Paper 6 – Health Sector Reforms – Where are we now?

1 The points of view expressed in the paper are that of the author and not necessarily shared by the World Bank or its Executive Directors.

Daya Samarasinghe

Abstract

The idea of reform – increasing efficiency, equity and effectiveness in the health sector and thus in health care – has wide appeal. But, compared with other areas of public policy, health sector reform is particularly difficult. To start with policy reform is a profoundly political process and generally it takes a top down approach. To undertake this activity in an atmosphere of contentious and acrimonious political party rivalry, involving a system organized in different structures, employing fractious personnel of diverse professional backgrounds, financed and paid in different ways, and affected by policies of other sectors is a daunting task. This paper is presented in three parts. The first addresses the issue of the need for reform. The second, describes the country's attempts at reform and offers some explanation for the poor success rate. But all is not lost, attempts are being made to plant seeds of change into the system. Some appear to be successful to the extent of having a snowballing effect, with champions to the fore. Others are being implemented but need close monitoring and fine-tuning. Some are on the drawing board and are being subjected to critical analysis. And, the signs are that "the sleeper" is finally awakening.
"Without change, something sleeps inside us, and seldom awakens.
The sleeper must awaken"

Frank Herbert (1920-86)

Introduction

Since independence, the Sri Lankan Health System has made considerable progress in improving the health status of its citizens. Our life expectancy at birth is approximating that of the developed world and is currently estimated at 70.7 years for males and 75.4 years for females in 1996-01 (Annual Health Bulletin, 2001). The vital indices are better than many middle income countries and are the best in the region. The maternal mortality ratio of 2.3 deaths per 100,000 live births is around the average for developed countries. 2 According to the Maternal Mortality Surveillance System the rate is 59.6 deaths per 100,000 live births The Infant Mortality Rate is 15.4 per 1,000 live births with neonatal mortality rates of 12.9 per 1,000 live births (Annual Health Bulletin, 2001). EPI coverage is over 80 percent. All this at a cost of around USD 29 per capita in 1999 (Ministry of Health & Institute of Policy Studies, 2002). With such impressive indices achieved at relatively low cost, it begs the question, is there a real need for reform? The simple answer is yes. The accolades we have received and our track record should not in anyway hinder recognition of the fact that we have an unfinished agenda and a set of emerging and re-emerging health problems. The system design of nearly seven decades ago with some modification has responded well but many of the institutions and health care delivery programmes developed over this period need adjustment to keep pace with political, economic, epidemiological, social and other transformations to which the sector is exposed.

Justification

Our health system is currently facing strong pressures on several fronts and will be under even greater strain in the near future. Among the many pointers to a sizeable increase in the demand for health services in the coming decades are:

• Technological changes.

New developments both within and outside the health sector have had a variety of profound affects. Within the health sector the enormous expansion of medical knowledge has been a key factor driving medical specialization and sub-specialization and it is the state that is burdened with training, equipping, and support personnel costs. Second, advances in technology have inevitably driven cost upwards. Included in this category are vaccines and antibiotics that have prevented or cured diseases in ways that reduced health care cost and sophisticated lifesaving, high technology innovations that have made it possible to achieve previously unattainable results. It appears the more we better our health status the more our health costs keep increasing. The attainment of a replacement fertility level and the accompanying demographic transition is a case in point. If so, is the sector robust and flexible enough to face the challenges that further scientific developments will certainly bring? Or will it be a case of the sector being driven to a high cost trajectory that would be antagonistic to the country's overall strategy of sustainable development?

Advances in the transportation, communication and agricultural sectors too have had their effects on the health sector. The introduction of new methods of transportation within Sri Lanka and with the outside world has had an impact on the health sector. A rapid rise in traffic injuries and in pollution related respiratory ailments has led to a substantial increase in health costs as have interventions put in place to prevent the introduction of SARS and bird flue epidemics from neighboring countries. Advances in communications have had both positive and negative effects. Whereas, improved access to information is making the health system more accountable and consumer responsive, health status is being adversely affected by the perverse and aggressive promotion of non-traditional life-styles, foods and other products on the electronic and print media. In the agricultural sector productivity has increased systematically due to factors such as the use of high-yielding seed varieties, increased fertilizer application, increases in land under cultivation and the use of tractors. Also, there has been a sharp increase in the use of chemical pesticides with consumption increasing, from 2400 metric tonnes in the early 1960s to about 6,742 metric tonnes in 1993-94 (Arulnandhy, 2004). Their indiscriminate use poses a serious threat to the environment and human health with adverse health impacts. Ease of access to a whole range of chemicals has contributed to a rapid increase in the number of accidental poisonings and successful suicides. Many systemic pesticides that are currently in use have a tendency to remain in plants for a long time. They enter the food chain and are found in meat and dairy products. The impact of residual pesticides on health has yet to be fully assessed, as is the policy determination on the import of hormone treated or genetically modified foods and vaccines.

• Economic Development.

The opening of the Sri Lankan economy in 1977 and its subsequent management has affected the health sector in several ways. First, it has brought about major social changes, which have put pressures on the health system. The ready acquisition of radios, the introduction of television and computers, the expansion of the print media and the communication system has exposed our citizens to worldwide social trends. Increased external migration for purposes of employment, and greater investments in travel and overseas education have had similar effects. Accordingly, an awareness of what is available elsewhere in the world has influenced Sri Lankan expectations of their own health sector. Similarly, internal migration of the labor force particularly to Export Promotion Zones and the resulting life style changes has lead to an increase demand. Second, though our economic growth rate averaged about 5 percent in the 1990s aided by an increase in exports both budget deficits and external debts have been worsening. Global trade and global capital movements have exposed us to worldwide economic fluctuations thus limiting our fiscal autonomy. Tax revenues have fluctuated with economic fluctuations. Also, our fiscal policies of the past two decades and poor tax collection have seen a reducing trend in state revenue all of which have limited the capacity of government to raise money for the health. Budgetary constraints and increasing competition with other priorities of government, such as defence, have further compounded the problem.

Economic developments affect the health sector in other ways. Comparative studies have shown that rich nations spend not only more, but a higher percentage of their income on health. Economic growth tends to increase consumer demand for health services thereby generating substantial reform pressures. As people get richer the tendency is to spend money on getting better health care. Such rising demands have been largely met, post-1977, by a rapid expansion of the private sector facilitated through several policy interventions: i) the providing duty waivers and tax concessions for investments in BOI approved health care infrastructure; ii) permitting off-hours private practice to physicians on the pay roll of the state; and iii) by liberalizing imports of pharmaceutical products, biomedical equipment, and other devices. This, in turn, has created problems for the state in the management and delivery of health care in state-owned facilities, in keeping abreast with technological advances available in the private sector, and in the oversight of the quality and cost of pharmaceuticals and devices.

Economic growth has a direct bearing on health status. Over the past decade and a half the state has made substantial direct investments in public health infrastructure such as water and sanitation. Also, with rising incomes, nutrition has improved (DHS, 2000) and there has been an increase and improvement in quality of the housing stock. These, in turn, have produced substantial gains in health status largely through a reduction of certain infectious diseases. On the other hand, there is a rise in urban population which is expected to account for 40 to 50 percent of the population by 2025 (Central Bank, 2003). Among many issues most urban centres face, environmental and waste disposal problems are perhaps the most important, especially in the context of the endemicity of Dengue and regular monsoonal outbreaks of epidemics. Much of this is due to behavioural problems of the community and poor management and neglect in the enforcement of public health law by local authorities. Tuberculosis too, is on the rise. While growth itself shifts the burden of disease toward chronic diseases, it appears, the benefits of development have yet to reach a substantial segment of the Sri Lankan population. The latter group run the risk of poverty-related illnesses thus putting the onus on the health sector to deal with a double burden of disease.

• Epidemiological and Demographic changes.

Economic and technological changes have had significant epidemiological and demographic impacts with obvious affects on health sector problems. For instance, while the mortality rate may be reduced due to epidemiological and demographic changes it has a tendency to increase the quantity of morbidity and therefore an increase in demand for health care (Murray & Chen, 1994).3 Increases in reported morbidity may be caused by increased awareness, improved measurement, substitution of morbidity for prevented deaths, or associated with rising incomes and education. This rising demand is met through a full range of health care services from symptomatic self care estimated at about 35 percent (Samarasinghe & Aikin, 1993), over-the-counter purchase of pharmaceuticals, out-patient specialist consultations, to advanced treatment at public and private tertiary care facilities, the use of indigenous medicine, homeopathy, acupuncture, and Chinese medicine. 4 It is estimated that there were 4 lower primary care and outpatient visits and 0.2 inpatient admissions per capita in 1997 (Ministry of Health, Nutrition & Welfare, 2003) The epidemiological and demographic changes also increase the proportion of chronic and adult disease e.g. cardiovascular disease, stroke, diabetes, cancer, mental illness and trauma, and in total morbidity and mortality. These diseases are more costly to treat per episode of illness and have a lower cost-effectiveness resulting in an increased cost burden. And, it is very evident that this shift is already creating serious priority-setting issues in our reform effort.
The rapid increase in chronic diseases provides the health sector with increased opportunities with respect to prevention. Tobacco and alcohol use, diet, exercise, stress and socio-cultural factors are all critical to the rate at which cardiovascular disease and cancer develop. The rate of trauma, namely accidents, homicides and suicides, is behaviour related. And, to change behaviour, the best we could do, so far, is to increase taxes for alcohol and tobacco, undertake prevention campaigns or activities in schools and the media, and impose certain regulations (Sessional Paper No. II, 1993; Health Sector Reforms Unit, 1997). Yet, much of this does not come within the purview of the health sector, and even if it does, the strategies in place and their financing are inadequate (MOH and IPS, 2001). • Social Changes. Communication, media influence, trade, mobility, prosperity, and changing life styles together with the spill-over effects of the ethnic conflict, poor governance and law enforcement have produced far reaching social changes. These have, singly or in combination, led to increased urban migration, drug trafficking, high levels of substance abuse and risky behaviors leading to violence, homicide and sex trade related activities. Also, they have led to an increase accidents and injuries, poor parenting and inadequacies in coping skills, increase in single parent households, and the shift away from the traditional extended family. These, in turn, have a negative health impact and need to be addressed through new intersectoral strategies and increased resources.
