Innovations in Public Hospital Management - The Experience of Sao Paulo State in Brazil

Andre Medici

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”.

Colombia: The Sinuous Path to the Universal Health Care

Andre Medici

The long and wide path to integrate health pluralism





Health care in Colombian is a pluralistic and complex system composed by four main delivery schemes[1]. Three of these schemes are based on insurance. They are the contributory regime (CR), for formal labor market workers, the subsidized Regime (SR) and the partial subsidized regime (PSR), for low income families no attached to the formal labor market. The last is the supply side coverage scheme (SSCS). This scheme is not insurance-based. It is organized as an open-access system and covers, potentially, all those that are not registered in the insurance schemes, known in Colombia as “vinculados”. On the other hand, the SR is basic financed by payroll contributions meanwhile the SR, the PSR and the SSCS are mostly public funded (taxes and transfers from the payroll contributions)

Since initiating reform in 1993, the Colombian Health System has utilized insurance schemes as the primary method of increasing coverage. Two main kinds of insurance schemes were created by Law No. 100, issued in 1993: the contributory regimen (CR) for formal labor market workers and their families, and the subsidized regimen (SR) for those working in the informal labor market without capability to pay. The latter are identified by a means-test mechanism called SISBEN[2].

Both insurance regimens – CR and SR -- include mandatory enrollment and are financed by different mechanisms. The CR is financed by payroll taxes applied to companies and workers[3]. These payroll contributions are consolidated into the Solidarity and Guarantee Fund (Fondo de Solidaridad y Garantía - FOSYGA), which finances all medical services for these workers and also transfers some funds to the SR. In addition to these FOSYGA transfers, the SR is financed by state and municipal tax revenues. In 2007, 49% of SR funding came from federal tax revenues, 36% from FOSYGA transfers and 14% from municipal taxes[4]. The SR is also financed by co-payments paid directly by clients when services are delivered. FOSYGA also finances part of the public health and public hospital expenditures.

To access health benefits, insured populations must be enrolled in a Health Promotion Company (Empresas Promotoras de Salud - EPS) which compete for clients and supervise service delivery. As insurers, the EPSs are either organized vertically (integrated model) or horizontally (network model). All EPSs contract with health providers, such as hospitals, clinics, ambulatories, labs and others[5], to deliver health services to their insured populations. The organization of these subcontracting arrangements may vary depending on the EPS model. The EPS are remunerated according to capitation mechanisms. The value of the capitation rate unit (Unidad de Pago por Capitación - UPC) received by the EPSs per each person affiliated is defined according to formulas that need to be reviewed and unified[6].

A third type of insurance coverage is available for those who do not meet the requirements of CR or SR. By Law, all workers in the formal labor market are covered by the CR regime and all informal workers must be enrolled in the SR regime. Those workers determined to be under the poverty line have their health insurance premiums subsidized by the government when using the SR. However, many informal workers are not eligible for the SR because they do not meet SISBEN eligibility criteria[7] due to high income or other factors. In these cases, the Colombian government established a partially subsidized regime (PSR), which provides a smaller health package and requires higher out-of-pocket deductibles and co-payments.

Both regimes – CR and SR - offer their insured populations a comprehensive health package called the Mandatory Health Plan (Plan Obligatório de Salud - POS) which should provide comparable coverage. The POS is a package of promotion, prevention, treatment and rehabilitation services. While in 1993, the package of procedures covered by the POS for the CR was more comprehensive than that covered by the SR, disparities have been progressively reduced in recent years[8]. The PSR still offers a smaller POS for its beneficiaries.

Citizens without any health insurance coverage can still access health services. Remaining populations not covered by the CR or SR are supposed to have access to health services by using public facilities (hospitals and ambulatory clinics) without the supervision of an EPS. This kind of coverage – known in Colombia as supply side coverage schemes (SSCS) -- has been deemed inefficient since it exercises little control over expenditures or labor patterns of health workers.

Current government policies and incentives designed to bolster the SR are not strong enough to eliminate the demand for supply-side health services. In 2003, the SSCS spent an amount equivalent to half of the public health expenditures and it still delivers services in big cities like Bogota[9]. The SSCS remains the main health provider scheme in smaller cities and rural areas.

In recent years, the national government has tried to reduce the use of SSCS and to transfer its covered populations to the SR. However, this strategy has been difficult to implement the small number of EPSs working under the SR and the strong opposition of health worker unions, whose members would have to change their civil servant status to private managed contracts in public hospitals[10]. The public sources for the SSCS, the SR and PSR are financed basically by general tax revenues from central government, Departments and Municipalities. These resources are complemented by copayments and deductibles paid by users. However, public hospitals organized as state social enterprises are also partially financed by the FOSYGA, basically for emergency care.


Health Reform to Date: Positive, but Challenges Remain



The 1993 reforms made significant improvements in coverage and Colombia has become a regional leader in coverage rates. According to official data, coverage rates increased from 58% to 90% between 1997 and 2007 and the absolute number of covered citizens grew from 22 million to 39 million, an increase which primarily benefited the poor.

Coverage grew rapidly, but not equally, and did not follow expected patterns. Under the three schemes (SR, SPR and SSCS), which covers lower income groups, coverage tripled between 1997 and 2007, jumping from 7 to 22 million people. Coverage under the CR regime grew at a slower pace during the same period (from 15 to 17 million), most likely due to the corresponding slow expansion of the formal labor market. Most policymakers believed that strong growth in the formal labor market during the 1990s would lead to reduced use of the public schemes by 2007 but it did not happened.

Health expenditures as a percentage of GDP have fallen slightly. Despite the coverage increase, cumulative health expenditures as a percentage of GDP fell from 7.7% to 7.3% between 2000 and 2005. This decline does not reflect a reduction in health spending but instead the country’s economic growth during this period (average 5.5% per year). In fact, during the same period, the percapita health expenditure in Colombia increased from 485 to 581 American dollars in parity purchasing power basis, according World Health Organization data. The proportion of Colombia’s health expenditures in GDP is about average for all of Latin America, but it is less than most of the South Cone countries.

Out-of-pocket expenditures have also fallen. Compared with other Latin American countries, Colombia has one of the lowest out-of-pocket expenditure rates in the region (estimated at 6.4% of the GDP in 2006, compared with 33.3% and 52.4% for Brazil and Mexico, in the same year, respectively. This low expenditure rate demonstrates the powerful effect of Colombia’s health insurance model on the reduction of catastrophic family health expenditures.

In spite of some variances in data, the trend toward reducing coverage inequities is clear. According to Colombia’s 2005 Demographic and Health Survey (DHS), 68% of the population was covered by health insurance (CR, SR and PSR). This figure contrasts with the 81% coverage rate, presented by the data from administrative records in 2005 given that in these records are registered some population under the SSCS However, the DHS data does show a sharp reduction in coverage inequalities in recent years.

Between 1995 and 2005, all income quintiles experienced increased health insurance coverage and the disparities between the poorest and richest quintiles narrowed significantly. Health insurance coverage in the poorest and richest quintiles increased from 3% to 57% and from 61% to 86%, respectively. In addition, preventive and control care coverage rates increased from 49% to 79% in urban areas and from 29% to 78% in rural areas between 1997 and 2003 according DHS data. An improved performance in the rates and equity of health coverage is usually related to better health outcomes.

In addition, other risk factors have yet to be brought under sustained control. For example, neonatal tetanus mortality rates have bounced between lower and higher rates during recent years, due to the failure to increase coverage of the amplified immunization program (PAI). Between 2003 and 2006, the coverage of tetanus vaccine among children under five years old declined from 93.3% to 88.2% after an increase from 79.5% to 93.3% between 2000 and 2003. Improvements have been made in maternal health, although national-level data can obscure extreme regional disparities. The percentage of mothers receiving post-natal care increased from 46% to 64% between 1995 and 2005. This improvement, combined with an increased share of births attended by skilled personnel (BASP), led to a reduction in the maternal mortality rates (MMR), which declined from 105 to 70 per hundred thousand births between 2000 and 2006.

Part of this achievement could be explained by the percentage of BASP, which increased from 93% to 97% during the same period. However regional differences in MMR are even higher than IMR. Some Departments such as San Andres, Valdes and Vichadas, did not even register maternal deaths in 2005. In the poorest Departments, like Guainia, the MMR reached 386 per hundred thousand in the same year. Some of the health system’s main challenges to improving health outcomes, especially in child and maternal mortality, may be related to the nature of coverage. Considering the three modalities of health insurance affiliation in Colombia (CR, SR and no affiliation), it is easy to demonstrate the correlation between better outcomes and higher rates of coverage (CR, SR).

According 2005 data, infant mortality rates tend to be lower in the Colombian Departments with higher health insurance coverage rates. Of course, other factors could also affect this correlation and more careful data analysis is necessary. Non-communicable diseases are becoming a critical issue. Colombia is in the middle of a rapid demographic and epidemiological transition, and mortality rates for non-communicable diseases (NCDs) are increasing very quickly. Between 1980 and 2005 the mortality rate for cardiovascular disease and stroke increased from 79 to 98 per hundred thousand inhabitants. The rising challenge of NCDs demands new POS designs and strategies in order to include more cost-effective protocols for promotion, prevention and treatment of chronic conditions.


The System under Pressure


Legal and Financing Issues Legal challenges to coverage limitations have created urgent pressure for further reform. In the past two years, the Colombian government has experienced a sharp increase in judicial complaints (tutelas) demanding payment for health procedures not covered by the two insurance plans (CR and SR). Most of these complaints have been successful, and, as a result, insurance providers have been forced to pay corresponding medical bills, creating financial pressure not only on the EPSs, but also the FOSYGA and the public budget.

In response, the Supreme Court issued a 2008 ruling that defines patient rights regarding coverage. The increase in legal challenges prompted the Supreme Court to issue the Sentencia T-760 in July 2008. The Sentencia establishes a Bill of Health Rights and stipulates that the Colombian Government must protect all citizens under the following five circumstances: (a) health services are not delivered because of the patient’s inability to pay, including for catastrophic or high-cost procedures; (b) health services are stopped without clear medical reasons; (c) patients do not receive adequate information about their treatment options; (d) patients face unnecessarily burdensome bureaucracy or administrative procedures that might prevent access to services; and (e) patients are asked to pay separately for services which are part of an integrated treatment plan.

The Supreme Court’s Sentencia also requires the Colombian Government to rapidly establish a strategy to eliminate coverage and financing disparities and to increase portability among EPS. Under the 2008 ruling, the Government must create an Action Plan by February 2009 that will set out the strategy to create a single health package (POS) for all children under 5 years old. This single POS is to become effective by the end of October 2009. The Action Plan must also propose interim actions to eliminate ambiguities in POS guidelines and protocols and must define actions to be taken toward a universal single POS, eliminating differences between plan types, increasing portability among all plans offered by the EPS and creating patient capability to pay in order to assure universal coverage for all Colombian citizens by 2010.

The Sentencia defines two new health challenges facing the country: (i) improving the quality of health care, and (ii) guaranteeing the feasibility of a universal and unified health insurance in a context of increasing labor market informality.

To improve the quality of health spending, the health system needs to establish better incentives for insurers and providers. Many of public hospitals in Colombia have been systematically bad evaluated by poor management performance and outcomes. Most of the causes are related with lack of financial incentives to the main stakeholders and lack of managerial skills to improve quality and timely outcomes. Recent changes in health-related legislation have introduced new quality standards for health services delivery. For example, some payments to providers (IPS) that were previously tied to price margins became, after 2004, dependent on the provider’s quality of health management (including the capacity to follow-up patients after clinic visits or hospitalizations). However, there has been little evaluation of the impact of this new legislation on the achievement of better health outcomes. Other national and international experiences of incentives to improve quality have not been sufficiently applied or tested in the Colombian case.

Given Colombia’s increasing labor market informality, the feasibility of current health system financing should be evaluated, as well as the capability to pay of the large populations covered by the SR or the SSCS. For example, some estimates by Colombia’s National Department of Planning (DNP), based on the 2003 Living Standard Survey (ECV), found that some SR beneficiaries should be part of the PSR according their income. On the other hand, high social contributions, which reached 53% of payroll numbers in 2007, have been identified as one of the factors responsible for the reduction of Colombia’s competitive advantages in the global economy.

The future and feasibility of the Supreme Court ruling on creating a single universal system depends on a broader and equal access to health in Colombia. This process should be conducted by implementing some previous actions as piloting experiences to extend coverage, to improve the quality of health care, to reduce costs, to increase promotion and preventive measures (so scarce in the context of the current Colombian Health System) and to guarantee the financial and institutional feasibility of a single health package. But should be the government able to buy this challenge and does the society have enough willing to pay for it?




NOTES

[1] There are two other health schemes – the voluntary enrollment insurance, which comprise a small segment of the high income families and could be overlapped with the CR, and the special regimes for some civil servants categories as military, judiciary, congress members and others. According 2003 estimates these schemes spent 8% and 2% of the total health expenditure, respectively (See Acosta, Ramirez and Canon, 2005). Given that both schemes are not related with the Colombian Health Reform and represent small portion of the enrollment and health spending, they will not be discussed in this concept note.

[2]The SISBEN (Sistema de Identificación de Potenciales Beneficiarios de Programas Sociales) uses a proxy means test index designed by the National Planning Unit (DNP), conceptually similar to the mechanisms used in Chile’s CAS or Mexico’s PROGRESA beneficiary identification system. The SISBEN index is a function of a set of variables including availability and quality of housing and basic public services, possession of durable goods, human capital endowments and current income.
[3] The contribution to the FOSYGA was 12.0% of the payroll until January 2007, when it increased to 12.5%.

[4} In addition the one percent remaining was financed by other sources as “Cajas de Compensacion”.

[5] Health providers are called IPS (Instituciones Proveedoras de Salud) according the definitions used by the Colombian health system.

[6]In fact, the UPC paid in the SR regime is almost 60% of the value of the UPC paid in the CR regime. Between 1997 and 2003, the real value of the UPC decreased in 20% in the SR and in 11% in the CR.

[7]The SISBEN score allows the ranking and stratification of potential beneficiaries based on the severity of poverty: level 1 for the poorest which roughly correspond to the national definition of extreme poverty; level 2 for the traditional definition of poverty line; and level 3 for three times the extreme poverty line. In total, six levels of SISBEN are calculated, with total scores ranging from 0 to 100. For the subsidized regime, the cut-off score for eligibility is 22 in urban areas and 32 in rural areas which comprises SISBEN levels 1 and 2.

[8]The ultimate definition of procedures and pathologies covered by the POS in the SR is listed in the Acuerdo 000306 issued on August 16, 2005 (published as Diario Oficial 46.096, November 18, 2005). However the POS in the SR still offers less coverage than the POS in the CR, especially regarding ambulatory services and second and third complexity level interventions.

[9]According Acosta, Ramirez and Canon (2003) the distribution of the Colombian health public expenditure was the following: 41.4% to the SR; 9.1% to public health and 50.5% to cover the population enrolled in the SSCS. Using 2003 household surveys we can observe that 35% of the Colombian population is affiliated to the CR; 24% to the SR and 41% are “vinculados”. At least two thirds of the vinculados were covered by the SSCS in 2003 according administrative records and the remaining population was supposedly not covered.

[10] The EPS dedicated to provided services to the SR are called ARS (Subsidized Regime Administrator Companies). Public Hospitals can be organized under ARS schemes, as State Social Enterprises (Empresas Sociales del Estado), but only a few public hospitals in Colombia have fully implemented this management model.