Issues in Healthcare

Containing healthcare costs remains one of the priority topics of Georgia health system from the perspectives of both the government and private health insurance companies. Public health expenditure is rising but the efficiency of increased public investments in health sector is a subject of great public discussion. The government’s attempt to improve population access to health services by introducing Universal Health Coverage (UHC) program in Georgia increased motivations of private sector to enter in the healthcare market and facilitated growth in the supply side of the market: Number of outpatient and inpatient care facilities increased by 10% and 20 % between 2012-2019, respectively.
Increased capital investment in Georgia’s private health sector became one of the major reasons that tripled public expenditure on health in its absolute amounts after introducing UHC program. The Ministry of IDPs from Occupied Territories, Labor, Health and Social Affairs (MoILHSA) of Georgia is the single public purchaser contracting private healthcare facilities to provide health services to the population under UHC on fee-for-service basis resulting in oversupply of services without improving quality of care (MoILHSA, 2017). Although the public health expenditure is rising in the country, out-of- pocket payments still remain the main contributor of total health expenditure in Georgia constituting 55% (in 2017) according to the National Health Accounts data (MoILHSA, 2017). The recent policy change to introduce new reimbursement method in inpatient settings in Georgia aimed to reduce unnecessary expenditure including out-of-pocket payment on health services in expensive cardiac care caused wide public discussion around the topic (Government of Georgia, 2019). With this new policy mechanism, the MoILHSA aims to smoothly move the existing reimbursement system of inpatient care on DRG to make the public expenditure more efficient and reduce out-of-pocket expenses on healthcare for the population of Georgia.
The aim of this document is to provide evidence to inform ongoing deliberations regarding alternative payment methods to reduce cost and improve quality of care. Specifically, it attempts to inform the following question: What are the effects of bundled payment methods on healthcare spending, service utilization and quality of care?