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An assessment of hospital financing– Findings from a survey in some selected hospitals Dam Viet Cuong, Nguyen Khanh Phuong, Tran Van Tien, Hoang Thi Phuong and colleagues
Objectives "Evaluation of hospital economic and pharmaco-economic situation” is one of the three studies belonging to project “Baseline survey and overall evaluation of hospital system in Vietnam”. This study was carried out under the request of the Ministry of Health. The study aimed to evaluate the sources and utilization of hospitals' income and the prospect of financial autonomy. Findings from this study provide inputs to develop policies for hospital system reform and development. Methods This is a cross-sectional study. Secondary data analysis, hospital statistics collection, in-depth interview and focus group discussion were conducted. This report presents the study results of phase I, which was evaluated and approved by the Ministry of Health in 2006. Phase II of this study is being conducted in the remaining provinces and cities of the study sample, representing all socioeconomic regions of Vietnam. Main Findings The main sources of hospital revenue came from the government budget, user fees and health insurance. Government budget was the chief source, accounting for the largest share in the total hospitals' revenue at all levels(central: 40%, provincial: 37%, district: 61%). Revenue from user fees and health insurance ranked second and third, respectively (36% and 10.6% at central level, 45% and 17% at provincial level, and 39% for both user fees and health insurance at district hospital). Structure of the revenue sources differed across administrative levels,types of hospitals, and different areas. Compared to provincial and central hospitals, district hospitals had a higher share of government budget as percentage of total hospitals' revenue. Similarly, the share was larger in district hospitals for the national target health programs such as TB and mental health. The current budget allocation algorithm was not reasonable as it was based on the planned number of beds, not on actual capacity utilization and hospitals' ability to collect user fees and reimbursement from health insurance. Besides, the budet allocation depends largely on local financial sources. The spending patterns by sources remarkably differed across hospital levels. The share of state budget expenditure out of total health spending was the highest in district hospitals (67.2%), then came down to central (44.4%) and provincial hospitals (38.1%). The share of user fees and health insurance expenditure washighest in provincial hospitals (62%), followed by the central (56%) and district hospitals (32.8%). About 65% of the revenue from user fees and health insurance was spent on activities directly related to patient services, 12% for personnel, and the remaining on maintenance and purchase of fixed assets. Contrarily, state budget was spent mainly for personnel (57%), then for professional activities (14.4%) and other recurrent expenditures (28.6%). Average annual expenditure per bed at central hospitals was around 112 million VND, nearly double the amount at provincial and district hospitals. The proportion of prescription drugs that were in the approved essential drug list was high in all studied hospitals (85%). Drug expenditure tended to increase over time and accounted for 30% of total hospitals' spending. Prescription of imported drugs was very high, especially at the central facilities (90% of total drug spending). Delay in payment for drugs was common in all studied hospitals. District hospitals and specialty hospitals that had no revenue from user fees were not able to be financially autonomous. Financial deficit due to inability to collect user fees, incompatibility of policies especially in personnel recruitment and management, and inadequate compensation policy posed great barriers to hospitals in the process of becoming financially autonomous. Recommendations Develop appropriate state budget policy that is based on a set of criteria that reflect the needs of hospitals, cost recovery, revenue generating ability, utilization of bed capacity, and hospital types. Revise and amend the user fees policy on the principle that full service costs need to be calculated and recovered; Change the health insurance payment method and develop a transparent relationship between health insurance agencies and healthcare facilities. Complete the policy on drug supply management that assures safe, coherent and effective prescription in all hospitals. Delegate power to hospital directors in arranging and recruiting human resources; Modify compensation policy and link incentive to job nature and performance; Improve administrative and financial management capacity for hospital management personnel.
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