Financial autonomy for public hospitals: a blessing or a curse

June 13, 2019 - 07:38
Financial autonomy would boost the competitiveness of health institutions as they would have more "wiggle room" to pursue hi-tech techniques in organ transplants, extracorporeal lithotripsy, endoscopic surgery and other cancer-related diagnosis and treatments.


Doctors at Bạch Mai Hospital in Hà Nội receive training from Japanese doctors on the less invasive ablation method to deal with liver tumours . Financial autonomy is expected to give public hospitals more budget freedom to invest in advanced medical technology and equipment. — VNA/VNS Photo Dương Ngọc

HÀ NỘI — Just a day after undergoing surgery to remove one of her lung’s lobes, Nguyễn Thị H., a 59-year-old woman from the northern province of Bắc Giang, could already sit up and chat with other patients in the room.

Last week, H. was one of the first two cancer patients to experience a brand-new and much less invasive procedure, namely the uniport video-assisted thoracic lobectomy. The procedure was first carried out at Bạch Mai Hospital in Hà Nội with support from world-leading surgeon Dr Diego Gonzales Rivas, who is also the ‘father’ of this technique.

The method forgoes the ‘cutting open’ of the patients’ chest cavity, which means the patient suffers less pain and takes less time for recover, as well as reduces risk of complications that could affect the functions of the lungs post-op.

However, as one of the hospitals under the direct management of the health ministry, this advanced technique and other state-of-the-art equipment wouldn’t be possible at Bạch Mai Hospital if it still solely depended on limited funds from the State budget.

Dương Đức Hùng, head of the financial planning department of Bạch Mai, said financial autonomy is “required” in line with market mechanisms.

Accordingly, over the past few years, Bạch Mai Hospital has started to take advantage of its newly granted freedom to make decisions as it sees fit in various areas, from deciding on salaries for its employees or calling upon private funding to expand operations and upgrade existing facilities.

“Many public hospitals in the southern region are suffering from a terrible ‘brain drain’ where skilled doctors jump ship, and work for private hospitals instead. The reason is simple – the salaries they get are not commensurate to the time and effort they spend on training, or their skill level,” Hùng told Dân Việt newspaper.

“Now, if the director of a [public] hospital has the authority to recruit staff as they see fit and set a salary that best reflects their ability without conforming to a rigid basic salary scheme that is applied on all public employees,” Hùng said.

Nguyễn Nam Liên, head of the financial planning department under the health ministry, said that financial autonomy would boost the competitiveness of health institutions as they would have more "wiggle room" to pursue hi-tech techniques in organ transplants, extracorporeal lithotripsy, endoscopic surgery and other cancer-related diagnosis and treatments.

Prime Minister Nguyễn Xuân Phúc recently approved a decision to grant full autonomy on a trial basis for the “super four” hospitals under the health ministry – the Việt Nam-Germany Hospital, Bạch Mai Hospital and K (Cancer) Hospital in Hà Nội, and the Chợ Rẫy Hospital in HCM City.

According to the decision, the move aims to “encourage proactiveness, creativity and effective use of the hospitals’ resources to raise the capacity and quality of medical examinations, treatment and healthcare for people,” as well as promote the establishment of hi-tech centres that could cater to both Vietnamese and foreigners as well.

Attached responsibility

Currently, regarding financial autonomy, hospitals are categorised into four groups: ones that have stable, sufficient revenue to cover expenditures and have some left to invest in facilities, equipment and human resources; ones that can handle expenditures only; ones whose revenues can partly cover expenses, and finally, those that are entirely dependent on the State budget.

The four hospitals that were given comprehensive autonomy in the Prime Minister’s decision belong to the first group, and they will enjoy a higher degree of freedom in professional activities, organisation and structure, tenure and other expenditures.

They could also decide salaries and recruit employees just like any other business, Liên from the health ministry said.

The Government has a reason to encourage financial autonomy in hospitals – at least, the larger, more reputable ones in the country – since it would also mean less pressure on the already-stretched State budget.

According to the health ministry, the budget allocation for hospitals in 2017 decreased by nearly VNĐ5.47 trillion (US$234.8 million) compared to 2016, and dropped another VNĐ3.21 trillion in 2018.

However, many have voiced concerns over the possibility that hospital fees would skyrocket and public hospitals would deviate from their original social welfare functions now that the regulatory “shackles” have been relaxed significantly.

Professor Trần Tuấn, Director of the Research and Training Centre for Community Development, argued that there must be an independent unit that monitors the now-autonomous hospitals, citing fears that the hospitals could focus more on developing for-profit services to recoup their investment instead of catering to the general public.

“We still lack a way to supervise the autonomy mechanism, which means patients could stand to lose as all sorts of services, while rates, screening fees or treatment costs could rise significantly. Also, these four hospitals are central-level ones, so patients won’t have an alternative if their condition proves to be serious,” Tuấn said.

Director of the K (Cancer) Hospital in Hà Nội, Trần Văn Thuấn, said the hospital fees for those with healthcare insurance will continue to follow the guidelines issued by the health ministry.

The fees for non-insurance medical services will be based on another set of guidelines from the health ministry, which will take into full account all seven cost factors – ranging from maintenance of equipment and depreciation of facilities to electricity and salaries for medical staff – while the current fees do not reflect the true costs.

In a roadmap issued by the health ministry, hospital fees for those with insurance will also be raised accordingly by 2021.

However, the health ministry will place a cap on the fees if the hospitals provide on-demand services for patients with the facilities and equipment they get from State investment.

“For other totally financially independent institutions, with facilities they themselves build, equipment they themselves buy and staff they pay, they could set their own rates, but the rates must be public and transparent so patients could make an informed choice,” Liên said.

According to Bạch Mai Hospital’s officials, 80 per cent of their patients have health insurance so the impact wouldn’t be considerable, but those opting for non-insurance services will likely have to pay more.

“But the service quality will be worth every penny,” Hùng said.

Aside from the price hike, Bùi Sỹ Lợi, deputy chair of National Assembly Committee for Social Affairs, said that as larger hospitals relied less on State funding, the freed-up money should go into directly supporting citizens, especially those in disadvantaged areas or poor backgrounds, in the form of health insurance.

As attractive as it seems, there has not been a detailed and consistent set of instructions for the mechanism yet, nor is there a one-size-fits-all model of autonomy. What the “super four” are doing could not be easily replicated at any other hospital, especially lower level ones at communes or districts.

“We need to pilot different models of autonomy, identify the problems and the measures to correct them, so that subsequently autonomy could be extended to all hospitals,” Hùng from Bạch Mai Hospital said. — VNS