Child Health

FINANCING HEALTH CARE IN JAMAICA NOVEMBER 1988 Resources for Child Health R John Snow, Inc. RA.C 1100 Wilson Boulevard, 9th Floor Arlingtkn, VA Z2209 USA Telex: 272896 JSIW UR Telephone: (703) 528-7474 Financing Health Care in Jamaica Maureen A. Lewis The Urban Institute November 1988 Prepared by the Resources for Child Health (REACH) Project. Contract No. DPE-5927-C-00-5068-00. TRBLE OF CONTENTS EXECUTIVE SUMMARY V I. INRODUC I . ...... Healt Status in Jamaica........................................ 5 Jamaica's Public Health Care System............................. 10 Current Financial Issues....................................... 13 II. MACROECOMIC PERFORMANCE AND THE PUBLIC HEALTH SECTOR ............... 16 Ministry of Health Budget ...................................... 17 Conclusion .................................................... 27 III. CURRENT FINANCING OF PUBLIC HOSPITAL CARE DELIVERY.................. 28 Hospital Finance and Performance ................................ 29 Costs of Hospital Care......................................... 36 Efficiency of Hospital Care .................................... 41 Effectiveness ................................................. 44 Equity in Hospital Service Delivery............................. 46 Conclusion...................... .............................. 47 IV. PRIVATE HEALTH CARE DELIVERY AND FINANCE........................... 49 Characteristics of Private Health Care .......................... 49 Outpatient Care ............................................... 49 Inpatient Care.............................................. 50 Financing Private Care ......................................... 53 Fee-for-Service ................................................. 54 Third-Party Payers .............................................. 57 Financial Circumstances and Difficulties of Private Hospitals..... 60 V. HEALTH CARE DEMAND, UTILIZATION AND EXPEDIIURE ..................... 70 Access to Health Care Services.................................. 72 Utilization of Health Service .................................. 75 Expenditure on Heath Care ......................................... 82 Conclusion................................................... 88 VI. ALTERNATIVE HFALTH CARE FINANCING PROPOSALS ......................... 90 Privatization................................................. 91 Divestiture ................................................. 92 Privatization of Public Hospitals ............................. 94 Health Facilities Trust ...................................... 95 Outstanding Issues in Privatization ............................. 98 User Fees in Public Hospitals................................... 99 Issues in User Fee Policy ....................................... 103 Administrative and Financial Management Reforms ................... 105 Conclusion ........................................................ 106 VII. CONCLUSION ........................................................... 1 08 REFERENCES ................................................................. 113 ii x1.strcadj:toc & coy LIST OF TABELS Table 1.1: Summary of Health Care Financing Reports for Jamaica, 1983-1988 ................................................... 3 Table 1.2: Vital Statistics for Jamaica, 1980-1986......................6 Table 1.3: Number and Rates for Leading Causes of Death in 1981 with Comparative Rates for 1979 .................................. 8 Table 1.4: Number and Rates for Five Leading Causes of Admission to General Hospitals, 1983....................................9 Table 1.5: Distribution, Number, Personnel, Catchment Area, and Service Provided at All Levels of the Public Health Care System..... 12 Table II.: Government Expenditures as Percentage of GDP, 1980-86 ....... 18 Table 11.2: Summary of Total Government Expenditures and Financial Position .................................................... 19 Table 11.3: Ministry of Health Budget as Percentage of Total National Budget: 1982-87.......................................... 21 Table II.4: Ministry of Health Expenditures: 1981-86 ................... 22 Table 11.5: Ministry of Health Recurrent Expenditures by Program, 1982/83 - 1986/87 ........................................... 24 Table 11.6: Ministry of Health Recurrent Expenditures by Type of Expenditure, 1983/84 - 1985/86 .............................. 25 Table II.7: Expenditures on Drugs and Medicaid Supplies ................. 26 Table III.: Characteristics and Utilization of Public Hospitals, 1987-88 ..................................................... 30 Table 111.2: Operating Budgets for Government Hospitals, by Region, 1982-83 through 1986-87 ..................................... 32 Table III.3: Distribution of Budget Expenditure by Department for Selected Hospitals, Mid-1984 ................................ 34 Table III.4: Ranking of Operative Workload, Weighted to Reflect Complexity of Procedure, by Hospital 1982 ................... 37 Table 111.5: Annual Average Costs per Patient Day in Public, Private, and Quasi-Public Hospitals ...................................... 39 Table III.6: Efficiency Measures for Public Hospitals for Selected Fiscal Years ....................................................... 42 ul.strucadj:toc & cov Table IV.2: Hospital Charges for Selected Inpatient Services at Four Jamaican Facilities .............................. ........... 55 Table IV.3: Comparison of Selected Laboratory and X-ray Charges for Three Non-Public Hospitals .................................. 56 Table IV.4: Premiums, Restrictions, and Copayments for Health Insurance and HMO Coverage in Jamaica, 1986 ........................... 59 Table IV.5: Summary of Revenues and Expenditures in Two Private Jamaican Hospitals ................................................... 62 Table IV.6: Efficiency Measures for Selected Private and Public Hospitals ................................................... 65 Table IV.7: Comparative Earnings by Occupied Bed in the Private Health Care Sector, 1986 ........................................... 67 Table V:l: Selected Characteristics of NIHFA Survey Population by Catchment Area, 1987 ........................................ 71 Table V.2: Access and Average Amount Paid to Reach Public and Private Outpatient and Inpatient Services ........................... 73 Table V.3: Health Care Contacts, 1983 ................................. 77 Table V.4: Trends in Public Health Care Utilization, 1983-1986 ......... 78 Table V.5A: Distribution of Outpatient and Inpatient Public and Private Sources of Health Care Over Past Two Years, 1987 ............ 79 Table V.5B: Proportion of Patients Using Public and Private Sources of Outpatient and Inpatient Care for Last Illness, 1987 ........ 79 Table V.6: Household Expenditure on Health Care by Income Group, 1984.. 83 Table V.7: Number and Proportion of Population Paying for Health Care, Average Expenditure and Total Expenditure, by Last Amount Paid ........................................................ 85 Table V.8: Number and Proportion of Persons Participating in Health Schemes by Type of Scheme and Parish ........................ 87 Table VI.: Jamaica's Public Hospital Fee Schedule ...................... 100 iv m1.ztrucedj:toc & Coy EX VE SLRY Introduction Jamaica's health care status is among the Health care best in the developing world. services are provided free or at nominal charge Services range to all citizens. from a broad primary health care network to tertiary care, and all Jamaicans scphisticated have relatively easy access to all levels of health care services. The comprehensive nature of subsidized care and health care in recent the expansion of primary years, combined with severe macroeconomic difficulties, has taken a toll on the quality of health growth care, however. Negative economic over the past decade, average annual inflation rapidly climbing of 16.6 percent and a debt service prompted government to curtail the decade. The health spending early in sector received modest increments in its nominal over the 1980s, and its prcxortion budget of the recurrent budget increased. The sector's share of the capital budget, however, some nominal almost disappeared. Despite increrents, the real value of total resources was seriously available for health eroded between 1980 and 1987. Moreover, devaluation, raised the cost of imported which medical supplies and pharmaceuticals, further reduced the spending power of domestic resources. Government hospitals are financed almost exclusively only modest by tax revenues with amounts generated from recently introduced user have been receiving charges. Hospitals an increasingly smaller portion of the already health budget due to the expansion constrained of the primary health care system. Within hospital budgets, 70 percent goes to personal emoluments, only a fraction of wtich (10% to 15%) pays physicians. Per patient hospital, budget allocations by adjusting for casemix across public, quasi-public facilities, suggest a gross and private underfinancing of public hospital care. Quality care is lower in the underfinanced of public facilities when compared to the quasi-public but better financed University quality Hospital. A recent study showed to be particularly poor in lower level hospitals. resources The shortage of has contributed to deteriorated physical infrastructure inadequately and functioning equipment in public hospitals. The equity performance of Jamaica's evidence. health system is good based on general Better information

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