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Damjan Denoble
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Damjan heads Rubicon Strategy Group’s China hospital practice and have led market research work in China and Vietnam. Since 2009, I have been the lead editor of the award-winning website Health Intel Asia (formerly the Asia Healthcare Blog). In September 2014, I will be starting a new consumer... More
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Rubicon Strategy Group
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Health Intel Asia
  • We're In Myanmar Surveying The Health Care Market. Here's How.

    Regular readers of Asia Healthcare Blog may be aware that Benjamin Shobert is currently in Myanmar, where he is conducting a health care survey in two major cities. The survey work is part of a project that Rubicon Strategy Group is carrying out for a client with operations in Myanmar to determine how mature of a market Myanmar's health care space is for foreign capital.

    The survey Benjamin is using was designed in-house based on a data bank of validated survey questions designed for deducing a variety of information about patient care preferences and patient attitudes towards health care providers. Adapting validated survey question is the standard method for designing surveys in much of epidemiological research. Because questions have been tested and validated beforehand, it is much more likely that a survey will yield useable data, and that the data collected will be useable for cross-area studies. For example, it is much more likely that a survey conducted in Myanmar will yield data that can be analyzed in relation to survey data from Hong Kong if the surveys used in both studies originated from the same validated set of questions.

    Rubicon Strategy Group's Myanmar Healthcare Questionnaire was constructed using two primary sources of validated questions: a questionnaire used for the Commonwealth Fund to survey healthcare systems in developed countries used by Harris Interactive, and the Picker Patient Experience Questionnaire (PPE-15) adapted for use in Hong Kong. The PPE-15 core set is an international standard set of core questions used to measure patient experience with healthcare. We looked for a PPE-15 set that had been deployed in an Asia health care system, and we further adapted it to the needs of our survey.

    Recognizing the need to both make the survey accessible to respondents and to collect as much information as possible from a country where data is scant, the survey Benjamin is employing in the field is a balanced mix of closed-ended and open-ended questions.

    Closed-ended questions are ones where the choices available to respondents are defined, or "closed". A question where the respondent can only answer "yes" or "no" is a very simple closed-ended question. The sorts of closed-ended questions we employed in our study are much more complicated. For example, we have the following question:

    1) Which of the following statements comes closest to expressing your overall view of the health care system in this country?

    a) On the whole, the system works pretty well and only minor changes are necessary to make it work better.

    b) There are some good things in our health care system, but fundamental changes are needed to make it work better.

    c) Our health care system has so much wrong with it that we need to completely rebuild it.

    d) Not sure.

    e) Decline to answer.

    You'll notice that in addition to have more than just a binary Yes/No option, we have several choices, including a "Not sure" and a "Decline to answer" response. The "Not sure" and "Decline to answer" responses are important to include because capturing the absence of an opinion and a refusal to answer is important for statistical purposes, and because it can actually help the surveyor identify possible gaps in knowledge, which can be addressed with future questions and surveys.

    Open-ended questions, on the other hand, are ones where the respondent is allowed to answer in basically any way they wish. The upside of these questions is that the surveyor can capture responses she couldn't otherwise think to catch. In a country like Myanmar the open-ended question can be very powerful because so little data on health in the country exists, as Benjamin recently explained. The downside, however, is that open-ended questions can be impossible to quantify, and they make the respondent work much harder. The fact that a respondent has to work hard to answer the question, and the absence of any triggers, like in a closed-ended question (where each choice is a trigger of sorts), can result in answers that are hard to verify with much certainty. In our survey we tended to employ open-ended questions in tandem with a closed-ended question designed to capture similar information, like the following:

    32) [Global rating of the quality of healthcare] Using any score from 0 to 10, where 0 is the worst health care possible and 10 is the best health care possible, how many score would you give for your last inpatient care episode in the past 12 months?

    33) [Open ended question to capture responses we can't think of] What are your biggest frustrations about health care in Myanmar?

    Of course, a survey is useless unless it can be administered in a language understandable to the locals. Translators trained in health care research have been employed to help Benjamin carry out the survey. Here is one of the translators, with our survey in hand, administering a question.

    Translator administering RubiconTranslator administering Rubicon's survey in Myanmar

    The survey will take place over two weeks. We hope to come back from Myanmar with several hundred interviews that fit certain screening criteria we've come up with. Our survey includes six basic categories that we feel touches on information where little or no information is otherwise available:

        • Overall views of the health care system
        • Access to health care
        • Patient/Physician relationship
        • Prescription and prescription brand use
        • Out-of-pocket Costs and Ability to pay
        • IT Access
        • Demographics

    We will share with you some of the results of this research in the months to come, to the point that we're able to do so, since a lot of the information will be proprietary. For now please follow along with Benjamin on Asia Healthcare Blog as he snakes his way through Myanmar, and follow me her on Seeking Alpha for more coverage of health care in Asia.

    Mar 14 5:59 PM | Link | Comment!
  • Understanding How China's Health Care Reforms Pressure Local Governments Is Critical To Making A Good Investment Choice

    Hana Brixi of the World Bank, Yan Mu and David Hipgrave of UNICEF China, and Beatrice Targa of UNICEF Timor-Leste published an excellent article in Health Policy and Planning's December 2012 issue, where they put forth an argument that regular readers of Asia Healthcare Blog will know I am fully on board with: the success of China's health care reforms is not going to be equally realized, and success, where it is found, will be directly related to local governments' ability to find creative ways to fund health care expenditures. Brixi et al.'s article, "Engaging sub-national governments in addressing health equities: challenges and opportunities in China's health system reform", is worth reading in full, but I just want to highlight it here and use it as a jumping-off point for the discussion that follows. First I present the abstract with my emphasis in bold:

    China's current health system reform (HSR) is striving to resolve deep inequities in health outcomes. Achieving this goal is difficult not only because of continuously increasing income disparities in China but also because of weaknesses in healthcare financing and delivery at the local level. We explore to what extent sub-national governments, which are largely responsible for health financing in China, are addressing health inequities. We describe the recent trend in health inequalities in China, and analyse government expenditure on health in the context of China's decentralization and intergovernmental model to assess whether national, provincial and sub-provincial public resource allocations and local government accountability relationships are aligned with this goal. Our analysis reveals that government expenditure on health at sub-national levels, which accounts for ∼90% of total government expenditure on health, is increasingly regressive across provinces, and across prefectures within provinces. Increasing inequity in public expenditure at sub-national levels indicates that resources and responsibilities at sub-national levels in China are not well aligned with national priorities. China's HSR would benefit from complementary measures to improve the governance and financing of public service delivery. We discuss the existing weaknesses in local governance and suggest possible approaches to better align the responsibilities and capacity of sub-national governments with national policies, standards, laws and regulations, therefore ensuring local-level implementation and enforcement. Drawing on China's institutional framework and ongoing reform pilots, we present possible approaches to: (1) consolidate key health financing responsibilities at the provincial level and strengthen the accountability of provincial governments, (2) define targets for expenditure on primary health care, outputs and outcomes for each province and (3) use independent sources to monitor and evaluate policy implementation and service delivery and to strengthen sub-national government performance management.

    My consulting company is currently engaged in negotiations with a sub-provincial government in China to provide health system restructuring services. I can't say any more than that because we have signed non-disclosure agreements. We were contacted because this particular local government is facing a dilemma, which I believe is typical of local governments during these health care reforms.

    It has a certain budget that it has been allotted that must be spent on health care construction projects. This money must be spent by a certain period of time within the next two years. But the rub is that this sub-provincial government is not guaranteed any more money after the money it received to build the new health care development is spent, which means that it will have to figure out how to fund the operation of this new massive development through local taxation, petty fees, and, they hope (and this is where we come in) foreign investment. The problem is that this province which like most of China's provinces is not on the coast, likely doesn't have the growth potential needed for a sufficiently large enough tax base. This is where the dilemma really starts. It's the classic chicken and egg scenario.

    The sub-provincial government could develop a tax base by bringing in foreign funds that would then go to actually making the health care development run the way its newness would suggest it could. But, because the local government is dependent on both taxes and petty rents (minor fees for routine administrative matters, participation fees for filling board seats that are otherwise unneeded, etc.) it is difficult to bring in foreign investment without some fundamental changes in how incentives for private businesses are aligned.

    A remedy for this situation is for Beijing's Central Government or the provincial governments that allocate funds for use in health care systems to become better aware and more responsive to the dilemmas faced by local governments that have to simultaneously raise taxes to fund reform-mandated health care projects and attract the outside investment necessary to transform those construction projects into viable long-run institutions that provide great health care to the community. Maybe this adjustment would take the form of smaller annual construction targets, or guaranteeing a larger portion of local cadre salaries, or subsidizing the salaries and training of health care workers to a greater extent.

    For foreign investors, it is important to be aware of this dynamic because it should shape the conversation that one has with local government leaders who are soliciting investment of funds. Knowing the down-the-road availability of government funds for a hospital, for example, can make a big difference on the initial decision to invest at all, but also on the decision of how much to invest, and, more importantly, what to ask for in return. In the pitches that we are currently making, the assumed policy and financial pressures of the local government party take center stage (i.e. "The goals of the reform for your province are X, and we understand the pressures involved in having to simultaneously construct a new building and fund a training program from local government coffers"). These questions are all the more pressing when one considers that the future of health care investment for non-HK, non-Taiwanese, non-Macao investors is the joint venture vehicle.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: long-ideas
    Mar 14 4:32 PM | Link | Comment!
  • The Community Health Service Center Opportunity For Investors In China's Health Care Space

    Both Phase I and Phase II of the Chinese health reforms have stressed the development of China's Community Health Service Centers, 社区卫生服务中心, (CHSCs). It is tempting to see the American Community Health Center (NYSE:CHC) model as the closest analog to the CHSC, but I believe that the better comparison can be found in the model of certain American outpatient centers that function as components of larger care organizations.

    In contrast to American community health centers, which are part of the safety net system that caters to the uninsured and the underserved and function primarily as non-governmental organizations, CHSC's are, in theory, (1) the primary and preventive care pillars of China's regionalized healthcare system and (2) are increasingly recognized by various provinces as a niche in the health care system that could greatly benefit from fully realized privatization incentives.

    The reason I qualify the first of the above two statements with "in theory" is that China's greatest reform issue continues to be its inability to shift the primary patient access point from the largest urban hospitals to lower-level access points like CHSCs. The reason I qualify the second statement with "increasingly" and "fully realized" is that the push to privatization is not the same in all areas and, more importantly, the way that CHSC privatization is being encouraged is not the same everywhere.

    I want to talk about the second of these qualification, because the first of the two problems has been extensively covered elsewhere by us and many others.

    On this second point I want to use a 2009 paper by Yan Wang of the Shandong Provincial Health Department and Karen Eggleston of the Asia Health Policy Program at Stanford. The paper, "Contracting with providers for primary care services: evidence from urban China," is a case study of how contracting with private providers for urban primary and preventive health services in Shandong Province, China, is affected by different bundles of government incentives. Two concurrent pilot program in the city of Weifang and in "City Y" where privately-held CCHCs were allowed to contract with the government for a certain package of incentives provided the authors (and one would assume, pilot architects as well) with a natural experiment to measure the outcomes of incentive bundles in two different cities.

    What the study found is that one year after the privately-held CHSCs entered into contracts with the two governments, in Weifang city there was no great difference between the performance of privately-held CHSCs and government-run CHSCs along certain performance dimensions after size and other characteristics were controlled for. Meanwhile, in City Y, privately-run CHSCs performed much worse than government-run CHSCs. The question the authors sought to answer is, What does this tell us?

    While the authors were careful to not jump to any firm conclusions, they still draw a lot of insights from the outcome of the natural experiment.

    THE EXPERIMENT

    As mentioned, the most glaring difference between Weifang and City Y is the bundle of benefits given to private CHSCs. In Weifang 33 private CHSCs entered into a contract with the government that stipulated the providers would receive the benefits of,

    1. payment for public funds for designated services (up to 10 RMB per patient),
    2. inclusion in the expanded social insurance coverage system,
    3. the ability to receive professional training from the larger hospitals in the area, and
    4. financial assistance for investment in infrastructure.

    In return the private providers had to agree to two terms:

    1. all buildings and medical equipment purchased would resort to the government at the end of the Contract period, or sooner if the CCHC pulled out of the program, and
    2. they must adhere to the policies governing service provision, quality of care and regulatory oversight.

    In City Y, privately held CHSCs participating in the program (there were around the same number of participants as in Weifang), had to adhere to all of the same conditions as the providers in Weifang, but in return the contract stipulated that the only benefit City Y would provide would be the public fund reimbursement of 10 RMB per person.

    In both cases, at the end of the program, the per resident expenditure was still much higher in government run CHSCs than in the privately-run CHSCs, a disparity best explained by the difference in the mix of services available in government-run centers, which in turn impacts the number of referrals that government-run centers can make to hospitals.

    RESULTS AND TAKEAWAYS

    The differences in the two programs (Weifang and City Y) can partly be explained by Weifang's greater ability to reform the problems that characterize the engagement (or lack thereof) between the private sector and the government. By providing training, the opportunity to participate in the social insurance system, and financial assistance in addition to per-resident payment, the Weifang City government went a long way towards addressing the opportunity cost of foregone curative care that CHSCs face when agreeing to greater government oversight. This not only brought up the level care of privately-held CHSCs, there is some evidence that it also helped recuperate the image of privately-held CHSCs in the eyes of the patient public.

    Indeed, the benefits to private players were substantial (huge! even, if I am allowed to step out of my policy-language bubble). The private players were allowed to participate in the social insurance system, a heretofore limiting step to the expansion of private care in China. Moreover, they were given access to the best government health care workers. If you're a private investor of health care entrepreneur looking for an entry point, just these two facts alone should make the CHSC an opportunity worth pursuing.

    The other really enticing aspect of CHSCs is that they are not only a rural phenomenon, in fact they are a central component of the urban health care system. Therefore, CHSCs are not just a door into the Chinese health care system generally, they are a potential entry way into the urban health care market.

    At Rubicon Strategy Group we now look at the CHSC opportunity whenever we work with clients.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 11 11:12 AM | Link | Comment!
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