Health-spending behaviors: the temporal dimension of 'out-of-pocket spending'

by Gideon Lasco, MD

Out-of-pocket spending or out of pocket expenditure is defined by the World Bank as "any direct outlay by households, including gratuities and in-kind payments, to health practitioners and suppliers of pharmaceuticals, therapeutic appliances, and other goods and services whose primary intent is to contribute to the restoration or enhancement of the health status of individuals or population groups." Broadly defined, we can look at it as the percentage of total health expenditure borne by individuals and their families. OOPS is seen as a measure of the quality of a health care system: a higher OOPS means that there are not enough safety nets.

There is, I believe, compelling reasons to further dissect out-of-pocket spending versus the temporal profile of illness (clinical factors), and factor in what we already know about health-seeking behaviors (sociocultural factors). Let me lay down the foundational statements to explain what I mean:

(1) In the semantics of health, "Sakit" being the term for both disease and pain can suggest that pain may be essential in our folk conception of disease. This could explain in part why consults are delayed in illnesses that are initially painless such as tumors and the like. There is also the the concept of "Malayo sa bituka" (Far from the guts) which is another justification to delay consult

(2) If we speak of health as a 'business', our health care system is not a monopoly. There are alternative systems of health care which, playing by the laws of supply and demand, have an advantage by offering cheaper solutions and better, 'friendlier' services. These are the traditional healers who may be the arbiters of both medical management and health spending of the initial phase in the temporal profile of an illness.

(3) Strong family ties in the Philippines could lead to recruitment of more funds once the threshold has been reached where illness is considered grave, i.e. "Malma na" or "Malala na". The patient who initially had no money for a consult now has funds for a CT scan and an MRI, because the relatives from the States have remitted and a hectare of farmland has been mortgaged.

These three indicate that out-of-pocket spending may not be getting allocated according to temporal need (as defined by the clinician). There may even be instances when a patient could actually afford treatment, but it was not distributed appropriately per unit time. Indeed, a typical breast cancer patient in the Philippines may be spending the same amount of P1,500,000 as compared with a patient in Thailand (one of the better performing countries as per Dr. Banzon) but the outcomes may vary profoundly.

Why? Because a substantial portion of the Filipino patient's P1,500,000 was spent on the latter course of the illness: this was the time when she was willing to pay, this was the time when the "Malala na" threshold and thus the health insurance policy of every Filipino - strong family ties - is activated. This may also be the time when the patient begins to avail of hospital services having found no benefit from traditional healers and herbal medications. The opportunity cost of these alternative therapies too would weigh heavily in this discussion.

It will be interesting if we can generate plots that chart not only expenses per illness, but to plot expenses also against the the temporal profile of an illness, from the perception of illness to diagnosis to outcome (successfully treated, died, etc.). How much does a breast cancer patient spend in the Philippines? This question can be further expanded into "How much does a breast cancer patient in the Philippines spend throughout the course of her illness?" A good graph would show a gradual increase in spending but what I would expect to see is an initial under-allocation (clinically this will manifest as "lost to follow up" or "poorly compliant to medications") and then, towards the end, an over-allocation (and sometimes futile allocation) of funds. Doctors will end up hearing "Doc, gawin nyo ang lahat!" - a blank, desperate check for doctors to do everything. This could be an attempt to compensate for a perceived neglect on the part of the relatives, or simply a reflection of how serious the disease has become as a result of the above-described heatlh-seeking behaviors.

What will be the implication of these findings, if confirmed and quantified? To a clinician, this would simply mean the need for more patient education. But to a health economist, these temporal profiles can actually quantify opportunity cost and localize the particular weaknesses and points of improvement. Moreover, although OOPS is seen as negative indicator with respect to universal health care, it must be recognized for what it is worth: a resource that can be optimized if it is spent when it is of maximal benefit. Policies can then focus on prevention of futile spending, emphasis on preventive care, combating opportunity-grabbing alternative therapies, and a more aggressive appeal for patients to comply to initial management.

Properly managed out-of-pocket spending may also ease public spending, enabling its allocation to more pressing needs. The dynamics of private and public spending continue to be in a state of flux but in the meantime, we can micromanage both components to make it optimal. For instance, knowledge that the insurance policy of "strong family ties" is activated only with the pronouncement of 'serious illness' may be used by the physician as an ally in aggressively pursuing surgery in a Stage II cancer, where it could still be of maximal benefit. The economist can likewise use this cultural trait by allocating more (at least initially) in primary and secondary prevention where we have identified that there is an underallocation of private spending, but where a great need for financing lies.

I drew from a cultural perspective to support my points, but it can also work the other way. Analyzing where and when out-of-pocket spending goes can also help enlighten us more about the way people deal with illness. Indeed, health-spending behaviors (essentially OOPS, rephrased) may well be an excellent reflection of health-seeking behaviors can be an important focus on inter-disciplinary studies in the future. 

This is just one point where culture weighs in on the continued discussion on health financing. In a future article, I would also like to look at how a cultural perspective can help explain some of the problems that PhilHealth is facing with regards to universal coverage.