Financial autonomy pushes public hospitals into payments crisis

The HCMC Oncology Hospital, which has managed its budget allocations independently for nine years, is VND91 billion ($3.77 million) in the red.

The hospital said its revenue had significantly dropped during the pandemic and since early this year; and it has not been able to pay any extra allowances for staff or cover expenses for repairing and maintaining medical equipment.

Last year, the hospital, the leading healthcare facility for cancer treatment in southern Vietnam, had no financial resources to give employees their Lunar New Year bonus. Eventually, it had to ask for financial support from the city and several other sources to give each staff, from the hospital’s director to the nurse’s assistant, a sum of VND7.5 million each.

Doctors and nurses get a cancer patient ready for radiation therapy at the HCMC Oncology Hospital 2 in Thu Duc City, HCMC, May 13, 2022. Photo by VnExpress/Quynh Tran

So far this year, the hospital has used up funds it had saved up in previous years to pay salary, which is VND8.8 million per person per month on average.

HCMC Oncology Hospital is not alone in its financial plight.

According to the municipal Department of Health, in the first half this year, hospitals in the city saw revenues drop by 20% against the same period in 2020 to VND12.4 trillion. The figures for 2021 were not used for comparison as Vietnam was hit by the worst Covid-19 wave that year.

Vietnam’s health sector has gradually switched to giving public hospitals more budget freedom to invest in advanced medical technology and equipment in the past 20 years.

By 2018, all public hospitals across the country had deployed financial autonomy at different levels.

The government last year issued Decree 60 to categorize the fiscal autonomy of public administrative units into four groups: group 1 would have comprehensive autonomy; group 2 would have autonomy in recurrent expenditures; group 3 would have partial autonomy in recurrent expenditures; and group 4 would have the state guaranteeing 100% of recurrent expenditure, which is the use of state budget allocated to one unit.

Except for the Bach Mai and K hospitals in Hanoi, all public hospitals are now in groups 2 and 3, which means the state will cover the cost of buying equipment, and bear other capital expenditures.

After suffering sustained losses, the Bach Mai and K hospitals had in August asked for permission to move from group 1 to group 2.

More autonomy, more losses

The financial autonomy policy was established to let hospitals become more proactive in using financial resources, have the right to regulate revenue and expenditure effectively, increase capital mobilization and actively expand investments in facilities and equipment.

In HCMC, the mechanism has, over the past 20 years, allowed hospitals to equip themselves with more modern facilities and advanced equipment to improve their services. For this, they have tapped different financial sources.

Currently, the municipal budget allocated to the health sector is just 2% of the city’s total recurrent expenditure, compared to 9% 2015, said health department deputy director Nguyen Hoai Nam.

However, hospitals that have complete autonomy in recurrent expenditure are having difficulty balancing hospital income and expenditures, the latter including salaries to pay their staff. Their autonomy is limited to how they use the recurrent expenditure and the government still decides hospital fees as well as salaries for healthcare workers.

These establishments complain that their fees are not high enough to cover their expenditure on various things including maintaining equipment and training staff.

The salary for health workers, meanwhile, is too low, prompting many to quit.

The Health Ministry said in mid-September that in the past 18 months, 9,680 medical workers had quit their jobs nationwide.

Tran Van Khanh, director of Le Van Thinh Hospital in Thu Duc City, said with the current hospital fees, public hospitals will not have the resources to upgrade their infrastructure and equipment or train their staff and attract talent.

A nurses supply medicine to cancer patients at the K Hospital in Hanoi, June 2022. Photo by VnExpress/Quang Hung

As one of the two hospitals that have comprehensive autonomy, K Hospital, the leading cancer treatment facility in the north, now reports a lack of devices for radiation therapy.

“For two years now, the hospital has not had any money left to buy new equipment; and with no regulation on taking loans or raising funds from different sources, the hospital cannot do anything,” said hospital director Le Van Quang.

Today, patients that need radiation therapy have to wait much longer to get; while existing devices must operate from 5 a.m. to 10 p.m. every day.

The other establishment with comprehensive autonomy, the Bach Mai Hospital also reports a lack of funds to buy new machinery despite “significant shortages.”

It had pushed forward 27 projects to do business in collaboration with private firms, but none have been approved. In fact, 11 are even under investigation.

Duong Duc Hung, chairman of Bach Mai Hospital’s Management Board, did not mince words: “Autonomy is just rhetoric. In fact, the hospital cannot decide anything for itself.”