The impact of the introduction of user fees at a district hospital in Cambodia

doi: 10.1093/heapol/czh036 HEALTH POLICY AND PLANNING; 19(5): 310–321 Health Policy and Planning 19(5), © Oxford University Press, 2004; all rights reserved. The impact of the introduction of user fees at a district hospital in Cambodia BART JACOBS1 AND NEIL PRICE2 1Enfants&Développement, Phnom Penh, Cambodia and 2Centre for Development Studies, University of Wales, Swansea, UK This case study of the introduction of user fees at a district referral hospital in Kirivong Operational District in Cambodia, using the findings from empirical research, examines the impact of user fees on health-careseeking behaviour, ability to pay and consultation prices at private practitioners. The research showed that consultation fees charged by private providers increased in tandem with price increases introduced at the referral hospital. It further demonstrates – for the first time that we are aware of from the available literature – that the introduction and subsequent increase in user fees created a ‘medical poverty trap’, which has significant health and livelihood impact (including untreated morbidity and long-term impoverishment). Addressing the medical poverty trap will require two interventions to be implemented immediately: regulation of the private sector, and reimbursing health facilities for services provided to patients who are exempted from paying user fees because of poverty. A third, longer-term initiative is also suggested: the establishment of a social health insurance mechanism. Key words: user fees, poverty, private sector, Cambodia, health financing Introduction The international development discourse presents numerous, often interrelated, rationales for the introduction of user fees in the health sector, relating inter alia to cost recovery, improved equity and greater efficiency (Price 2002). A major argument for the generation of revenues through cost-recovery strategies based on user fees relates to covering operational costs: ‘Facilities that retain revenues generally performed substantially better than facilities that sent all their revenues to the treasury’ (Shaw and Griffin 1995, p. 26). With regards to equity, it is claimed that universal free health care reinforces inequitable distribution of resources in that it provides better access to services in wealthy urban areas at the expense of poor and rural populations (Birdsall 1989; Foreit and Levine 1993). Proponents of this view claim that user fees avoid the provision of subsidies to those who can afford to pay all or some of the costs, and in doing so, free-up funds to pay all or part of the costs of services for those less able to pay. The dominant theme in the efficiency rationale for user fees is that charging attaches value to a service, i.e. it increases demand by increasing perception of quality and deterring unnecessary use of health care systems. Some advocates of user fees claim that free services reduce utilization because of inefficiencies leading to quality and time costs borne by the users, and because of the low value ascribed to free services (Lewis 1986). Foreit and Levine (1993) argue that selective user fees encourage clients to use appropriate service delivery outlets, by charging higher prices at tertiary level (hospital outpatient clinics) than at primary level (health posts). ‘Correct pricing’ schemes, according to Shaw and Griffin (1995), thus signal to consumers to use health resources effectively and efficiently, and serve as a warning that those who choose to bypass the referral system will be required to pay the full cost of the service. Opponents of user fees refer to studies indicating dramatic and sustained decreases in service utilization following their introduction (Waddington and Enyimayew 1989, 1990; Mbugua et al. 1995; Mwabu et al. 1995). Creese (1991) provides extensive evidence that user fees divert those who cannot pay to other sources of health care or away from the health care system. Other studies highlight how user fees Proponents of user fees in the health sector in poor countries cite a number of often interrelated rationales, relating inter alia to cost recovery, improved equity and greater efficiency. Opponents argue that dramatic and sustained decreases in service utilization follow the introduction of user fees, highlighting evidence that user fees reduce service utilization when they fail to result in improved quality of care and/or when services are priced higher than those charged by private health care providers. Utilization of public health services in Cambodia is low. Supply-side factors are significant determinants of such low public sector utilization, including low official salaries of service providers (forcing many to seek additional income in the private sector), and operations budgets which are erratic and often insufficient to cover running costs of service delivery outlets. The Cambodia Ministry of Health (MOH) encourages user fee schemes at operational district level. By allowing revenue to be retained at the health facility level, the MOH aims to improve health care delivery – and consequently service utilization – through increased salaries to health facility staff and increases in operations budgets. The impact of user fees reduce service utilization when they fail to result in substantial and sustained improvement in the quality of care and/or when services are priced higher than those charged by private health care providers (Audibert and Mathonnat 2000; Chawla and Ellis 2000; Ha et al. 2002). This case study of the introduction (and subsequent increase) of user fees at a district referral hospital in Kirivong in Cambodia draws on empirical research to examine the impact of user fees on health-care-seeking behaviour, ability to pay and consultation prices at private practitioners. The case study demonstrates that the introduction and subsequent increase in user fees created a ‘medical poverty trap’, which has the potential to lead to untreated morbidity, reduced access to care, long-term impoverishment and irrational drug use. Background Kirivong Operational District (KOD) is located in Takeo Province, in the southeast of Cambodia, bordering Vietnam. It consists of four administrative districts with 31 communes and 290 villages, with a total population of 201 870 (1998 census), whose main economic activity is subsistence farming supplemented by fishing and gathering. Two of the administrative districts are located in the Tonle Bassac Delta; because of widespread irrigation through canals and flooding during the rainy season, these two districts have different farming patterns to the two administrative districts on higher ground, which have very limited irrigation. KOD has 20 health centres and an 80-bed referral hospital, and is run through a ‘contracting-in’ agreement whereby a non-governmental organization (NGO) is responsible for its management and administration. KOD has a flourishing private health sector. A census c (...truncated)