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Section 5. Economics and management
https://doi.org/10.29013/ESR-21-7.8-30-33
Meparishvili Davit, Doctor of Business administration Invited Professor, Ilia State University, Tbilisi, Georgia E-mail: mefarishvilidavit@gmail.com Maridashvili Manana, Doctor of Business administration Professor, Georgian National University, Tbilisi, Georgia E-mail: manana.maridashvili@gmail.com Sanikidze Ekaterine, Doctoral student of Business administration Georgian Technical University. Tbilisi, Georgia
FINANCIAL STABILITY AND RISK ASSESSMENT OF THE HEALTHCARE SECTOR IN GEORGIA
Abstract. The paper discusses healthcare sector financial stability and risk assessment in Georgia. Healthcare sector has excess capacities and they are not effectively used: the sector profitability indicators are worsening from past years; the healthcare related state expenses are permanently increasing and are uncontrolled and the state tries to balance it with the help of introduction of the state unified tariffs. Besides, high level of vagueness related to the expected regulations and state policy creates obstacles for encouragement of investments and complicates development of long-term investment or operation strategies by medical companies.
Keywords: health care management, financial stability, risk assessment, medical companies, health expenditures.
Introduction average indicators. This has negative impact on the
Increasing of the state expenses has encouraged financial results of the sector. Health care as an im-establishment of new medical institutions - in the portant sector of the state, which includes a system years 2015-2020 the number of ambulatory institu- of political, economic, social, legal, scientific, meditions increased 1.4 times and the hospital bed capac- cal, sanitary and hygienic, anti-epidemic and cultural ity increased 1,5 times. As a result, now we are facing measures, organizes, provides and aims to protect the excess healthcare infrastructure and low effectiveness. physical and mental health of each person. In 2020 only 49% ofthe beds were occupied, thus lag- Healthcare is an integral part of international deging sharply behind the EU (77%) and CIS (83%) velopment. An effective health care system can make
a significant contribution to the development of a country's economy and industrialization [1].
Healthcare sector capacities and effectiveness
The funding for health programs is growing every year and in 2020 will exceed one billion GEL. Its largest share, more than 70%, is universal health program spending. It is true that after the launch of the universal healthcare program in Georgia, the share of out-of-pocket payments in total healthcare expenditures decreased, but in 2019, about 56% of healthcare expenditures were still paid out of pocket, which is still high compared to EU (16%) and regional (38).%). Similar diseases (e.g., diseases of the cardiovascular system) united in one nosological group) plan to increase the share of inpatient cases reimbursed by 100% and the share of primary health care and prevention expenditures by 40% in total costs [2].
It is noteworthy that despite the significant increase in health expenditures in recent years, according to available data, among European and regional countries, Georgia is still one of the last places in the share of public health expenditures in both total health expenditures (2017-38%) and GDP (20172.9%) and in the state budget (2017-10%) [3].
According to the statistics of 2020, the bed load rate in Georgia is 49%, which is significantly lower than the average rates of the European Union (77%) and the CIS (83%). It is important to improve the cost-effectiveness of health services and to introduce the DRG (diagnostic grouping) model of financing hospitals and emergency care services, to introduce new standards of hospital infrastructure and human resources, which will significantly reduce the efficiency of the sector.
At the same time, there is an abundance of doctors and a shortage of nurses in Georgia. There are only 0.6 nurses per doctor in Georgia and 2 to 5 nurses in European countries. As a result, Georgian doctors are 3-5 times less productive than their counterparts in European countries, which means that they serve fewer patients [4].
An important challenge is the spread ofCOVID-19 in Georgia and its effective management; It should be noted that medical consumables are a major component of sector expenditures and account for approximately 25% of revenues. Clearly, in such conditions, the need for additional equipment (gloves, goggles and other protective equipment) to protect against a pandemic increases the cost of medical care. Medical supplies are mostly imported and the depreciation of the gel further increases their cost. At the same time, increased utility tariffs - from 2021 electricity tariffs for companies by 65-75%, and water tariffs will increase by about 48% compared to 2018-20.
Encouragement of investments and development
During past decades significant changes have taken place and significant progress has been made in Georgia in improving the health of the population, taking into account key risk factors and reducing health risks. Since 2006, the government has carried out market-oriented reforms.
Priority was given to state funding by providing access to medical care for vulnerable (targeted) segments of the population. Direct funding of medical institutions through state programs has replaced the model of financing with insurance and medical vouchers.
The development of the hospital sector began in 2007 and almost completely upgraded the medical infrastructure, privatizing most of the medical service providers, using the public-private partnership model and in the form of direct privatization. It is noteworthy that the private investment in medical infrastructure during this period amounted to more than $500 million. Healthcare funding has been increased from GEL 80 million to GEL 380 million. The share of illegal payments has been significantly reduced from 67% to 6% and the level of corruption in the healthcare sector in general. Out-of-pocket payments were reduced from 90% to 75%.
Unlike the universal health care program, other state insurance programs were implemented by
private insurance companies, the beneficiaries of which were only the socially vulnerable, retirees, children under 5, students, children with disabilities and severely disabled persons. In 2014, all other state health insurance programs were abolished and their beneficiary citizens also joined the universal health care program. Consequently, private insurance companies no longer participated in state projects from this period [5].
It is true that according to statistics, the number of clinics increased from 2011 to 2019, however, the surplus medical infrastructure was often created without taking into account the medical needs of the population and it should be noted that the rapid increase in the number of clinics from the beginning Was the result of a health program [6].
The share of private, profit-oriented hospitals in Georgia in the total number of hospitals is 86% and is quite high compared to many developing and developed countries, the remaining 14% (mainly specialized medical institutions such as psychiatric, drug, etc.) are state-owned. Owned. It important to promote the development of other forms of ownership, in particular non-profit (non-profit) and public-private partnership medical organizations, which play an important role in developed countries [7].
The number of hospital beds exceeds the needs of the population. In 2020 only 49% of the beds were loaded, which is significantly lower than the EU (77%) and CIS (83%) averages. All this indicates the inefficient use of invested capital and other resources.
Conclusion
Increasing Financial stability and developing the effective risk assessment is crucial to controlling the growth costs of the health care sector, including increasing funding and access to funding, and strengthening the role of the planned outpatient sector. We consider it important to increase funding for medicines, which in turn will reduce the aggravation of a number of diseases at the level of inpatient treatment, thus saving a considerable amount of money spent in the universal program and improving the health of the population.
Accreditation and increase of remuneration, rational use of state investments, introduction and dissemination of innovative and high-tech products / services, projects, accurate determination of the volume of medical services that will be fully funded by the state and balanced with real opportunities, better transparency of state programs and Ensuring effective communication with the public using all means of modern mass media and the optimal solution of other topical directions, have a positive impact BS to achieve the improvement of the health system of the country, the health of the population and to raise the standard of living. The effective functioning of the Georgian healthcare sector envisages the improvement of such important issues as: improvement of the legal framework, improvement of the quality of medical services, improvement of the existing mechanisms for ensuring quality and safety in terms of infrastructure and human resources, improvement of state permits, licenses and certification system.
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