Background
Latin America experienced a fever of health reforms during the 1980’s and 1990’s. Given the increasing costs of health care and the impossibility to finance generous health coverage for all, as happened in the European since the 1960’s and 1970’s, mostly of these reforms had taught objectives such as increasing coverage and health quality with lower costs and efficient management. It was also expected reduced health inequalities and improved health outcomes.
To address these goals, many Latin American countries embraced changes in health financing (by increasing the participation of the public spending), health entitlement (by defining and addressing health rights) and health management (by separating the functions of financing, regulation and provision).
Brazil led one of the broadest and most visible world health reforms, creating a single health system (SUS) with some special features: (i) universal health rights; (ii) health management and delivery decentralization to States and Municipalities; (iii) single model of financing shared by all government levels; (iv) strong social participation; (v) service delivery model based on private and public providers, and; (vi) the existence of a complementary and voluntary private health insurance system (for 25% of population in formal labor market and middle class) regulated by a federal agency.
The alignment of all these objectives in a single health model was tried during the first ten years of the reform without reach good outcomes. First positive results were shown when health management and financial decentralization to states and municipalities became effective (in the late nineties) and different models to finance, manage and delivery health services were experimented. One of these models was developed in Sao Paulo State in the management of public hospitals.
Sao Paulo State in the Brazilian Federation
Densely populated São Paulo State is an economic powerhouse, and has also achieved high levels of social progress. More than 40 million Brazilians live in the State (22% of the national population - 2005) and more than 31% of the country’s gross domestic product (GDP) is produced there. A 2004 comparison of the human development index of all 27 Brazilian States puts São Paulo in the third position, below Santa Catarina and the Federal District. The percentage of illiteracy among the State’s adult population (age 15+) was 5.5%, well below the national average (11.4%), as well as that of the Southeast Region (6.6%). Life expectancy in the State was 73.4 years, which is also above the national average (71.7 years). The percentage of São Paulo’s population served with piped water, adequate sewage systems and regular waste disposal services in 2005 was 96%, 91% and 98% respectively.
Poverty in the State has been decreasing and cash transfer programs have not been as necessary to cover poverty needs as in other Brazilian states. Between 1993 and 2004, the percentage of the population living below the poverty line (according to national definitions) fell from 30% to 16% due the continuous State’s good economic performance. In 2006, only 9% of the population received governmental conditional cash transfers. However, for 94% of these families, the cash transfers supplemented other income; only 6% of the recipient families relied on the cash transfers as their sole source of income. On the other hand, according to recent living standard surveys[1], the mandatory conditions for families to receive cash transfers income (children’s vaccination and school enrollment) did not lead to significant increases in vaccination and school enrollment rates among both beneficiary and non-beneficiary families living below the poverty line, due to the high coverage / enrollment already achieved in the State. Vaccination among children under five years old is practically universal (99.5%) and school enrollment is above 97% for both beneficiary and non-beneficiary groups.
Health indicators reflect the State’s advanced epidemiological transition as well as the need to focus on preventing chronic disease. As of 2006, non-communicable diseases now represent the State’s major health challenge, with 85% of deaths attributable to chronic conditions, primarily cardiovascular diseases (33%); cancers (18%) and respiratory diseases (13%). Only 4% of the State’s mortality is linked to transmissible diseases. Among children younger than one year old, certain disorders originated in the perinatal period, due to maternal complications during pregnancy or birth labor, are a major issue, representing 60% of all related causes of mortality. External causes (such as traffic accidents and homicides) are the major cause of death for people between 5 and 49 years old[2]. These trends indicate that the State requires a robust combination of specialized promotion and prevention activities addressing chronic conditions, mixed with well-managed, comprehensive hospital care that can treat emergencies related to external causes. In order to achieve this objective, the State government is experiencing different management arrangement in order to find which one produces the best outcomes.
The structure and challenges of the State’s health system
The State’s population relies heavily on the public health system, especially the public hospitals that provide specialized care for complex health problems. Even though São Paulo is relatively wealthy, almost two-thirds of São Paulo’s population uses Brazil’s public universal health system (SUS) as the sole source of health care coverage. In 2008, although 40% of the state population was voluntarily enrolled in private health plans, the majority of this group continues to use public facilities, especially public hospitals, when they need specialized health care. Some public hospitals have made agreements with health insurance companies or health management organizations (HMOs) to be reimbursed for specialized health procedures.[3] The State’s hospitals have become centers for medium and high complexity care. Many state hospitals are important referral centers for highly specialized health care, not only for the State’s population, but sometimes even for the Brazilian population as a whole.[4]
The state health system is diffuse and complex, with variations in levels of responsibility and multiple cooperative arrangements. The state system is subdivided into 17 Health Regions that include all of the state’s 645 municipalities. About 36% of municipalities are legally allowed to manage all complexity levels of health services, including hospital care. The remaining municipalities only have capability to manage primary health care services. In addition, the 17 Health Regions are grouped in 10 Health Macro-Regions, 65 Health Micro-Regions; 345 assistance modules[5]; 125 assistance poles[6]; 8 regional health training centers and 15 inter-municipal health consortia, where the State is also one of the consortia members. Consortia are organized to facilitate issues such as shared used of hospital beds and patient transportation.
Different hospital management arrangements are used in the State. The SUS in São Paulo has contracts with 614 public (under municipal or state management) and private hospitals. Of these public hospitals, 70 are state-owned hospitals: 45 are directed-managed by the São Paulo State Secretary of Health (SES) and 25 are managed under the OSS autonomous model (management contracts). The other 544 hospitals are public (under municipal management) and private (for profit or philanthropic). From the total number of SUS public hospitals, 35 are teaching hospitals (27 under state management and 8 under municipal management) among those some are included in the 25 hospitals managed under the OSS regime.
New management models have been introduced in the State’s SUS hospitals and are showing positive results. Management issues can often profoundly affect health system performance, with certain processes (such as vertical management structures and centralized planning) generally associated with poor health outcomes and inferior performance. On the other hand, international experience has shown that new management models that emphasize autonomy in contracting, human resources and budgeting can improve efficiency, outcomes and customer satisfaction. The State’s Health Secretary introduced, in the last decade new models on hospital and ambulatory care management; outsourcing of auxiliary services in hospitals to be operated by private companies and other innovations that increased efficiency in the health system as described below.
The public hospital – private management model (OSS)
In the late 1990’s, São Paulo State introduced a new management model that allowed private entities, with State oversight, to manage public hospitals. This model is known as OSS (State Social Organizations Model) and is built on three pillars: the partners, management contracts, and the role of the state as regulator. Entities that enter into an agreement to manage a hospital must sign a management contract with the SES. Hospital management partners are institutions with recognized capabilities to manage hospitals, such as universities (like UNICAMP, USP, UNIFESP, UNESP) and philanthropic organizations (such as Santa Casa de São Paulo, Santa Marcelina Hospital Network). The OSS model began with 15 hospitals in the regions of the State with the neediest populations and lowest health coverage.
OSS management contracts are comprehensive and include distinct evaluation and reporting requirements:
(a) Management contracts are signed between the Secretary of Health and the managing partner, and specify the kind of assistance and services to be delivered as well as the agreed health goals;
(b) OSS contracts are supervised and evaluated by a special State Commission that includes representatives of the State Health Council, the Health and Hygiene Commission of the State Legislative Chamber and professionals chosen by the SES. The Commission evaluates the outcomes achieved against the contract’s stated goals;
(c) Management contracts specify that each OSS can only serve populations that use the SUS (i.e., not patients that have private health care coverage or other insurance);
(d) OSS hospitals are required to publish the OSS Accounts and other information in the Official State Newspaper as a means of guaranteeing transparency. In addition, OSS financial and accounting statements must be audited by the State Accounting Tribunal (TCE);
(e) To be designated as a hospital OSS manager, the bidding institutions are submitted to a selective process where some conditions have to be verified. One of these conditions is the following: the institution must prove at least 5 years of experience in autonomously managing their own health services with a good record of management performance and health results achieved.
Regulatory capacity has been a weak link in the OSS model. Although SES is defined as the regulator of the management contracts, its regulatory capacity has been the weak link of the OSS model. To increase the regulatory capacity of the SES and also to measure the comparative advantage of the OSS model, the World Bank is helping to create a performance and evaluation system based on indicators and fed by systematic data collection in all state hospitals. This system should enable the SES to: (a) evaluate the achievement and impact of management contract goals, and (b) provide a rapid and effective instrument to identify and address problems in hospital performance.
OSS management contracts should be an important instrument of accountability and transparency in the use of public funds for health. The OSS model gives more managerial autonomy to hospitals, but also it is expected to create higher levels of responsibility and accountability. Hospital management is expected to respond to or solve problems identified by a “control panel of core indicators” that should be monitored by the SES, as proposed by this Concept Note, but not yet implemented. In addition, OSS management teams must simultaneously work toward service production goals including quality assurance and customer satisfaction. Management contracts also establish some limits on personnel expenditures, and delineate patient rights. Contracts also govern OSS hospital data interface with central health IT systems, where a core set of indicators common to all hospitals, should be available on line and monitored by the SES. The OSS model should also be accountable to the state financial administration. In order to facilitate financial audits, the SES receives monthly health production cost reports and financial statements which are sent to the TCE, allowing a comparison between expenditures and goals achieved.
OSS hospitals should contribute to a more robust health system and increased patient satisfaction. Hospitals under the OSS model are expected to be active participants in local health systems and to participate, as directly-administrated public hospitals, in deliberative bodies of both the SUS and in the municipal health council systems. Currently, the availability of new managerial tools already improves the quality of health assistance and encourages social participation and the relationship between citizens and hospital management. Most patient complaints are solved and customer satisfaction increases without the intervention of SES.
Comparing hospital management models: some preliminary data
In a study conducted not long after their introduction, hospitals under the OSS model demonstrated better outcomes than those under direct administration. Studies published by the World Bank[7], which controlled for hospital size, equipment and characteristics of the target population, showed that hospitals under the OSS model present better performance on quality, efficiency and cost-effectiveness than directly-administered public hospitals. In 2003, only a few years after the model was introduced, the OSS hospitals produced more patient discharges, used hospital facilities more intensively, contracted fewer medical services, and had lower average costs per inpatient. At the same time, the OSS model adds more quality to the services, by guaranteeing patient integrity and accomplishing medical quality protocols. An extrapolation of the data in Table 1 hypothesizes that if these ten direct managed hospitals had used the same management processes as the twelve OSS hospitals they could have admitted 12,500 additional inpatients; produced 5,500 more required surgeries and saved R$ 67 million in the same time period.
A subsequent comparative study showed that OSS hospitals continue to out-perform direct management hospitals. Data collected by SES in 2006 shows that some OSS processes and cost indicators continue to improve performance in public health facilities. OSS hospitals are employing a higher number of qualified personnel and making more efficient use of existing public hospital facilities. At the same time, OSS hospitals had lower costs for some specific medical services, such as Intensive Care Unit (ICT) daily rates and medical exams as tomography and breast scanning.
Better outcomes in OSS hospitals are attributed to several of the management model’s characteristics. The above-mentioned studies suggest that the superior performance by OSS hospitals is associated with more autonomy in selecting and contracting managers, allocating budgets, hiring and firing personnel, defining and paying for performance incentives and managing contracts with suppliers. The OSS hospitals are financed mostly by global budget schemes, and provide for better monitoring and evaluation of contracts, and flexible bidding processes (avoiding the complexities of the 8666 and 8112 Brazilian procurement laws). At the same time, the OSS model provides more space for better monitoring and evaluation by the central government, by providing electronic data on outcomes linked with health goals agreed between the OSS and the SES.
Hospital information systems in São Paulo State
Hospital information systems in the state are fragmented and overlapping. In recent years, three separate information systems have been developed and implemented by the SES to collect data and information from hospitals in São Paulo State: (a) the first System tracks data in direct-managed hospitals (45 hospitals); (b) the second covers OSS hospitals (25 hospitals under autonomous management contracts); and (c) the last tracks data from teaching hospitals under the responsibility of the SES (35 hospitals). All this information should be complemented by the production data provided by other public information systems at national level, as the DATASUS and the IBGE/AMS that should be used in the analysis and evaluation reports to be produced by the SES.
Despite the existence of multiple hospital databases, very little comparative analysis has been done. Much information is duplicated in the three databases and some hospitals have their information collected by more than one system. However, the SES has not yet used the data to compare outcomes on specific indicators across the three management models. Existing systems allow SES to establish comparative indicators, parameters and cross analysis among different databases in order to built common indicators for the existing state hospitals.
A system that would allow comparative analysis would have many benefits. Some health professional unions have begun to criticize the OSS model; an analysis of data showing the relative benefits for both patients and health care staff would be a useful tool to compare the benefits of all management models. A comparative analysis would also provide input for the plan to extend the OSS model from the existing 25 to all 70 state owned hospitals by 2010[8] and to remove institutional legal and institutional barriers to extend this model to other state hospitals. In addition, comparative data would facilitate increased transparency and informed reports about the real effect of ten years of implementation of the OSS model in the SES Hospitals. Finally, comparative data would support the possibility of extending the OSS model to other health institutions such as pharmacies, laboratories, ambulatory services and even integrated health networks.
Currently the World Bank is helping the State on developing and implementing a system of core indicators to compare and evaluate hospital performance and outcomes under the different management arrangements currently utilized in the State of São Paulo. Once in place, the system will produce regular hospital performance indicators, analyze the indicators, publish continuous information, identify operational and efficiency bottlenecks in the hospital network and guide policy decisions and future opportunities for investment in the health sector. The overall benefit expected by implementing the use of this system of core indicators is the improvement of the state health results by using the OSS model.
Footnotes
[1] Governo do Estado de São Paulo, Fundação SEADE, Pesquisa de Condições de Vida (PCV), 2006.
[2] For teen-agers between 15-19 years old external causes represent 75% of all mortality.
[3] The existence of large share of the population covered by private health plans could introduce bias in some of the statistical parameters used to define the health needs at the local level. An analysis of this aspect in the case of São Paulo State can be seen in Bittar, O.J.N. (2005).
[4] That is the case of INCOR, a public hospital which is an international leader and referral center in the treatment of cardiovascular diseases;
[5] Assistance modules are regional units of the State Health Secretary responsible to assist the regional health network with specific and thematic health programs integrating basic and medium complexity care. This concept was defined in specific legislation of the Brazilian Ministry of Health (NOAS-2000);
[6] Assistance pole is a health management unit responsible to coordinate the health integrated care for a set of municipalities.
[7] See La Forgia, G. and Couttolenc, B (2008)
[8] Valor Econômico, February 17, 2009 “Gestão por metas será adotada por todos os hospitais públicos de SP”.
