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Cost of healthcare to go up in Bhutan

Jan 28, 2010

Bhutan is likely to witness sharp increase in healthcare costs, says a McKinsey finding. The country’s health minister has urged for more efficiency, stressing on cutting costs by about 15% so as to make it possible for government to continue providing free healthcare services.

Bhutan: McKinsey’s diagnostic finding on Bhutan’s healthcare system projected a 70% increase in healthcare cost in the next five years if the country’s health system standards remained the same.


McKinsey explained that global experiences showed improving health services at this stage was more costly because of changing patterns of diseases.

“Bhutan is at the cusp where further improvement in health outcomes requires higher cost,” stated the findings.

Such findings have caused health ministry officials to consider financing options to sustain its healthcare system, lauded for the state bearing almost 70% of the health expenses. Besides, the Constitution states that “basic” health services be provided “free.”

Health minister, lyonpo Zanglay Dukpa said people should be made aware of healthcare costs.

“With McKinsey’s expertise, we are looking at ways to make our health system more efficient and cut costs by about 15% so as to continue providing free healthcare services,” he said.

World Health Organisation (WHO) officials pointed out that Bhutan spent 4% of its gross domestic product (GDP) on health.

About 50% of the ministry’s recurrent capital was spent on salary and allowances and about 29% on medical supplies and office stationeries. Referrals abroad cost about 7.1% of the total health expenses every year.

Tax, donor aids, Bhutan health trust fund and foreign funded hospitals, like IMTART, continue to be the country’s main sources for health revenues.

In a presentation on Bhutan’s current health financing approach in a global context, World Bank’s Dr George Schieber said that non-communicable diseases (NCD), which are expensive to treat, dominate the health care system in Bhutan. “And future aging will affect total health expenditures in Bhutan and most south Asian countries,” he said.

Dr Schieber said Bhutan had fared better in reducing infant mortality rates and increasing life expectancy compared with other countries within the region.

“But given its income and expenses spent on health, its performance is below average,” he added.

Provisions for private healthcare systems and outsourcing non-clinical services like housekeeping and security were some of the options McKinsey proposed. “I usually recommend the government to increase health care tax if funding is an issue,” WHO consultant Dr Soonman Kwon said.

Public health director, Dr Ugen Dophu suggested the need to strengthen public health department’s role to cut costs.

“All the funds DPH gets comes from donors and not the government,” he said. “To save costs on treatment, which is expensive, we should focus on prevention.”

A few experts insisted that Bhutan should focus on improving what it has been doing well in so far rather than starting a new system all together. “Please don’t try to fix something that’s not even broken,” Dr Soonman said.

About 60 participants from world health organisation (WHO), World Bank, McKinsey and Bhutanese health officials have gathered at Paro since yesterday to discuss health-financing options for Bhutan.

In the next two days, participants will discuss sharing health costs, feasibility of different private insurance schemes and government subsidy for people unable to finance their own healthcare services.

Source : Kuensel
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