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Researches Health System


To follow the direction by MOH Minister in evaluating the implementation of Government Decree 43 in public hospitals to clarify gained results as well as disadvantages and unexpected effects on health care thereby making recommendations on adjustment, revisions to be suitable to the future, the Health Strategy and Policy Institute (HSPI) cooperates with the Department of Planning and Finance (DPF) and some other Administrations/Departments of MOH to conduct a survey on the implementation of Government Decree 43 in 18 hospitals at levels (7 at central, 5 provincial and 6 district)
To analyze the Government Decree 43 implementation process, re-examine the organization for implementation according to related legal documents
To evaluate the results of Gov Decree 43 implementation in public hospitals in terms of task performance, organizational structure, personnel and finance
To make recommendations to the existing autonomy policy in Vietnam to ensure service delivery toward equity, efficiency and development
The study employs cross-sectional survey in combination with data retrospective on hospital operations in 2005-2008. Data are collected based on prior designed questionnaires, interviews with health professionals, group discussions, in-depth interviews and patient record analysis.
The implementation of hospital autonomy has brought about positive impacts:
+ Organizational structure: Hospitals have actively rearranged/established new departments and wards and reappoint staff among departments.
+ Technical operations: Most hospitals expand medical service types, leading to clear changes in technical operations (bed occupancy rate increased by 25% in full autonomy hospitals, 17% at central hospitals, 14% at provincial level, and 16% at district level compared with pre-autonomy period; the number of outpatient visit and admissions in most hospitals at level grew: the difference in total visits between 2008 and 2005 is 1.3-1.5 times; the variance in total admission is 1.2-1.4 times; the average number of test per patient increased by 1.5 times in full autonomy hospitals; 1.4 times at central hospitals; 2.1 times at provincial hospitals; 1.3 times at district hospitals; the number of diagnostic imaging – CT-scanner per patient visit raised twice in 2008 over 2005; at provincial level this figures was triple …)
+ Finance: 
Income increase: The implementation of financial independence policy has created conditions for hospital to be more financially active. Units can regulate expenditures in a flexible way. The total hospital revenues increase by year (revenue in 2008 by full autonomous hospitals was 1.8 times higher than 2005; at central level it was 3 times, provincial level 2.9 times and district level 2.5 times). Of which the major increase is from recurrent revenues, including user fees, health insurance reimbursement and others. The revenue ratio and structure also experience notable changes. The revenue ratio of state budget allocation for recurrent expenditures reduced continuously by year at all levels (2.7 times at full autonomous hospitals; 2.5 times at central hospitals; 1.3 times at provincial and district hospitals). Meanwhile, the ratio of recurrent revenue (including user fees, health insurance reimbursement and others) increase in all hospital groups, except the National Mental Health Hospital (recurrent revenue accounting for 96.8% at full autonomous hospitals; 72% at central hospitals; 81.7% at provincial hospitals and 59.4% at district hospitals). With regard to expenditure structure, expenses for human resources increase in total spending at all level hospitals. Compared with 2005, in 2008 the difference in expenses for human resources at provincial hospital is 2.7 times, central level 1.9 times and district level 1.8 times; at full autonomous hospital, the total expenses for human resources in 2008 only increase by 1.2 times over 2005. The drug proportion in the total expenses for technical transactions in surveyed hospitals ranged 56-65%. There are differences among hospitals at levels and they tend to increase by year (comparing data in 2008 and 2005: increase from 52% to 59% at full autonomous hospitals, 51% to 62% at central hospitals, 50% to 56% at district hospitals). However at provincial hospitals this figure tends to reduce (from 71% to 65%). The proportion of administration expenses in 2008 of the total technical transaction expenditures fluctuates 5-11% and tends to reduces slightly at hospitals at all levels, except the provincial one. Expenses for maintenance only accounts for a small ratio of the total technical transaction expenditures, ranging 0.9-1.2% (according to recommendations it should be at 5%). The above ratio tends to reduce clearly at hospitals at all levels after implementing autonomy policy, except slight reduction at full autonomous hospitals (1.3% in 2005, and 1.23% in 2008). 
Increase income for employees: 
+ Employee incomes increase significantly by year. Comparing income increases among years shows that additional incomes of employees in 2008 raised significantly over 2005. However such increase is modest at full autonomous hospitals (only at 1.2 times), 1.7 times at central hospitals and 3 times at provincial hospital.
+ Comparing hospital groups shows that in 2008, the group of full autonomous hospitals have the highest average income increasing rate, at 2.1 while hospitals with limite capacities of autonomy like the National Mental Health Hospital or district hospitals have modest income increasing rate, at 0.6-0.8.
Increase investment for medical devices in the form of socialization (or public private partnership -PPP): There are various partnership formats: (1) joint venture with private companies to invest in medical devices for profit sharing; (2) investors invest in medical devices and hold monopoly rights in chemical and consumable supply; (3) hospital staff and employees make capital contribution. Besides joint venture there are two other investment types: (1) preferential loans from investment development bank; (2) time-bound medical device hiring (not popular). The most popular type is the first one. There are 5 of 16 hospitals applying all 3 investment types, namely Bach Mai Hospital, Ophthalmology Hospital, Central Hue General Hospital, Dong Thap Hospital and Phu Tho Hospital. The invested medical devices increase by year, especially high-tech devices like CT-scanner and MRI.
Implementation of hospital autonomy has shown some limitations and dangers:
o Existence of service overuse for revenue generating: It can be in the form of increasing test and high-tech services prescription, raising admission to generate more revenue for hospitals, irrational use of drugs, and prolong length of stay.
o Increase in treatment costs: If taking into account only irrational services, the inpatient and outpatient costs for health insured patients increase at all level in 2008 over 2005; central hospital: 1.2-2.6 times and inpatient, 1.1 – 2.8 times.
+ At provincial hospital, outpatient treatment costs for health insured patients increase from 1.7-3.3 times in 2008 over 2005; inpatient treatment costs raise 1.5-2.0 times
+ At district hospital, outpatient treatment costs for health insured patients increase from 1.1-3.3 times in 2008 over 2005; inpatient treatment costs raise 1.6-3.4 times
o The quality of services for patient may be affected due to overcrowding, heavy workload while the number of physician/bed is short at district hospitals and the number of nurses/physician is normally below regulations in most hospitals.
+ Bed occupancy rate increase by year 
+ The physician/bed indicator is lower than regulations in Circular 08 at district hospital (district hospital can only have 0.18 physician/bed – according to regulations, it is 0.25 physician/bed)
+ The nurses/physician indicator is lower than regulations in Circular 08 at all level hospitals, especially at central level (1.9 nurses/physician)
o There is variance in income and working conditions between hospitals at central level, big cities and poor provinces, district hospital. This has led to staff shifting from lower to upper levels, rural to urban areas, worsening the staff shortage situation at grassroots health care level. 
The differences in benefits among levels in autonomy implementation: The central and provincial hospitals get more benefits from the autonomous hospital policy than district hospital due to more advantages in resources and resource mobilization capacities. In the meanwhile, autonomy policy implementation capacities of district hospitals remain limited.
The difference among levels in total revenue: increase at central and provincial hospitals from 2.7-2.9 times while that at district only 1.9 times (comparison between 2008 and 2005)
The income additional increase coefficient for staff at district hospital is significantly lower compared with upper level hospitals (0.8 times at district hospital compared with 1.5 times at provincial hospital). Low income is one of the key reasons of personnel shortage at district level (information taken from interviews with hospital leaders)
Investment in medical devices focuses at central and provincial hospitals.
Organization for hospital autonomy implementation according to related legal documents 
Most hospital carry out autonomy policy in accordance with legal documents and guidelines. There are 3 of 18 hospitals active in development and deploying new management methods to improve efficiency and accountability of staffs like assigning tasks to staff and applying staff performance rating system. However, some hospitals apply new management method, transferring autonomy to departments/wards and it is not in line with regulations by Circular 71 on scope of autonomy application.
Investment in medical devices in the PPP form at some hospitals have not been in compliance with regulations of Circular 15 (procurement of secondhand medical devices, 19% of medical devices without project developed before procurement as regulated in Circular 15).
Some obstacles in implementing legal documents on hospital autonomy:
+ Circular 71: Ways to classify institutions in hospital autonomy as in current regulations are not appropriate to the type of partial autonomy to secure partial recurrent expenditures due to large fluctuation, from 10 to 100% (data from hospital interviews)
+ Circular 15: no guidelines on monitoring the value assessment of medical devices invested by partners for profit sharing under joint venture form
+ The current corporate tax rates are not relevant to the health sector (data from interviews with hospital leaders)
Legal documents and management instruments are not complete and synchronized 
No master plan on investment in high-tech medical devices for hospitals at levels
No standards on service quality assessment based on standard treatment protocol leading to non-existence of bases to evaluate the appropriateness of test order
Non-appropriate user fee policies (results from interview with hospital leaders).
Hospital leaders’ management capacities: Results of autonomy policy implementation are largely dependent on hospital leaders’ management capacities. However such capacities are still limited due to no systematic training on hospital management
The application of a Management Information System (MIS) at hospital remain limited (only one of 18 hospital apply LAN-based MIS)
The hospital autonomy policy has helped to increase hospital revenue, investment in high-tech medical devices, volume of medical care services, including high-tech services. The autonomy policy also contributes to improve living conditions for hospital staff. Nonetheless, the hospital autonomy policy, investment in medical devices via capital contributions in all forms and investors’ placement of medical devices with monopoly rights in chemical and consumable supply may lead to the risks of medical device abuse without close control, because of benefits to each partner. 
Legal documents on hospital autonomy
It is needed to consider and revise some contents in Circular 71 to address obstacles seen during implementation like the regulations on total added revenue in the year for administrative units that must control part of their operational costs; ways to classify administrative units in hospital autonomy according to regulations by Circular 71.
It is needed to provide clear unique tax tariff for health administrative units upon apply autonomy mechanism.
It is necessary to review the capital contribution investment in all forms, and the form in which investors placing medical devices and holding monopoly rights of chemical and consumable supply whereas some hospitals must commit to use their supplied chemicals and consumables at prices and volume not lower than regulated in the contract.
The legal documents on hospital autonomy implementation should be reviewed and systematized to ensure their consistency.
Improvement of related legal documents 
The related legal documents should be improved to strengthen the state governance role in autonomous hospital management via issuing appropriate monitoring and supervision instruments (Master plan on high-tech medical devices investment, standard treatment protocol, etc.)
It is needed to promulgate some decrees on the implementation of financial mechanism renovation in health administrative units on the principle of revenue-expenditure balance so as to enable hospitals functions in a synchronized and consistent way according to the intent of financial independence.
Change payment mode, from fee-for-services to others for cost containment (capitation, case-mix)
Monitoring and evaluation 
The Ministry of Health needs to strengthen the monitoring of hospital autonomy implementation according to related legal documents, especially investment in medical devices according to PPP method as in Circular 15/2007
The hospital information and reporting system should be consolidated.
Hospital management 
It is necessary to increase state budget allocation for recurrent expenditures and investment to upgrade physical infrastructure and medical devices for district hospitals, ensuring the responsiveness to medical care demands at lower levels
State budget allocation should be ensured to enable hospitals to carry out non-revenue generating tasks like technical assistance to lower levels, student training
Hospital leaders should be trained on hospital management and hospital management capacity should be added to appointment criteria.


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