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Hospital Autonomy in Vietnam Yields Positive Changes and New Challenges

March 5, 2012

  • Vietnam has been implementing a policy of hospital autonomy for about 10 years to mobilize much needed additional finance from the private sector and individuals
  • Evidence from a survey of 18 public hospitals in Vietnam indicates that the hospital autonomy policy has yielded both positive and negative consequences
  • Lessons from hospital sector reforms around the world provide Vietnam with the policy and organizational options for managing the risks associated with hospital autonomy

March 5, 2012 - Organizational and management reforms of public hospitals have occurred in every region of the world in the past 30 years. The reforms were in response to some common problems in public hospitals that include inefficiency in the use of staff, equipment, supplies and other resources, user dissatisfaction, a “brain-drain” of qualified personnel to the private sector or through emigration, run-down assets and overall failure to serve the poor.

The Government of Vietnam granted autonomy to public hospitals as part of a wider public administrative reform, with the aim of improving performance of these entities and reducing the burden on the Government budget. A report entitled "Lessons for Hospital Autonomy Implementation in Vietnam from International Experience" conducted by the World Bank and Vietnam’s Ministry of Health has shown some positive results from the implementation of hospital autonomy in Vietnam.

At the same time, the report also analyzed the existing problems and proposes recommendations to optimize hospital reform. The report’s analysis is based on the implementation of hospital autonomy policy in the world from various international studies and a survey of 18 public hospitals by the Ministry of Health of Vietnam. The survey, which studied both fully and partially autonomous hospitals, attempted to identify how performance changed in response to the level of autonomy granted (based on 2005 and 2008 data).

The survey found significant growth in total hospital revenues; increased capital investment in hospitals; expansion of the range of healthcare services and an increase in hospital utilization; substantial growth in incomes of public hospital medical staff; as well as overall reduced costs and more effective use of human resources.

However, the survey also revealed that these benefits did not occur equally. Central hospitals and hospitals in large cities benefited more from hospital autonomy than hospitals in poorer provinces and those in rural areas.

The survey findings also pointed to a decline in hospital efficiency and some aspects of quality of care, such as sharing of hospital beds, were also shown to have declined.

Based on the survey and assessment of international experience and practice in Vietnam, the report proposes the following recommendations to optimize hospital reform:

• Short Term Actions
- Revise the VSS price schedule based on studies of actual costs for essential health services;
- Control utilization through contracts between VSS and hospitals that limit volume and/or total expenditure;
- Set clear tasks and public policy objectives to public hospitals to counteract market driven objectives of maximizing revenue or maximizing surplus of revenue over costs;
- Utilize available public financing regulations to ensure income equity across different levels of hospitals and different specialties. Regulate salaries and salary top-ups to ensure equity across different levels of hospitals and different specialties, and within hospitals;
- Conduct hospital management systems capacity assessments as one criterion for increasing the autonomy status of hospitals;
- Improve regulations for social mobilization of capital and private capital finance in hospitals to prevent conflicts of interest, ensure transparent procurement processes and provide guidelines for project investment appraisal;
- Mandate a clear separation of private-paying services from essential services covered by social health insurance;
- Mandate separate accounting for for-profit business units within the hospitals, and mandate a “no subsidy” policy to ensure these units fully cover joint costs and overheads.

• Medium to Long Term Actions
- Develop prospective payment methods and performance-based incentives for VSS to use in paying hospitals;
- Develop and promote use of evidence-based clinical practice guidelines;
- Introduce health technology assessment and strategic planning of public hospital capacity and high-cost equipment to avoid wasteful investment and irrational over-provision;
- Strengthen the monitoring, inspection and enforcement of regulations of the autonomous hospitals; consider putting external supervisory boards or expert hospital authorities in place to carry out this role;
- Strengthen management capacity through professional training of managers;
- Improve information for management and supervision by upgrading health information systems and validating or auditing data;
- Enhance codes of ethical conduct for medical staff to address the new issues of conflict of interest and profit-motivation that have arisen as a result of hospital autonomy and social mobilization;
- Consider hospital certification and accreditation policies to ensure that essential management and clinical capabilities are in place.