Cablegate: Romania: Health System Remains On Life Support


DE RUEHBM #0843/01 3551121
P 211121Z DEC 09





E.O. 12958; N/A



1. (SBU) Summary: The Romanian healthcare system is in serious
trouble, beset by a convergence of the economic crisis, political
instability, and government budgetary woes. A recent report by the
Romanian Academic Society (SAR) highlighted the major problems
plaguing the system. With expenditure on healthcare falling to 3.2
percent of GDP (979 million USD) even as GDP contracts by over seven
percent this year, the resources necessary to ensure basic quality
care to Romanian citizens are evaporating. The country's
unsustainably low level of health expenditures can only add to the
long-standing corruption, brain drain, inefficiency, and poor
quality already plaguing the system. While the problems, and to
some extent the solutions, are readily apparent, none of the key
stakeholders yet appears willing to embrace substantive reforms.
Instead, stakeholders would rather the Government simply increase
funding for health by reallocating funds from an already shrinking
state budget. With the exception of the pharmaceutical companies,
who are opposed to the measure, most other stakeholders support
higher taxes on medications to help pay the tab. End Summary.

2. (SBU) Of the 9.3 million active workers in Romania's labor
force, whose social security contributions are meant to fund the
health system, SAR estimates that only five million or so are
actually contributing. While reliable figures are hard to come
by--self-employed laborers, farmers, and others often
under-calculate their contributions or opt not to pay at all--SAR's
estimation suggests that only a quarter of the Romanian population
foots the healthcare bill for all 21.5 million citizens. The result
is chronic under-funding, even as costs continue to rise. The last
of the 2009 annual health care budget was spent by the end of
September, leaving a three-month funding shortfall which the
Ministry of Health (MOH) has attempted to cover through a series of
service cuts and other stopgap measures. With the Government forced
to constrain spending under IMF requirements, supplemental funding
has not been forthcoming and the MOH has had to tap into the (yet to
be approved) 2010 budget.

3. (SBU) According to the SAR report, the overall decline in
spending will be around 20 percent this year. This will drive
healthcare's share of GDP down to 3.2 percent, making 2009 a real
nadir for the Romanian healthcare system. The SAR report notes that
Romania is well behind other EU nations both in terms of overall
spending and quality indicators, placing 26th out of 27, ahead only
of Bulgaria in percent of GDP spent on healthcare. A massive
infusion of new resources would be required to bring Romania
anywhere close to other EU countries, which spend an average of 8.6
percent of GDP on healthcare.

4. (SBU) As one means of addressing the funding gap, MOH has
devised a much-ballyhooed decentralization project meant to transfer
hospital financial and managerial responsibility to municipalities,
in an attempt to decrease overall operating costs by 85 percent
while improving the effectiveness of patient care. The project has
already started in Bucharest, but plans to expand it throughout the
country in 2010 are on hold. In a visit to nearby Cantacuzino
Hospital, EconOff discussed the hospital's experience with
decentralization. The hospital administration reported positive
results in functionality, acquisition of equipment and psychological
well-being of both patients and staff, but also expressed
frustration with relatively limited authority in establishing
salaries and staffing patterns.

5. (SBU) Cantacuzino is generally considered one of Bucharest's
best hospitals, but EconOff was struck by the extreme cost-saving
measures in place at even this leading institution--such as using
only natural lighting, with windows open for ventilation, in at
least one operating room where a patient was undergoing surgery.
While the hospital appeared to have a fully stocked pharmacy,
patients routinely reported that they must purchase their own
medications outside of the hospital, including such basics as
painkillers and antiseptics. The operating rooms only had a limited
quantity of surgical supplies on hand, and according to numerous
anecdotal reports, "disposable" surgical supplies are often reused
without adequate sterilization, resulting in the occasional
transmission of blood-borne illnesses such as Hepatitis C. Local
authorities in other cities, such as Ploiesti, have told EmbOffs
that they have refused MOH offers to hand over administration of
hospitals to their communities because the Government only wants to
transfer managerial responsibility while depriving them of central
funding or granting local revenue-raising authority.

6. (SBU) Another MOH solution to the funding crunch has been to
impose a "clawback" surtax on pharmaceutical sales retroactive to
the beginning of the year. The surtax was passed in October as a
Cabinet emergency ordinance, meaning it took immediate effect, but
could still be reversed if Parliament eventually votes to overturn
it. MOH is expecting the tax to raise approximately 100 million RON
(35.17 million USD) in 2009 and 570 million RON (200.49 million USD)
in 2010. Pharmaceutical companies protest that the GOR is unfairly
targeting them, citing previous MOH measures (such as imposing a
below-market currency exchange rate and a "minimum European price"
rule for drug sales) that industry says are detrimental both to
profits and to business relations.

7. (SBU) Low wages for medical staff drive the twin problems of
corruption and brain-drain. The average Romanian doctor makes
approximately 500 USD a month, with nursing staff earning
significantly less. Low wages and inadequate staffing sometimes
result in preventable medical mishaps, such as the recent case of a
day-old infant being seriously burned in an (allegedly
malfunctioning) incubator when the attending nurse, who was
responsible for 29 other infants, left the room for an extended
period. In this kind of a working environment, it is not surprising
that Romania has lost 4,000 doctors to other EU countries in the
last two years and that up to 80 percent of medical students declare
an intention to leave following graduation. For those who do stay,
"gratuity" payments (i.e., bribes) are considered de rigueur. The
proposed solution, a formal co-payment system where patients would
provide fixed additional payments to hospitals and doctors, was
announced in early 2009. However, it failed to meet the June
implementation deadline in the face of strong opposition. The
public perception is that such a system would be inadequate to
supplant bribery and would likely only supplement it.

8. (SBU) Romanians frustrated with the subpar public system now
have the option, if they can afford it, of buying services from a
small but growing network of private clinics in major cities.
Private health insurance policies to cover care at these clinics
(which public insurance will not pay for) are also being marketed.
The two-tiered private insurance system that is evolving, and for
which policies are now available, consists of a first tier of
required payments into the state system, with a supplemental tier
covering extra costs for treatment at private facilities. The
supplemental insurance options in Romania, while still limited in
scope and very pricey for the average citizen, should broaden when
the MOH fully implements the decentralization process.

9. (SBU) Comment: While everyone agrees that the Romanian
healthcare system is under-financed, a public accustomed to
state-provided, cradle-to-grave care still believes that the
solution is more government spending. Even were that money
available, however, throwing it at the current system won't solve
the system's many problems, because the underlying truth is that the
Romanian state has proven incapable of providing adequate healthcare
even with additional resources. With statistics that place Romania
far below EU averages in terms of quality of care, the state
monopoly has resulted in corruption, crumbling infrastructure, and
widespread frustration. The political unwillingness to consider
real alternatives to state control has left the system bereft of
funds and has widened health disparities country-wide. Unless
Romanians can be convinced that good healthcare is something they
will have to pay for--either through higher taxes or consumer-borne
costs on the private market--results will remain poor and the
quality of the system will continue to worsen. End Comment.


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