At first glance Lebanon’s health sector reveals a multitude of apparent contradictions and anomalies. Generally speaking, the health sector is a monumental achievement, and boasts some of the highest-caliber medical apparatus in the region in terms of both facilities and human resources.
The sector constitutes a significant contribution to the economy, but, in the same breath, public health puts great strain on the country’s finances.
The sector seems to be falling into the regional trap of creating high technology hospitals that are only accessible to a small minority of wealthy citizens. In a sector dominated by private care, the task of trying to expand the coverage and remain profitable is proving to be a challenge, if not impossible.
The National Social Security Fund (NSSF) is a case in point, as its spending deficit continues to place a great burden on the sector. If underlying issues of institutional rot in the NSSF are addressed it would almost certainly result in a promising and profitable health sector in Lebanon.
Two tier treatment
The importance of the health sector is reflected in its turnover of $700 million in 2008 and the 25,000 employees, including 6,000 doctors, it retained in 2009 according to the Syndicate of Private
Hospitals in Lebanon.
“In the opinion of the syndicate of hospitals this figure is low and is less than 3 percent of GNP [gross national product],” said Sleiman Haroun, president of the syndicate. “However, it does not include a lot of revenue from outside hospitals such as pharmacies.”
The medical profession is unlike other businesses in one principle aspect: no matter how important the economics of the profession are, all those involved in the sector have moral obligations that are not so obvious or pertinent in other industries.
“We do not want two tiers of healthcare; one for the rich and one for the poor,” Haroun said. “You can have this in restaurants, but not in healthcare.”
In Lebanon, as in many countries that are dominated by private health care, the balance between a profitable and an ethical health system is a delicate and continuous process. This balance becomes increasingly difficult as more complex and expensive technologies are introduced into the system, allowing people to live longer and healthier.
“The costs of health care are rising and this is happening everywhere in the world. We have to take care of our elderly and the financing and resources are rare,” said Roula Zahar, financial director of Mount Lebanon Hospital.
In a straight comparison of private health care turnover and GNP, Lebanon looks to be in a position to deal with this situation, since the share of total GNP the sector constitutes is not overly substantial.
However, the bigger picture of health care in society is less positive.
According to the latest available figures (2008) produced by the World Bank, Lebanon is among the countries with the highest public health expenditure in the Middle East. Government spending on healthcare equals 12 percent of total spending; only Djibouti spends more.
This is higher than the global average of government healthcare spending (some 11 percent) and the Middle East and North Africa, where spending averages between 2.4 and 6 percent.
Further to this, the World Bank also provides figures on out-of-pocket expenditure, which includes expenses such as pharmaceuticals, optional costs and in-kind payments, which make up 75 percent of private health expenditure in Lebanon (the global average is 43 percent).
The United Nations Development Program shows that, taking into account purchasing power parity theory, per capita healthcare spending in Lebanon— at just over $800 — is surpassed only by Bahrain ($870) in terms of regional spending.
Geographic distribution of hospitals in Lebanon
Ministry of Health’s quality accreditation of hospitals
Total number of hospitals
Covering the people
In Lebanon people are covered by six different public health insurance entities: The NSSF, which covers some 1,350,000 Lebanese; the Ministry of Public Health (1,500,000); the Cooperative of Public Servants (195,000); the Army (350,000); miscellaneous entities such as municipalities and judges (75,000); and private health care insurers (450,000).
Despite the different entities, “We believe that there are still issues where people who are very poor are not covered,” said Zahar. “We have a problem of coverage.”
At the same time, a system with so many insuring entities has created redundancy in the sector.
“As a doctor I am covered by the [American University Hospital] but as a worker I am also covered by the NSSF,” said Samir Arnaout, the representative of the Lebanese Order of Physicians and associate professor of medicine at the American University of Beirut (AUB).
“If I am admitted [to hospital] both will cover me. On top of this 10 percent will be covered by the Lebanese Order of Physicians. So, like myself, some Lebanese individuals and their families are covered as many as three times or even more, while others are not covered at all.”
Those entering private hospitals without any type of health insurance are designated as ‘self-payers.’ The number of self-payers varies: at the predominately maternity oriented Trad Hospital for instance, 40 percent of patients are self-payers, while other major hostpitals see just 5 percent.
“The patient coming in as a self-payer will pay a higher tariff because there is no pressure on the hospital,” said Chadi Sebaaleni, marketing manager for Trad Hospital.
The tariff and the NSSF
Coverage and who pays for it is an issue of great importance and an area of significant controversy in the sector. There is a complex system of tariffs in Lebanon that are highly controversial. For those covered by the NSSF, there is a very low tariff.
“The same tariff set in 1995, nearly 15 years ago, by the NSSF is still being used today,” said the Syndicate of Private Hospitals’ Haroun. “This is simply not workable for the health sector in Lebanon.”
This tariff has to be accepted by private hospitals by law.
Ostensibly, the NSSF is paid for by Lebanese employers and employees, with the former contributing 23 percent of each employees salary to the fund and individual employees paying 6 percent of their income. However, the NSSF is mired in debt, estimated at some $400 million, and rife with allegations of excess pay, overstaffing and being opaque about its operations.
“The NSSF has all the ills that an institution can possibly have,” said Farid al-Khazen, AUB professor and a member of Parliament.
The NSSF is still implementing a computerization program which began in 2007, after receiving funding from the World Bank.
“It is not a healthy institution,” said a chief executive officer of a Lebanese hospital, who asked to remain annonymous. The NSSF did not answer requests for comment.
As a result of the deteriorating state of the NSSF, serious ethical and financial difficulties have emerged for the private health sector in Lebanon.
“The NSSF does not recognize your cost and they do not change [their rate] even with inflation,” the unnamed CEO told Executive, illustrating his point with the example of a gastroscopy procedure — an internal examination of the digestive tract.
“The hospital buys the equipment, employs the technicians and the doctor comes in and uses this equipment. The doctor is paid LL 90,000 ($60) and the hospital is paid LL7,000 ($4.60) [the rate set by the NSSF].”
“The gastroscope cost $80,000; they don’t recognize whatsoever the cost of your services, so we are in a constant battle,” he said.
Not only is the rate set at a level that is not responsive to industry costs, payment is sometimes withheld for several years. The extent of the problem was articulated when AUB signed an agreement with the NSSF in 2009 to be reimbursed for outstanding out-patient co-payments dating back to 2002.
“No one knows who owes what. At the end of the year there is no statement of account,” said the CEO.
Reforming the NSSF has been a governmental priority for years, but the institutional rot has continued. A solution to the deep-rooted financial and administrative problems that have crippled the NSSF has proven to be illusive.
“This is creating a lack of proper financing in the sector,” said Mount Lebanon Hospital’s Zahar.
“The hospitals are in a dilemma. You cannot go on paying for the drugs and the treatments for this person. You have a financial and human problem at the same time and we don’t know what to do.”
The NSSF remains teetering on the edge of collapse and a major strain on the country’s private and public coffers. A Council of Ministers decree was passed stipulating that tariffs should be raised by 25 percent but the NSSF is refusing to apply it.
“Political issues are underlying the problem [of reform], there are political affiliations on the board of the NSSF,” Haroun stated. “If it were just a technocratic problem of reform it would have been sorted.”
Most in the health sector, however, have given up hope of NSSF
reform in the near future.
Exploiting the elderly
The need for immediate reform of the NSSF is an issue of life or death for many, particularly the chronically ill and the elderly.
Many elderly patients are currently stuck in a life threatening and highly exploitative situation, created by the deadlock between the hospitals and the NSSF, which is nothing short of a national scandal.
The NSSF introduced a voluntary scheme for elderly citizens that were having difficulty finding coverage elsewhere. But the inability of the NSSF to pay for these patients has led to a dangerous standoff with the hospitals.
“They [the NSSF] collected subscription [payments] from the elderly and they went to hospitals but the hospitals were never paid,” the CEO explained. “So we stopped covering these patients and now the patients have coverage that is not accepted in any hospital.”
Despite this, the NSSF continues to collect payment from the elderly, one of the most vulnerable groups in society, for a worthless insurance scheme that exists theoretically but not in reality.
“You ask the NSSF why they don’t close this program and they don’t reply, so [the elderly] keep on paying subscriptions,” said the CEO.
Regulation, accreditation, fragmentation
The need to overhaul the NSSF seems obvious. But beyond this, many are also calling for a renewal of the macro approach to the sector.
One of the fundamental issues is that the Ministry of Health does not possess an effective framework to implement changes within the sector. Decision making is spread over several different agencies, making it almost impossible for the health ministry to create an effective health policy. Haroun gave the example of coverage to illustrate how, in its current disjointed state, effective reform is simply not possible.
“Health coverage is fragmented: the [NSSF] is under the Ministry of Labor; the Armed forces under the Ministry of Defence; the [Internal Security Forces] under the Ministry of the Interior; the Cooperative of Public Servants under the president,” he said. “The result of this is that decision making is spread across five agencies, which means there is no single person that can impose a certain health policy with steps to implement it.”
This has created large disparities in the type of health care provided, even when considering standardized governmental coverage.
“Each group has its own policy regarding health care, the type of coverage and the amount of coverage required,” said the unnamed CEO. “The army comes to me, says to me they want this, we argue, [we] give them something and they take something, then they go to another hospital and do the same bargaining.”
Even within the army or police there can be different treatment based on the particular deal their representative has done with the hospital they are admitted to.
Regardless of the difficulties the health ministry faces in making reforms, there have been some successes which were received with near universal praise.
The most important step taken was the introduction of an accreditation scheme that started in 2002, whereby all hospitals in Lebanon are assessed by a team of foreign health specialist and graded into four classes.
“The accreditation system is a good start and it is the first time that Lebanon has moved toward a measure of quality [in the health sector],” said Tony Zreik, associate of the University Medical Center — Rizk Hospital (UMC-RH). “It narrows the margin of error.”
Mount Lebanon Hospital’s Zahar warned that the accreditation process stops short of any real reform and merely classifies hospitals instead of raising their quality levels.
“It does not give incentives for hospitals to perform better; it does not provide for everything they need such as training for the hospitals to improve,” she said.
Cohesive thinking
Many in the health sector told Executive that because of this fragmentation, policies are made on an ad hoc basis and are not strong enough to create a sustainable health sector.
“This sector depends on government regulation,” said Zahar.
“The government does not respond to citizens’ needs or to the problems in the sector, and this is a big problem.”
Efforts to create a more cohesive governmental health care system have been met with resistance.
“The Minister of Health is trying to unify health policies in the country but he is not succeeding, as all the different players want to retain their independence,” said the CEO.
This problem is compounded by a lack of unity in the private health sector that is creating wasteful practices. The CEO explained that this happens because the sector is not guided by blanket regulation, and an oversupply of certain types of medical facilities often occurs.
“Lebanon is a country of four million people and by global standards it requires probably four MRI machines. We have probably 20 or 22, because of competition between hospitals,” said the CEO. “We have more equipment than needed and to justify the purchasing of this equipment doctors are requesting unnecessary [MRI] tests…so you go there and pay.”
Lacking a proper regulatory
authority, Lebanon is spending far more on health care than it actually needs to and yet the resources that the health sector has are not being properly allocated. This wasteful practice and the issue of tariffs are driving hospitals to search for alterative sources of revenue.
Insurance fund coverage
Healthy tourism
Health tourism is seen as the best possible way of generating the substantial amounts of income hospitals need. The health sector is seen by many as well positioned to target the Gulf market because of the sector’s highly qualified staff, its technological advancement, excellent management and also Lebanon’s location within the region.
Lebanon is already a well known for its plastic surgery. But as Haroun, from the Syndicate of Private Hospitals, warns, this is not the same as health tourism for the hospital sector.
“Health tourism is not well developed in Lebanon; of the half million or so admissions last year only a few thousand were foreign,” said Haroun.
Individual hospitals are now creating initiatives to capture some of the growing health tourism market. Trad’s Sebaalani stated that his hospital is now focusing its marketing strategy on health tourism.
“We can charge five times what we can charge a patient from the NSSF,” he said with regards to foreign patients.
Currently, foreigners account for just 15 percent of Trad’s total patients, yet brought them some 30 percent of their $10 million turnover in 2007.
UMC-RH’s Zreik, on the other hand, stated that initiatives by individual hospitals will ultimately prove futile.
“Big companies in the United States have deals with countries where they send their patients,” Zreik explained. “But to capture this market these companies need to see things that one operation or institution cannot provide.
“One institution cannot provide accommodation, accreditation and regulation. You need the state to assist in providing these,” he added.
Not all are convinced that Lebanon is the bastion of health tourism in the Levant. There is stiff competition from Jordan and Egypt, with Jordan in particular creating a highly effective national health strategy for health tourism.
In the Gulf, many nations are building expensively equipped hospitals at a rapid pace and their nationals typically travel to Europe for more complicated procedures.
“Health tourism is not a solution,” said the CEO. “Rather it is wishful thinking and a distraction from organizing a proper health care system.”
Without sweeping reforms it seems doubtful that issues such as the NSSF, tariffs and coverage are going to go away any time soon or that the highly fragmented health sector will unite. Health tourism may provide some relief to the sector but is unlikely prove sustainable.
Although far from receiving a clean bill of health, an ever present demand should ensure that Lebanon’s health sector will not collapse altogether.
It will likely remain resilient, as it has for many years, with the private health sector struggling to survive against the odds.
