Georgian Healthcare System: Quest for the Cure

Ten Years of Reform Fail to Generate Hope

Managers of the Georgian healthcare are proud they started to ponder the ideas of the healthcare reform already in 1993. However, ten years past the date the results are far from encouraging, while the generally agreed blueprint of reform seems to be missing or, at least, not followed.

In mid-1990s it was clear that the Soviet healthcare system aiming for the general, free-of-charge services for all was crumbling. In 1993 several blueprints of reform were elaborated. Already in 1995, it was decided to settle on the scheme that would provide both for the state-subsidized and private medical services and facilities.

Today, the officials of the Ministry of Healthcare concede, many doctor, patients and even some officials of the Ministry are dissatisfied with the pace or outcomes of the reform.

Vasil Cheishvili, Deputy Minister of Health says the main reason of such opposition to the reform is that “nobody, except few specialists, understands what the reform really means and how it would be implemented.”

Most practitioners and government officials agree on the background for the reform. Merab Kavtaradze of the Georgian State Medical Insurance Company (SMIC) says the Soviet system of healthcare was highly inefficient. “Under the communists, we always held some of our capacity in reserve for the case of war. Now that we presumably live in times of peace, we are saddled with overcapacity – especially since so many people have curtailed their use of health care services out of financial necessity.”

According to the information of the deputy state minister Akaki Zoidze, excessive capacity relative to demand was the most serious problem for the system in Georgia. Zoidze, relying on an official data, claims an occupancy rate at the hospitals was only 32,7% in 1998.

It was also clear, that as the financial situation deteriorated in post-soviet Georgia, the social safety net has collapsed, and the healthcare was not able to provide for free or partially free care. Zoidze lists five main problems: limited public resources, underpaid doctors, large amount of informal payments and financial access barriers to the population.

The reform package saw several solutions to this issue. One was to “rightsize” both the number of doctors and of the medical facilities. Second, to introduce the system of health insurance – a public one ran through the SMIC was targeting the pre-natal care and socially vulnerable population, while the private insurance companies would subsidize well-off clients. The third solution was to encourage privatization of the state medical facilities and create the system of public contracting for the remaining ones.

Then “trifles”, such as creation of institute of the family doctor, development of an infrastructure of public health services in rural areas (were people have always suffered shortage of doctors) were also planned.

The reforms have been initiated in August 1995 and appeared much more difficult to be carried out in practice than they were supposed to. The Heath Ministry officials believe that a sole fact that they have managed to sustain functioning health care system is a tremendous achievement.

Akaki Zoidze says some progress was achieved. For instance the average utilization of the contracted facilities increased by more than 20%, salaries of the doctors increased two-fold, while informal payments almost disappeared. However, these positive changes apply only to the few selected hospitals, which undertook reforms based on the World Bank funding. Beyond the pilot cases, the situation remains grim.

One of the main tasks was to decrease the number of practicing doctors. Total re-certification of doctors was introduced at the end of 1990s. According to the new regulations the doctors have to be re-certified once in five years. However, as the rules of certification have changed several times, the system did not play its role as a barrier. Majority of the doctors managed to qualify for their certificates again and remain at their places of employment.

It was expected that fired doctors would have received significant compensations and some would have been re-qualified as social workers if they wanted to. But there the problem emerged – doctors did not want to lose their jobs and since majority of them were already working in private entities, the government could only recommend the efficient average size of the medical personnel. Most Chief Doctors of the soviet era, who became heads of the private hospitals and clinics felt reluctant to decrease the number of doctors.

“I have 37 employees in my polyclinic, which was privatized several years ago,” director of one of the Tbilisi polyclinics says. “Health Care Ministry insists on reduction of number of the staff. But I am sure that the status quo is favorable for me, for doctors working in the polyclinic, as well as for the patients. The Health Care Ministry should not interfere with the private polyclinics,” he adds.

Many observers believe, over-inflated staff is the source of corruption and illegal profits for the Chief Doctors.

“Officially I earn almost nothing,” says Akaki, surgeon of one of the public Tbilisi hospitals, “unofficially – much more. Officially a doctor earns 2-3 Laris (USD 1-1,5) from one surgery. So doctors have to avoid this system in order just to survive,” the surgeon adds.

Both the public and private hospitals run black books to avoid taxation. In both cases, the doctors prefer to charge unofficial fees, that are shared with their superiors.

Reduction of a number of medical institutions turned out to be quite a problem as well. Since majority of them are already privatized, their owners are not so eager the Ministry’s plans of consolidation, optimization, reformation, or mergers.
Thus, reduction is being carried out mostly on expense of few remaining state-run institutions. Usually, a building is sold out and the income is directed to the Ministry’s budget.

Even if the financial inefficiencies and the black bookkeeping is avoided, the reform is unthinkable without major investment. Here, the Ministry of Health, as well as the whole country continue to experience severe problems.

Deficit of the public funds undermines the state insurance system. Cases were reported, when both public and private hospitals refused to provide care to those insured by the state SMIC, as they prefer to receive immediate payment in cash, rather than expect highly dubious transfers from the state budget.

Private insurance companies, on their side complain that the legal basis for the private medical insurance, as well as the shared vision of the complementarity of the state and private insurers is lacking. 

Today a surgery costs approximately $750 on average. According to calculations of the Health Care Ministry of Georgia, an average family can afford such expenses when necessary. Vasil Cheishvili says, however, that if the prices of the medical services are increased, citizens will have no other choice but to insure their health. Cheishvili hopes this “demand driven” need to establish effective insurance system can drive the reform.

Meanwhile, it seems that the state is not capable of managing the transition of the healthcare system. While Georgia retains some of its best medical professionals in a few private clinics, their services become less and less available for the average citizen. Successes in reform remain mere showcases against the background of decreased availability of the medical care outside of Tbilisi.

By Giga Chikhladze