Health-spending behaviors: the temporal dimension of 'out-of-pocket spending'

by Gideon Lasco, MD

Out-of-pocket spending or out of pocket expenditure is defined by the World Bank as "any direct outlay by households, including gratuities and in-kind payments, to health practitioners and suppliers of pharmaceuticals, therapeutic appliances, and other goods and services whose primary intent is to contribute to the restoration or enhancement of the health status of individuals or population groups." Broadly defined, we can look at it as the percentage of total health expenditure borne by individuals and their families. OOPS is seen as a measure of the quality of a health care system: a higher OOPS means that there are not enough safety nets.

There is, I believe, compelling reasons to further dissect out-of-pocket spending versus the temporal profile of illness (clinical factors), and factor in what we already know about health-seeking behaviors (sociocultural factors). Let me lay down the foundational statements to explain what I mean:

(1) In the semantics of health, "Sakit" being the term for both disease and pain can suggest that pain may be essential in our folk conception of disease. This could explain in part why consults are delayed in illnesses that are initially painless such as tumors and the like. There is also the the concept of "Malayo sa bituka" (Far from the guts) which is another justification to delay consult

(2) If we speak of health as a 'business', our health care system is not a monopoly. There are alternative systems of health care which, playing by the laws of supply and demand, have an advantage by offering cheaper solutions and better, 'friendlier' services. These are the traditional healers who may be the arbiters of both medical management and health spending of the initial phase in the temporal profile of an illness.

(3) Strong family ties in the Philippines could lead to recruitment of more funds once the threshold has been reached where illness is considered grave, i.e. "Malma na" or "Malala na". The patient who initially had no money for a consult now has funds for a CT scan and an MRI, because the relatives from the States have remitted and a hectare of farmland has been mortgaged.

These three indicate that out-of-pocket spending may not be getting allocated according to temporal need (as defined by the clinician). There may even be instances when a patient could actually afford treatment, but it was not distributed appropriately per unit time. Indeed, a typical breast cancer patient in the Philippines may be spending the same amount of P1,500,000 as compared with a patient in Thailand (one of the better performing countries as per Dr. Banzon) but the outcomes may vary profoundly.

Why? Because a substantial portion of the Filipino patient's P1,500,000 was spent on the latter course of the illness: this was the time when she was willing to pay, this was the time when the "Malala na" threshold and thus the health insurance policy of every Filipino - strong family ties - is activated. This may also be the time when the patient begins to avail of hospital services having found no benefit from traditional healers and herbal medications. The opportunity cost of these alternative therapies too would weigh heavily in this discussion.

It will be interesting if we can generate plots that chart not only expenses per illness, but to plot expenses also against the the temporal profile of an illness, from the perception of illness to diagnosis to outcome (successfully treated, died, etc.). How much does a breast cancer patient spend in the Philippines? This question can be further expanded into "How much does a breast cancer patient in the Philippines spend throughout the course of her illness?" A good graph would show a gradual increase in spending but what I would expect to see is an initial under-allocation (clinically this will manifest as "lost to follow up" or "poorly compliant to medications") and then, towards the end, an over-allocation (and sometimes futile allocation) of funds. Doctors will end up hearing "Doc, gawin nyo ang lahat!" - a blank, desperate check for doctors to do everything. This could be an attempt to compensate for a perceived neglect on the part of the relatives, or simply a reflection of how serious the disease has become as a result of the above-described heatlh-seeking behaviors.

What will be the implication of these findings, if confirmed and quantified? To a clinician, this would simply mean the need for more patient education. But to a health economist, these temporal profiles can actually quantify opportunity cost and localize the particular weaknesses and points of improvement. Moreover, although OOPS is seen as negative indicator with respect to universal health care, it must be recognized for what it is worth: a resource that can be optimized if it is spent when it is of maximal benefit. Policies can then focus on prevention of futile spending, emphasis on preventive care, combating opportunity-grabbing alternative therapies, and a more aggressive appeal for patients to comply to initial management.

Properly managed out-of-pocket spending may also ease public spending, enabling its allocation to more pressing needs. The dynamics of private and public spending continue to be in a state of flux but in the meantime, we can micromanage both components to make it optimal. For instance, knowledge that the insurance policy of "strong family ties" is activated only with the pronouncement of 'serious illness' may be used by the physician as an ally in aggressively pursuing surgery in a Stage II cancer, where it could still be of maximal benefit. The economist can likewise use this cultural trait by allocating more (at least initially) in primary and secondary prevention where we have identified that there is an underallocation of private spending, but where a great need for financing lies.

I drew from a cultural perspective to support my points, but it can also work the other way. Analyzing where and when out-of-pocket spending goes can also help enlighten us more about the way people deal with illness. Indeed, health-spending behaviors (essentially OOPS, rephrased) may well be an excellent reflection of health-seeking behaviors can be an important focus on inter-disciplinary studies in the future. 

This is just one point where culture weighs in on the continued discussion on health financing. In a future article, I would also like to look at how a cultural perspective can help explain some of the problems that PhilHealth is facing with regards to universal coverage.

Three challenges for governance in health care in the Philippines

by Gideon Lasco, MD
Universal Health Care Study Group,
National Institutes of Health, UP Manila

Public discourse operates in opposites, particularly in the health sector. We see this in the ongoing debate on the reproductive health bill, where opponents and proponents are known as "anti-RH" and "pro-RH". In the US, the 'Obamacare' is attacked as a 'leftist'  policy, even as certain Republican counter-proposals are labeled as 'right-wing social  engineering'. In the Philippines, critics of PhilHealth object to 'privatization' as if public and private sectors were in opposition to each other. Public vs. private, pro vs. anti, left vs. right: does it always have to be "versus"?

In a recent talk as part of DOH-supported "Secretary's Cup" - a series of talks, debates, and town hall meetings on Universal Health Care - former DOH Secretary Alberto Romualdez defines governance as "not just about government, but deals with how the government and other institutions arrive at decisions and implement them towards meaningful changes that are beneficial to the people." The government's role, thus, is to aim at building consensus and forming partnerships, replacing the operative word "versus" with "and", paving the way for synergism and constructive, not oppositional relationships.

In this article, we discuss three relationships, which have to be reconciled to achieve good governance in health. These relationships also delve into the heart of health problems in the Philippines.

Local and national: Transcending bureaucracy in health
In 1991, the Local Government Code drastically altered the bureaucratic landscape by transferring the management of public health program and government hospitals at the municipal and provincial levels, from the DOH to local government units (LGUs). Not long after, the advantages and disadvantages of this new, decentralized system began to emerge. While it enabled LGUs to deal with their own particular health needs, it also opened the possibility for LGUs to neglect health care delivery. Moreover, health became enmeshed in local politics; good programs ascribed to a political opponents are spurned, even if the program was actually helping the people. Health officials are deployed for medical missions intended to gain political capital for the incumbent.

In a Universal Health Care scheme, the Department of Health would have to build strategic partnerships with local governments. While it is clear that there has to be a centralized body to coordinate macro-level functions, such as health information gathering, policy formation, and the operation and management of tertiary hospitals, there are also strengths in empowered local governments. It must also encourage the strengthening and expansion of Interlocal Health Zones - adjacent towns and cities that cooperate on health at the district level. These Zones have already demonstrated  better health outcomes where they were successfully implemented. Dr. Alberto Romualdez, who spearheaded the Health Sector Reform Agenda in 1998 as DOH secretary, has advanced the notion that the district health system ought to be the level of devolution, and that a referral system must be in place to weave things together: from the smallest rural health unit to the district hospital.

PhilHealth can act as leverage to optimize local-national partnerships, by providing incentives to local governments that perform well, and as well as setting standards in the accreditation of LGU hospitals, ensuring quality and safety, and providing additional capital with which enough human resources and quality health services can be guaranteed.

Finally, by building a constituency on health sector reform, which is what the Secretary's Cup aims to achieve, a political capital on health is built, creating incentives for local and national politicians to work together towards better health outcomes.

Private and public: Building public-private partnerships  
One of the flagship projects of the Aquino administration is the pursuit of public-private
partnerships (PPPs). In the health sector, health facilities enhancement was seen as the major focus of PPPs, with the P54-million NKTI Hemodialysis Center, a collaboration with Freseneus Medical Care Philippines, as a flagship project. Additionally, there are also examples of private sector engagements with LGUs that are remarkable for its successful outcomes. For instance, the Zuellig Family Foundation has helped initiate and sustain heath reforms in 485 municipalities located in Geographicaly Isolated and Disadvantaged Areas (GIDA), leading to significant decreases in maternal and infant mortality.

On the other hand, several groups have voiced their concern that these so-called 'partnerships'  may actually lead to the privatization of health care, which in turn would cause the spiraling of heath costs and the disenfranchisement of the indigent poor. These fears were exacerbated when it was announced that charity beds in public hospitals might be eliminated in favor of 'PhilHealth beds'.

Safeguards need to be instituted to ally fears. Just as importantly, the Department of Health needs to communicate to the general public what the PPPs mean for ordinary citizens. It is imperative for the stakeholders to project the whole picture of health reform, because focusing on just one part can slant the news. For instance, the claim that charity beds would be 'eliminated' was true, but it was just one part of the story: in fact, this 'abolition' is contingent upon the universal coverage of the indigent poor, who would then be able to avail the rechristened 'PhilHealth beds'.

In instituting safeguards, PhilHealth can once again play a pivotal role. By adopting 'case payment' schemes in which rates for particular procedures are fixed, patients are protected from overpricing, but these policies should also allow for some flexibility so as not to stifle the freedoms of medical practice. By setting standards for hospitals, PhilHealth is also able to ensure parity in terms of health service delivery, for private and public facilities alike.

Moreover, the Department of Health's strategic thrust towards 'health facilities enhancement' needs to be pursued aggressively. By enhancing government hospitals to be at par with private facilities, patients' perception of public health care will improve. By being competitive in terms of quality health services, a good performing public health care delivery system is perhaps the best deterrent to contain costs of private hospitals.

With PhilHealth emerging as a major player in health care, it must be managed carefully. Universal Coverage (PhilHealth coverage for every Filipino) does not necessarily translate to Universal health Care (good health for every Filipino), but it is an important prerequisite. Hence, the government needs to place more effort in making sure that everyone gets covered. As we mentioned earlier, the “correct-ness” of policies such as the change from 'charity beds' to 'Philhealth beds' depends on this. The National Household Targeting System, while effective, is still imperfect. Indigenous and marginalized peoples need to be integrated into this system without feeling threatened by the paperwork involved.

Professionals and laypersons: The team approach in health care delivery
Finally, health care must be seen not as an authoritarian imposition of doctors and industry upon patients and consumers; but as a team effort among doctors, nurses, midwives, patients, as well as among producers, regulators, and consumers of pharmaceutical products and health services. In a larger context, this 'teamwork'  approach mirrors the 'social solidarity' concept that rationalizes the social health insurance scheme of PhilHealth.

The 'community health teams' program of the Department of Health is a good move towards this direction. In recognition of the dearth of doctors in rural areas, the CHTs serve to augment the health needs of communities, particularly those that have indigent families. It also mobilizes nurses and midwives, by providing them with experience, training, and also an exposure to community health. In his paper on Health Human Resources published in the Acta Medica Philippina, Dr. Ernesto Domingo departs from the conventional notion of doctors as automatic leaders, saying, “Requiring the presence of a physician even for clusters of barangays is not only unrealistic, but also uneconomical and unsustainable in the long run.” Indeed, it is about time to mobilize and empower the health professionals we have rather than stick to outdated notions of hierarchy.

Involvement in health care must likewise extend to the patients themselves, and the community as a whole; the only thing that can beat a 'community health team' is a community that works as a health team. The bayanihan spirit, if applied to health, can mean community members engaging in healthy activities, cooperating with local health centers in the immunization and regular check-ups of children and pregnant women, as well as  public health endeavors such as the elimination of dengue-bearing mosquitoes in their areas, and planting of leafy vegetables and medicinal herbs. These acts may seem small, but by staying healthy and by not being dependent on hospital-based care for minor illnesses that the community can handle anyway, the health care system is unclogged, allowing it to focus on patients who need it the most.  

Conversely, patient empowerment can be maladaptive if coupled with mistrust in the health system overlaid with perceptions and experiences of unaffordable drugs and unfriendly health care providers. This leads to self-medication and its corollary ills of antibiotic resistance and numerous side effects, as well as the pursuit of alternative and traditional medicine which, by diverting patients from legitimate and life-saving procedures, can be even more harmful.

Patient education, thus, needs to be emphasized, with a focus on how to navigate the health care system. In line with the Department of Health's strategy of collaborating with other government agencies, the Department of Education can contribute to patient education by strengthening the health curriculum of students. Patient “miseducation”, by way of misleading advertisements, should likewise be dealt with. Regulatory agencies such as the Food and Drug Administration (FDA) need to be strengthened, and they must seen and perceived to be acting in the interest of patients.

In addition, patient groups and consumers groups need to be organized. Patient groups can clamor for more benefits from PhilHealth; consumer groups can become allies of regulators in ensuring quality and safety of products that are available in the market. What Secretary Esperanza Cabral proposed when she was in office – to translate “No Therapeutic Claims” into “Hindi Ito Gamot” is significant not only in who was involved: government vs. industry, but also in who was not involved: the consumers who are the users of these products in the first place. Perhaps what legislation or regulation cannot achieve, consumers can.

Moreover, the 'Daang Matuwid' battlecry must be applied to government hospitals; the system of patronage, where those with friends among the hospital staff can easily get admitted in charity wards, should be eliminated so as not to alienate patients who have no 'connections'. Financial protection should be extended to vulnerable populations, so they will not seek potentially unsafe alternatives.

Finally, a 'team' paradigm requires reforms in the curriculum of health professionals, which should emphasize not just patient education, but also the reciprocal concept of patient feedback (i.e. physician education). Performance in health must be measured not only in terms of health outcomes or economic gains, but also in terms of patient satisfaction.

Conclusion: Universal Health Care is the way
Universal Health Care, in the context of governance, can thus be defined, to paraphrase JFK, as 'health for the people, by the people'. Through consensus-building and rapprochement, the oppositional relationships can be transformed into partnerships.

Today, with the Aquino administration and the DOH under Secretary Enrique Ona supportive of Universal Health Care, and with the increased confidence in the government both by the people and by the private sector, we are presented with the perfect opportunity to push through with these reforms, the legislation needed to enable them, and the constituency needed to build political and social capital to make sure that our leaders place health as a top priority. By articulating Kalusugan Pangkalahatan, the Department of Health is opening the way for a meaningful discussion on how to achieve UHC. Questions such as, “Should private hospitals be exempt from the no balance billing policy of Philheath?” and “Should DOH should exercise oversight functions?” are some of the debate questions in the “Secterary's Cup” but they should also be debated  upon in pubic discourse until consensus is reached.

The urgency of moving towards Universal Health Care is underscored by the persistent and emergent health threats that continue to put our people at risk: ominous health indicators such as the rising cases of HIV/AIDS and the persistently high maternal mortality rates, and just as importantly, the everyday risk of bankruptcy that many Filipinos continue to face. They remain vulnerable to 'catastrophic illnesses': a single car accident or a cancer diagnosis could spell doom not only to the patient, but also his family. How many houses, farmlots, and carabaos have to be sold as the price and health and hope? With people's lives and well-being at stake, the chance to move towards a health care for every Filipino is an opportunity that must be lost.

Manila
August 12, 2012