Go to just about any clinic, pharmacy, or hospital in Nepal with a head cold. Your symptoms are invariably caused by a virus, for which time is the only remedy, rather than antibiotics, steroids, or vitamins. Despite the substantial harms and lack of benefit of such medications, you will most likely receive them all.
If you are feeling particularly unwell, you might also get intravenous fluids, perhaps some antacid medications, and certainly some amount of analgesics like paracetamol or diclofenac. You will emerge from your consultation 1,500 Nepalese rupees poorer, despite not having received anything of particular benefit to your health.
Of all the problems facing the post-earthquake Nepal health care system, its greatest challenge remains the one that long pre-dates April 25: a system built around unregulated fee-for-service health care delivery. As we go about the process of rebuilding the health care system, we must bear in mind this fundamental threat.
A Global Pandemic
Unregulated fee-for-service medicine is not a problem unique to Nepal. In the United States, the country that one of us (Maru) calls home, over one-third of cardiac catheterizations performed are unnecessary, and over one billion US dollars are spent on antibiotics for adults with viral respiratory tract infections.
The problem is that the basic business model at play gets provider and institutional incentives all wrong. You suffer from a health ailment, you visit a health care worker, you get some diagnostics and interventions, and the clinician receives payment based on what you receive — not on your health benefits. While the United States has a highly developed insurance system, this system has been based on a fee-for-service model, leading to the highest per capita health care spending in the world ($9,000) with some of the worst health outcomes among developed economies. Fee-for-service is a truly global pandemic. It is a pathology that, like any disease, we must combat.
What is to be done? The only way out of the trap of unregulated fee-for-service is population-oriented national health insurance. The insurer bears the uncertain risks intrinsic to human health — the future costs of unforeseen health problems, both acute and long-term care needs. Providers are compensated based on their success at delivering health to populations rather than interventions to individuals.
Health care is often life-saving, but with the wrong incentives, health care can be systematically damaging. Cesarean sections are life-saving for women suffering from complications of labor. Yet the cesarean section is also a major surgery with high risks, especially if the decision to perform one is based on an obstetrician or midwife getting compensated. It is no surprise that at some institutions in Kathmandu, where cesarean sections cost more than three times that of vaginal deliveries, cesarean section rates are greater than 50 percent. We thus have substituted the epidemic of maternal deaths from a lack of available obstetric services with an epidemic of unnecessary cesarean sections.
The stakes will only increase as the positive forces of globalization connect Nepal to medical innovations. A number of hospitals in Nepal now do cardiac catheterizations. Will providers primarily restrict this intervention to its key indication—an acute heart attack—or will they provide it to an ever-increasing array of non-evidence-based but profitable indications? After saving a life from a heart attack, will providers be accountable for following up with that patient for the rest of their life? Will they ensure they have the resources to take the blood pressure and provide anti-clot, cholesterol lowering, and heart rate medications required to prevent the next heart attack?
Fee-for-service does not incentivize longitudinal and preventive care. Fee-for-service relies on short-term, acute interventions that are more costly to deliver, more easy to convince patients of their need, and thus more profitable. Yet long-term management of lower-cost preventive interventions is critical for patients’ overall health. The current fee-for-service system cannot provide clinicians and institutions with the right financial incentives to do the right thing.
The Path To Equity: National Health Insurance
Providers’ number one priority should be taking care of populations of patients. For example, a provider might be compensated for the care of pregnant women. That provider should be compensated on the basis of the total volume of pregnant women, costs, and quality measures. Such a provider still gets compensated for the costs of potential surgery within their population, but not directly for each individual case.
Or, for another example, imagine how a provider might be compensated for the care of adult patients at risk of heart attacks. Providers must pay for cardiac catheterization when needed, but they will be encouraged to pay for preventive interventions—smoking cessation, dietary modifications, certain medications—to prevent heart attacks.
Such prevention is in the best health care interest of patients and the financial interests of the insurer, especially if that insurer knows that those patients will remain on its rolls well beyond the current plan year. The insurer must be rational in the sense that they demand value for their money, which is optimal health at the lowest cost. In fact, a similar approach has been successful in the U.S., where capitated payments produce incentives around controlling costs and preventative care.
While private insurers can exhibit such patient-centered rationality, the government is well situated to be a payer. This can happen via national health insurance, which Nepal’s Ministry of Health and Populations is currently piloting. First, it is the government’s responsibility to ensure access to health care for its citizens, a notion enshrined in the country’s Interim Constitution. Its fundamental incentives should therefore be aligned with patients’.
Secondly, the public can hold the government accountable by paying for high-quality health care at lower cost. Finally, even if government insurance schemes are open to competition from private insurers, the fact that the government is a payer provides a strong push for the government to better regulate health care by building performance-based agreements with service delivery organizations that are tied to population metrics. Such regulation is central to holding both public and private providers accountable to rational, evidence-based, patient-centered care.
The government’s increased capacity to regulate health care should also be paired with a willingness to engage private sector health care institutions. There is a robust private health care sector in Nepal — the problem is they are almost universally based upon the flawed business model of unregulated fee-for-service. If the government can shift some of its resources towards regulation and pay for performance of health care institutions, the government can leverage some of this innovation energy.
Indeed, this sort of partnership happened in the aftermath of the earthquake. Kathmandu’s existing robust private system, with operating rooms and surgeons, worked around-the-clock taking care of patients for free. The government responded with a cabinet-level decision to compensate those institutions. Admittedly, the payment scheme was very rudimentary—a flat fee of $250 per operative case—and was fee-for-service. The government lacks very little capacity to regulate or audit those hospitals for the quality of care provided. Yet it is an important step towards delivering greater public good from private institutions.
The costs of inaction are great. The status quo, of unregulated, under-resourced public sector health care and unregulated, fee-for-service private sector, is not delivering the health care Nepali citizens deserve. It is setting us on a continued path that will bankrupt us, financially and morally.
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