Does Autonomization of Public Hospitals and Exposure to Market Pressure Complement or Debilitate Social Health Insurance Systems? Evidence from a Low-Income Country

Granting public hospitals greater autonomy and creating organizational arrangements that mimic the private sector and encourage competition is often promoted as a way to increase efficiency and public accountability and to improve quality of care at these facilities. The existence of good-quality health infrastructure, in turn, encourages the population to join and support the social health insurance system and achieve universal coverage. This article provides a critical review of hospital autonomization, using Vietnam's experience to assess the influence of hospital autonomy on the sustainability of Vietnam's social health insurance. The evidence suggests that a reform process based on greater autonomy of resource mobilization and on the retention and use of own-source revenues can create perverse incentives among managers and health care providers, leading to the development of a two-tiered provision of clinical care, provider-induced supply of an inefficient service mix, a high degree of duplication, wasteful investment, and cost escalation. Rather than complementing social health insurance and helping the country to achieve universal coverage, granting public hospitals greater autonomy that mimics the private sector may indeed undermine the legitimacy and sustainability of social health insurance as health care costs escalate and higher quality of care remains elusive.