How Decentralization Improves Public Sector Health System Organizational Performance - Literature review Example

How decentralization improve public sector health system organizational performance Executive summary This paper will argue why decentralization improves public sector health system organizational performance. It will also analyze Australian public health sector organizational performance, and compare it with those of other countries such as the UK, Germany, China and the US. In various literatures reviewed that will also be discussed in this paper, the research has found out that decentralization brings services closer to people, access to healthcare, accountability, equality and efficiency in healthcare. A research comparing Australia and other countries including the US, UK, Germany and China found out that health system in Australia, US and German is decentralized to states in form privatization and deconcentration and funded by state and private organizations. The study has also found out that health system in the UK is decentralized to four countries which make United Kingdom. However, the research found out the Chinese health system is centralized and controlled by ministry of health. Lastly, the paper provides recommendations which countries can us to embrace decentralize their health systems, including clear structure roles, proper funding modalities, effective human resource management, accountability structures and coordination. Table of Contents Executive summary 1 1.0 Introduction 3 2.0 Decentralization and Reasons for decentralization 3 3.0 Health system of Australia compared with four countries 5 4.0 Importance of health system decentralization 8 5.0 Conclusion and recommendations 9 6.0 References 10 1.0 Introduction Exworthy et al., (2010, p. 15) claimed that over the years, healthcare policy makers have promoted decentralization as one of the best policies in ensuring accountability, quick services, better financial management, effective leadership and general efficiency. Observed at first as a reform of administrative nature that would enhance quality of services and efficiency, and afterward as a way of encouraging accountability and democracy to the public, decentralization has been observed by numerous proponents as a key reform in itself. In spite of this support, until recently just a few countries had embraced the decentralization reforms and its tenets. Costa-Font & Greer (2012, p.14) argued that some of the countries have improved considerably compared to ones with centralized systems. However, even the decentralized; the implementation of systems differs from country to another. Therefore, paper will argue and give reasons how decentralization improve public sector health system organizational performance. It will also compare decentralization of health systems in Australia and those of the UK, Germany, China and the US. 2.0 Decentralization and Reasons for decentralization Regmi et al., (2010, p.362) described decentralization as the socio-political policy which relocates authority, power, control and responsibility in the planning, decision-making and management from the central government to the local government. World Health Organization (2010b, p. 66) contended that this process is encouraged partly by the need to bring policy and decision-makers closer to the citizens so as to facilitate equitable, fair and inclusive health systems including creating services which are more effective and efficient. As stated before, decentralization of health systems and its tenets differ in countries. World Health Organization (2015a) stated that for that reason, there are numerous types of decentralization including deconcentration, delegation, devolution and privatization. World Health Organization (2015a) went ahead to state that deconcentration involves transferring relocates authority, power, control and responsibility from the top level of Ministries of Health to lower levels which include the field offices. Delegation entails transferring, relocating authority, power, control and responsibility from the Ministry of Health central level to the health institutions that are not directly controlled by it. World Health Organization (2015a) argued that evolution on the other hand, involve relocates authority, power, control and responsibility from the top level of Ministry of Health to the autonomous units at the lower level. Privatization entails the relocation of government and ownership functions from the public to the private sectors that could comprise of voluntary companies and both for-profit and non-profit private companies with differing levels of regulation by the government. Costa-Font & Greer (2012, p. 15) asserted that decentralization has been brought by the ineffectiveness of health systems, particularly when the system was centralized. The research has found out that when health systems are centralized, many local populations who cannot afford to go to the top level hospitals suffer considerably. Looking it closely, it may create inequality where only the rich and middle class can get access to such systems leaving majority of the lower class. Regmi et al., (2010, p.369) stated that decision takes a long period of time when systems are centralized, hence, there is a need to decentralize such systems. 3.0 Health system of Australia compared with four countries The Australian health system has evolved a great deal between the 20th and 21st century. According to Berthet & Bourgeois, (2014, p. 23-27), Australian health system was borrowed from the UK model which is both funded by the state and privately. Berthet & Bourgeois, (2014, p. 23-27) maintained that in both Australia and the UK, the large part of the healthcare is funded by the private companies while up to 75 percent of hospital beds are funded by the government. Medicare is Commonwealth Government health insurance program which enables the provision of universal healthcare since 1984. The scheme coexists together with the private health system. Berthet & Bourgeois, (2014, p. 23-27) opined that The Medicare insurance program is financed by 1.5 percent Medicare levy while part of it is also financed by the government. The public health system is decentralized from the government to territory, state and local levels. This means the public health sector is financed by the government but the money is allocated to lower levels for operations. Here the officers at the lower levels are mandated to determine the budget before being allocated the funds to run these institutions either at the territorial or state level. World Health Organization (2010b, p. 30) claimed that the public health in Australia is funded majorly by tax and the rest by donor funds. Decentralization is embraced to ensure these funds are efficiently managed. This is because it is only people at the lower level that understand the prevalence of disease and equipments needed to treat these diseases, so they can determine the budget to cover all costs. Based on decentralization reforms, healthcare in Australia have improved significantly. Costa-Font & Greer (2012, p.16-17) argued that on the contrary to most countries in Europe, among the earliest governance reformer was United Kingdom as it started its decentralization processes in 1980s under the inspiration of radical neo-liberal. Just like Australia, the UK public health system is funded by taxation. However, to help inefficiency and inequality decentralization has been embraced over the years. Boyle (2011, p.17) asserted that since UK comprise of many countries, health systems are devolved in England, Scotland, Wales and Northern Ireland with every country having its own system which is publicly funded. With their own systems, there are some differences due to different priorities and policies. However, healthcare has been free for every permanent resident of the UK. Even though, there is decentralization based on private, it smaller compared to the public health sector. Their system has been effective thus improving health performance of UK. According to Berthet & Bourgeois (2014, p.25), the Commonwealth Fund Mirror report of 2014 ranked UK in position eleven best health system in the world in terms safety, quality care, effective, coordinated, patient-oriented, efficiency and equity. However, within these jurisdictions, decentralization has been ineffective sometimes due to fragmentation and inequality. Minas (2010, p. 7) posited that the political system and interference has never allowed UK to enjoy the health systems benefits of devolution making the control of healthcare to be reverted back to the federal government. Therefore, UK health system can be described as centralized. Health system of the US has existed over the years and undergone different challenges to be where it is today. For the efficiency of the healthcare, the federal decentralized health systems early to lower level of government. World Health Organization (2015a) claimed that the top most level of health systems in the US is the federal government, followed by the state level and local level. Scott & Atlas (2011, p.7-8) affirmed that even though, the federal level allocates the budget; the state level prepares the budget which can adequately fund the operations. The local levels are the district level. The decentralization of the healthcare system has improved performance and successes at the lower level as the trends suggests. For instance, Massachusetts today offers health insurance to all citizens starting from 2006. Mandy (2014) claimed that, Germany health care system is regarded as the oldest since it dates back from sickness Insurance Law 1883 that was fronted by Otto von Bismarck. The system being decentralized by private medical doctors who offer ambulatory care, while self-governing and non-profit hospitals offering inpatient care. Exworthy et al. (2010, p. 16) reported that the population of about 92 percent is under the Statutory Health insurance cover, which offers regular coverage for anyone of around 1100 private or public sickness funds. The sponsors of the Standard insurance scheme are mainly contributions from the employer, the employees and the subsidies from the government depending on the level of income. Sometimes workers who have higher income may decide to pay tax so as to support the private insurance while avoiding the standard. The current premiums are related to health status and not the level of income. Berkel, de Graaf & Sirovátka (2012, p.265) stated that currently, the level of compensation of the provider for particular services is decided by agreement between the sickness funds and the relation of regional medical doctors. Bergmark & Minas (2010, p.247-250) posited that the government ever since 1976 has organized a yearly commission, consisting of representatives from medical doctors, labor, pharmaceutical companies, insurance and business. The commission considers the government policies and provides recommendations on general expenses targets to the regional association. At another perspective, the Chinese economy has grown positively over the years that one would think it has a better healthcare. The truth is that, the country has a long way to go. Inequality and access to healthcare have been created by its centralized system. Bloom (2011, p.1305) claimed that the central government determines the budget of every region then allocates the funds. Even though, the government has established special funds for the rural population called “rural cooperative medical system” it is not managed because of the ineffective system. Qian et al. (2010, p.229) held that china has an infant mortality rate of 11 per 1000 births which can still be considered high today. Also, the country has 32 maternal mortality per 100, 000 births. 4.0 Importance of health system decentralization In the majority of the European health systems, decentralization has grown to be a management strategy that is well known. According to Exworthy et al., (2010) decentralization portrays a broad variety of accountability structures and transfer of power arrangements. The tenets of decentralization is based on a strong idea which urges that small health care organizations are appropriately structured hence are intrinsically accountable and agile compared to the larger health care institutions. Generally, in the financial circle decentralization is known as the most significant aspect. Bergmark & Minas (2010, p.257) argued that being both a political and an economic process, it entails the handover of financial authority to local governments from the central government in order to perform functions of decentralization. Berkel, de Graaf & Sirovátka (2012, p.267) affirmed that the main aspect in the usefulness of local government decentralization is the availability of efficient revenue, and the ability to make decisions concerning expenses. Also, Fiscal decentralization can be used to create better financial and cost controls. Costa-Font & Greer (2012, p. 16) claimed that here, priorities of the local are commonly emphasized on targeted and streamlined programs which should result to better efficiency as related to the centre programs. Decentralization has a positive effect in the local sectors because it produces high revenues. This is because when functions are devolved, control can also be established at the lower level to ensure central direction and accountability. 5.0 Conclusion and recommendations Decentralization of the health system has become a common practice in different nations of the world today because it improves service delivery, accountability, health access, equality and efficiency. However, despite the success, the system has faced numerous challenges including corruption, expensive implementation, uncertainty, complex negotiation and fragmentation. Therefore, this paper provides recommendations which countries can consider in implementing decentralization. 1. Create a clear structure from top to bottom level of authority and assign roles. Proper structure and assigning of roles makes the system smooth and efficient because it determines what each officer does in the system, whether it preparing the budget or determining medicines to purchase. 2. Create appropriate funding modalities. Appropriate modalities for funding the system must be defined whether it is the tax, donor funding or special kitty. 3. Proper human resource management must be set to oversee how the system operates. Normally, health system fails because lack of professionalism and experience in managing healthcare. 4. Local Structures for accountability must be set to mitigate corruption. To do this, the national government can advise anti-corruption bodies at the local level to oversee the operation and spending and report it quarterly. 5. Central institution which coordinates and for oversights the operation and the reform agenda ought to be formed by the federal governments to ensure the fruits of decentralization of health system reaches the locals and there is fair treatment based on population of the area. 6.0 References Bergmark, A., & Minas, R. (2010). Actors and governance arrangements in the field of social Assistance. in Kazepov, Y. (Ed.), Rescaling of Social Welfare Policies: A Comparative Study on the Path Towards Multi-level Governance in Europe, Ashgate, London, pp. 240-74. Berthet, T. & Bourgeois, C. (2014). Towards ‘activation-friendly’ integration? Assessing the progress of activation policies in six European countries. International Journal of Social Welfare, 23(1), 23-39. Berkel, R.V., de Graaf, W., & Sirovátka, T. (2012). Governance of the activation policies in Europe: Introduction. International Journal of Sociology and Social Policy, 32(5/6) 260-272. Boyle, S. (2011). United Kingdom (England): Health system review. Health Systems in Transition, 13(1), 1–486. Bloom, G (2011). Building Institutions For An Effective Health System: Lessons From China's Experience With Rural Health Reforms. Social Science and Medicine, 72(8): 1302–1309. Costa-Font, J., & Greer, S.L. (Eds.) (2012). Federalism and Decentralization in European Health and Social Care. Palgrave MacmillaneBook. Exworthy, M., Frosini, F., Jones, L., Peckham,S., Powell, M., & Greene, I. (2010). Decentralization and Performance: Autonomy and Incentives in Local Health Economies. National Institute for Health Research Service Delivery and Organization program. Mandy, K (2014). Insurance: Health Insurance. Retrieved from http://insurance2c2a.blogspot.com/ Minas, R. (2010). (Re) centralizing tendencies within health care services: implementation of a new idea? Working Paper/Institute for Futures Studies, p. 9. Qian, D et al. (2010). Determinants of the Use of Different Types of Health Care Provider in Urban China: A racer illness study of URTI. Health Policy, 98(3), 227–35. Regmi K., Naidoo, J., Greer, A., & Pilkington, P. (2010). Understanding the effect of decentralization on health services: the Nepalese experience. J Health Organ Manag, 24(4), 361-82. Scott, M.D., & Atlas, W. (2011). In excellent health : setting the record straight on America's health care and charting a path for future reform. Stanford, California: Hoover Institution Press, Stanford University. pp. 199–205. Wright, S. (2011). Steering with sticks, rowing for rewards: the new governance of activation in the UK. in van Berkel, R., de Graaf, W. and Sirova´tka, T. (Eds), The Governance of Active Welfare States in Europe. Palgrave Macmillan, Basingstoke, pp. 85-109. WHO (2015a). Health systems: Health Systems Strengthening Glossary. Retrieved from http://www.who.int/healthsystems/hss_glossary/en/index3.html World Health Organization. (2010b). The world health report: health systems financing: the path to universal coverage. Geneva: World Health Organization. Read More