First Aid for Hospital Reforms | World Bank Institute (WBI)

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March 25, 2010—Hospitals play a critical role in health care provision.  The range of services provided by them – from high-tech clinical care and complicated surgeries to basic hotel services – make their management costly and complex and their oversight and control profoundly challenging.

This makes hospital reform central to health sector reform. In many of the middle-income countries in Asia, making hospitals more efficient, effective, accessible and affordable is becoming an urgent issue. Even in the poorest countries, hospitals provide the training ground and key benchmark for the health system at large. In these countries, they are the engine of sound health care. Yet in much of the developing world, hospitals have been sorely neglected.

Countries Share Experiences
To address this issue, the World Bank Institute (WBI) and its regional partner, the Asia Network for Capacity Building in Health Systems Strengthening (ANHSS or Asia Network) organized the Knowledge Event on Hospital Reform - A Strategic Systems Approach on January 28-29, 2010 in Hong Kong, SAR China. 

"The newly founded Asia Network provides an excellent opportunity for the Asian countries to learn from each other, work on some common issues about hospital reform, and look into strategic alternatives to address those problems," Vice Minister of Health of China, Mr. Li Xi said in his opening remarks.

open-quotesThe newly founded Asia Network provides an excellent opportunity for the Asian countries to learn from each other, work on some common issues about hospital reform, and look into strategic alternatives to address those problems.close-quotesMr. Li Xi, Vice Minister of Health of China

Sixty senior and mid-level government officials and hospital managers from ten countries in East and South Asia shared lessons about hospital reforms worldwide, particularly in the Asia region. Hong Kong's entire top health administration team was present at the event.

Case studies from the UK, Singapore, China, Hong Kong and Latin America illustrated various models of hospital reform, highlighting country-specific requirements and implementation challenges. Corporatization of public hospitals, key elements of hospital organizational reform, and complementary health systems reform featured prominently. 

Brazil's case showing successful efforts in raising hospital efficiency and quality, and China’s highly challenging reform agenda generated rich discussion and learning.

The Case of São Paulo
One state in Brazil pioneered innovative ways to hold public hospitals accountable, offering effective incentives for good performance, with autonomy and flexibility to the hospitals to implement improvements. The reforms enabled hospitals in São Paulo’s “health social organization” to be more efficient, at lower cost, and to achieve far better patient health outcomes (reflected in much lower mortality rates) than comparator hospitals. This reform is an important breakthrough, not only for its creativity, but also because it was successfully implemented and outcomes measured.

Implementing hospital reform is notoriously difficult. Many middle-income countries face similar problems. The linkages between organization arrangements, incentives, management, and performance are universal problems, and successful ideas may be transferable if they are carefully evaluated and understood.

Boosting the Efficiency of 20,000 Hospitals
Over the past two decades, China has explored different management and internal governance models for public hospitals. Improvement has been elusive, costs have risen dramatically, and efficiency has fallen. It is a formidable challenge: half of China’s 20,000 hospitals are owned by the government, and employ 4.8 million health care workers.

Health providers have been compensated through a combination of fee-for-service by patients and line-item budgets to cover some fixed costs. Prices were set by government, but in ways that gave providers strong financial incentives to induce demand for more drugs and some services.

The hospital reforms generally lag behind the macroeconomic system reforms. Public hospitals’ social responsibility role has been weakened, and the distribution of facilities across the country is quite unbalanced. The incentive structures and internal management mechanisms in public hospitals do not promote efficiency, accountability, or improved quality of care. The relationship between hospitals and patients has become increasingly tense, arousing massive public concerns.

Facing all these issues, the Government of China has made public hospital reform a main pillar of the health system reform just launched. The MOH is developing a new vision for the reform seeking global experience and international perspectives; as well as a framework for assessing progress and outcomes of the reforms. 

The opportunity of the WBI-Asia Network joint knowledge event on hospital reform provided a just-in-time opportunity for a group of participants from China to discuss the new initiative for hospital reform and share reform lessons with the representatives from the other Asia nations.

What’s Next?
Given the positive outcome of this event and the importance of this topic on many countries' health reform agenda, WBI and the Asia Network will continue sharing knowledge about hospital reform in the Asia region.

China already requested support for a national public hospital restructuring seminar for 200 senior health policy makers and key provincial health reform leaders in Beijing.

This event was designed and organized by a strong partnership among the Asia Network, WBI’s Health Systems Strengthening group, Health, Nutrition and Population Sector Unit of the East Asia Region (EASHH), and South Asia Human Development Sector (SASHD).