Centralized Health Care More Cost-Effective: Mexico

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Centralized Health Care More Cost-Effective, Offers Better Access To Preventive

Services. Tuesday, 14 September 2010, 18:26 CDT

UCLA comparison of Mexico's federal and state health care–delivery systems

provides important insights for other developing nations

Families from rural Mexico who receive health care from centralized clinics run

by the federal government pay up to 30 percent less in out-of-pocket expenses

and utilize preventive services more often than those families who access

decentralized clinics run by states, according to a study by researchers at the

UCLA School of Public Health.

The findings are published in the September issue of the Journal of Social

Science and Medicine and are currently available online.

The data were drawn from a comprehensive survey of 8,889 rural families from

seven states in Mexico conducted in 2003 by Oportunidades, Mexico's principal

anti-poverty program. The findings contradict the widely perceived notion that

decentralized systems — in which local knowledge and resources can be more

effectively used to address local needs — are superior to centralized

organizations.

The study measured the effectiveness of centralized and decentralized providers

using two measures: overall health expenditures by users (both centralized and

decentralized providers offer free health care and drugs at rural clinics) and

the utilization of preventive services (higher use reduces the cost of treating

preventable conditions in the future).

Since centralized and decentralized organizations rarely operate within the same

country during the same time period or cater to comparable populations, Mexico's

health care–delivery system provides a unique opportunity to compare the two

approaches side by side.

Starting the mid-1940s, the public safety net for Mexicans not covered by the

Mexican Social Security Institute or other federal social security institutes

was administered by the federal government. The government provided a limited

bundle of cost-effective services, including primary and preventive care and

basic hospitalization to the poorest rural areas of the country.

During the 1980s, the government undertook an ambitious decentralization plan

that gave half the Mexican states oversight over these health services. A new

administration interrupted the process, but it was restarted in the 1990s. Since

then, both centralized and decentralized health care services have co-existed in

17 Mexican states without competing with one another.

The study revealed that households serviced by decentralized providers reported

higher out-of-pocket health expenditures and lower utilization of preventive

services, spending almost 40 percent more out-of-pocket and utilizing preventive

care 7 percent less than households serviced by centralized providers. The

households studied showed no differences in terms of age, years of schooling,

family size, insurance status, employment, need and most community

infrastructure measures.

Providers that were devolved to state governments during the first round of

decentralization in the early '80s performed slightly better than providers

decentralized in the '90s. This suggests that over time the performance of

decentralized providers may improve.

" We find that the Mexican experience can be useful to other developing countries

in Latin America (e.g. Chile or Brazil) and other areas of the developing world

(e.g. China, Iran, Turkey) where relatively professional centralized governments

have considered decentralization as a policy mechanism to reform their national

health systems, " said Arturo Vargas Bustamante, the study's lead investigator

and an assistant professor of health services at the UCLA School of Public

Health.

Vargas Bustamante suggests that the centralized providers have four attributes

that may give them an advantage:

* Type of service: Because the types of services provided to rural

populations do not require a high degree of specialization and are relatively

homogenous and less sensitive to local taste and variation, centralized

providers may be able offer these services more efficiently.

* Quality of care: Centralized providers have more public resources to

provide better services and employ more incentives and monitoring to improve the

quality of care. For example, centralized providers can offer more generous

pensions and benefits to their employees, compared with the average

decentralized provider.

* Experience: In the three decades since decentralization began, centralized

providers may have resolved functional issues that decentralized providers may

still be tackling.

* Local capacity: Even if local authorities are closer to their communities

and are more familiar with their characteristics and limitations, they still

need managerial skills to provide health services that require some level of

expertise. If these skills are less developed among decentralized providers,

they will not be able to perform better than centralized providers.

The study suggests that decentralization may be less effective because state

governments do not always match the public resources that are taken away by the

federal government.

The researchers note that the single advantage enjoyed by those served by

decentralized clinics is access to health campaigns. These are useful in

providing basic interventions such as vaccinations, screenings and health

education. The study suggests that decentralized providers could reduce users'

out-of-pocket costs by offering more mobile health services and strengthening

the network of clinics where follow-up treatments would be available to people

reached by health campaigns.

The UCLA School of Public Health is dedicated to enhancing the public's health

by conducting innovative research; training future leaders and health

professionals; translating research into policy and practice; and serving local,

national and international communities.

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