Georgia’s Medical Experience: What Ukraine Should Pay Attention To

In Ukraine, Georgian reforms often looked at as an example. Openness, new police, fast public services. But did they manage everything from the first time? We decided to look at the transformation of the medical system and find out what lessons of Georgian reform Ukraine has to study.

Oleksandr Kvitashvili, who managed to work as a Minister of Health in Georgia in at a similar position in Ukraine, described the necessary changes in our medical system:

“Money should be allocated for a patient rather than a hospital bed; the system must be an open one; patients should be allowed to make choices (of the doctor and the medical institution – ed.). “

After independence, Georgia, like Ukraine, inherited a centralized model of health care. That is, all decisions were made “at the top”, not taking into account specific needs on the ground. It was the system of the Soviet academician Semashko: state budget funds the medicine based on the number of hospital beds and square meters of infrastructure rather than the quantity and quality of services provided by doctors. That is, they fund the walls, not the people. In such a system, money is spent inefficiently. Reporting on treated patients leaves a lot to be desired: it is unlikely that all beds are occupied; nor is it likely that the doctors have enough patients. Or whether there are enough doctors. But even so, taxpayers’ money is spent.

And Georgia went through that problems in one way or another.

Let’s there be market!

Since 2006, the medical reform in Georgia has focused on the complete transition of the sector to market relations. Private rendering of services, a private service procurement system, liberal regulation and minimal oversight should all became staples of new Georgian medicine. 

At that time, a mandatory health insurance system, that was introduced in Georgia in the 1990s was running. It was abolished and replaced by a voluntary health insurance system. Citizens living below the poverty line received government vouchers to purchase voluntary health insurance policies. They could be issued at one of the private companies of one’s choice. The government then contracted with the insurer, purchasing a voucher-based budget insurance program on the government funds.

However, the rest of the citizens were forced to purchase voluntary health insurance policies at their own expense or to pay for services directly at the time of their receipt.

The first problem was hidden here: when the model of direct payment of medical aid at the moment of its receipt prevails, the access of the population to medical care is determined by the patient’s ability to pay, not by his rights. And Georgia lacked both compulsory health insurance and a national health care system that would guarantee universal coverage.

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Further reforms of 2008-2012 have made Georgia’s healthcare system even more decentralized. At this stage, deregulation and expansion of the market mechanism became the cornerstones. During these years, most of the public health care expenditures went to private insurance companies. The latter provided a standard package of medical services for the most deprived population.

In 2010, private insurance companies claimed a monopoly (Article 16) in certain regions to provide medical assistance to those living below the poverty line. But to gain their monopoly position, these companies had to invest in the modernization of hospitals and primary care facilities. Because of this, vertically integrated commercial healthcare providers have emerged.

Former Georgian government official Kvitashvili in an interview with VoxUkraine emphasizes it is normal – to attract money and resources from private companies, when there are not enough state funds, the main thing – to establish clear rules of the game and monitor their implementation

“It worked well in Georgia. For example, in the city center there is an old Soviet hospital, an old building. It is very expensive to maintain, expensive to upgrade, but we can use it as a “bonus” system for building modern hospitals. For example, there is a large hospital in the center of Kiev. <…> It cannot be reached by foot or by car due to constant traffic jam, therefore, it cannot fulfill its function. Although we can say – here we have a cluster that costs a lot of money, build us a new hospital and we will give you this territory as a bonus,”- suggests Kvitashvili.

Healthcare for everyone?

Since 2013, the state health insurance (Universal Health Care Program or UHCP) emerged in Georgia. The Georgian government thus sought to address the problem of low coverage of the population with access to medical care.

State health insurance reimburses treatment costs for retirees, children under 5, and households below the poverty line. They can count on compensation for basic primary care, emergency ambulance and secondary care (to a certain stated expenditure limit), obstetric care and oncology treatment.

Georgia’s state health insurance operates on the principle of “money follows the patient”, which Ukraine now implements at all levels of health care services. The Social Services Agency pays for the treatment of a patient insured in the state system. The patient chooses which hospital to go to and receives the necessary medical services. The Social Services Agency then reimburses the provider for the services provided.

However, the problem inherited from the previous stage of changes (reform) remained. A considerable proportion of Georgian health care costs were paid and still paid out-of-pocket. At that time, these expenses amounted to more than half of all medical expenses. For example, in 2006, when the reform in Georgia was just beginning, the share of out-of-pocket medical expenditures from all healthcare expenditures was 78.7%. This share has gradually decreased and in 2016 it was already 61.2%. The out-of-pocket expenses are still considerable, as more than half of treatment is paid by Georgians from their own pockets.

However, it is somewhat different in nature than in Ukraine. Paying for medical services in Georgia is legal.

“You either pay extra for your health insurance, that is, upgrade your policy, or you have some kind of co-payment – the state pays 80% and you pay 20% out of your own pocket. Also, Georgia has very little coverage for over-the-counter drug costs”, explains former head of the MOH Kvitashvili.

In Ukraine, however, unless private hospitals are involved, no payment for medical services is implied. There is no established mechanism of co-payments prescribed by law, so the funds go to the hospital through so-called “voluntary contributions” to the hospital’s charitable foundation. This does not give an opportunity to calculate normally which services for Ukrainians are most in demand, which are the most expensive, and what the regulator should help with. Nevertheless, in 2006, out-of-pocket spending on medicine, estimated by the World Bank, made up 39.1% in Ukraine, and in 2016, before the primary reform was launched, it increased to 56.8%.

That is, the Ukrainians paid, and paid a lot, but it is unknown where money went.

There is no recent data on out-of-pocket expenses for medicine neither in Ukraine nor in Georgia.

Conclusion

There are many medical systems in the world. Some countries rely solely on private insurers, some tries to put the entire medical burden on the state budget, and some works with private sector and combine such different systems. Therefore, there is no single correct medical system. There are systems that perform worse or better in certain countries, depending on local conditions and available funds.

Georgia and Ukraine are developing their medicine in similar ways: “money follows the patient”, decentralization. And competition between private insurance companies, which has been known to Georgians for over ten years, in Ukraine can be activated from next year – when insurers will understand the prices for medical services at all health care units.

However, before Ukraine develops its medical system, which will be fine tuned (calibrated) to its own specific needs and capabilities, we can suffer our share of bumps and bruisers. Therefore, it is worth learning from someone else’s experiences.