Methods of Economic Evaluation of the Health Services – Term Paper

1.1 Introduction

Evaluation entails measuring the real, or the anticipate changes in indicators of operations and impacts related to healthcare service delivery (Levin 2010, p.1). The economic evaluation of health services in a country entails assessing the health projects and the outcomes. A country does an economic evaluation for the health care services to see if its efforts are achieving safety and efficiency of the interventions provided to the population. The intention is to see whether the resources were effective in achieving the intended health outcomes. Through economic evaluation, the department of health in a country can see the tradeoffs in the costs of resources as well as benefits in public health entailed in selecting one health intervention to another. 

The Sultanate of Oman is placed third among the largest countries within the Arabian Peninsula (Interlink for Modern Projects 2010, p.1). Saudi Arabia, as well as the Yemen Republic, are the first and second respectively. Oman is a country whose health sector does an evaluation of health services within the country. The effectiveness in an economic evaluation of health services depends on factors such as the national awareness of the burden of disease, cost-effectiveness of health interventions implemented, the political will for addressing the health problem as well as accessibility to financial resources in support of long-term interventions. Being able to carry out an effective cost effective evaluation of health services mean that the country can support awareness of increasing advocacy activities. The health program planners can allocate enough resources to the identified interventions that have the greatest influence on the burden of disease. Based on this background, this research examines the methods of economic evaluation of the health services in Oman. It assesses how the efficiency of health services is evaluated in Oman and whether they are effective in meeting the healthcare needs of the people. 

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1.2 Statement of the Problem

Economic evaluation in Oman faces one main issue in that there are no sound systems for evaluating the cost of health services by the government. The Oman government fund and manages the healthcare sector within the country. It means that a huge percentage of about 80% of the healthcare services are provided by the Oman government (Dhawi and West 2006, p.126). The Ministry of Health within the country has the responsibility of overseeing the activities of health facilities within the country including the usage and disbursement of funds to the respective health programs. It means that a huge amount of the government expenditure is placed to the healthcare sector in Oman. However, evaluating the effectiveness of these institutions has been a challenge since the government has not managed to implement the required state of art technology that can assist in monitoring all the costs and revenues generated by the health care institutions within the country. Such situation has been evident with the public health institutions where exploitation of government resources has been prevalent without much monitoring of how resources are allocated to the necessary institutional needs. 

It has been lagging behind with many problems of accounting for the elderly care. The government is not effective in managing to evaluate the cost of healthcare programs including those of the elderly. This has affected the sustainability of the health care system within the country (Dhawi and West 2006, p.124). The failure of effective economic evaluation of the health services in Oman is the cause of resource constraints facing the sectors regarding funding, capital infrastructure as well as workforce. Regarding resource mobilization, the government of Oman has been ineffective in allocating the use of resources in the various sub-elements (Lakshmi, 2003, p.1). This has affected the evaluation of resources for the private and public health institutions. Further, it has affected financial sustainability where cost recovery has not been easy to achieve under the current laws. Further, since the implementation of automated analysis of costs and revenues is still in its early stage for the government of Oman, the government lacks the capacity to collect as well as account for revenues generated by healthcare institutions within the sector in Oman. It has caused demand for healthcare revenue collection and auditing to be compromised. Besides, looking at past research, no research covers the health care economic in Oman. AL-Riyami (2000, p.) says that the government has been considering health research as an important aspect of guiding priority to health care improvement. However, a research of health economics has not been provided. Therefore, the study is aimed at investigating the methods of economic evaluation of the health services in Oman.       

1.3 Aim of the Study

To investigate the methods of economic evaluation of the health services in Oman

1.3.1 Specific Objectives

1. To examine what methods of economic evaluation of health services are used in Oman

2. To describe the effectiveness of the methods of economic evaluation of health services in Oman

1.3.2 Research Questions

1. What are the methods of economic evaluation of health services are used in Oman?

2. How effective are the methods of economic evaluation of health services in Oman?

2.0 Literature Review

2.1 All health services in Oman are free of costs for Omanis from government

Evaluation of health services in Oman has been affected by the fact that all the health services provided by the government are free (WHO 2008, p.5). This gives an advantage to the health care institutions in Oman to exploit public finances. The Ministry of Health within the country takes the overall duty to develop policies and programs for the healthcare sector.  The government has been the key architect of the health design system of healthcare institutions in Oman. Free medical services to the Omanis create challenges in evaluating the cost-effectiveness of the health services. The population is large; health activities are many. Besides, the records of health service delivery are also poorly maintained and difficult to retrieve due to slow implementation of the EHR (Mogli 2011, p.68). It means that the system of evaluating the cost of health services by the government is ineffective. The management of the health sector by the ministry of health is complex. It works together with other public systems in making policies and decisions regarding the effectiveness of health service costs in the healthcare sector. In this case, coming to a consensus on the best way or evaluating health services costs has been a challenge (Dhawi and West 2006, p.125).  

2.2 Government change the contract of non-Omani staff to temporary contract

Many of the medical staffs are expatriates and the government changed their employment status to temporary (Oman Labor Law 2003, Chapter 3). It means that these workers are not covered by the government and have to pay for their health insurance. When evaluating the costs of health services, there is the problem of accounting for medical staff salaries and wages. The major question is that how does the government evaluate health insurance costs incurred by the expatriate medical staffs for which it has not provided. 

According to the Globe Media Limited (2016, p.1), the nationals of Omani, as well as those coming from the Gulf Cooperation Council countries, obtain medical treatment in Oman public health institutions for free. However, for expats, they are required to pay for their medical services obtained from the public hospitals with which they are only allowed to seek medication in case the private sector does not provide such medical services while in Oman. There is a problem in how the government evaluates the costs and revenues incurred and received respectively regarding expats medical treatment. The current system of evaluation cannot determine who has been treated as an expat or an Oman national. 

2.3 No insurance for Omanis get treatment in ministry of health hospitals

Oman is a country where the health insurance is not entirely established. In this case, some of the medical covers provided are limited including only road accidents which are covered under the automobile insurance system. According to the Oxford Business Group (2014, p.77), medical insurance is not given mandatory by the government to citizen in Oman. About sixty percent of the ministry of the health budget is usually allocated to the acute health care services while a third of it is given to primary care. These are the major causes of death in the population in the country (MOH 2002, p.117). 

Apart from Omanis, expat employees are also limited to receive health insurance from the employing health care institutions. It means that expats have to cater for their health insurance privately. They should ensure that they obtain private medical insurance to cater for their medical expenditure when they become sick (Globe Media Limited 2016, p.1). Those without medical insurance or sustainable ways of settling their medical charges are prevented from accessing those services or in the case they access medication; they are not allowed to leave the country until they pay for those charges. The health insurance scheme for Oman people is compulsory now for them to access treatment on the ministry of health hospitals.       

According to Regimon (2015, p.1), the case for supporting expatriates with health insurance by employers is changing. Both Omanis and non-Omanis are required to obtain a mandatory health insurance plan provided by their employers.  Since the employee medical insurance is cashless (James 2014, p.1.), it has been difficult for the government to account for the costs incurred and balancing them with the revenues the ministry of health hospitals receive by treating patients with health insurance. The infrastructure to evaluate these costs is still in the development stages in Oman. It means that there is still much for the Ministry of Health in achieving effective evaluation for costs of health services for those using a cashless health insurance scheme. The essence of the cashless scheme is that it ties hospitals in a network, builds huge business for the hospitals and gets employees to the company to access the cashless facilities (Rejimon 2015, p.1). After the processing of payments by the company to the hospital, all is left to the employee healthcare, the hospital concerned as well as the insurance company. The ministry of health obtains little information regarding the transactions that took place between the two entities. It is an indication that, the government of Oman through the ministry of health does not have the ability to evaluate the economic costs of the hospitals that are paid through a cashless scheme by the health insurance companies.       

2.4 The current oil crises make the ministry of health review the system and try to calculate the cost

Oman is one of the countries faced with oil crises that has not only affected the economic status of the country but also all other sectors within the nation. The GDP per capital has been affected negatively due to reduction in oil prices. By the year 2020, the GDP for crude oil share is expected to go down to 9% when compared to 1996 which was 41% (WHO 2006, p.13). The health sector has been influenced on how the Ministry of health calculates the economic costs of health services provided by government hospitals. The MOH needs to reviews the social system and tries to calculate the cost. This is a difficult way of capturing costs for evaluation. The major question relates to how estimates are made to reduce health services costs. It is a cumbersome and impossible way of arriving at accurate cost estimations. The challenges of estimating salaries to medical staffs by the Ministry of Health as a result of the oil crisis is one example that demonstrates the negative influence to the Ministry of health in calculating the costs of health services. According to Mukrashi (2016, p.1), due to the oil crisis, medical interns in Oman have remained unpaid for six months. The oil crisis has affected the economy and caused a financial downturn in the country. The Central Bank of Oman (2014, p.3) denotes that oil crisis has caused financial instability in the country and this has damaged the broader economy.  As a result of lower oil prices, the allocation of funds to different ministries by the Ministry of Finance has insufficient. In this case, the Ministry of Health has been affected on how it adjusts its costs to health services.    

2.5 The ministry of health calculates the cost using the National Health Account

 The calculation of health service costs by the government/Ministry of Health is usually based on the National Health Account. This is not an appropriate way of calculating these costs because the government disburses fund to health care institutions at the local, district, regional and national level in Oman (Jahn and Gugolz 2010, p.1). It is not appropriate to use the national health account to calculate the costs of health services. Using this method the government will not present the correct costs for the health sector. The government does not have the ability to access all the health service costs information at the local, regional, district and national level. Besides, such a method of calculating costs does not include those of health care institutions in the private sector. 

2.6 Private Hospitals are Many in Oman

 Oman has an increased number of private hospitals whose consequence is requiring patients both Omanis and non-Omanis to pay for health services. Earlier, the discussion noted that the government provides health services for Omanis for free. When the patients seek their medical needs from private hospitals, how does the Ministry of Health evaluate those costs of health services? Here, the cost of health care is going up in the public health organization due to many people going to private health facilities even those employed by the government (Julie Appleby and Kaiser Health News 2012, p.1).