PHA-Exchange> Resource Management and Cost Containment

Fri Jun 6 00:06:46 PDT 2003

The following is one of the articles on Health Care Financing published in Asia Pacific Consumer, No. 30, the quarterly magasine of Consumers International Office for Asia Pacific based in Kuala Lumpur. For more information, visit our website, www.consumersinternational.org/roap

Resource Management and Cost Containment 
AP Consumer, Health Care for All
No. 30 4/2002
By Sharon Kaur and Dr. Carmelita C. Canila

Health care for all does not always mean increased health expenditure. This article looks at various strategies that may be employed to save costs and maximise resources.

Health policy reforms alone have not been successful in containing health care cost. While lack of money is often a governing constraint, it does not mean that progress is not possible without the injection of money into the system. It is necessary to identify areas of wastage, inappropriate spending and strategies to contain health care cost while improving quality of health care provision.

It makes sense to start by spending money on cost-effective interventions that save a lot of lives. A recent experiment in Tanzania illustrates the impact of rational spending. Researchers were sent to the rural districts of Morogoro and Rufiji. They carried out a door-to-door survey asking whether anyone had died or been laid low recently, and if so, with what symptoms. They found that the amount of money local authorities spent on each disease had no relation whatsoever to the harm it inflicted on local people. Malaria was horribly neglected. It accounted for 30% of the years of life lost but only 5% of the 1996 health budget with a tiny infusion of cash (80 cents per person per year) they redirected money to a more effective approach to Health Care. Health workers were provided with a simple algorithm to show how to treat common symptoms, cheapest treatments were offered first, drugs were ordered according to need and people were encouraged to use preventive methods proven to be effective. Infant mortality then fell by an amazing 28% in a single year.

Below are brief descriptions of six priority areas where cost containment strategies might prove very useful:

1) Prioritisation of  primary health care services 

Primary health care has been proven to be a more cost-effective intervention compared to curative services. An immunisation programme for measles, mumps, and rubella can save approximately $14 for every dollar spent. Programmes that target smoking during pregnancy can save more than $6 for every dollar spent. 

Different ministries or departments can contribute to health promotion with healthy lifestyles programmes. These can be financed using tobacco and alcohol taxes. For example:
 Victorian Health Promotion Foundation, Australian State of Victoria gets Aus$ 22M per year from a dedicated levy of 5% on sales of tobacco products 
 Thai Health Promotion Foundation gets US$30M per year from a dedicated 2% of the tobacco and alcohol taxes. 

2) Health infrastructure

Establishment and maintenance of curative facilities in urban areas incur a greater portion of national health budgets over and above primary health care activities. This trend must be reversed. There should be an equitable infrastructure build-up in rural areas to satisfy their primary health care needs. The utilisation of these infrastructures must also be regularly checked.

3) Utilisation of appropriate technology in health 
The rampant use of modern technology in diagnosis and treatment is inappropriate in countries where the primary determinants of illness are poverty related. 

Technology in health care must be based on the assessment of current and future trend of diseases, demographic changes (ex. population getting older), epidemiological distribution of diseases, and other social factors. 

4) Human resource management
Expenditure for human resource management in the public health care system takes a substantial portion from health budgets. The potential benefits of reforms such as on financing and organisational restructuring are greatly reduced if the need to improve staff performance is not adequately addressed.  Human resources must be managed to effectively meet people’s health needs. There should be a regular assessment of training needs and evaluations of Performance Management Systems

5) Research capabilities of the Ministry of Health. 

There is a need for further research into areas of cost containment. This was recognised by one of the members of the Commission on Macroeconomics and Health, Professor Anne Mills, who said, " ...it is important to emphasise that our knowledge on how best to scale up health care services, particularly in the most constrained countries is limited and that research on this is badly needed". Timeliness and quality of data are primary pre-requisites for changes to be more meaningful and substantial. 

6) Procurement, affordability and quality of medicines 

Drugs are among the most salient and cost-effective elements of health care. Often 20 - 50% of the recurrent government health budget are used to procure drugs and medical supplies. The best-cost containment measure in relation to drugs is the practice of rational drug use.

Rational drug use means patients receive medications:
- Appropriate to their clinical needs. 
- In appropriate doses.
- For an adequate period.  
- At the lowest cost to them. 

Intervention strategies

1. Educational materials - such as standard treatment guidelines, flow charts, newsletters, bulletins and leaflets
- Standard treatment guidelines (STGs) used in Fiji for acute respiratory infections resulted in a 50% 
   reduction in antibiotic use.
- Drug bulletins are an ongoing source of objective drug information for prescribers. In Sri Lanka, a 
  controlled study on the use of a newsletter on antibiotic prescribing showed some improvement, albeit 
  nothing significant.

2. Introduction of an essential drug list

The 12th Model List of Essential Drugs prepared by a WHO expert committee in 2002 contains 325 individual drugs including 12 antiretroviral medicines. Today the list contains safe, effective treatments for the infectious and chronic diseases, which affect the vast majority of the world's population. 

3. Financial interventions

 Making people pay for drugs, which used to be provided free of charge, could reduce over consumption of drugs. In Nepal, improved drug supply and cost sharing resulted in more appropriate prescribing in terms of dosage, but led to more polypharmacy and excessive drug use. There should be appropriate mechanisms to guard against over-prescribing practices in such schemes.

4. Consumer and patient education

In Pakistan, community health workers received training in appropriate drug use in order to provide health education to mothers. Preliminary results of an evaluative study reveal that health education sessions resulted in considerable change in knowledge and practice among the mothers. 

Indonesia's drug supply during the economic crisis
In mid-1988, Asian currencies underwent rapid devaluation leading to extensive unemployment and massive downturns in economic production. In Indonesia, the affordability of drugs was a serious problem. The effects of drug price increases were exacerbated for many people by job loss, as well as the escalating prices of other commodities.

The Ministry of Health took effective focused action. Priority was given to ensuring the availability and affordability of generic essential drugs in private pharmacies and to ensuring generic drug supply to health centres. Actions taken included:
- Allocation of additional funds for provision of generic drugs to health centres.
- Continuous monitoring of availability of "key drugs" in the districts.
- Set and published maximum prices for generic essential drugs in the private sector.

As a result, the health centre drug supply system weathered the economic crisis fairly well. Meanwhile the private sector followed the market and switched to generic supplies for essential drugs.

Fake Drugs
In a recent survey of pharmacies in the Philippines, 8% of drugs bought were fake. A countrywide survey in Cambodia in 1999 showed that 60% of 133 drug vendors sampled sold, as the anti malarial mefloquine, tablets that contained the ineffective but much cheaper sulphadoxine-pyrimethamine, obtained from stock that should have been destroyed, or fakes that contained no drug at all. In another recent survey, 38% of tablets sold in five countries in mainland South East Asia as the new anti-malarial were fake. 

WHO Model Formulary

In its efforts to promote safe and cost-effective use of medicines, the World Health Organization (WHO) released the first edition of the WHO Model Formulary. The formulary is the first ever publication to give comprehensive information on all 325 medicines contained in the WHO Model List of Essential Drugs. It presents information on the recommended use, dosage, adverse effects, contra-indications and warnings of these medicines. Correct use of this tool will improve patient safety and limit superfluous medical spending.

The new formulary is primarily intended to be used as a basis for developing national formularies. It is particularly relevant for developing countries, where commercial and promotional materials are often the only available source of drug information to health workers, prescribers and patients. 

References:

- Introducing Performance Management in National Health Systems: Issues on Policy and Implementation. 
  By Javier Martinez and Tim Martineau. An IHSD Issues Note, 2001.
- The work of the Commission on Macroeconomics and Health, Bulletin of the World Health Organisation 
  2002, 80(2), 164.
- Brudon P, Comparative Analysis of National Drug Policies in 12 Countries. WHO/DAP/97.6 Action 
  Programme on Essential Drugs. Geneva: World Health Organisation, 1997:114.
- Le Grand A, Hogerzeil HV, Haaijer_Ruskamp FM, Intervention research in rational use of drugs: a 
  review. Health Policyand Planning 14(2) 89-102.
- 'Murder by fake drugs. Time for international action.' British Medical Journal Vol. 324 6 April 2002
- Progress in Essential Drugs and Medicines Policy 1998-1999, World Health Organisation 2000.
- The Economist, Special Report: For 80 cents more - Health care in poor countries, August 17, 2002
- WHO Model Formulary is available on the internet at the following address: www.who.int/medicines.

________________________
Carmelita C.Canila, M.D

Programme Officer 
Health & Pharmaceutical

Consumers International 
Asia Pacific Office
Lot 5-1 Wisma WIM,
7 Jalan Abang Haji Openg,TTDI,
60000 Kuala Lumpur, Malaysia.
Tel: (603) 77261599
Fax: (603) 77268599
E-mail:   carmelita at ciroap.org
Websites: www.consumersinternational.org/roap , www.ciroap.org/apcl , www.ciroap.org/food

Consumers International is a federation of consumer organisations dedicated to the protection and promotion of consumers' rights worldwide through empowering national consumer groups and campaigning at the international level. It currently represents over 250 organisations in 115 countries. For more information, see: www.consumersinternational.org

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