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A Perspective on the Philippine Health Human Resource Crisis A. Kraft, J. Capuno, O. Solon April 21, 2006.

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Presentation on theme: "A Perspective on the Philippine Health Human Resource Crisis A. Kraft, J. Capuno, O. Solon April 21, 2006."— Presentation transcript:

1 A Perspective on the Philippine Health Human Resource Crisis A. Kraft, J. Capuno, O. Solon April 21, 2006

2 Clarifying Measures of Unmet HHR Needs Total needs = HHR requirements derived from medical services utilized if services were free Total needs = HHR requirements derived from medical services utilized if services were free Needs met by the private sector = HHR services utilized at prevailing market prices (i.e. professional fees, salaries) Needs met by the private sector = HHR services utilized at prevailing market prices (i.e. professional fees, salaries) Needs met by the public sector = HHR services delivered (vs. available) under public budgets Needs met by the public sector = HHR services delivered (vs. available) under public budgets Unmet HHR needs = total less HHR services provided by the private and public sectors Unmet HHR needs = total less HHR services provided by the private and public sectors

3 Unmet Needs and the HHR Crisis If consumer willingness and abilities to pay and if government budgets are limited, unmet needs are likely to exist, out-migration not withstanding. If consumer willingness and abilities to pay and if government budgets are limited, unmet needs are likely to exist, out-migration not withstanding. Removing unmet needs entirely will mean effectively setting prices to zero via demand or supply side subsidies Removing unmet needs entirely will mean effectively setting prices to zero via demand or supply side subsidies That we have unmet needs does not necessarily imply that we have an HHR crisis That we have unmet needs does not necessarily imply that we have an HHR crisis But an HHR crisis will definitely exacerbate unmet needs But an HHR crisis will definitely exacerbate unmet needs

4 A Starting Point Filipino doctors, nurses and other medical professionals will stop leaving the Philippines when: Filipino doctors, nurses and other medical professionals will stop leaving the Philippines when: Expected net compensation abroad = Philippine net compensation package = Philippine net compensation package + “Love for the Philippines” + “Love for the Philippines”

5 Possible Sources of the HHR Crisis 1. Increased net compensation abroad  increased global demand 2. Decreased net domestic compensation  reduced effective domestic demand owing to economic difficulties 3. Decreased motivation to remain in the Philippines owing to political, peace and order situation, etc. 4. All of the above

6 The Source Matters Analysis of extent, impacts, self- adjustment, and possible public policy interventions will vary depending on primary source of the Philippine HHR crisis –Change in global demand –Change in domestic capacity to pay HHR –Change in love of country –All of the above

7 Source 1: An HHR Crisis Triggered by Increased Global Demand Increased global demand  increase net compensation abroad  out-migration Increased global demand  increase net compensation abroad  out-migration HHR out-migration  domestic HHR scarcity  upward pressure on local HHR compensation (subject to resource constraints) HHR out-migration  domestic HHR scarcity  upward pressure on local HHR compensation (subject to resource constraints) If increases in local compensation cannot match global offers  out-migration continues If increases in local compensation cannot match global offers  out-migration continues Higher domestic prices and continuing out- migration  increased domestic unmet needs Higher domestic prices and continuing out- migration  increased domestic unmet needs

8 Source 2: An HHR Crisis Triggered by Reduced Domestic Demand Reduced income and employment, high inflation and fiscal deficits, etc.  reduced demand for health care  reduced demand for HHR services Reduced income and employment, high inflation and fiscal deficits, etc.  reduced demand for health care  reduced demand for HHR services Reduced local HHR compensation makes jobs abroad more attractive  out-migration Reduced local HHR compensation makes jobs abroad more attractive  out-migration Out-migration  increases unmet needs Out-migration  increases unmet needs Reducing out-migration will require increasing local compensation which is restricted by the very economic condition that prompted reduced demand for health care services Reducing out-migration will require increasing local compensation which is restricted by the very economic condition that prompted reduced demand for health care services

9 Source 3: An HHR Crisis Triggered by a Loss of Hope for the Future as a Filipino Political crisis, peace and order, etc.  out- migration (more likely permanent) Political crisis, peace and order, etc.  out- migration (more likely permanent) HHR out-migration  domestic HHR scarcity  upward pressure on local HHR compensation HHR out-migration  domestic HHR scarcity  upward pressure on local HHR compensation If increases in local wages cannot compensate for the loss of hope for the future  out- migration continues If increases in local wages cannot compensate for the loss of hope for the future  out- migration continues Higher domestic prices and continuing out- migration  increased domestic unmet needs Higher domestic prices and continuing out- migration  increased domestic unmet needs

10 Source 4: All of the Above (Possibly the Philippine HHR Crisis) Global versus local compensation differentials are much larger Global versus local compensation differentials are much larger Resources available to support adjustments are much limited Resources available to support adjustments are much limited Greatest increase in unmet needs Greatest increase in unmet needs Health care (and HHR services) will be limited to profitable market centers and vote-rich areas leaving numbers of un-served areas Health care (and HHR services) will be limited to profitable market centers and vote-rich areas leaving numbers of un-served areas Wide variations in quality of care will prevail within the country Wide variations in quality of care will prevail within the country By this definition, the Philippine health care system may have already collapsed By this definition, the Philippine health care system may have already collapsed

11 Long-term Adjustments and Impacts Increasing compensation differentials will encourage entry into high-demand HHR professions Increasing compensation differentials will encourage entry into high-demand HHR professions Local demand may still be served by the HHR waiting or transit pool, but with high turnover rates Local demand may still be served by the HHR waiting or transit pool, but with high turnover rates Effective screening by global HHR employers will reduce the average quality of remaining HHR Effective screening by global HHR employers will reduce the average quality of remaining HHR Quality based hiring may reduce domestic capacity to train quality graduates Quality based hiring may reduce domestic capacity to train quality graduates

12 Possible Forms of Interventions (1) Subsidize local HHR compensation Cost of filling the global versus domestic compensation differential is prohibitiveCost of filling the global versus domestic compensation differential is prohibitive There may be more productive alternative uses of public subsidies (e.g. NHIP premium subsidies)There may be more productive alternative uses of public subsidies (e.g. NHIP premium subsidies) Limited resources to subsidize compensation should be well targetedLimited resources to subsidize compensation should be well targeted Targeted subsidies for compensation are better than scholarshipsTargeted subsidies for compensation are better than scholarships Subsidies might be counterproductive if not linked to quality of HHR performanceSubsidies might be counterproductive if not linked to quality of HHR performance

13 Possible Forms of Interventions (2) Tax global HHR returns Only exit related activities can be effectively taxed (travel, passport, work permits)Only exit related activities can be effectively taxed (travel, passport, work permits) Only taxes on the supply-side can be workable (license, placement, certification)Only taxes on the supply-side can be workable (license, placement, certification) Bilateral agreements do not necessarily bind private transactions (if they do, its effectiveness will be compromised by grey HHR markets)Bilateral agreements do not necessarily bind private transactions (if they do, its effectiveness will be compromised by grey HHR markets) Remove subsidies or impose taxes on local HHR training (e.g. tuition tax) and grant rebates to those who stayRemove subsidies or impose taxes on local HHR training (e.g. tuition tax) and grant rebates to those who stay

14 Possible Forms of Interventions (3) Impose quantity restrictions There are legal, ethical, and enforcement obstacles to banning out-migration of HHRThere are legal, ethical, and enforcement obstacles to banning out-migration of HHR Domestic service requirements for graduates require effective and incorruptible enforcement mechanismDomestic service requirements for graduates require effective and incorruptible enforcement mechanism Domestic service requirements might have to be introduced in the context of basic trainingDomestic service requirements might have to be introduced in the context of basic training

15 Possible Forms of Interventions (4) Increase effective demand for local HHR Expand NHIP coverage and improve benefits and payment systemsExpand NHIP coverage and improve benefits and payment systems In addition to clinical capacities, critical investments in medical tourism include basic infrastructure (e.g. transport, communications, peace and order)In addition to clinical capacities, critical investments in medical tourism include basic infrastructure (e.g. transport, communications, peace and order)

16 Possible Forms of Interventions (5) Facilitate system self-adjustments Facilitate sorting and matching through better informationFacilitate sorting and matching through better information Remove restrictions on HHR substitution (MD vs. nurse vs. midwife)Remove restrictions on HHR substitution (MD vs. nurse vs. midwife) Manpower pooling with formation of ILHZsManpower pooling with formation of ILHZs Promote consumer-side adjustments (e.g. prevention, better health practices)Promote consumer-side adjustments (e.g. prevention, better health practices) Secure availability of trainers (subsidize teachers not students)Secure availability of trainers (subsidize teachers not students)

17 Considerations in Choosing Interventions Some interventions costlier to implement than others Some interventions costlier to implement than others Non-consideration of motives and incentives may result in adverse or unintended effects Non-consideration of motives and incentives may result in adverse or unintended effects Interventions not limited to health human resource sector, i.e., demand side interventions Interventions not limited to health human resource sector, i.e., demand side interventions Interventions that also achieve Fourmula One reforms may be prioritized Interventions that also achieve Fourmula One reforms may be prioritized

18 Concluding Remarks (1) The Philippine HHR crisis is a combination of increasing global demand, declining domestic demand, and less love for the Philippines The Philippine HHR crisis is a combination of increasing global demand, declining domestic demand, and less love for the Philippines This combination makes the impact of HHR out-migration on unmet needs more serious This combination makes the impact of HHR out-migration on unmet needs more serious This combination also severely restricts the range and effectiveness of policy interventions This combination also severely restricts the range and effectiveness of policy interventions

19 Concluding Remarks (2) Carefully choose doable and incentive- compatible policy interventions: Carefully choose doable and incentive- compatible policy interventions: –Targeted and performance-linked compensation subsidies –Tax activities directly related to out-migration (travel, passport, work permits, placement, certification) –Introduce domestic service requirements in the context of basic training –Expand NHIP coverage and improve benefits and payment systems to increase effective demand –Secure availability of trainers (subsidize teachers not students)

20 Thank you very much for your attention.


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