People and businesses will start making monthly contributions to the national health scheme (Gesy) fund from March next year with the aim that the first stage of the scheme – free primary healthcare – is introduced from July 2019. Questions however persist whether the annual budget for the scheme, about a billion euro, will be enough to cover all the expenses or there will be a deficit.
The Cyprus Medical Association has repeatedly warned that the budget is too small, explaining that the EU average for health services is between eight and 10 per cent of GDP, whereas the Cyprus government has allocated only five per cent of GDP for Gesy. How would Cyprus have a viable health scheme when the government plans to spend half the percentage of GDP other EU member states were spending, asks the Association, without receiving an answer.
The budget is low because the government did not want to frighten off the individuals and businesses that will be making a monthly contribution to Gesy, as they do for the Social Insurance Fund. From March 2019, employees will pay 1.70 per cent of their monthly wage and their employer 1.85 per cent and these will increase in March 2020 to 2.65 and 2.90 per cent respectively; during the second stage, the state would contribute an additional 4.70 per cent of the wages and pensions of all beneficiaries.
Major concerns about the level of the contributions have been expressed by the Employers and Industrialists Federation (Oeb), which has repeatedly argued that these contributions would be a burden on businesses and they could threaten their viability. This may be a warning to government not to entertain the idea of increasing contributions – the current ones are enshrined in law – in the future amid speculation that the allocated budget would be short by about €300 million from the word go.
Given the concerns of businesses, the government opted for a relatively small budget to pre-empt strong opposition that could have thwarted the implementation of the scheme. The small budget means that the Health Insurance Organisation (HIO), which will manage Gesy, has limited funds that it will have to make go a long way. As a result, it has set ceilings on its spending on each aspect of Gesy, including keeping the fees of private doctors and payments to private hospitals as low as possible.
The economic model of the HIO involves setting the fixed yearly amount of €157m to cover all the examinations by all doctors, irrespective of specialty. For each examination a doctor will receive a ‘unit’ and the value of the unit will depend on the total number of examinations carried out in a month by all doctors belonging to Gesy. In a month like August, when many patients and doctors are on holiday and there are fewer visits to doctors, the unit could be worth €20, but in January when everyone is around and there are more illnesses the value of the unit could be €10. There is no minimum per visit so, theoretically, doctors could receive even less than €10, which is peanuts compared to what a doctor currently charges, between €40 and €50 per examination.
This is why negotiations over the Medical Association are currently deadlocked, private doctors threatening not to join Gesy under the proposed conditions and the HIO insisting that it cannot increase its budget for examinations. The stance of the doctors has sparked hostile comments in the press and on social media, and they have been accused of ‘profiteering’ and ‘tax evasion’. There have even been wild allegations claiming that some doctors would earn €300,000 per year as public opinion perceives greedy, tax evading doctors blocking free healthcare for people.
“We need to be told what we will be earning,” says Dr Theodoros Potamitis, a consultant ophthalmologist who runs the Pantheo Eye Centre in Limassol. “They have to define what we will be earning. I will agree to be paid €15 per visit as long as I know this will not become €10 because the value of the unit has gone down. How are we supposed to budget for the year when we will not know what we will be paid per visit?”
As Dr Potamitis points out, a doctor has monthly expenses, which need to be covered. A doctor pays rent for a surgery, employs a nurse and a receptionist, whose wages would have to be paid every month and also has monthly bills to pay.
“How could I budget for my monthly expenses when I do not know what I will be receiving every month?” asks Potamitis before highlighting the unfairness of the criticism doctors have faced. “People claim we want too much money, but the reality is we want to know how much money we will be earning. How can we say it’s too much or too little?” Were there a lot of professionals who would agree to be paid different rates for the same work every month? Why were doctors expected to agree to this arrangement, he asked.
“I do not know if my surgery would be viable under Gesy, and the casual response of the HIO is ‘join it and if you are not viable you can leave.’ What would I tell my patients? Does the organisation not realise this would be bad for patients?”
The small budget and the conditions set by the HIO will also affect the quality of healthcare provided to patients “because there are no criteria and there is no quality control.” The HIO set the rates without setting any minimum quality standards, Dr Potamitis said. “How do you buy anything without clearly specifying what quality you want?”
He likened the HIO’s shoddiness to the state ordering 1,000 cars for its needs without setting any quality standards, something that never happens. He explained: “But the HIO has not even set a minimum protocol for operations. So if they pay me too small a fee for a cataract operation, how would the money cover the purchase of a high-quality lens? The eye surgeon will be forced to use cheap lenses made in China instead of the high quality lenses made in Germany.
“This is what would happen in the absence of any quality control or minimum protocol, with the state concerned only with paying the lowest possible price for medical services.” Dr Potamitis feels that healthcare standards are certain to fall as a result of the HIO’s insistence on keeping costs as low as possible and showing complete disregard for quality control.
Similar problems are reported by private hospitals, which have also experienced the HIO’s policy of getting all medical services on the cheap. The budget for operations and medical procedures is €100 million per year and is also based on units, although these will be weighted, based on the difficulty of the operation. Again, the rates will not be fixed but vary in accordance to how many medical procedures were undertaken in a month. The danger, of course, is that some medical procedures would prove uneconomical for private hospitals and clinics, which have big overheads.
Dr Marinos Soteriou, a cardiothoracic surgeon who set up the pioneering American Heart Institute in 2001 and the state of the art private hospital, American Medical Center, 10 years later, knows a few things about the Cyprus healthcare sector and believes the Gesy model is doomed to failure.
“I am very concerned that the preparation for Gesy is very superficial, incomplete and biased. There has been an organised campaign in the media to blame and stigmatise doctors, and push them to accept Gesy. Unfortunately it is now more than obvious that Gesy is poorly planned, poorly funded and will be badly executed with far reaching financial, accessibility and quality implications,” he said.
When doctors challenged the HIO about its practices, the latter invariably cited the Mercer Study, that provided the blueprint for Gesy, but Dr Soteriou said it refused to release the full study for review by doctors. “There is only a summary on the website of the ministry of health. The assumptions and other details of the study are still treated as a state secret and are not released to be reviewed and scrutinised by the medical world or other interested parties. It is highly likely that the study contains a lot of information and assumptions that do not correlate with what is about to be implemented through Gesy.”
For example, the rate Gesy will pay for an electrocardiogram (ECG) is €7.50. “A manicurist receives €20 to do someone’s nails,” said Dr Soteriou, who believed it was unreasonable to expect a doctor to be paid less than a manicurist. “We have to bear in mind the responsibility associated with the reading of the ECG and the risk of paying malpractice costs if the doctor misses something on the ECG. There was a relevant case recently in which a private hospital and a doctor were ordered by court to pay €750,000 in damages.”
The unit system will also apply to operations. Even with the HIO’s contention that there will only be a 15 per cent variation in the value of the unit of payment, this will have a significant effect on what is paid for operations. A 15 per cent fall in the unit value for an operation that costs €10,000 is a reduction of €1,500, which could be the hospital’s profits. And without profits private hospitals cannot invest in modern equipment.
“We have invested in equipment that carries out mammography for detection of breast cancer, but at the rates Gesy will pay it will be written off in 30 years,” Dr Soteriou pointed out. “How would we invest in the latest medical technology, if we need 30 years to write it off?”
All this is an indication of how Gesy is heavily weighted in favour of the state hospitals, which will continue to be inefficient and uncompetitive because they will be subsidised by the state for between three to five years after the introduction of Gesy or even longer.
“Public hospitals may be paid the same rates as private hospitals, but if there is a big financial hole at the end of the year the state will cover it. What incentive would the state hospitals have to keep costs down and improve quality? It is the same anachronistic system that always favours state organisations and state employees,” said Dr Soteriou.
“The unfair competition will continue because the public employees at state hospitals will receive their pay rises every year, pushing up the costs in private hospitals as well, because we will have to follow suit in order to keep our staff. But we will not receive a state subsidy at the end of the year to cover any deficits caused as result.”
State support is not the only unfair advantage enjoyed by state hospitals, which do not have to maintain minimum standards and are not subject to inspections by the health ministry as all private hospitals are. Dr Soteriou explains that private hospitals are even subject to town planning laws, whereas state hospitals were not. “A private hospital must have a parking space for every 30 square metres under its roof, but a state hospital is not subject to such requirements. This increases our costs substantially,” he said.
There was even a special law for private hospitals that dictates minimum requirements in order to safely practise medicine. “As regards the intensive care unit, we are obliged to have one bed in every 12 square metres in order to reduce the risk for infections and facilitate the care to the patient,” he said. “The state hospital can have several patients in the same area. All these things, plus many others add to our costs.”
The state sets minimum standards for private healthcare providers in order to safeguard the safety of the patients, but the state-run hospitals are not required to meet these standards. “This, by default, results in major quality differences in the healthcare provided by the two sectors, not to mention the blatant double standards practised by the authorities,” said Dr Soteriou.
Neither Dr Potamitis nor Dr Soteriou have much faith in Gesy. Dr Potamitis believes that under the rules formulated by the HIO there is a danger medical quality standards would decline while the reward system will discourage good young doctors from coming to work in Cyprus.
Dr Soteriou is even more pessimistic. While acknowledging that the healthcare system is in need of reform, he said the “more details of the proposed Gesy I learn about the more I realise that it is doomed to create big problems with serious consequences.”