Transcript Slide 1

IN THE NAME OF GOD
Flagship Course on Health Sector Reform
and Sustainable Financing; Module 4:
:
Scarcity & Choice
Scarcity
&
Choice
Scarcity and Choice
• What do you want?
• What are your desires?
• What do you need?!
•
……
BUT
• How much money do you have !?
• Which one is better for you now?
Scarcity and Choice
• Our wants, our needs, our desires
are unlimited.
+
• Resources are scarce
•
• We face with choices
so
What is resources?
Human
• MONEY
Material
Building
Equipment &
•TIME … ...
What is choices ?
• For Individuals:
• What to do ?
• Where to spend our money ?
• How to spend our time ? … …
• For countries:
• what to produce … …
• what to consume ... …
IRAN
Car
What choice?
• The choice depend on how
the individual or society
values alternatives … …
Choices:
• Making choices is
Inevitable
• Making choices is Hard
• Why? … …
• (Scarcity / Best Result)
Difficult Decision:
• Allocate Scarce
Resources
• Selection of a Choice
means deleting many
choices
Government’s Role
in
the Health Sector
Critical Task for
Every Government
• allocate resources
1. Between Sectors
2. Within Sectors
…
…
Which choices we
are referring to:
• those related to
public spending
• Consumers will have to make choices
when spending their own resources. …
Reasons for government
intervention in health
1. many health services
represent
public goods
2. health market is a form of
market failure
3. impact on health status
and poverty reduction
Pure public goods have two main
distinguishing properties:
• 1- Inexhaustible: Once produced, there is
no additional cost for having additional use a
public good. Marginal cost of additional user
is zero (formula of a pill).
• 2- Nonexclusive: one person’s use of the
service does not make it less available for
someone else. This applies to things like
control of contagious diseases and
information.
Government
Objectives :
• Efficiency
• Quality
• Equity
• Sustainability
• Access
Government can :
• Correct market failures
• Protect the poor
• Assured service availability
How choices
should be made?
• Review of History:
• What were the selected choices ?
• What are the result of those
choices?
Major Health
Problems
in
Developing Countries
Major Health Problems in
Developing Countries:
• Infectious and parasitic diseases
45% of death
• Latin America/Caribbean, SubSaharan Africa, Middle East/N.
Africa, Asia
• Mortality is not the only
consequence of health problems.
Figure 1.1 Burden of Disease Attributable
to Premature Mortality and Disability,
by Demographic Region, 1990
(DALYs) lost per 1,000 population
DALYs LOST
PER 1,000 POPULATION
600
500
400
Mort
300
200
100
Morb
0
SubSaharan
Africa
India
Middle
Estern
crescent
Disability
Other
Asia and
islands
Latin
America
and the
Caribbean
China
Formerly
socialist
economies
of Europe
Premature Moratility
Established
market
economies
Main 10 Causes of Disease
Burden in Children in
Developing Countries in 1990
•
•
•
•
•
•
•
•
•
•
•
•
Respiratory infections
Perinatal morbidity and mortality
Diarrheal disease
Childhood cluster (prevent. w/imniz)
Congenital malformation
Malaria
Intestinal helminthes
Protein-energy malnutrition
Vitamin-A deficiency
Iodine deficiency
Subtotal
TOTAL DALYs lost
98
96
92
65
35
31
17
12
12
9
467
660
14.8%
14.6
14.0
10.0
5.4
4.7
2.5
1.8
1.8
1.4
71.0
100
Main 10 Causes of Disease
Burden in Adult in Developing
Countries in 1990
•
•
•
•
•
•
•
•
•
Sexually transmitted diseases/HIV
Tuberculosis
Cerebrovascular disease
Maternal morbidity and mortality
Ischemic heart disease
Chronic Obstructive Pul. Dis.
Motor vehicle accidents
Depressive disorders
Peri. Endo. and myocarditis and
cardiomyopathy
• Homicide and violence
• Subtotal
• TOTAL DALYs lost
49.2
36.6
31.7
28.1
24.9
23.4
18.4
15.7
12.4
12.2
252.6
550.0
8.9%
6.7
5.8
5.1
4.5
4.3
3.3
2.9
2.2
2.2
48.6
100
Provision of Health Services in Dev.
Countries, Efficiency: (1)
• PHC is cost-effective
1. the low cost
2. simple nature of the interventions
•
Comparison of the same health
problems between PHC. at higher
levels of the health care system,
i.e. in hospitals.
Provision of Health Services in Dev.
Countries, Efficiency: (2)
• PHC. services are often underconsumed by the population
• owing to:
1. Lack of information
2. Not adequately financing
Provision of Health Services in Dev.
Countries, Efficiency: (3)
• Share of Hospitals is Total Public Recurrent Health Expenditure
Country
Hospital Share
Bangladesh
61%
Burundi
66%
China
61%
CoteD’Ivoire
46%
Ethiopia
49%
Jamaica
72%
Mexico
58%
Philippines
71%
Somalia
70%
Turkey
63%
Zimbabwe
54%
OECD mean
54%
Health sectors costs in Dev. Countries
Hospital vs. Other health services:
• The high Hospital Expenditure means:
little left over for more basic
services
• Providing primary care at hospitals
represents a waste of resources.
• Many people seek care at hospitals due to the
lack of personnel and supplies at health
centers, actually providing that care in these
settings reinforces the behavior of patients
• Brazil: 66% of public spending on health in Brazil went to
preventive and public health activities to 15% in 10 Years
how the money is
allocated :
• Staff salaries is 70 or 80
percent of spending
• Very few resources are left for
supplies, drugs, and utilities
Provision of Health Services
in Dev. Countries, Equity:
• populations reside in rural areas, most
health spending occurs in urban areas:
• resulting in highly inequitable
access to services
• In sub-Saharan Africa, UNICEF data: 10 people
have access to health services in urban areas,
only 2-3 have similar access in rural areas.
• Nairobi, there is 1 doctor per 500
people; in rural Turkana 1 per 160,000
Mismach of
Health Problems
&
Health Spending
Gap between Health Problem
and Health Spending
1. Budgetary methodologies
2. Incentives
3. Political and administrative
processes
4. Lack of information
5. Costs
6. Political and social power
Budgetary
methodologies
• Budget allocate on a historical basis
• Budgeting has usually focused on
incremental changes from the previous
year’s patterns
• No efforts made to assess how appropriate
or valid last year’s spending
• The result is often continued inefficiencies
Incentives
• For many health professionals,
prestige and monetary rewards are
generally associated with higher
levels of care, the use of costly
technology, and specialization.
Political & administrative
processes
• Unnecessary staff may result
from income-generation policies
• Health workers are poorly paid
(no incentives) and perhaps
trained (no ability) to provide
excellent care in difficult
circumstances
Inefficiencies and Waste in the
Supply of Drugs from Budget
Allocation to Consumer
Budget
allocation
for drugs
Value
received by
consumer
100
US DOLLARS
80
60
100
90
40
76
49
20
30
15
12
0
Inadequate buying
practices
Quantification
problems
Remaining value
Inefficient
procurement
Inefficient
distribution
Irrational
prescription
Non-compliance by
patients
Cumulative losses
Political & administrative
processes; Drugs:
• Cost-effectiveness criteria are not used to select drugs,
(app 10%);
• Purchases are done on small scales, foregoing volume
discounts (app 15%)
• procurement is rarely done through competitive bidding
(app 25%);
• Significant losses result from poor storage & inventory
management, expiration, and theft (app 20%)
• Irrational prescription practices (app 15%)
• Problems of patient compliance (app 3%)
Resource Allocation
of Drugs
• For every $100 spent on drugs in Africa,
$88 are lost
• Don't forget only 50% of drug budget is
available for dispensing
• 20% lost due to storage, expiration & theft
remaining 30% of drugs available
• 15% is also wasted by malpractice (really
50% of available drugs for use)
• 15% remaining 3% isn't used by people &
only 12% is used
Lack of information
• What consumers want may not
necessarily be the same as what
they should want
• patients do not have full
information
Costs
• Under-consumption of
cost-effective services:
1. lack of demand
2. lack of information
3. unwillingness or inability to pay the
prices of treatments, travel and time
required to obtain these services.
Political and
social power :
• Compounds existing inequities
• Urban vs. Rural
• Medical profession vs. public
(additional hospitals and the
purchase of expensive technology)
Mismach of
Need, Demand
&
Supply
Perceptions of Need
Community
Perceived
Need
Professionally
Perceived
Need
Perceptions of Need
Community
Perceived
Need
Professionally
Perceived
Need
Demand:
Means needs
of which
money is available
for paying
Willingness
to pay
Supply:
• reflects what is available,
from both private and
public sectors, given
technology and resource
levels
Need, Demand and
Supply for Health Care
NEED
Poverty
High Cost
Market Incentives
High Cost
Lack of Information (*)
Supplier Induced Demand (*)
Lack of Information (*)
Externalities (*)
Public Goods (*)
SUPPLY
Lack of
Other Barriers to
Information (*) Competition (*)
(*) Sources of Market Failure
DEMAND
Non-Market
Incentives
Mismatch among need,
supply, and demand
•
•
•
•
Some services are public goods
High cost
Lack of information
Market failure
• Government can play a role
Bridging the Gaps:
• Government facilitate some of
the interaction between
providers and consumers
• Identifying Incentives
• It is important not to allow those
incentives to dominate the decisionmaking process
Is
Prioritizing
Useful ?
Why Prioritizing
Could Be Useful?
• Scarcity makes us not be able
to provide all of the health
services we would like to
• We have to make hard choices
Selection of a Choice
means deleting many
choices
The Current Political and
Economic Contex
• Demand for health care is growing
and will continue to do so
• Per capita income is rising
• Life expectancy increases, and
people need to consume more (and
perhaps different) health services.
• Increased education levels, people
are more aware
The Current Political and
Economic Contex
• Demand is growing up
• GOV budgetary restrictions
• Demographic & epidemiological
transition esp. In Dev countries
International Issues:
Demographic & epidemiological phenomena:
• 1) aging population;
• 2) more education and awareness on health
issues increase demand;
• 3) changing life styles toward risky behavior;
• 4) cost of diagnostic and curative technology
has increased rapidly during past 20 years
(Mosley et al, 1993, Berman and Ormond, 1988, Bobadilla and Costello, 1961,
Bronzino et al, 1990).
Prioritization task?
•
•
Many would readily agree on the
need to prioritize
Few people would like to do so in
practice
Prioritization task?
Difficulty of task
1. Rationing of care; so, some
services not provided or some
people may not receive care
2. People react very negatively
Making decisions like that may mean
the difference between life and death
hard choices
Why Prioritize? (1)
• Rationing health care is not
new (now informal ways)
• Methods:
Willingness
to pay
ability to wait
Why Prioritize? (2)
• It forces decisions, which
may currently be implicit, to
be explicit and transparent
Why Prioritize? (3)
• Forcing decision-makers to discussions
about what is good or not in terms of being
an effective response to health problems
Netherlands;
physicians view of really effective
services (covered by social Ins)
ranged between 20 and 40%.
Why Prioritize? (4)
• Gov don’t omit less important
services, don’t finance them
• less critical services , can still
be offered through
1. out of pocket expenditures or
2. private health insurance
How to Prioritize
Different Approaches
1. Categories of care
2. Specific criteria
•
•
•
•
•
Severity
Community needs
Effectiveness
Efficiency
Necessity of services
How to Prioritize
Different Approaches
Cont,
3. guidelines or technology
assessment methods (inform)
4. Adopt models or formulas that
incorporate economic principles
5. Program budgeting and marginal
analysis approach
Why Design a Package
Benefits
•
•
•
•
•
The link between treatment and
prevention
Multiple outputs from inputs
Identification of all required inputs
Coordination of resources
Directing demand for services
Why Design a Package
Political Benefits
•
Defining a package of high priority HS.
helps Gov. to overcome its inabilities:
1.
2.
3.
Assure the highest priority activities
Eases the task of planning investment, training
Clear distinction between Gov. & Private, to
prevent Gov. have fallen victim to the “try to do
everything” approach, which has led to
everything being done badly
Design a Package
Problems
•
Consumers may still demand other services
and bypass those in the package
1. Unpopular package
2. Lack credibility among People & Doctors
•
Unavailable information
Other Policy Tools:
• Prioritization (Defining a Health package)
is not the only policy tool of Gov. to
influence efficiency and equity in health
•
1.
2.
3.
4.
5.
Other policy tools:
Provision of information
Regulation/legislation
Taxes and subsidies
Direct investments
Research
Health sector allocation
of resources is not fair
•
There are serious mismatches between the disease
profile of population and the distribution of resources.
This is attributed to:
1.
2.
•
the use of oversimplified models for setting
health care priorities;
lack of appropriate quantitative information
(Bobadilla, 1998).
Resources for health are either shrinking or are not growing
fast enough. Many low and middle-income countries have
reduced per capita public spending on health (Lafond, 1995).