INFLUENCE OF FINANCING AND PAYMENT MECHANISMS ON MEDICAL DECISION MAKING: NORMAL DELIVERY VS. CESAREAN SECTION

Monday, October 24, 2011
Grand Ballroom AB (Hyatt Regency Chicago)
Poster Board # 40
(ESP) Applied Health Economics, Services, and Policy Research

Varduhi Petrosyan, MS, PhD, Meri Tadevosyan, MPH(c) and Arusyak Harutyunyan, MD, MPH, American University of Armenia, Yerevan, Armenia

Purpose: To explore if increasing rate of Cesarean sections (CS) is motivated by higher reimbursement to hospitals and to providers for CS than for normal delivery, which was introduced in 2008 with the new system of public financing for obstetric care in Armenia.

Method: The study included a comprehensive desk review and hospital based cost accounting, which estimated the mean cost of CS and normal delivery from provider perspective and compared the ratio of these costs with the ratio of reimbursement. The study collected cost related data through mother and child hospital record review and self-administered questionnaires for providers.

Result: The number of CSs significantly increased from 6.4% of all births in 2000 to 14.3% in 2007, and to 18.6% in 2010 in Armenia; the current numbers are exceeding the 10-15% that could be medically necessary according to the World Health Organization. The situation is of particular concern in maternity hospitals in the capital city Yerevan, where the CSs rate increased from 18% to 24% in the last 3 years. Our findings indicated that health providers had financial motivation to perform more CSs. Facilities receive about 1.7 times higher reimbursement for CS than for normal delivery from the government and this is in line with the ratio of the real costs. However, providers received up to 20 times higher bonus payment per CS than per normal delivery, which is significantly higher than the ratio of the real costs.

Conclusion: When making decisions on improvement of financing and payment mechanisms the policy makers should always keep in mind the influence of these changes on the medical decision making for obstetric services. Therefore, to improve efficiency and quality of the obstetric services that will eventually improve maternal and infant health, the Government of Armenia would need to reconsider particularly the provider payment mechanism introduced in 2008.