Empowering consumers in the health sector

M.A.P. Insights
Ronald U. Mendoza

Posted on January 12, 2016

If one looks back at the Aquino administration’s accomplishments, important reforms related to human capital investments, notably in the health sector, will surely be part of its legacy. For example, the passage of the Responsible Parenthood and Reproductive Health Act of 2012 triggers government programs to help families remain manageable in size. Eventually, one hopes this puts the country in a better position to concentrate and deepen public sector and household level investments among fewer children.

In addition, the passage of the Sin Tax Law of 2012 helps to mobilize and channel resources for health sector investments, including a more inclusive and well-financed health insurance system (e.g. PhilHealth). Already, the Sin Tax generated $2 billion within two years of its passage, boosting resources to enroll 14 million more families -- about 45 million mostly poor and low-income citizens -- in PhilHealth.

However, recent evidence generated by government researchers suggests that enrollment does not automatically translate to access. Other policy innovations are now underway to help poor and low-income consumers access the health system more effectively, including efforts to reduce out-of-pocket share of spending, streamlined procedures and direct assistance to navigate the health system and its requirements.

The above reforms could be a powerful force for inclusiveness in the health sector if further steps are taken to achieve better quality and more competitive services for the low-income market segment. Both public and private sector stakeholders in health have an important role to play in this regard.

The health care and medical tourism sectors have been identified among the potential sunrise industries of the Philippines. According to Euromonitor, sales from health and wellness tourism in the Philippines more than doubled from 2007 to 2012 -- these two sectors combined increased by around 118% during this period. Medical tourism alone grew by 155% with sales reaching P52.4 billion in 2012 from P20.5 billion in 2007.

Bullish private sector demand for health services is mirrored by resurgence in public sector spending in this area. Challenges nevertheless remain, notably on the inclusiveness of health care services for the vast majority of poor and low-income households. The largest share of total health expenditure for 2012 is from out-of-pocket sources at 58%. For a poor household, this remains an effective barrier to access, and in many cases curbs health-seeking behavior itself. Furthermore, it is well known that many government primary health care centers lag in quality services.

Ultimately, through its impact on both quality and price, increased competition in the health sector could be good for all consumers of health services, rich and poor alike. Yet this competition needs to empower consumers, if they are to work to their benefit.

In addition to more general health policy reforms, several novel information-related innovations have recently been rolled out by the Department of Health (DoH), providing consumers, civil society, and other health sector stakeholders with the means to hold industry players much more accountable:

• Drug Price Watch (dpw.doh.gov.ph/) is an online repository of drug prices which allows health sector consumers and practitioners to monitor the prices and availability of medicines in different locations. This allows them to weigh options; and this should trigger more effective competition across drug outlets.

• Drug Price Reference Index (ncpam.doh.gov.ph/index.php/drug-price-reference) has been established by the DoH for all essential medicines in order to guide national and local health facilities in their more efficient procurement of pharmaceutical products. This responds to the well-known variability in procurement prices in national and local public health offices that were assessed to be up to 16 times more costly for branded drugs and three times more costly for generic drugs when compared to international benchmarks. With better information, the DoH could more effectively monitor which health offices could dramatically improve their drugs procurement. From a governance point of view, civil society watchdogs and the Commission on Audit could use this information database to ferret out anomalous transactions as well.

• Hospital Advisor (HospitalAdvisor.doh.gov.ph) is an online application that could be used to search over 1900 public and private hospitals for price, quality and other service-related information. For hospitals, it allows smaller and more competitive players to showcase their services and more effectively amenities. For consumers, it provides a searchable platform from which they could more effectively choose hospital services. It also provides them a direct-feedback opportunity to publicly rate their hospital services for quality and effectiveness. Think TripAdvisor.com for hospitals.

Ultimately, many of these information-based reforms seek to empower consumers by providing them a choice in the health market. Quite understandably, many of these reforms are disturbing parts of the industry that have gotten used to years of weak competition, leaving many consumers poorly informed. Greater access to market information could therefore serve as a game changer.

What happens in 2016, when a new government takes over? Ultimately, the sustainability of most reform gains depend critically on citizens proactively relying on them, so that future officials will have no choice but to continue to build on these policy innovations. With this in mind, the approach of the DoH to empower consumers could be a very effective strategy.

(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the M.A.P.)

Ronald U. Mendoza, PhD, is the Executive Director of the AIM Rizalino S. Navarro Policy Center for Competitiveness (AIM-RSN-PCC). This article draws in part from “Opportunities and Challenges in Health Tourism: The Case of the Philippines” co-written by the author with staff members of the AIM Policy Center.