MARK D
TITLE
Transformation of Health Insurance Management –
The Case of Serbia
AUTHOR
Vesna Bjegovic, MD, PhD
ADDRESS FOR
CORRESPONDENCE
(incl. fax and email)
KEYWORDS
LEARNING OBJECTIVES
(expected outcomes)
SYNOPSIS
TEACHING METHODS
SPECIFIC
RECOMMENDATIONS
ASSESSMENT OF
STUDENTS
(type of examination)
Institute of Social Medicine, Statistics and Health Research
School of Medicine, Belgrade University
Dr Subotica 15, 11000 Belgrade
YUGOSLAVIA
Tel: +381 11 643 830; Fax: + 381 11 659 533
Email: bjegov@EUnet.yu
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Transformation of Health Insurance Management – The Case of Serbia
“When a manager leads from one crisis to another, it is time for the next manager”*
Vesna Bjegovic, MD, PhD
Institute of Social medicine, Statistics and Health Research,
School of Medicine, Belgrade University,
Belgrade, Yugoslavia
Introduction
The reform of health sector is a multidimensional phenomenon with compulsory
inclusion of the management of the health insurance system in the process of reforming. As
noticed in reform projects in other countries, “one part of the scale involves administrative
and managerial pressure for cost-containment, and the other individual citizen wanting the
best possible care at the moment utilization. At first sight, there seems to be an insoluble
dilemma between the two respective opposites”. However, as one of the WHO experts for
health system reforms vividly observed, “since citizens are the final payers of any health care
service – public or private – it is in their interest to spend a dollar, mark or ruble for health in
the most efficient and effective manner, and for real priorities” (1). This is, simultaneously,
also one of the basic management postulates, which has been neglected in health care for a
long time. Thus, each health system alteration or reform considers, obligatorily, also the
questions of respective management of a finance component – regardless of the model
applied, in order to limit the politics field, recognise the economic reality and ensure maximal
effects with minimal investments in the process of reform implementation and further
feasible health care system development (2,3).
Management of the system/health insurance institution is, as in other areas, a series of
managerial measures undertaken for planning, organising, functioning and evaluation of all
numerous and interrelated system elements by which the set objectives are brought into effect
(4). The basic aims of this management are to ensure the following functions of the modern
health insurance institution: formulating the health insurance strategy in accordance with the
health policy objectives of the respective country, participating in designing the service
package, marketing and registering the insured individuals, contract relationships with the
service providers, inspection of cost demands, continuous work quality improvement,
encouragement of all the insurance participants, partnership forming with the insured and
health service providers, development of information and communication technologies as
*
Wahba AW. “Appropriate Technology”. The Road to Happiness.2 nd Edition. Copenhagen 1985: p. 43-9.
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support in the processes of decision-making and managing, and one’s own financial sector
activities (5).
A theoretical approach to management of health insurance is neither unique for all
situations, nor is there a universal optimal management structure that is copiable, since it is
dependent upon a number of factors, largely the following (6):
-
a level of political independence of health insurance funds,
-
possibility of choice, for potential insured persons, of one or several health
insurance funds,
-
organisation of health care services (whether health care providers are employed
in health insurance companies or make contracts on providing health services with
insurance),
-
historical factors (existing administrative structure of the Ministry of Health) and
country’s political system (federal state, centralised state, political responsibility
etc.),
-
economic and social situation of the country, and
-
health policy objectives that need to be achieved by health insurance.
The basic trends in reforms of management of health care finance
system in the European Community countries, both developed and developing, have been
determined by factors related to the alteration of the state role and introduction of a controlled
market, reorganisation of the whole health care system in terms of decentralisation, recentralisation and privatisation, civil rights, their choice and participation, as well as
enhancing the role of public health (7).
General consensus has been noticed in forming the balance between the state role and
health care finance system role, so that in the countries where there used to be a prominent
state centralisation, the management structures have been decentralised towards the lower
organisational levels. In the countries where the state used to have significantly minor roles,
there has been an increased state intervention within individual subsystems of health care
system, but based on regulatory measures going beyond the traditional “command and
control” measures (8). In organising the health insurance institution, there are two basic
models influencing the power structure and management empowerment: insurance may be a
government body (a part of the Ministry of Health) or an independent body with its own legal
status (6).
Management of obligatory health insurance funds requires also specific professional
skills and may be highly expensive if additional resources are not generated (9). In contrast
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with other European countries (primarily of central-Eastern Europe), for which the
introduction of health insurance as a finance model represents a costly reform project, for our
country (as well as other former Yugoslav Republics), the former has been the most
acceptable alternative due to structural prerequisites for development of a feasible system in
the present situation of health insurance (7).
The present state of health insurance management
problems in the Republic of Serbia
The present dominant characteristics of health insurance institution management in
Serbia have been influenced by marked centralisation of power structure and empowerment
and a strong dependence in decision-making by supreme authorities often beyond the health
care sector. Such “quasi-autonomy” of health insurance and its strong political dependence
prevent from initiative and enterprising, and the management effectiveness has been
additionally decreased by strict and often out of date legal regulations.
Potential consumers have no option among insurance funds, since compulsory health
insurance has been organised by one institution with declaratively independent legal status, at
the Republic level (The Republic Company of Health Insurance), with 30 organisational units
(branch offices) situated in the district centre as existing administrative units.
According to the 1992 Law on Health Insurance, the following structures were in
charge of managing the above institution: the Parliament, the Board of Directors, the Director
and the Supervising Board (10). The Parliament consisted of mainly insured persons’
representatives, but the branch offices themselves, as organisational units, did not have a
single structure in charge of operational management with the responsibility of managerial
decision-making.
Passing the Law on Alterations and Amendments on the Law on Health Insurance in
1998 (11), the shift towards complete health insurance management centralisation, noticeable
in the 1992 Law on Health Insurance and various sublegal Acts and declarative interventions,
has gained also a complete legal support. Above all, the Parliament was dissolved by the
above Law, and it represented, at least formally, a representative body of the insured
population, though inadequate in terms of structure according to the consumer categories,
unproportional in terms of the number of the insured (one managerial body per around ten
million of potential participants) and without the possibility of local consumer representative
participants (from 30 local communities) in managerial decision-making on the resources
collected at their own territory. In this way, the terms of the supreme legislative Act at the
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Republic level – The 1990 Constitution of the Republic of Serbia - have not been realised
(Articles 40 and 68) which guarantee participation in managerial decision-making related to
compulsory social insurance of each citizen (12). Taking into account the last Law on
Alterations and Amendments of the 1998 Law on Health Insurance, except centralisation, it is
hard to determine to which organisation model, even management, our institution of health
insurance belongs.
The present structure of the management of health insurance institution in Serbia,
which is in complete dependence upon the external authority in making and putting decisions
into practice, namely The Government of the Republic of Serbia, as a centre of power and
decision- making beyond the health care sector, consists of: The Board of Directors, The
Supervising Board and the Director.
SCHEMA 1. MANAGEMENT OF HEALTH INSURANCE IN THE REPUBLIC OF SERBIA
THE SERBIAN TRADE UNIONS
THE ASSOCIATION OF
PENSIONERS
PROPOSALS
THE COOPERATIVE
ASSOCIATION OF SERBIA
THE GOVERNMENT
OF THE REPUBLIC
OF SERBIA
THE MINISTRY OF
HEALTH
THE SERBIAN CHAMBER OF
COMMERCE
THE DIRECTOR OF THE
REPUBLIC HEALTH INSURANCE
THE BOARD OF DIRECTORS
THE DIRECTOR OF
HEALTH INSURANCE
FUND
21 members
THE SUPERVISING
BOARD
7 members
PRESIDENT
VICE-PRESIDENT
PRESIDNET
30 LOCAL COMMUNITIES FUNDS
The Director and Vice-Director are directly appointed and acquited by the Serbian
Government, and the Board of Directors and the Supervising Board by previously obtained
proposals by the insured category representatives: The Serbian Trade Unions, The
Association of Pensioners, the Cooperative Association of Serbia, The Serbian Chamber of
Commerce and the Director of the Republic Company for Health Insurance. The present
Board of Directors consists of 21 members, out of whom 14 insured representatives out of the
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employee category, 2 insured pensioner representatives, 2 insured farmer representatives, 2
insured autonomous activity representatives and one company employee representative,
respectively.
The mechanisms of delegating the Managerial and Supervising Board representatives
have not been democratic and are not based on the real structure and the number of the
insured paying the contribution for health insurance. For example, 14 insured representatives
out of the employee category are proposed by the Serbian Trade Unions. If the present forms
of association of employees into the Unions are analysed, though it is the most numerous
organisation, it is not the sole employee’s interest representative in terms of the insured
category. A great number of employees are assembled into other Unions like the Trade
Branch Unions “Independence”, the Association of Independent and Autonomous Unions of
Serbia, the Independent Unions of Serbia and many others. Also it has been noticed that, in
contrast with other trends in health insurance reforms in other European Community
countries (4), the Managerial Board do not comprise health worker representatives, the
dominant profession above all – namely physicians responsible both for quality and costs of
services provided to the insured individuals and insured persons.
In such structure of the management, a good point is that there is still no enormous
administrative apparatus, since the total number of employees in the Republic Company of
Health Insurance, including all the branch offices, is 1921 (13). Although the number of
employees has been apparently high, yet relatively speaking, it has been by far smaller than
the systems having a longer tradition of health insurance with the funds individually having a
fewer number of the insured. For example, according to the data available from 1998, there
were 2621 registered insured persons per an employee in the Republic Company of Health
Insurance, which, compared to Germany, is much higher, since in its funds the number of
registered insured persons per an employee in health insurance ranges from 220 to 690 (6).
Although there have been neither studies showing the kind of motivation of the employee
staff, nor
performance skills
for specific jobs on health insurance, thanks to indirect
methods, like financial policy analysis, it may be noticed that the number of employees is still
insufficient for achieving an effective, qualitative practice for such a large number of persons
provided with health insurance services.
Management of the present health insurance has not been supported by a unique
information system in decision-making and other managerial functions, though several years
ago the Bull HN BG Company designed a major project for its introduction and architecture:
“Notional Project and Implementation Project for Management and Decision-making
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Support” within the development of information system of the Republic Company of Health
Insurance in 1994. Promotions of all functions of health insurance management would have
been significant, particularly when income fixing was in question, as well as timely cost
demand and the Company expenditure inspection. According to some calculations for
complete single control performance, only in the area of contribution payment, with the
existing personnel and without information system, there need to elapse 20 to 25 years (14).
The lack of information system facilitates non-allocated use of the Company resources,
ineffective use of the working hours of employees, and so on. With such rationales, upon a
minor revision of the major project, in 1997, there started its practical use – introduction of
the Company’s information system, which, unfortunately, failed and ended up with one of the
major financial scandals.
The lack of information system also prevents the effectiveness of other management
functions in health insurance, such as planning, accounting, financial management, external
and internal control. Thus a special problem, particularly recently, has been the lack of
relevant, reliable and timely information for effective management, and monitoring of health
insurance functioning. Such state of affairs enables numerous speculations and is contrary to
the recommended practice of developing an effective health insurance system in whose
strategy general public has insight, particularly the committed insured individuals.
Recommendations for adequate health insurance management
in the Republic of Serbia
The recommendations for changes in health insurance management relate to the
following: establishment of political independence in health insurance, decentralisation of
empowerment and responsibility structure, development of health insurance information
system, health insurance manager education and project management implementation.
Establishing health insurance political independence
For an effective health insurance management it is required to ensure an adequate
degree of autonomy related to the governing state structures, both administrative and
political. Enterprising, initiative and putting into practice regulated marketing mechanisms
for effective reaching the set objectives of health insurance have their place, regardless of the
fact whether the model chosen is with one or several different insurance funds (14,15). They
may be effectively applied only with the institution of health insurance being independent.
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Under conditions of extremely low financial resources being available for health care, it is
necessary to put into practice marketing techniques for finance resource expansion, winning
over donors and obtaining humanitarian aid. Also, the independent management techniques
in health insurance are necessary for motivating health care providers to work in a more
efficient manner and with acceptance of financial responsibility, plus motivating insured
individuals (particularly employers) to regularly pay legally prescribed contributions. The
application of managerial techniques ensures and encourages forming contract relationships
with the private sector also under conditions in which voluntary health insurance functions.
With the established political independence, the Ministry of Health should have a
regulatory role in insurance management, regardless of the existence of a particular level of
insurance company autonomy, since the system functioning of health care is important for the
whole country population. The Ministry regulatory function is reflected, apart from
establishing global health care policy, priorities and making a political scope for health
insurance company and health institution activities, also in monitoring health insurance fund,
health care service functioning and their activities, providing resources for staff education in
the health insurance institution and ensuring keeping under control total costs for health care.
Decentralisation of the empowerment and responsibility structure
Decentralisation is delegating the decision-making process towards the lower levels in
organisational hierarchy. This classical formal definition of decentralisation, according to
several authors, relates to the three most frequently used decentralisation models:
deconcentration, delegation and devolution, and more recently inclusion of the fourth model
referring to the function transfer from the Government to non-Government organisations (8).
In our health insurance practice, though implementaion of decentralisation is hardly possible
in the social system maximally centralised, it means delegating the management
empowerment to branch offices as lower organisational units, with regulation of their legal
status. Thus, direct information on consumers are ensured, as well as more effective control
of quality and costs of health care services provided, and, finally, impetuses for more
effective activities of the insurance company itself.
Having in mind that, presently, there are 30 branch offices, in the decentralisation
scope, in order to reduce costs, a potentially bulky administrative apparatus, it is necessary to
consider the introduction of bigger organisational units as managerial power centres. In
literature one can find different integration models, such as: according to territory principle,
consumer categories, risk consumer profiles (6,16). The application of evidence based health
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care is indispensable in regarding integration principles. The development of internal
organisation of health insurance, in integration, must take into account the insured and their
family member requirements, regional circumstances, existing political structure and
infrastructure, necessities for cost effectiveness and withholding, as well as motivation and
qualifications of the health insurance staff itself. This is achieved by the application of
operation research that may provide optimal models for adequate integrations.
In the Republic of Serbia, a long time since, there had been conducted projects in
cooperation with the WHO giving evidence for territorial principle advances in integration
(17). Based on the indicators of the health service development at a certain area, economic
possibilities, the population number, geographic relations, the number and structure of the
insured and the health state of the population there has been proposed the number between 7
and 4 territorial units, for the territory of the Middle Serbia. However, having in mind
dramatic changes in economic-political situation since that period till today, as well as
demographic changes and the ones in the population health, it would be necessary to make a
similar estimation of the justification of the prospective integrations and creating an adequate
number of risk communities, according to the territory principle.
The decentralisation itself, starting from the essence of health insurance, must take
place through the process of participation management, without marked bureaucratisation and
with the aid of democracy principles (18). This type of management implies responsibility of
several participant groups in health insurance for the processes of planning, organising,
coordination, management and control of health insurance functioning. The most numerous
participants are the insured themselves and the priority goes to the introduction of adequate
mechanisms providing their participation in the management processes, which are now totally
lacking, though the Constitution of Serbia and Yugoslavia gives legislative support for the
insured desicion-making. It is required to ensure also the participation of health workers in
management, above all physicians on whom health service provision is dominantly
dependent.
The development of health insurance information system
Health insurance would have to be modernised by introducing information systems
which would timely monitor health service utilization, changes in population health and
control of all the financial input and output forms. One of the crucial factors for
implementation of reform projects in health insurance and financial feasibility is the
development and application of a unique computerised information system for management
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support. Computer technology and the development of global communication networks, like
Internet, lead to other effects to be dealt with also in our country in near future, and are
related to, above all else, the accessibility of adequate and timely information relevant for the
insured making use of the health insurance services. Numerous insurance funds in other
countries already have their web presentations on the Internet, by which they inform potential
consumers on their policies, including contribution inspection, the option of the
physician/hospital, complaint opportunity. The web presentation health insurance institution
in Serbia is required, which would provide such data and be consumer-accessible. A 1999
study showed that the two thirds of the Internet users wanted, via computer network, to take
part in management of insurance fund to which they were registered (19).
Though there have been numerous commercial companies providing a managerial
information system, one should be careful in its introduction, since it is not, most frequently,
well adapted to local circumstances.
Health insurance manager education
When considering health insurance manager education, a number of countries have
been wrong about trying to develop health insurance without managers having necessary,
specific skills (effective contribution collection, the process of identifying health care rights,
provision of the service availability for the insured and monitoring health care quality) (6).
Personnel education for health insurance management may last for several years, but also,
contrary to the present practice in the Republic of Serbia, it has to be a must, the same as the
ongoing medical education (20).
Project management application
Bearing in mind an extreme economic crisis in the country resulting in rapid basic
resource cuts in financing health care, as well as traditional rigidity in change introduction,
the initial reform project requires caution in decentralisation introduction, that is the
application of project management for transition from a totally centralised to decentralised
management structure. Project management is a specific form of creating and maintaining the
environment enabling swift shift from one to the other policy phase, within the process of
achieving the set project objectives as a series of activities with particular means and timely
scope for completion (21). The advantage of project management would allow providing
operative responsibility to branch offices in a decentralised health insurance fund structure.
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The latter would have an impetus and support in a more effective use of local resources and
achieving balance between local and global interests when health care is taken into account.
In the established changes, tested in pilot projects, related to the decentralised
structure of health insurance management, a certain low centralisation level is maintained
when coordinative and regulatory function in health insurance processes are taken into
account. This is why, due to scanty financial means, for the present situation it is nevertheless
more adequate to accept a model based on one, rather than several insurance funds. In such a
model, apart from other partners in the health care system, health insurance management
should ensure the justification and total coverage, but not for all the possible services which
modern medicine may offer (22).
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