Evaluation Study of Cost Recovery of Hospital Development Committee in Nepal

Abstract

Executive Summary: Health care system of Nepal is in tremendous pressure because of the triple burden caused by increasing demand of services for communicable diseases, increasing non-communicable diseases, and poverty. The demand of quality health services with increased number of hospitals and hospital beds is being seriously challenged by the lack of adequacy and mobilization of resources. Different levels of public hospitals represent important health care outlets in Nepalese context. The government has found difficulties in ensuring the equitable access of hospital services in fair manner to the people. Resource generation and resource management are the major concern for making these services available and accessible to the general people. Albeit, in general health care policies, government has come up with few options of alternative approaches of health care service provisions and resource generation like using user charges, public private-partnerships, community participation in and through health sector reform strategies, practice of such options has been limited by the absence of autonomy of decentralized decision making space by the hospitals. At the time the government is planning to handover its all health care facilities to local bodies by making them more autonomous through health care reform strategies. However, there is very little understanding from evidence whether these health institutions will be able to stand autonomously. Very less information is available regarding the efficiency status as well as the cost recovery status of public hospitals in Nepal. Thus the current study aims to understand the status of public hospitals in resource generation and mobilization, efficiency of hospitals (allocative efficiency), accessibility of hospital services to people, feasibilities of hospitals for autonomy, and possible options for remedying the access barriers for improved access to hospital services, and financially sustained institution. This study applied quantitative and qualitative research methods for data collection and analysis. Step-down approach was used to distribute costs into three major cost centres: overhead, intermediate and final service departments. So as to ensure the wider representation of different levels, development and ecological regions of Nepal, hospitals were selected conveniently based on the variety of services components – specialization of hospitals by service components, willingness to support the study. Altogether 16 hospitals - 3 central, 1 regional, 3 zonal and 9 district level hospitals – were studied. A total of 367 in- and out- patients enrolled for semi-structured interviews. Focus group discussions in 6 hospitals and 23 in-depth interviews were conducted different hospitals. Quantitative data were expressed through descriptive statistics whereas qualitative information were collected and analyzed based on the grounded theory approach with native reflections. Budget allocated by the government was the major source of income for all levels of hospital. Income from the different services provided by the hospital was another major source of income for almost all hospitals. Cost recovery rateof the hospitals as a whole was not found satisfactory. Among all hospitals, Solu hospital had the best cost recovery status whereas BP Koirala Memorial Cancer Hospital had the lowest cost recovery rate in 2003. Staff of different hospitals were mainly categorized under doctors/nurses, paramedics and administrative staff. Koshi zonal hospital had the highest proportion of doctors and nurses and Mahakali zonal hospital had the highest proportion of administrative staff when compared to all levels of hospital. Total expenditure on paramedical staff was found lower in almost all hospitals which were mainly due to the lower number of paramedical staff in those hospitals. Hospitals are mainly relying on central government fund to deliver services to the people. However, hospitals located in urban centres generate revenues from various sources, for example, having shopping complex. Qualitative findings suggested that hospitals are not financially sustainable. Frequent transfer of staff, a lot of vacant posts and hospital development board without autonomy were the major hindrances for the smooth functioning of those hospitals. The key message of the study is hospitals could grow to gain cost recovery status and financial sustainability if the hospital development boards are provided adequate decision space for its autonomy. The role of government should be facilitating and monitoring the quality of hospital services rather controlling thehospital management activities directly. Also the allocative efficiency of public hospital can be achieved if: • The hospital development boards are allowed more decision space to take necessary actions for ensuring better service provision and its utilization; • The hospital development boards are allowed to takedecision for ensuring the effective human resource planning and its use. Mostof the hospital management boards have the problem of frequent transfer of stall (the government ones) and lack of necessary incentive and upgrading trainings for the staff. Provided the staffs are well trained and their skills are upgraded according to the demands of health care market, public hospitals can do achieve better cost-effective ratios for hospital services and so the improved allocative efficiency. • Practically, to improve the allocative efficiency of public hospitals in Nepal, resources should always be used to produce the most cost-effective interventions. The cost-effectiveness of interventions can be ensured through: (a) providing a mix of health interventions that reflects people’s need and has apotential to yield the highest return on health, (b) delivering and using the produced health interventions by the people who need them the most and get maximum health gain, and (c) providing health interventions, ensuring that the people who need hospital services, are accessible physically (geographically), culturally and economically. • It is by having the reform in the overall management of hospital in public sectors that can help in achieving efficiency. For example, extending the hospital services according to the needs of such services in the health care market; allowing hospital generating revenues for improved cost recovery based on the service components and people’s ability to pay but fairly; having competent staff and providing necessary training according to the needs, etc. • The public hospitals need to gain its autonomy. The autonomy of the public hospitals in Nepal is possible only by devising and implementing appropriate policy and interventions in at least five major domains: Governance and administration, Finance, Human resource management, Procurement and Hospital information system. This leads to public sector hospitals recover the costs of services and make the hospital services quality-assured, sustainable and also improve the access to the services, in true. This can be done through piloting in few sites, initially and scaling-up the scheme in other hospital incorporating the lessons learned.