Over the last 13 years, Georgia’s healthcare system has undergone effective reforms, which have improved health indicators and narrowed the gap between Georgian and European standards.
After Georgia regained independence in 1991, private spending became the major source of healthcare financing, as annual public per capita funding slumped to US$ 0.5 from US$ 149 in 1990. In 2002, healthcare spending per capita stood at US$ 64 and over 2002-13 it surged to US$ 350. The 5.5x growth came in ahead of the 4.6x growth rate of GDP per capita from US$ 779 to US$ 3,597 over the same period.
A new direction was set in 2003, aimed at liberalizing healthcare policy and boosting competitiveness through major changes including but not limited to easing regulations and letting private companies enter the market. In 2007, the government designed a plan to privatize the hospital sector. In the same year, the state introduced public health insurance for the neediest (21.3% of the population) and started to purchase private health insurance packages for beneficiaries. This led to a boom in the health insurance market as insurers competed for public funds. Pure private health insurance grew around 10x over the last few years to more than 0.5mn beneficiaries as of end-2014. After the hospital development plan was adjusted in 2010 to combine hospital operation and provision of health insurance, the government backed private insurers to become investors and operators. In 2012, the public insurance scope was expanded to include 41.1% of the population. By end-2014, private companies owned 84.3% of all hospital beds and health insurance generated US$ 74.1mn in gross premiums written, or 43.2% of the total insurance market.
In 2013, the Georgian government introduced a universal healthcare (UHC) system for the entire population. The reform diminished the role of insurance companies as government funds flowed directly to healthcare providers. The multistage reforms generated results and as of end-2013, up to 150 new hospitals had been built and opened for operation. The new hospital owners also invested in renovating facilities, equipping them with up-to-date equipment and improving human resources. Renewed hospital infrastructure combined with UHC improved accessibility of care as well as patient satisfaction, with 96.4% of patients satisfied by UHC.
Health indicators improved significantly as infrastructure improvements, increased public healthcare spending, and GDP growth resulted in better access to healthcare. Generally, the efficiency of a country’s health system is the key to success and we see a number of related opportunities for Georgia: 1) A relative oversupply of physicians and undersupply of nurses increase costs as relatively higher-paid physicians share nursing duties, meaning their qualifications are used inefficiently; 2) Insufficiently developed outpatient/primary care facilities; improvements can help prevent chronic diseases and lower out-of-pocket costs, a large portion of which (approx. 40%) are spent on drugs for self-treatment; 3) Renewed hospital infrastructure can lead to better cost control; and 4) Insufficient technology can be addressed with consolidation in the sector to open up more investment opportunities. Keeping in mind the fragmentation of Georgia’s hospital and outpatient facilities, consolidation should help capture economies of scale/scope, improve technology, and control costs.
All in all, several tides of health reforms, backed by strong political support, fostered a competitive environment in the healthcare sector by attracting private companies. The latter made considerable investments in the sector, which, combined with the MoLHSA’s liberalization policy and increased government healthcare spending, create room for sustained growth in Georgia’s healthcare sector.
