- Significant out-of-pocket expenditures due to high direct medical and non-medical costs
The utilisation of healthcare services in Sri Lanka among patients suffering from high proportions of non-communicable diseases (NCDs) is currently comparatively low despite the majority seeking care in the State sector. This in turn led to significant out-of-pocket expenditures (OOPEs) as the direct medical and non-medical costs for NCD care remain high, resulting in catastrophic health expenditures (CHEs).
These findings were made in a research article on "Variations in OOP spending and factors influencing the CHE of households with patients suffering from chronic conditions in four Districts in Sri Lanka" which was authored by A. Gamage (Specialist in Community Medicine, and Professor in Public Health, Paraclinical Department, Medical Faculty, General John Kotelawala Defence University [KDU], Ratmalana), N. Darshana (Senior Lecturer, Community Medicine Department, same Faculty, Ruhuna University, Galle), T. Gunasekara (same Faculty, KDU), D. Attygalle (Senior Health Specialist, World Bank South Asia Region, Colombo) and S. Sridharan (Deputy Director General Planning, Management Development and Planning Unit, Health Ministry) and published in the BMC Health Services Research journal's 24th Volume in September 2024.
In Sri Lanka, the burden of NCDs is growing. Also, there is an increased focus on ensuring that people are protected against financial risks due to accessing care. Universal Health Coverage (UHC), which is one of the overarching objectives of the Sustainable Development Goals, which are to be achieved by 2030, is defined as “attempts to ensure that all people obtain the health services that they need without suffering financial hardship when paying for them”. Considering financial protection, no best financing strategy fits all countries or situations. Therefore, the challenge is in identifying the pitfalls and the most suitable healthcare strategy to achieve UHC.
In Sri Lanka, inpatient care is mainly provided through the public sector, and outpatient care through both the public and private sectors. The private sector is sometimes utilised as a substitute for the Government sector and sometimes as complementary. The Government is the main financier of healthcare expenditure, and is universally free of charge at the point of delivery. In 2019, the Government was responsible for providing 47.2 per cent of CHE, while OOPE contributed to 51% of CHE (Global Health Expenditure Database, 2000–2020). More than 60% of Sri Lankan households incur high OOPE (A.S. Kumara and R. Samaratunge's "Patterns and determinants of OOP healthcare expenditure in Sri Lanka: Evidence from household surveys"). Patients incur OOPE expenses when utilising public and private sector services. In 2021, the Budget allocation to health was Rs. 24,500 million. Voluntary health insurance (VHI) contributes about 5% of total private financing, and the private insurance market has shown considerable growth in recent years (A. Gamage, T. Dias, M. Amarasiri and I. Karunathilake's "The impact of the economic crisis on Sri Lankan health financing"). Sri Lanka’s healthcare allocations are relatively low, posing challenges in meeting the growing demands for healthcare services and addressing the rising burden of diseases.
NCDs are diseases that are not transmitted from one person to another. Globally, the burden of NCDs is growing. NCDs are diseases that need continuity of care. Hence, the costs incurred due to NCDs are a significant financial burden to people suffering from these diseases. In a time and era where there is an increased focus on ensuring that people are protected against financial risks due to accessing care, addressing NCDs and the associated costs is essential. Especially since escalating NCD costs correlate with the ageing of the population with the demographic transition taking place in Sri Lanka, and is projected to rise in the next decade, the country needs to be prepared to face the rising demands. The increasing global prevalence of chronic NCDs, compounded by their chronic nature and the frequent occurrence of multi-morbidity, has led to a significant rise in OOPE for the affected individuals, placing a substantial financial burden on households worldwide.
Large OOPE for healthcare have been shown to impede healthcare-seeking behaviour and drive families towards impoverishment. Therefore, it is crucial to identify the characteristics of persons likely to incur OOPE and the diseases and conditions that are most likely to generate large OOPE. In the current context where the country is grappling with an economic crisis, its timely to re-visit and generate this information to ensure the sustainability of the services as the macroeconomic challenges that Sri Lanka is currently observing are interrelated with poverty and health.
The OOPE data should be valid, reliable, and up-to-date for policymakers for evidence-informed decision-making. Currently, the OOPE data is generated through the data that are collected through the Household Income and Expenditure Survey (HIES) conducted by the Census and Statistics Department using the HIES questionnaire. The HIES questionnaire has many components, and one section comprises health. However, it has been observed that the data gathered during the HIES survey does not consider direct non-medical costs or other essential components.
Sri Lanka’s healthcare system has achieved success despite limited resources. However, to achieve UHC, the healthcare strategy needs to be reevaluated. This includes revenue raising, pooling, purchasing, and addressing inefficiencies. Evidence-based policymaking is crucial. There is a need for more recent comprehensive national estimates of OOPE by the general population and individuals with chronic conditions.
Methodology
Gamage et al. conducted a cross-sectional study among male and female adults diagnosed with selected NCDs in four Districts. Sampling was conducted using stratified cluster sampling. Four Districts (Gampaha, Ampara, Jaffna and Nuwara Eliya) were considered as the strata. Economic factors and the level of urbanisation among the Districts vary. The four Districts represent four Provinces (Western, Eastern, Northern and Central) considering the population-size, population density, economic functions such as the cost of living, and governance. Grama Niladhari (GN) Divisions were stratified by the four Districts in the second stage of stratification and were selected based on the probability proportionate to the size.
A GN Division (Government approved smallest administrative sector) was considered a cluster, and the cluster size was 20. The number of households was identified from 115 clusters identified from four Districts representing the urban (Gampaha), rural (Ampara), semi-urban (Jaffna), and estate (Nuwara Eliya) sectors. The classification to urban, semi-urban, rural and estate was done based on factors such as the population size, population density, economic functions, and governance.
A random geographical point was selected within the sampled GN Divisions, and this was the starting point for sampling within a cluster. The study unit comprised male and female patients aged 18 years and older, diagnosed with selected NCDs for over three months and regularly receiving treatment for their chronic conditions. Twenty consecutive houses in one direction from this point which consisted of a NCD patient were selected and only one adult who was eligible to participate was chosen from one household where the Kish grid method was used to select one NCD patient per household.
The study was conducted from April to August 2022. An interviewer-administered questionnaire was used for data gathering.
The total cost of illness for NCDs was calculated from the patient’s perspective. It involved adding direct (related to patient care) and direct non-medical costs. Direct costs include medical expenses such as medications, laboratory investigations as well as non-medical costs such as meals, bystander costs and travel to the hospital. In calculating OOPE, both components (direct medical and direct non-medical costs), were considered. The economic burden of the patients suffering from NCDS was assessed using direct medical and non-medical costs incurred by the patients due to the disease.
In this particular study, the occurrence of catastrophic expenditure was calculated using the 15% threshold of the total expenditure.
Results
The study was conducted among 2,344 patients with chronic medical illnesses. Among them, the majority were females (52.8%), aged 30 to 60 years (67.4%), Sinhalese (51.5%), educated up to the General Certificate of Education Ordinary Level (GCE O/L) or above (69.3%), and married (74%). Nearly 41% were employed, and the majority were private sector employees (37.1%). Only 32.7% had an average monthly income above Rs. 60,000. The median (inter-quartile range [IQR]) distance to any healthcare institution was five kilometres (km) (seven km). The mean distance to any healthcare institution: urban (two km - standard deviation [SD] plus/minus 0.9 km), semi-urban (five km - SD ± 1.6 km), rural (six km - SD ± 2.3 km), and estate (nine km - SD ± 3.1 km).
Considering the proportion of diseases, the majority had hypertension (HTN) (29.1%), followed by diabetes (26.8%/27%), dyslipidemia (9.8%), and asthma (8.2%). Nearly 32% had more than one chronic medical illness, while only 55.6%-56%/1,304 were on regular clinic follow-ups. Nearly 50%/1,167 had suffered from NCDs for over five years. Only 12.8%-13%/298 had self-reported NCD complications. Most utilised Western medicines (73%) for their chronic medical illnesses. Interestingly, 9.4% spent on religious and cultural activities to cure chronic medical illnesses.
OOPE for hospital admissions and follow-up visits
The OOPE was calculated for both follow-up visits and admissions for NCD management. By combining direct medical and direct non-medical costs incurred, the total OOPE was calculated. Sector-wise variations were observed in OOPE for both hospital admissions and follow-up visits. For a regular follow-up, the media spending was as follows: urban patient (Rs. 3,903 [IQR Rs. 3,000]), rural estate patient (Rs. 6,564 [IQR Rs. 2,000]), semi-urban patient (Rs. 5,162 [IQR Rs. 1,500]) and estate patient (Rs. 7,224 [IQR Rs. 2,750]).
Among the sample, 252/10.7% patients had hospital admissions for NCD management. Among them, 51.6%/130 were females. Nearly 86%/217 were admitted to Government hospitals. During the admissions, the majority (212, 84.1%) incurred direct non-medical OOPE, while 15.9%/40 had both direct medical and non-medical OOPE. None had borne direct medical costs alone. Most patients had a total OOPE of less than Rs. 5,000 per admission (159, 63.2%). Patients had spent a median of Rs. 2,750 (IQR Rs. 3,500) on medications and Rs. 2,500 (IQR Rs. 2,300) on laboratory investigations. Patients had spent Rs. 800 (IQR Rs. 500) per day for meals and Rs. 500 (IQR Rs. 800) per day for transport. Only 11.5% had spent Rs. 1,500 (IQR Rs. 1,350) for bystanders per day. The average cost for a hospital admission was Rs. 3,100.
Nearly 25%/572 on regular NCD follow-ups responded to OOPE due to clinic visits. Among them, 52.1%/298 were females. Nearly 58%/333 were followed up in the Government sector. Diabetes (37.6%), HTN (31.3%), asthma (8.7%), cancer (8.6%), and chronic kidney disease (CKD) (7.9%) were identified as common NCDs among this subsample. Considering a clinic visit, most incurred only direct medical OOPE (521, 91.1%), while 4.5%/26 had only direct non-medical OOPE. Interestingly, only 4.4%/25 had direct medical and non-medical OOPE. Most patients (391, 68.4%) had a total OOPE of less than Rs. 5,000. The average cost for a clinic visit was Rs. 3,000. Patients had spent Rs. 750 (IQR Rs. 500) per day for meals while spending Rs. 2,000 (IQR Rs. 2,300) per day for transport. Interestingly, 6.3% had spent Rs. 1,350 (IQR Rs. 3,500) for investigations, and 6.5% had spent Rs. 1,500 (IQR Rs. 5,000) for drugs per routine follow-up visits. When considering common NCDs, cancer had the highest OOPE (Rs. 12,000 with IQR Rs. 5,000–16,000) and the highest CHE of 34.3% with IQR 13.7%-75% followed by CKD (OOPE Rs. 7,000 with IQR Rs. 2,375–9,475 and CHE 11.9% with 4.7%—20.9%), asthma (OOPE Rs. 2,500 with IQR Rs. 1,500–3,500 and CHE 10% with 4.7%—15%), diabetes (OOPE Rs. 3,000 with IQR Rs. 1,325–5,000 and CHE 6.9% with 2.5%—12.5%) and HTN (OOPE Rs. 2,400 with IQR Rs. 1,000–4,500 and CHE 5.8% with 2%—11%).
CHE for hospital admissions and follow-up visits
CHE for hospital admissions and follow-up visits was calculated by dividing the respective total OOPE by the average monthly income. CHE was less than 15% for the majority (167, 66.3%) in hospital admissions as well as for follow-up visits (461, 80.6%). District-wise variations were observed in CHE for both hospital admissions and follow-up visits. OOPE was higher in the private sector compared to the Government sector for hospital admissions (Rs. 4,800 versus Rs. 3,000). For regular follow-up visits, the OOPE was higher in the private sector compared to the Government sector (Rs. 4,700 vs. Rs. 2,000). A statistically significant difference in OOPE was detected among the private and Government sectors for regular follow-up visits.
Associated factors for CHE for patients with regular clinic visits and hospital admissions
Factors significantly associated with over 15% CHE for both hospital admissions and regular clinic follow-ups were the monthly income, the presence of complications, and the sector treated. The risk for CHE for regular follow-up visits is increased with the patients’ age, and duration of illness.
Discussion
Among the participants, 56%/1,304 were on regular clinic follow-up, with the majority utilising Government hospitals for Western medical care (70.2%, 916). Over the past year, 252 hospital admissions for chronic disease management occurred, with the majority to Government sector hospitals (86%). The average cost for a clinic visit was Rs. 3,000, while for a hospital admission, it was Rs. 3,100. CHE exceeded 40% for 6.1% of hospital admissions and 13.5% of regular clinic follow-ups. Patients admitted to private hospitals faced 2.61 times higher CHE than those admitted to Government sector hospitals.
The sector that a person lives in affects healthcare spending and well-being. The place of residence is correlated with living and working conditions, air and water quality, physical activity, and healthcare access.
NCDs have a long duration and cause complications if left untreated and are a major cause of premature death and disability. One of the main goals of Sustainable Development Goals is to “Ensure healthy lives and promote well-being for all at all ages” by 2030. Globally and locally, the leading causes of premature deaths are stroke, diabetes, cancer, and respiratory diseases. The current study reveals high self-reported NCDs among the participants. The majority had hypertension and diabetes. The high incidence of these NCDs leads to high healthcare costs, the limited ability to work through presenteeism, and absenteeism, leading to financial insecurity and the slow growth of a country. The current study provides evidence that NCDs related complications are high among the participants and alarmingly, nearly half of the population are not on regular follow-up. Although NCDs are not curable, with early diagnosis and regular treatment, patients can live a long life without complications. Public policies and financial protection are crucial to curb the NCDs epidemic, along with individual responsibility.
OOP payments are defined as any direct payment by households, including payments to health practitioners, pharmaceuticals, therapeutic devices, other goods and services, and informal payments. Chronic conditions often require ongoing medical care, medications, and specialised services, leading to high OOPE. This financial burden can cause CHE, where households are forced to spend a significant portion of their income on healthcare, leading to financial distress and impoverishment. There is an urgent need for strategies to reduce these economic impacts, especially for vulnerable populations. A substantial proportion of costs in hospital admissions is for medication, diagnosis, and other non-medical expenditures such as transport, meals, and bystanders. The study shows that private sector hospital admissions cost more. In Government hospitals, patients have access to free drugs and laboratory investigations available at the time as part of the public healthcare system. Conversely, in private hospitals, patients are responsible for covering the costs associated with these services. In Sri Lanka, only the formal sector employers have social insurance and voluntary health insurance enrollment is low. Hence, private sector healthcare utlisation will lead to OOPE. Follow-up costs also depend on finances and the medical facility. The current study confirms a link between the income and healthcare expenditure. Another major factor for the tendency to push people to incur high OOPE leading to CHE when obtaining treatment from a private sector facility could be due to the fact that the private sector aims to maximise profits.
The reasons for high OOPE for medications and laboratory investigations could be due to multi-morbidity and the lack of essential drugs and investigations at the Government hospitals leading patients to obtain these in the private sector. The current study shows that patients face significant OOP expenses and are more likely to experience CHE when suffering from chronic diseases such as cancer, CKD, and asthma. These conditions typically necessitate ongoing, intensive treatment, consisting of frequent healthcare encounters, specialised therapies, and long-term medication. The economic burden of illnesses such as asthma, CKD, and cancer, like other NCDs, often results in treatment non-compliance, which can lead to disease complications and a diminished quality of life. This may result in a higher occurrence of CHE, with households being compelled to allocate a large portion of their income to healthcare, potentially pushing them into financial hardship or poverty.
The current study shows that there are sector-wise variations of OOPE incurred and in some sectors, the transport costs are very high. This is despite the availability of healthcare institutions in close proximity. Patients bypass smaller institutions to go to larger healthcare institutions for many reasons. This study shows that most patients were followed up at Government Western healthcare institutions. Patients in Sri Lanka often prefer Western medical care because of its effectiveness, widespread availability, and trust in the system. Healthcare professionals’ expertise and formal training reinforce this understanding. The OOPE is higher for private hospital admission than public facilities.
Many disadvantages could occur when health systems rely on OOPE as the predominant revenue source for healthcare; the people may not seek the care that they need as treatment-seeking would depend on the ability to pay, or they may suffer severe financial hardship (CHE) as a result of incurring such payments. The current study showed that considering a hospital admission, 19.4% had borne over 15% CHE, and considering a clinic follow-up, 33.7% had incurred CHE. In the Sri Lankan setup, people prefer the public sector, which is free of charge, for hospital admission, and the private sector for regular follow-up. Hence, the public and private sectors sometimes act as a substitute and sometimes as complimentary to each other. Sri Lankan people often prefer the public sector for hospital admissions due to their faith in the system and the availability of free medical services, including treatments, medications, and diagnostic tests, which significantly reduces their financial burden. However, this decision could vary depending on factors such as affordability, having insurance, the type of dwelling/sector and the type of treatment that they need. If healthcare financing depends on OOPE, its burden would be shifted towards those who use services more, possibly to low-income earners or people at more risk, where healthcare needs are higher. This violates fundamentals of UHC and is against the objectives of a health system. If a health system does not consist of sound healthcare financing policies, barriers to quality healthcare will be created due to high costs and spending. In Sri Lanka, primary health facilities are not well equipped to manage chronic NCDs. The ability for patients to directly obtain tertiary care services without a referral system leads to the under-utilisation of the primary healthcare (PHC) facilities and increases the burden at the tertiary care levels. The over-utilisation of tertiary care institutions and the under-utilisation of smaller institutions pose a major threat to the efficiency of the healthcare system. Another issue is that this lack of a referral system does not allow for comprehensive or continuous care to the patient, which is crucial in NCD care. From a patient’s perspective, the continuity of care is necessary to monitor lifestyle risk factors. This places a burden on both the patient and the system. Considering these factors, it is evident that a PHC reform is necessary for Sri Lanka due to changing disease patterns and emerging issues. A well-equipped healthcare facility with trained doctors, essential lab facilities, and a consistent supply of necessary drugs plays a vital role in providing continuous care for chronic illnesses. Additionally, it would significantly alleviate the financial burden on patients. In formulating policies, it is important for policymakers to carefully consider the heterogeneities of patient preferences, and the social and commercial determinants of health.
The reasons for people not using healthcare facilities include a shortage of doctors, the lack of facilities, and the limited ability of smaller clinics to offer services for NCDs. This may be why transportation costs are high.
Conclusions
The Sri Lankan health sector has achieved impressive health outcomes, but, the rising burden of NCDs such as diabetes and HTN is concerning. There were sectoral variances in reasons for the incurred OOPE. The presence of heterogeneities of reasons carries important policy implications, and policymakers should consider these factors in addressing this matter. As a lower-middle- income country, Sri Lanka faces challenges in ensuring UHC due to limited financial resources. Policymakers must explore financial options like cost-sharing and service delivery reorganisation to improve efficiency, equity, and access while protecting patients from high OOPE.