Penalizing patients and rewarding providers: user charges and health care utilization in Vietnam

The introduction of a comprehensive system of user charges in 1995 provided public health facilities in Vietnam, especially hospitals, with a growing source of revenue. By 1998 revenues from user charges accounted for 30% of public hospital revenues. Increasingly, provider incomes have relied on fee revenues and provision-based bonuses, the effect of which is that a poorly regulated fee-for-service system has replaced a salary system based upon a centrally determined global budget. This paper examines the potential influence of providers' on the use of publicly provided health services. Using facility-based data over the period 1996-98, the relative contribution of treatment intensity is compared and contrasted under the two sources of hospital revenues from patients, namely a user charge system and a third party payment system based on fee-for-services. The primary focus of the comparison is on the treatment intensity for all hospital contacts, hospital admissions and the length of hospital stays, decisions normally taken by the providers and over which patients have little or no influence. The results indicate that growth in patient revenues was associated with large increases in intensity. The growth in intensity was more pronounced in the case of inpatient contacts. Moreover, both the admission rate and the length of hospital stay were far higher for better off individuals than for the poor, and greater for the insured than the uninsured. The increase in the intensity of hospital care for both health insurance enrollees and the uninsured can be seen as, among other things, an attempt on the part of providers to increase revenue from health insurance premiums and user charges in the face of a shrinking share of public resources allocated to hospitals, and low wages and salaries.