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Vietnam’s healthcare system suffers on policy failure

Vietnam hospital. Credit: Ben Cullen-KerneyReproduced 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:

  • Doctors and other healthcare providers have incentives to move from rural and poor urban areas to major urban hospitals that serve the local elite and relatively wealthier sections of society.
  • Pharmaceutical companies lobby to make their drugs included in insurance lists. Once on the lists, they often increase drug prices by at least 30% over the market price and encourage doctors to overprescribe expensive medications and laboratory tests. Indeed, media investigations have shown that kick-backs and commissions to doctors sometimes make drug prices ten times higher than the import price (see VIETNAM: Media shape the news despite state ‘control’ – Oxford Analytica April 23, 2010). Since medication accounts for 45-60% of all hospital costs, such distortions increase the cost incurred by the Vietnamese National Health Insurance Fund (VHIF). Unsurprisingly, the VHIF is running at a loss and facing the risk of bankruptcy.
  • Public spending on health has begun to increase in recent years and currently stands at 6.4% of GDP. However, about 70% of the funds go to curative care at the central and provincial levels and their service providers, at the expense of primary care and preventive services in rural areas and at the commune level.

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.


13 Responses to “Vietnam’s healthcare system suffers on policy failure”

  1. Thank you very much for the post. The efforts to privatize health facilities are being initiated in many developing countries.The types and procedures of privatization, however, differed from one to another country. The negative impacts of such privatization in poor people’s access to health services is clearly visible in many of the countries. In Nepal, we are currently conducting a study on effect of uncontrolled cost of medical diagnostic services. The medical diagnostic is being irrationally imposed, and the cost is also very high. This is expected to have affected the people’s access to health services.

  2. Peter N. Cross says:

    It is easy to criticize policies which appear to result in inequities the national level, especially if one is a beneficiary of similar inequities at the international level. The article indicates that public sector spending equals 6.4% and 30% of GDP, suggesting that Vietnamese health spending is 21.3% of GDP. Is that correct?

    Response: Thank you for your comment and question Peter. To clarify, public spending on health in Vietnam has increased in recent years and currently stands at 6.4% of GDP. Please do not hesitate to get in touch if you have any further queries about this article.

  3. Nga Nguyen says:

    Total health spending in Vietnam currently is about 7% of GDP, of which 30% from government budget, 20% through health insurance, and 50% OOP. When you mention public spending on health of 6.4% of GDP, you mean total health spending or government spending on health?

  4. Jess says:

    Thankyou so much for this insightful article, i am researching the health system in Vietnam for a school geography assignment and you effort is much appreciated!

  5. 38playboy gangster crip says:

    they need help

  6. Bob says:

    Like every other type of business n Vietnam, if you don’t pay under the table to all of the right people all of the time, you don’t get anywhere.

  7. Jonathan London says:

    6.4 percent is total health spending…

  8. Thanks for writing. interesting

  9. mohammad says:

    the problem in the health sector in viet nam exactly similar to iran ….it needs to policy makers in this sector have enough attention to real efficient reforms….
    Kind Regards,
    M.Sc.student of health services management,
    Department of Management and Medical Information,
    Tabriz University of Medical Sciences, Tabriz, Iran

  10. toko ac says:

    similar with indonesia too..indonesia healthcare system is not good either

  11. Mia T says:

    Thanks for your post.
    People have to pay tax in every single thing in Vietnam. I wonder where the money gone?
    …in their leaders’ pockets?

  12. David Sung says:

    I worked for DADHC care of intellectual disability and physical immobilized people in Australia. And I consider contribute my experience and knowledge where need hand in Vietnam,Cambodia,Laos

    would you help me to enquire right place please.
    Now I awaiting your knidly reply

    Best Regards

    • Mohga Kamal-Yanni says:

      Thank you for contacting us. You may like to write about what you learnt from your experience. The blog is open to contributions.

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Global Health Check was created by Anna Marriott and is currently edited by Mohga Kamal-Yanni