which account for a significant proportion of hospital
fees and constitute a major source of revenue for public hospital staff.
The national health insurance scheme currently covers an estimated 60% of the
population. Today, about 35 million Vietnamese are uninsured and at high risk of
falling into poverty when encountering major medical expenses. The 53 million
insured can in principle benefit from their health insurance. However, in
reality, the poor and the exempted groups still find services unavailable
without informal fees, known as 'envelope' payments, to doctors, nurses,
midwives or other health staff. Indeed, a recent national survey shows that 65%
of respondents experienced corruption at local health services and 70% of the
medical staff interviewed admitted that they have asked patients to pay bribes.
Due to this endemic corruption, the access of poorer Vietnamese to healthcare
services remains limited.
The lack of relevant controls and regulations has created negative incentives in
the health sector, compounding problems:
Doctors and other healthcare providers have incentives to move from rural and
poor urban areas to major urban hospitals that serve the local elite and
relatively wealthier sections of society.
Pharmaceutical companies lobby to make their drugs included in insurance lists.
Once on the lists, they often increase drug prices by at least 30% over the
market price and encourage doctors to overprescribe expensive medications and
laboratory tests. Indeed, media investigations have shown that kick-backs and
commissions to doctors sometimes make drug prices ten times higher than the
import price (see VIETNAM: Media shape the news despite state 'control' - Oxford
Analytica April 23, 2010). Since medication accounts for 45-60% of all hospital
costs, such distortions increase the cost incurred by the Vietnamese National
Health Insurance Fund (VHIF). Unsurprisingly, the VHIF is running at a loss and
facing the risk of bankruptcy.
Public spending on health has begun to increase in recent years and currently
stands at 6.4% of GDP. However, about 70% of the funds go to curative care at
the central and provincial levels and their service providers, at the expense of
primary care and preventive services in rural areas and at the commune level.
However, the current economic situation (see PROSPECTS 2011 Q4: South-east Asia
- Oxford Analytica September 5, 2011) implies that the trend towards increased
private and informal payments will continue and the government will struggle to
extend insurance provision to an increasingly vulnerable population.
Commercialisation of the health sector has failed to address the ongoing
problems of corruption, distribution of health workers, high drug prices and the
dominance of curative services. Without major reforms to the fee-for-service
mechanism, removal of negative incentives available to service providers and a
reduction in informal and corrupt procedures in the health service and insurance
refund system, Vietnam will struggle to develop a more efficient and equitable
healthcare system. These reforms are all the more necessary because healthcare
costs will only increase with economic development and increased demand for
effective, accessible and quality services.
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