Reproduced and adapted with permission from Oxford Analytica. Original article published in the Oxford Analytica Daily Brief on September 27, 2011
Commercialisation of healthcare services in public hospitals in Vietnam since the late 1980s has embraced private investment in public services and thereby shifted a large part of the fiscal burden of healthcare from the state onto individuals. Against this backdrop, the health sector is facing fundamental challenges in terms of access, quality and effectiveness.
At the arrival of market-oriented economic reform in 1986, Vietnam had extremely limited economic resources. Still, the country posted strong health outcomes. It had a strong network of primary care at the commune level and promoted social equity and free access to basic healthcare as a universal right. Following reform, social services were rapidly commercialised: the health sector began charging fees and privatised drug sales. In 1989, private practices were legalised.
In many respects for some social groups, healthcare provision in Vietnam is better than it was in 1989. Most notably, treatment standards have improved. According to official data, health indicators on issues such as life expectancy, child mortality and incidence of tuberculosis are also improving.
However, these benefits have not been shared equally – the main beneficiaries of commercialisation continue to be affluent social groups. The share of out-of-pocket payments in total health financing increased from an estimated 59% in 1989 to 80.5% in 1998. According to official figures, this fell to 52% in 2008, though other sources estimated the level at above 70%. In either case, this suggests that together with Bangladesh, China and India, Vietnam has among the world’s highest levels of private health financing. Furthermore, this share excludes informal fees, which account for a significant proportion of hospital fees and constitute a major source of revenue for public hospital staff.
The national health insurance scheme currently covers an estimated 60% of the population. Today, about 35 million Vietnamese are uninsured and at high risk of falling into poverty when encountering major medical expenses. The 53 million insured can in principle benefit from their health insurance. However, in reality, the poor and the exempted groups still find services unavailable without informal fees, known as ‘envelope’ payments, to doctors, nurses, midwives or other health staff. Indeed, a recent national survey shows that 65% of respondents experienced corruption at local health services and 70% of the medical staff interviewed admitted that they have asked patients to pay bribes. Due to this endemic corruption, the access of poorer Vietnamese to healthcare services remains limited.
The lack of relevant controls and regulations has created negative incentives in the health sector, compounding problems:
However, the current economic situation (see PROSPECTS 2011 Q4: South-east Asia – Oxford Analytica September 5, 2011) implies that the trend towards increased private and informal payments will continue and the government will struggle to extend insurance provision to an increasingly vulnerable population.
Commercialisation of the health sector has failed to address the ongoing problems of corruption, distribution of health workers, high drug prices and the dominance of curative services. Without major reforms to the fee-for-service mechanism, removal of negative incentives available to service providers and a reduction in informal and corrupt procedures in the health service and insurance refund system, Vietnam will struggle to develop a more efficient and equitable healthcare system. These reforms are all the more necessary because healthcare costs will only increase with economic development and increased demand for effective, accessible and quality services.