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Review: Healthcare Industry in Georgia in 2017

State budget allocations for health sector grows every year. Despite similar growth, the answer to the question: who spends more on healthcare – government or citizens, does not change. The issue of valuable services remains unchanged too.

According to the last indicators, the government’s ratio in total health expenditures accounts for 40%, while the ratio of citizens is 60%. The research has showed that 60% of expenditures of citizens are spent on medications. Those, who cannot buy medications, reject to pass treatment courses because of lack of finances.

According to the report – Cooperation for Budget Transparency: Civil Monitoring of State Expenditures in Georgia prepared as part of European Fund project, 74.2% of the respondents cannot buy medications prescribed by doctors or they buy only part of them. Only 25.8% of the respondents are able to buy all necessary medications. In this situation specialists assert that the problem solution consists in introduction of Health system. The system formation will enable to shape timely and precise payment system in the health sector and improve control and supervision system for diseases and health expenditures.  Digital prescription system is one of the components of the system, and Health Ministry plans to move to this system in 2018.

Akaki Zoidze, head of parliament committee for health and social issues:

We carried out very important reforms in health system in 2017, first of all, we have introduced the model adjusted to the existing needs, when the rich part of our society has limited access to universal health program benefits. In turn, this package was broadened to socially vulnerable citizens. Namely, on September 1 Government launched the program for supply of medications to patients with chronic illness. This is huge relief for the poor, who have four chronic disorders – arterial tension or diabetics (insulin-dependent or insulin-excluding diseases), thyroid gland disease, asthma … these diseases are widespread and a major part of similar patients are poor. They need expensive medications every day and their prices rise following the GEL exchange rate changes. The program will be continued in 2018 too and the poor will be able to save a half part of their pensions.

We will move to the so-called selective contracting mechanism and this implies a selection of the facility, which will provide better quality and qualified services. Consequently, only these facilities will remain in universal health program. Medical facilities will have enough time to satisfy the due standards. If they fail to do so, they will not be able to participate in the universal health program and their contract agreements will not be continued.

The works for introducing digital prescriptions is of crucial importance. Restoration of the institute of prescriptions was a right decision. It was expedient to establish the digital system immediately, because paper carriers cannot fully reflect the real situation and ensure valuable analysis. And this system enables to cast light on details related to prescription of extra medications (how, whom, where). Divulging these results will ensure rational use of medications. The current practice is unacceptable – frequently patients need one medication, but doctors prescribe 5-6 medications, because some doctors  have business interests in certain pharmaceutical companies.

Program for chronic disorders is also very important. The issue is of about 700 000 persons with 0-100 000 scores (100-150 thousand persons have chronic disorders). In the future we plan to direct existing reserves to expansion of coverage and contingent in this direction, expansion of the list of medications. We plan to introduce this system in 2018, if we fail to do so in 2018, this system will  be established definitely  in 2019-2020.

The medications project will enable to enhance primary health role. Primary health system is the backbone of primary health system, where we should resolve, treat and manage 80% of the health problems without hospitals and expensive interventions. We can achieve this through healthy lifestyle, primary health services, prevention mechanisms and we will make accent on this direction in the coming years.

Jointly with the Ministry, we have prepared a long-term vision through involvement of wide society and determined the target direction up to 2030 in the direction of social, labor relations, healthcare issues. Our action plans will be based on these directions.

We have improved immunization program, programs for mothers and children. This signifies a referral program will be launched that has reduced death toll. This is a huge achievement.

I would also name the parliament-performed job for public health issues and adoption of tobacco control law.

Excluding rare exceptions, everywhere in the world the health market is regulated in this or that form. This is an asymmetric market, where supply determines the demand, not on the contrary. There are many other problems – all these factors substantiate state involvement in the market, including in terms of medical services, price regulations, including in terms of regulation of medication prices. We do not regulate prices. Only the God knows on what principle it depends. They do not know themselves how much the supplied service costs. All prices are conditional and depend on individual preferences. We have access to global experience. It is important to introduce just pricing depending on resource capacity. Introduction of this principle will take a certain time, because big volumes of statistical indicators should be processed, many people should be trained.

This  system should be established in not only state health system, but, in general, and in this case prices will be identical and transparent for private insurance companies and individual patients. At this stage, tariffs are determined only in universal health system and this approach will be general for everybody. For example, we can refer to the sample of Germany, where prices are revised every three years.

As to medical business, it genuinely flourishes today. Commercial banks issue loans for expansion of medical business or other needs without problems. In 2.5 years 57 clinics opened in the country. Similar paces in development, excessive commercialization grows expenditures and enables to supply excessive services that may be unnecessary for patients. I believe this sector should be regulated to a certain extent.

Nikoloz Gamkrelidze, head of Georgian Health Group (GHG):

GHG is a major actor on this market and is represented in all segments of this market – hospital, insurance or pharmaceutical. Various challenges exist in each of them and there are various types of opportunities too. The year of 2017 was rather transient in terms of changes.

Universal Health Program was launched in 2014 and Government started active efforts in 2017 to enhance the program efficiency. As a result, the market rules were revised, specific criteria were determined for inclusion of a person in the program. The program has outlined target programs and this was very important. This decision has redirected rich citizens to private insurance sector, while poor citizens will receive improved packages with a wider list of medications. This was a transient year for state programs.

As to GHG, this was one more dynamical year for the company. We opened hospitals and this process continues. At the beginning of 2018 we will open 2 major hospitals with 700 beds. We continue making investments in the sector. We are major investor in health sector and we have made 180 million GEL investments in 2016-2017. We plan to make 50 million USD investments in 2018. In general, we have optimistic moods for the coming 2018 year. We expect more changes on the market. Universal Health Program is a vivid organism and changes will take place on permanent basis. We expect more changes for differentiating valuable and invaluable medical facilities. I hope a classification system will be introduced in this sector, because those who care, should be appreciated more. I believe this is a key challenge in this health sector.

In this case I mean that Government has contracts with all facilities and they do not satisfy quality criteria and I believe higher-quality selection should be carried out. This factor will provide more quality guarantees. We expect these changes and we have positive mood.

As to the pharmacy market’s major players, we are represented by two brands – GPC and Pharmadepo.  These two brands will operate on the market separately. GPC makes focus on personal care things and will maintain this direction. As to introduction of new brands, we will activate efforts in the future and offer more novelties to the consumer.