MAASTRICHT UNIVERSITY MAASTRICHT GRADUATE SCHOOL OF GOVERNANCE MASTER ON PUBLIC POLICY AND HUMAN DEVELOPMENT

MASTER THESIS

THE IMPACT AND THE DETERMINANTS OF INFORMAL PAYMENTS IN HEALTH CARE: THE CASE OF ALBANIA

Student:

Sonila TOMINI

ID:

i437522

Supervisor:

Prof. Dr. Hans MAARSE

TABLE OF CONTENTS

Page 1. INTRODUCTION

3

2. INFORMAL HEALTH CARE PAYMENTS

5

2.1. Types and definitions of informal health care payments… … … … … … … … ...

5

2.2. Health care system performance and the informal payments… … … … … … ....

9

2.3. The determinants of informal health care payments… … … … … … ..................

10

2.4. The extent of informal payments in different countries … … … … … … ............

12

3. HEALTH CARE AND THE INFORMAL PAYMENTS IN ALBANIA

16

3.1. The organization of health care system… … … … … … ...… … … … … … ...........

16

3.2. The financing of health expenditure… … … … … … ...… … … … … … ...… … ...

19

3.3. The evidence on the informal payments in Albania… … … … … … ...… … … …

21

3.4. Impact of health informal payments on household welfare… … … … … … .......

25

4. EXPLORING THE DETERMINANTS OF THE INFORMAL PAYMENTS IN ALBANIA

31

4.1. The Model and the Results… … … … … … ...… … … … … … ...… … … … … … ...

31

4.2. Data and Descriptive Statistics… … … … … … ...… … … … … … ...… … … … …

34

5. FINAL REMARKS AND DISCUSSION

41

6. REFERENCES (TO BE INCLUDED)

45

1

ABSTRACT Ensuring quality health care is a very important aspect of social systems all over the world. Unfortunately, in many developing economies health systems are suffering consequences of inadequate financial resources or weak governance systems. Many studies have identified corruption and informal payments as phenomena associated with underdevelopment of health systems. This paper deals with the issue of informal payments in a transition country like Albania. We identify the main theoretical developments in this respect and also try to identify main determinants of these informal payments in inpatient and outpatient sector. To identify the probability of paying an informal payment and determinants of amount paid we use OLS and probit models. We also explore the probability of giving a voluntary or requested payment by using the probit model.

We find clear evidence suggesting that there are differences between determinants of informal payments in inpatient and outpatient care, and these are in the majority of cases related to institutional arrangements of these services. There are reasons to believe that if services of inpatient sector are purchased by health insurance we may observe less informal payments (at least for some of categories). Other determinants of these payments resulted to be the higher level of incomes, the positive health rating, lower level of education, and services offered by public providers.

Key words: health care, health financing, corruption, informal payments, transition countries

2

INTRODUCTION Securing adequate health care is a very important aim of the all societies. It ensures stability in people lives and their everyday activities, and at the same time it makes the future more secure for everyone. Nowadays most of the developed countries have in place consolidated health care systems that provide affordable and quality services and are based on the principles of self/social insurance. Unfortunately, on the other hand there exist a lot of other countries where these systems are still underdeveloped and where not all the people enjoy the right of having adequate health care when they need it most. The reasons for this vary from the economic development of one country, to the governance deficiencies of other health systems. It has been showed that corruption is one of the most severe consequences of bad governance, and that in the case of health system can lead to disastrous results not only for the people who seek health care but also for the whole society.

From this perspective, the evidence from various empirical analyses shows that there exist strong relationship between poor health conditions and vulnerability to poverty. Sickness can influence both the ability to work and earn incomes and the financial situation of the household through out of pocket health expenditures. In many cases, especially where the governance is weak and health systems are not efficient, the main part of the out of pocket health expenditures consists of informal payments. Usually defined as unofficial payments to a health care provider for services, which are supposed to be provided at no charge to the patient (Lewis 2000), the informal payments have attracted the attention of many researchers for their complexity and diversity.

On the other hand, the informal payments for health care are an issue that may affect seriously not only the well-being of the health care seekers, but more over may have severe consequences on the governance of the health sector, posing a big barrier to the efficiency of reforms and to the quality of the services.

The complete understanding of the mechanisms of these payments and the impact that they have on the health care governance is an open field of research. Nowadays, there are 3

more and more studies based on the evidence from the low and middle income countries, which try to explore more on the variety of such payments and their impact. The evidence shows that the phenomenon takes different forms, including many variants from cash payments to in-kind contributions and from gift giving to informal charging, and widespread, reported in at least the three continents (Gaal et. al, 2007).

This paper tries to address the problem of informal payments in a transition Eastern European country like Albania. We present a summary from the literature and the empirical studies on informal payments from other similar countries of Eastern European and Former Soviet Union countries. In addition, the paper gives a brief overview of the organizational and financial issues of the health system in Albania, as well as the current situation in terms of informal gifts. We also try to give our contribution on identifying the reasons and motives behind such payments in the context of Albania for both the inpatient and outpatient health care. We use a probit model to test the effect that the individuals’characteristics have on determining the probability of paying any “gifts” in the inpatient/outpatient sector, and then an Ordinary Least Square (OLS) model to test for the determinants of the amounts of these “gifts”. We also test for the determinants of “explicitly requested”or “voluntary”gifts.

The paper is organized in five chapters, where the second chapter gives the main definitions of informal health payments, the impact on the system performance, their determinants, and the evidence from similar countries. The third chapter gives an overview of the organization and financing of health care in Albania, the evidence from other papers and the impact of the informal payments on household welfare. The fourth chapter presents the model and the main results from our empirical tests, and the last chapter is dedicated to some final remarks and conclusions.

4

II. INFORMAL HEALTH CARE PAYMENTS Out of pocket health care expenditures have been a wide-spread phenomena in the Central and Eastern European Countries (CEE) and Former Soviet Union (FSU) countries, especially after the fall of the communism. Evidence from these countries has shown that the major part of these expenditures are informal payments that are paid openly or under the table to health professionals for services that otherwise should have been free. The causes and the motives for such payments vary, but what all these countries have in common are the scarcities of the financial resources allocated to heath care, the lack of efficient policies for both health care financing and for human resources management, as well as high informality present in all sectors of economy. This chapter deals with the main definitions of the informal payments in health care, the impact that such payments have on the system’s performance, the main factors that drive and motivate these payments, as well as the empirical evidence for Central and Eastern European Countries and Former Soviet Union countries.

2.1. Types and definitions of informal health care payments Due to the nature and the variety of the informal payments, the task of finding a simple and yet comprehensive definition is very difficult. In fact, individuals of different countries/cultures would answer very differently to questions like: Would you consider as an informal payment as a gift given to your medical doctor following a satisfactory service? Are you these gifts considered as bribes? Are you considering private purchasing of drugs considered as informal or formal payment? Are the payments for private laboratory services considered as informal or formal payments?

The differences in the answers to the above questions would strongly depend on various factors like: the organization of the health sector in the country, the economic development of the country, social and cultural norms, laws and legislative acts that regulate these payments, the general perception about the informal payments and corruption, etc. 5

Based on the characteristics we have just mentioned, the terms used to denote this phenomenon in the literature vary greatly and so do the types of transactions. The most important types of these informal payments are: •

Gratuities or gratitude payments are the gifts (in cash or in kind) given after the treatment has been finished. These kinds of payments have their root in cultural norms, and are created as a result of historical factors and the deficiencies of the current health system in the country. They are evident in the post communist countries but also in other developing countries. They are also classified as ‘gratuities’ due to the voluntary nature that they must have.

•

Under the counter, unofficial, and under the table payments are payments that are made in informal way to the medical staff by patient or his relatives, and that should complement (or substitute) for services that otherwise should be provided for free to these persons. These payments can be in cash or in kind and are usually explicitly or implicitly requested by medical staff. Particular forms of these payments are also the envelope payments which are payments in cash where a “fee for the medical service” is defined by a pre-agreement between doctors and patient (see also Vian et al, 2004). It takes place more for major health services (tertiary level health care), and the “fees”are not fixed and can be defined by doctors explicitly or follow historical trends.

In reality it is more difficult to find a clear cutting point between these two definitions. As we mentioned above gratuities are based on voluntary motives and given after the treatment has been finished. On the other side, it is not always very clear if this ‘gift’is expected from the medical staff or it is entirely voluntary. In most of the cases the big gifts are made after the difficult treatments (surgical operations, birth giving, etc), which need continues care and dedication over time from the medical staff. Giving these conditions, it is not really clear whether these persons are giving informal gifts or ‘gratuities’because they appreciate the efforts done by the medical staff or because they 6

are afraid they will not get the same care during the course of their treatment and recovery.

Box 1.

PROPOSED DEFINITION OF INFORMAL PAYMENTS

Source Country

Definition

Distinctive Characteristic

Adam (1989) Hungary

A gratuity can be defined as a financial or other Voluntary, after the

Balazs (1996) Hungary

Medical gratitude payment is an informal money Informal purchase; transaction between a doctor and a patient, in the course of which the patient purchases a health service from the publicly employed doctor.

public

Chawla (2000) Poland

Payments, in cash or in kind, made by patients, or

Illegal; public

Thompson and Witter (2000) Lewis (2000)

material benefit, given to a doctor by a patient or his or her relatives after treatment has been terminated.

treatment

others on behalf of the patients, to an individual or institutional public health care provider directly or to any person arranging for provision of health care from such public health care providers, for health services received or expected to be received that the recipients of these payments are not authorized to receive under existing laws of land, including the Constitution of Poland, 1997, and the Health Insurance Act, 1997, or under the rules of business of the health facility.

Informal payments can be described as payments made Not sanctioned by by individuals to state health workers or institutions but that are not sanctioned by the authorities.

the authorities; public (state)

Informal payments can be defined as (1) payments to

Unofficial; corruption

individual and institutional providers, in kind or in cash, that are made outside official payments channels and (2) purchases that are meant to be covered by the health care system… . In effect, informal payments are a form of corruption.

Source: Gaal, P., Belli, C.P., McKee, M., Szocska, M. Informal Payments for Health Care: Definitions, Distinctions, and Dilemmas. Journal of Health Politics, Policy and Law.

In fact the most common image that one has in mind when talking about the informal payments for health care is that where the medical staff is being paid by patients who use

7

health services that should be free of charge in the public system (see also Balazs 1996). Following this description several attempts have been made by researchers to come up with comprehensive definitions that will grasp all the aspects of such complex transactions. Gaal et. al (2006) make an attempt to put together a compilation of definitions coming from work on the ex-communist countries in Eastern Europe (see also Box 1).

The in-kind informal payments here range from tangible gifts, such as sweets and alcoholic drinks, or more expensive items, such as works of arts and jewelry, to services provided by the patients or their relatives, and political favors. Evidence from various countries has led researchers to include to the definition of the informal payments not only the ‘pure’ in-kind payments but also another form of payment which includes the series of goods and services that under normal conditions should be an integral part of the service the patients should get, and in this case is purchased/provided privately. Examples of this are the cases when the patient buys drugs that are supposed to be offered free of charge by the hospital, or if he purchases services which are also supposed to be free of charge. On the other hand, given the ambiguities that exist in identifying all the forms of informal payments other researchers argue that these forms create all the premises for an informal market in health care within the existing system of the public health care service network. As such, they should be certainly considered as a form of corruption (Lewis 2000). In fact, Lewis stresses the point of between informal payments and gratitude payments calling for more attention to the fact whether the payment is really voluntary or implicitly required by the acts and/or behavior of the medical staff.

Despite the ongoing discussion, treating this problem as purely a “corruption” problem will simplify the complexity of such process, and moreover we will let out of the analysis very important factors that define the “rules of the game”. As Gaal et al (2006) put it, the patients and the doctors simply adapt themselves to the rule of the game because they need to survive. In our analysis (see also Chapter 4) we control for more variables that determine the probability of paying such visit and the extent of the amount paid.

8

In our analysis we do not neglect the fact that corruption is part of the phenomenon, but we assume that there are also a range of other variables (like the lack of strong health insurance regulations, the current health status, and a series of socio-economic characteristics of the individuals) that can be crucial in defining how a patient will act when faced with a not efficient health system. We are thus trying to identify the main driver of these informal payments, in a system where insufficient funding undermines the legitimacy of regulations set by the government, and what can be done to improve this situation.

2.2. Health Care System Performance and the Informal Payments To analyze the potential consequences of informal payments, it will be necessary to see it at the levels of causes, (inputs, structures and process) even though the consequences can be defined at the level of system outputs or outcomes. To put it another way, a problem exists if the health care system does not achieve its objectives, such as improving the health status of the population or enhancing patient satisfaction.

Whenever the informal payments are analyzed it should always be noted that this specific informal fee-for-service form of payments does not always hamper the efficiency and equity of the health care system. All the other conditions where such informal payments should be consider before their impact on the performance of health sector is evaluated. Hence, in countries where the economic transition resulted in a dramatic decline in national income, these informal payments can be the most important source of health care financing and can compensate for the deficiencies in the health care financing.

The question posed is whether these informal payments are always associated with a negative impact. Many studies show that whenever the informal payments are truly given voluntary and all health workers do not provide any better services, these informal payments can improve the responsiveness of health care staff, provide an incentive for physicians to stay in the profession, and ensure a sustainable supply of human resources. These kinds of the informal payments are called gratitude payment because it happens

9

after the service and are a kind of patient’s appreciation for better health rather then for receiving better or more care.

On the other side if the informal payments in the health sector are given by ‘force’they negatively influence the efficiency of service provision because: 1. Informal payments could become a barrier for access to health care, and thus serve as a base of discrimination towards the poorer people. 2. The medical staff does not provide a needed service because it has not been paid informally for it. 3. The medical staff feels obliged to provide unnecessary services just to please the patient who paid. 4. The financial resources are allocated to the most influential professionals creating disincentives for the young professionals and other medical staff. 5. The efficiency and effectiveness of the health systems are jeopardized because the patients paying these informal payments may neglect the referral system and exploit the specialized health care professionals and facilities. 6. The generalized and accepted formal payments contribute to worsen the extent of informality in the country and can serve as a valid justification for other forms of corruption in the country.

Perhaps one of the most important consequences of informal payments is that they undermine governments’ efforts to improve accountability and formalization of the sectors of the economy. Moreover, they contribute to the spreading of corruption, making it more acceptable to the eyes of the public, putting at risk every effort to enhance the transparence of public policies and eroding the trust in government interventions.

2.3. The determinants of informal health care payments As we mentioned in section 2, the performance of health care systems can not be analyzed separately from the background in which these last operates. In fact, the extent of the corruption in the health care system is a reflection of the society in which it 10

operates (Savedoff and Hussmann 2002). Previous studies and surveys have concluded that health system corruption is most likely in societies where there is lack of the rule of law, absence of the government transparency, luck of public trust, and where the public sector is not ruled by effective civil service codes. The accountability mechanisms are other important features of the effective health systems that if absent lead to more vulnerability to corruptive manners of operations. These mechanisms are important in every level of health system management to ensure the participation and the obedience to the rules of every actor and professional in the field. As we have also mentioned previously, there exists an ongoing discussion to whether include the informal payments as a form of health sector corruption, or as a “pragmatic way” to deal with various deficiencies in the planning, financing and management of human resources of such sector. Studies have showed that there exist a relationship between informal payments and corruption which is complex and bidirectional. The lack of resources in the health care system in the CEE and FSU countries (as in other transition and developing countries), have generated the need for additional incomes to finance a constant supply with health professionals. As a consequence of this, over time the informal payments have become an established and accepted practice. As an example, a common theme in all these countries is the differentiation between payments before and after the service, regarding the former as corruption while the latter as a gift, indicating one’s gratitude.

The causes and origin of informal payments have long been debated in all countries in which these phenomena are growing and are becoming a big issue. Many researchers have advanced different casual factors, which can group in two main categories: •

Social-cultural. According to the ‘donation hypothesis’, gratitude payment is part of the culture of society where patients express their gratitude in the form of gifts. The key issue is that the elimination of informal payment would require a change of culture, which is very difficult to achieve.

•

Economic. We call this the ‘scarcity hypothesis’. This hypothesis is based on economic explanations and argues for causes rooted in the design and operation of the ’Semashko’system where the state was the main and only 11

financier and every service was provided free of charge. The ‘freeness’of health services which resulting to exceed demand from one hand and the higher number of the medical staff with the low salary on the other bringing the cause of informal payments. This increased demand could be satisfied if investments in health care had been given priority, but the macroeconomic policy of the communist regime did not favor this ‘unproductive’sector of the economy (Kuti 1984). •

Lack of good governance. The ‘poor governance hypothesis’on the other hand, argues that the lack of regulatory capacity and lack of monitoring, accountability and formal payment systems have contributed to worsen the existing corruption in the public sector. With this we refer both to the deficiencies in the health sector as well as the government deficiencies in enforcing the rule of law. We can add all of these deficiencies under a separate group named the “lack of good governance”.

Going back to our discussion of defining what constitutes corruption, it is difficult to separate the specific forms of informal payment and to decide what constitutes corruption. In countries where corruption is well-spread, the measures that will be based on sanctions taken against individual offenders for taking unofficial payments within the health sector will be unlikely to work. In addition, policy makers need also to take into account which of the causes mentioned above is the dominant cause for these informal payments to be persistent and well-spread.

2.4. The extent of informal payments in CEE and FSU countries There exists a wide range of evidence suggesting that the informal payments are widespread phenomena in the post-communist health care systems of the CEE and FSU. As we have argued previously, the reasons for the spread of such payments in this region vary from the deficiencies of health systems and governance to the socio-economic roots. In fact, many researchers argue that the informal payments are one of many individual coping strategies adopted by medical staff and patients in countries where health systems 12

are under-funded, overstaffed, and burdened with broad mandates for free access to care (Lewis, 2000; Vian, 2005).

The last survey from the Transparency International has revealed that most of the people on the Balkan countries think that the health care system is very/extremely corrupt (Table 1).

Table 1. The extent the interviewees perceive the medical services to be affected by corruption Total Sample Not at all corrupt 2

Western Balkan/ potential EU candidate countries ALB

BGR

CRO

KVO

MCD

RMA

SER

TUR

0,11

0,01

0

0,02

0,08

0,02

0,02

0,02

0,02

Total 0,02

0,21

0,04

0,04

0,04

0,09

0,03

0,1

0,1

0,05

0,06 0,15

3

0,26

0,17

0,13

0,13

0,15

0,14

0,19

0,2

0,13

4

0,19

0,38

0,29

0,24

0,16

0,22

0,23

0,27

0,25

0,25

Extremely corrupt

0,18

0,40

0,43

0,5

0,43

0,57

0,33

0,34

0,45

0,42

DK/NA

0,04

0,01

0,11

0,07

0,08

0,03

0,12

0,07

0,1

0,1

Source: GALLUP International, 2006

This survey was based on the perceptions of the people who perceived the health systems in their countries as very corrupted. Intuitionally, this perception comes because of two reasons, the first being that these people distrust the public system in their countries (including the management of health system) and the way the public money is spent, and the second being that they are faced with informal payments whenever they are constrained to seek health care in public facilities. Table 2. Out-of-pocket payments/ informal payments in selected countries Country Albania

Out-of-pocket/Informal payments 16% of total health financing— out-of-pocket (1996)

Source HiT 1999

Croatia

10% of direct service costs— co-payments

HiT, 1999

Czech Republic

10% of health financing before health HiT 1994 insurance— gratuities and under-the-counter payments

Hungary

17% of total health expenditure— out-of- HiT, 1999 pocket pay (1996) 11% of total health expenditure— gratuities World Bank, 1993

13

(1997) 20% of total health costs— informal payments Kazakhstan

30% of total health expenditure— out-pocket for drugs, food, nursing services (1996) A survey by local newspaper, almost all 500 patients paid UCP for service 10% of financing in Almaty was covered by user charges (1996)

Ensor, 1998

Kyrgyzstan

30–50% of total health expenditure official and unofficial out-of-pocket payments (1997) a half of those consulted made informal payment for consultation (1996) 8% of outpatients and 25% of in-patients gave gifts to staff 24% paid formally for admission, but of those 62% did not get a receipt (informal payment) 18% of total cost of hospital stay— informal

HiT, 1999 Falkingham, 1998/9 Abel-Smith and Falkingham, 1995

Poland

46% of expenditure per episode of hospital Chawla et al, 1998 treatment (‘envelope payment’) (national household Reported ‘envelope payments’ more than survey 1994) double the average gross salary of a physician

Romania

25% of payments

total

health

costs— informal World Bank, 1993

Source: McKee, M., Balabanova, D., Understanding informal payments for health care: the example of Bulgaria

Table 2 gives an overview of the spread of the out pocket payments and informal payments in Central and Eastern European and Former Soviet Union countries. As we can observe out of pocket payments and the informal payments are wide-spread in all these countries. Despite the classification used (gratuities or informal payments), they constitute a large amount of total expenditure on health in all cases. Informal payments constitute 20% of total health costs in Hungary, and 25% in Romania, while the so called gratuities constitute 10% of health expenditures in Czech Republic, 10% in Hungary. Informal payments and other forms of gratuities constitute a large share of total health expenditures in other countries as well.

There is evidence that almost in all countries the majority of informal payments are paid for specialized services such are operations and childbirth, or other life-threatening procedures. The majority of them occur in hospitals or elite urban facilities and they are

14

directed to well-known physicians. In turn, this suggests that informal payments are unequally distributed among health workers, and that it is not the overall amount of informal payment the only reason for concern, but also the effects that they have on with their unequal distribution among health workers.

Another inequality consequence of the informal payments is that they seem to bring greater attention to that group of the population that is able and willing to pay for these services (which are unfair and abusive). So informal payments hurt the poor and vulnerable who cannot afford to pay, and create uncertainties and anxiety during the careseeking process. They are considered as harmful to the effectiveness of the health systems all over this region, and ways to overcame them (or make them part of informal systems) are considered by the policy makers of these countries.

15

III. HEALTH CARE AND THE INFORMAL PAYMENTS IN ALBANIA

Albania has inherited a universal health care system from the past regime where the state was the only financier and every service was provided free of charge. Moreover, the system was wide-spread all over the country covering every single village and having hundreds of health posts and around 50 hospitals. With the fall of the communist regime the system immediately faced immense financial constraints. The state could not really afford to maintain anymore such system, having less and less financial resources, and on the other hand could not privatize or shut it down completely due to the political sensibility of the health care provision. The following sections give an overview of the main characteristics of this system such as the organizational aspects and the service delivery, the financing of the system, and the main problems and challenges faced by the system.

3.1. The organization of health care system The health care system in Albania has roots in the Soviet “Semashko” model, it is dominated by the public provision of the services. The network of Public Health Care Institutions, in charge of diagnostic and curative health services is organized around three levels: primary health care, secondary hospitals, and tertiary hospitals and specialized institutions. At national level, the network also includes the Public Health Institute.

3.1.1 Primary Health Care

Primary health care is provided in Primary Health Centers (PHCs) located in the main cities of each municipality and commune 1, Primary Health Posts (PHPs) located in a number of municipalities and communes, General Polyclinics and Dental Clinics in the main city of the 36 districts, and Specialized Polyclinics in Tirana.

1

The system inherited from the communist times is well spread over the regions, and it should be at least one Public Health Center per commune.

16

According to the data of Ministry of Health (MOH), in 2003, excluding Tirana, there were 582 PHCs, out of which only 316 or 54% were functional, 1,501 PHPs, out of which approximately 700 or about 47% were functional, 35 General Polyclinics and 35 Dental Clinics. In Tirana (municipality and province), there were 24 PHCs, 69 PHPs (for 162 villages), 10 Polyclinics, 3 Specialized Polyclinics, 1 Dispensary and 1 Urgency.

Approximately 1,444 general practitioners, 900 specialized physicians with full or part time assignment and 5,930 midwives, nurses and midwives-nurses currently were working in PHCs, during 2003. General practitioners offer diagnostic, curative, preventive, promotional and health educational services. They are paid by Health Insurance Institute (HII) on the basis of a combination of basic salary and “per capita” system.

Dental services in Albania have a curative and preventive character. They are mainly private (approximately 70-80%), while the public sector includes free service offered to children until the age of 18 and emergencies. Public service is offered in 8-year elementary schools and high schools as well in the centres of each district. There are currently 310 dental clinics in which approximately 1,200 licensed doctors work (283 in the public sector).

Maternity consultations as well as centers of family planning operate within the Primary Health Care structure. There are currently 108 such centers. Children consultations are also part of the Primary Health Care network. There are currently 177 such centers.

3.1.2 Secondary Hospitals

Secondary care is offered in secondary, regional, district and rural hospitals, as well as in most national hospitals offering tertiary care. There are 34 Secondary Hospitals, with 9 Rural Branches, and 2 Psychiatric Hospitals distributed and located according to different administrative division of the country.

17

Regional hospitals are located in the Prefecture centers and offer specialized services 2 as well as basic services. In total there were 11 regional hospitals active in 2003.

District hospitals are located in the District centers and offer a narrower range of service such are pediatrics, obstetrics-gynecology, surgery and pathology. In 2003 there were 23 district hospitals active in the country.

Rural hospitals are usually dependent from the district hospitals and operate as integral part of these ones. In 2003 there were 9 active rural hospitals offering services such as the pathology and pediatrics services.

As a special category of secondary hospitals there are also 2 psychiatric hospitals located in two different cities (Vlora and Elbasan). They are specialized in the treatment of chronic and acute psychic patients

3.1.3 Tertiary Hospitals and Specialized Institutions

Tertiary care is limited and located mainly in Tirana, the capital city of the country. The lack of secondary hospitals in Tirana as well as the very weak and inefficient referral system put an extra burden on the specialized institution of tertiary care in Albania. Health insurance is supposed to cover every cost related to the tertiary care but basically they do not have a contract agreement with these institutions and the funding still come directly from the Ministry of Health budget (see also section 3.2 for more details on the financing of the health system). Tertiary care is provided by 4 institutions specialized in different services, as below: − Tirana University Hospital is the main tertiary hospital of the country. The hospital has around 1,527 beds, and offers secondary and tertiary care. It also includes the Clinic Stomatology University; − Tirana Obstetric and Gynecology Hospital has 287 beds, and offers secondary and tertiary care; 2

These services include ENT, Ophthalmology, Orthopedics, Trauma, Neuro-Psychiatry, Chest Medicine and Infectious Diseases.

18

− The Lung Disease Hospital, has 232 beds and offers secondary/tertiary care and long-term treatment for tuberculosis; − The Military Hospital is dependent from the Ministry of Defense (parts of it are open for services to the civil population). The hospital has 412 beds and it is specialized in traumatology. It also includes the university orthopedic department.

3.1.4 Private Health Care Institutions

The private network of the health care institutions is basically limited in covering only some of the levels of the services. Health care services include: − Private, general and specialized practitioners. These are based on small facilities and are mainly located in main municipalities and Tirana. The fees are very high if compared with the public health care fees, and are mainly established by professionals that in most of the cases are also employed in the public health sector. − Specialized polyclinics, including exam centers that are specialized in diagnostific tests. − Dental clinics offer a wide range of services. It should be mentioned that this one of the sectors that was (almost) completely privatized early in the transition period. Now days the state own very few preventive and curative centers in the main cities. − Laboratories offer a wide range of services and mainly complement the inefficient state owned laboratories.

As it was the case with dental clinics one of the early steps of the health reforms has been also the privatization of the pharmaceutical sector. Nowadays all the pharmacies (except hospital pharmacies) are private.

3.2. Financing Health Expenditure in Albania The financing of the health sector is highly centralized. The financing resources come mainly from general taxes and very few of them come from the health insurance 19

contributions (the contribution norm for the insured employers is only 3.4% of the gross wage). The Ministry of Finances allocates funds to Ministry of Health (MoH) within the framework of the budget process. MoH budget includes resources for administration and management, Public Health Centers and Public Health Posts excluding Tirana Region, Hospitals and Public Health Institutions.

Central Government resources are funded by taxpayers both households and firms and different internal and external grants, while domestic borrowing and long-term external loans contribute to balancing the annual budget.

By law, inpatient services in hospitals including drugs are free of charge for the entire population, whether patients are insured or not. This also applies to long term treatments.

Outpatient services involve patient co-payments which are set at a low level and are publicized in principle. All fees thus collected stay within the institution delivering the services. 70% of the fees go to the staff, 15% to non-salary recurrent expenses and 15% to investments, including small repairs.

Table 3. Public Expenditure on Health Care System 1997

1998

1999

2000

2001

Total expenditure on health as % of GDP Albania

3.8

3.4

3.6

3.8

3.7

Croatia

8.1

8.8

8.9

9.4

9

Serbia

11

9.9

9.2

7.6

8.2

The former Yugoslav Republic of Macedonia

6.1

7.6

6.4

6

6.8

General government expenditure on health as % of total government expenditure Albania

7.8

6.9

6.9

7.7

7.3

Croatia

13.2

13.7

13.4

14.4

12.8

Serbia

21.2

17.5

15.9

14.7

15

The former Yugoslav Republic of Macedonia

14.5

19

16.3

15.6

17.4

Source: Albania Ministry of Finance; WHO/Europe, HFA Database, June 2002

Public expenditure on health in 2002 have been about 3% of total GDP3, one of the lowest shares in the Balkans, and about one-half of the CEE average (Table 3). Public

3

Source: Ministry of Finance, Medium Term Expenditure Framework (MTEF).

20

expenditure on health care system is low not when compared to other countries in the region but also when compared to Albania’s expenditure a decade ago.

The limited public spending on health care sector compared to the other Balkan countries, has implied an increased participation in financing health care of out-of-pocket for both formal “co-payments”and informal payments.

3.3. Informal payments in Albania: causes and determinants Health services are supposed to be equal for the Albanian’s citizens. In fact the hospitalization and the in-patient treatment of all the citizens are supposed to be free by law. Also a major part of other primary and secondary health services are supposed to be provided with very low level of co-payments or free of charge. In reality, often this is not the case and the informal payments are recognized to be well-spread in all the levels of health care provision. In fact a recent study of the World Bank (Health Sector Note, 2005) confirms that “informal payments seem to be rather widespread, which seems to contradict the free character of inpatient services in hospitals”. A series of studies based on the LSMS data or other survey data have indeed confirmed this as one of the major issues for the financing of health care.

There exists a variety of factors that influence informal payments in Albania. Different studies (see also Viana et al, 2005) have found that the main ones are as below: − Low salaries of medical doctors and other health workers especially in the secondary and tertiary level (see also graph 1); − For Albanians health is extremely important and they are willing to pay any price to have a better one; − The quality of health care system in Albania is not equal for all health seekers, so they face a constant fear of being denied the best treatment; − There exists a tradition of giving a gift to express gratitude for the service benefited;

21

− Other reasons are also given for the rising occurrence of the informal gifts based on the social economic transformations associated with the transition process in Albania. These reasons are listed as the lack of accountability, social norms influencing providers, and the growth of capitalistic values in Albanian society.

Table 4 below gives an overview of the main reasons as expressed by the health providers and health seekers in a survey conducted in the central region of Albania (see Viana et al, 2005 for a more detailed explanation of the survey and results).

Table 4. Reasons for informal payments Reasons why providers ask for or accept -

Financial problems, low salaries To have higher standard of living Market-orientation (health care is a market, people should pay) Socialization during medical training (learning how to solicit payments) Lack of social connection or personal relationship Not to insult patients, because patients want to give gifts or make payments

Reasons why patients offer or give -

Recognition that providers are not paid adequately For a feeling of security (did all that it was in your power to achieve good outcome) To motivate the provider to provide more attention, better service For fear that sub-standard care will be provided if you don’t pay Because you must pay or you will not seen or receive any care To “warm up”or create a closer providerpatient relationship To expedite or speed up care Because of gratitude, appreciation; to reward the provider (may be called a gift)

Source: Taryn Viana, Kristina Gryboskb, Zamira Sinoimeri, Rachel Halld. Informal payments in government health facilities in Albania: Results of a qualitative study

As we can observe, the reasons given by the two parties coincide in more than one point. The patients give because they feel that the state does not reward the health professionals good enough for what they give (and the health providers do confirm this to be the main reason). But, if this is the main reason, than we would observe the irregularity of such payments, and the evidence sustains the contrary. There is reason to believe that other reasons are behind the informal payments. These have to do with social norms, gratitude, appreciation, but also results of the bargaining process between the two parties. The patient’s answers confirm that they may face inadequate treatment, delay (or even denial) of treatment, and lack of motivation from health care providers if they do not “warm up” the relationship by paying the due informal payments.

22

The reasons mentioned above lead us to believe that there must be differences between the terms gifts and informal payment. The exploring of the main patterns of out of pocket payments and informal payments have part of a big project on two of the central regions of Albania. Based on the surveys and interviews that were part of this project Viana et al, (2005), have come up with some of the main differences between these two terms as perceived by the participants in the survey (see Table 5).

Table 5. Gift versus Informal Payment Characteristic or Attribute

Gift (dhurate, peshqesh)

Informal Payment (ryshfet, bakshish)

Given willingly

Usually true, although some people may feel they are obliged to give a gift for moral reasons (as described below)

From the providers’ perspective it may be seen as given willingly, while more often patients feel forced or obliged to make informal payments in order to receive care

Fulfills a moral obligation or spiritual need

Can be true. Some people feel Not usually as though they are morally obliged to give something when they have received a service

Gives patient pleasure

Usually true

More providers than general public respondents thought this was true.

Expresses respect, hospitality, gratitude

Usually true

Not usually, although some providers did say patients gave informal payments to express respect

Expresses satisfaction with the Usually true outcome

According to the public, informal payments are usually independent of the patient’s level of satisfaction with outcome, but providers sometimes believe informal payments express satisfaction

Usually true

Informal payments can be given before, during, or after service is provided

Given after service has been provided

23

Implies good provider patient relationship

Can be true. Gifts are sometimes given to a provider who has a relationship with patient, but the relationship need not be pre-existing

Not usually. Some providers expressed belief that patients give informal payments to create a warmer relationship with provider. Patients did not express this belief, however.

Of token value

Most informants agreed that gifts are “symbolic” and of small, “token” value, though some said wealthier patients give more valuable gifts

Not usually. Informal payments were sometimes of low value in the region surveyed, which may be why it was harder to distinguish them from gifts

In-kind

Often, though not necessarily. A gift can be cash, as in the patient who gives a doctor 100 Lek and says to “have a coffee”

Not usually, though there are cases where large amounts of produce or goods are given as an informal payment (a bottle of grappa rather than a glass, kilos of oranges rather than a few)

Source: Taryn Vian, Kristina Gryboski, Zamira Sinoimeri, Rachel Hall Clifford. Informal Payments in the Public Health Sector in Albania: A Qualitative Study Final Report July 2004, Partners for Health Reformplus (PHRplus)

The results from the table suggest that the gifts are payments given more voluntary that the informal payments. Gifts fulfill a moral duty or spiritual need, while with the informal payments it is not necessarily the case. The other qualities of gifts are that they give patient pleasure, express respect, hospitality, and gratitude, as well as expresses satisfaction with the outcome. All these later qualities do not seem to be attached to the informal payments as such (some of the providers did feel that this was the case, but this was not confirmed by the answers of the health seekers). The other qualities of gifts as confirmed by the answers in the survey were that they were usually given after the service was provided, proved for a good relationship between the two parties, and in general came in small values. As expected the survey did not confirmed the same expectations for the informal gifts, they can be given at anytime, do not prove for a good relationship between the parties and more importantly take different values according to the service provided and other specific factors. Another differentiation that comes out of the survey has to do with the way used for the payment. Gifts are usually identified with in-kind goods (unless it is a cash “gift”below 100 Lek), while informal payments are given mostly in cash. 24

3.4. The extent and impact of informal health care payments The well-spread phenomena of informal payments in Albania create a substantial burden on those who seek health care, both in terms of financial means spent and through the uncertainty created. What makes this situation worse is that these funds remain completely outside the formal control of the health system, thus do not directly contribute to the improvement of such system.

Another important consequence of the informal payments in Albania is the social impact that these payments pose not only on the health seeker but also on their social network. Anecdotic evidence suggests that in most of the cases the patient find alternative ways to finance the total of out of pocket payments for health care. One of these is also the intrafamily or inter-family borrowing. The family in Albania is based on a patriarchal set up, where the other persons of the family take care of unpaid debts of those who are not able to pay. Hence, if we have a look at the Table 8, we could easily observe that for the lowest deciles the total out of pocket expenditures for each episode amount to 50 per cent (first quintile), or 40 per cent (second quintile). This leads us to believe that these people resort to alternative ways to finance these expenditures, with the family and friends being the first resort.

The data collected by the LSMS are, in a sense, counting all the informal payments under “gifts paid to the medical staff”. This makes a little bit more difficult the distinction between an actual gift and an informal payment, but we will try to distinguish between these two by controlling for their main drivers (see also the analysis in Chapter 4).

According to LSMS data (2002) around 30% of those seeking outpatient care report to have paid informal payments, and around 60% of those seeking inpatient care state that they made a “gift”(World Bank, 2005). If we consider that the inpatient health care is provided by law as free of charge, than this amount may be significantly higher as at least a part of reported treatment costs may also be informal payments (LSMS 2002).

25

This evidence is also confirmed from our own calculations using LSMS data of 2003. The Table 6 shows that in our sample for 2003, 27.7% of the people seeking outpatient health care have reported informal payments, while 59.6% of the people seeking inpatient health care have reported informal payments.

What is more interesting from the table above is the fact that from LSMS data we can observe a substantial of informal gifts are also paid when seeking private health care.

Table 6. Health care levels and the informal gifts Inpatient has paid informal gift No Yes Total inpatient Outpatient has paid informal gift No Yes Total outpatient Private has paid informal gift No Yes Total private

Freq.

Percent

118 174 292

40.41 59.59 100

829 317 1,146

72.34 27.66 100

114 21 135

84.44 15.56 100

Source: Own calculations based on LSMS data 2003

Hence, about 15.6% of the people that seek private health care have reported to have paid an informal gift. This, in turn, suggests that there may be also strong social reasons for the payments of these informal gifts. We will try to explore more on this in Chapter 4.

The amount of paid as informal payment differs also if we consider the different levels of care. Once more, the LSMS data suggest that these payments for hospital doctors may amount to at least twice as their official wages, (though there may be variations across physician types, where for instance the surgical specialists will earn considerably more than the others). The informal payments for the outpatient doctors may amount to almost 50% of their received wages. These differences may be also due to the fact that the outpatient patient pay less to these doctors and that their salaries are higher on average (since they have a contract with the health insurance).

26

The amount of informal payments going to the other auxiliary staff is pretty low (compared to their official wage level) both in inpatient and outpatient health care. This suggests once again for an unequal distribution of these payments among the health care staff. Graph 1 shows that these payments go mostly to the inpatient services (41% of the wage came from informal payment).

Graph 1. The formal salary and informal payments for the health staff (2002) Formal and Informal Payments Outpatient Nurse Outpatient Medical doctor Inpatient Other staff Inpatient Nurse

Formal Salary Informal Payment

Inpatient Medical doctor 0

10

20

30

40

50

60

70

Source: Albania Health Sector Note, World Bank 2006

From the payer’s perspective, the informal payments constitute a substantial part of the total of the out of pocket amount. Table 7 gives a comparison of the average amounts of out of pocket expenditures and the informal gifts in different levels of care.

Table 7. Average amount of out of pocket and informal gifts by level of service, 2003 Average amount

Percent

Inpatient health service Out-of-pocket

6,998

Infomal payments

5,184

74.00

Outpatient health service Out-of-pocket Infomal payments

3,688 124

44.85

Outpatient health service Out-of-pocket

965

Infomal payments

84

9.90

Source: Own calculations based on LSMS data 2003

As we can observe inpatient health care is the level where the patients pay the biggest share of the average amount of out of pocket payments as informal gifts (the average 27

amount of the informal gifts is equal to 74 % of the average amount of out of pocket payments here). The average amount of informal payments in second health care is lower to the inpatient care and it drops more when speaking about private health services.

If we consider the amount paid from every patient individually, it results that these payments have a big impact on the patient’s welfare. Again, the LSMS data suggest that practically everyone who has taken hospital service has been obliged to pay out-of-pocket expenditures. The average amount is about 21,000 lek. The situation is more dramatic for the people on the lowest quintile, as they pay about four times more than the people in the highest quintile (World Bank, 2006). Table 8 gives a complete picture of the amount paid as outpatient out of pocket expenditures per each of the quintiles of the population, and also by location/region and health insurance status.

Table 8. Out-of-Pocket Expenditures for Outpatient Care in 2002 (Lek paid per episode of care for those who made payments) Quintiles

Treatment

Gift

Drugs

Laboratory

Transport

Total

% who paid (exct.transport costs)

payment per episode as % of monthly per capita consumption

1

319

92

1,071

144

212

1,838

95

50

2

344

147

1,256

218

312

2,277

96

40

3

312

146

1,276

238

266

2,238

97

30

4

294

153

1,244

334

205

2,231

94

22

314

158

1,314

383

188

2,356

95

15

Total

5

319

135

1,217

240

244

2,155

95

30

% of Total Payment

15

6

56

11

11

100

Region Coast

244

186

1,435

346

151

2,362

98

31

Central Mountain

372 396

104 150

1,058 1,239

169 196

308 401

2,013 2,382

94 98

29 42

Tirana

206

43

1,146

254

13

1,663

87

20

Urban

255

109

1,101

283

85

1,834

94

23

Rural

354

148

1,279

217

331

2,329

96

35

Health Insurance Status No Insurance

329

150

1,213

241

267

2,200

96

30

Insurance

308

117

1,222

239

218

2,103

95

24

Source: Albania Health Sector Note, World Bank 2006

A first look at the table reveals that the amount paid for various expenditures does not vary that much across the quintiles. We see that the “gift”amount is somehow lower for the first quintile only (meaning the extremely poor) amounting to 92 leks, but then it stabilizes for all the other quintiles. As from the regional point of view, we can observe that Tirana (the capital) and the urban areas pay less than the other areas of the country.

28

The people living in the coastal area pay much larger “gifts”than the others. On the other side the fact of having a valid health insurance license means that you will pay less “gifts” , but not much less of other out of pocket payments (as treatment, drugs, and laboratory). Perhaps the most interesting column is the last one as it compares the total out of pocket payments to the monthly per capita consumption of these categories. As we can see, the outpatient out of pocket payments for the fist quintile amount to 50 % of the monthly per capita consumption, which can tell very much about the impact that these payments can have on the poverty of such quintile. Table 9 is a similar table to Table 8 giving an overview of inpatient out of pocket payments for each of the quintiles of the population.

Table 9. Out-of-Pocket Payments for Inpatient Care in 2002 Quintile

Treatment

Gift

Drugs

Diagnostics

Transport

Total

% of monthly % of monthly per capita household expenditure expenditure

1

6,492

4,057

2,212

790

1,450

15,001

405%

61%

2

10,684

4,373

3,716

2,082

1,980

22,835

398%

69%

3

5,204

5,521

3,680

1,304

1,504

17,213

229%

43%

4

15,839

5,843

3,683

948

1,603

27,916

279%

61%

5

13,531

8,121

4,497

1,377

2,257

29,783

107%

41%

% of total payment

41%

26%

17%

7%

9%

100%

Source: Albania Health Sector Note, World Bank 2006

The findings suggest that the amounts of out of pocket in inpatient care are much higher than those for outpatient care. The average amounts of gifts do not vary much among the income quintiles suggesting that the incomes are not a strong determinant of the amount of informal gift paid. The hospital out of pocket expenditures put a high burden on the household incomes reaching 61 % of the monthly per capita consumption for the first quintile, and 69 % of the monthly per capita consumption for the second quintile.

Giving the large impact on personal welfare, the uncertainty surrounding informal payments creates an additional factor contributing to the insecurity of life for those who are obliged to seek health care. On the other hand as these payments do not go the finances of the provider institutions, they are somehow out of the formal way of management control and contribute to a general lack of transparence. Reports suggest 29

that the bigger contributor to this spread of informal payments is perhaps the government itself with its unclear policies towards co-payments in all the levels of care, and the low level of contributors and contributions to health insurance. Experience of other countries has shown that the informal payments can only be tackled with integrated reforms in health financing part (including the wages of the health personnel), and the establishment of accountability and quality control systems.

30

IV. EXPLORING

THE

DETERMINANTS

OF THE

INFORMAL PAYMENTS

IN

ALBANIA In the first chapters we have discussed about the main reasons driving the informal payments. Here, we try to asses the determinants of these informal payments using the data from the LSMS survey collected in 20034. The determinants of the informal payments are grouped in economic/governance and social factors (see also Chapter 2). We will consider both these factors and see which of the characteristics of the individuals seeking health determines the probability and the amount of informal payments. We use a probit model to test for the effect that the different characteristics of the individuals have on determining whether they pay this “gift”or not, and then an Ordinary Least Square (OLS) model to test for the determinants of the amounts of these “gifts”.

4.1. Data and Descriptive Statistics The data we will be using come from two parts of the Albania LSMS 2003; the individual panel, and the household panel. We have merged the information of these two panels. The individual panel includes information on 7,973 individuals, and information is collected on their demographical, social and economical characteristics. This panel includes a set of questions on the health issues. A set of the questions of our interest asks whether the individual has been seeking health care in the past period (4 weeks for the outpatient care, and 12 months for the inpatient care), what the total costs associated with their visits/staying, and how much did they paid as out of pocket payments (broken down by treatment, gift, drugs, diagnostics, and transport). Our variable of interest is the “gift” paid to the medical staff. The other data set is the household panel which includes 4

LSMS is a national representative survey that collects information on different indicators of health, education, economic activities, housing and utilities for households all around Albania. The 2003 Albania Living Standard Measurement Survey (LSMS) provides individual level and household level socioeconomic data from 1,782 households drawn from urban and rural areas in Albania. The sample was designed to be representative of Albania as a whole, Tirana, other urban/rural locations, and the three main agro-ecological areas (Coastal, Central, and Mountain). The survey was carried out by the Albanian Institute of Statistics (INSTAT) with the technical and financial assistance of the World Bank. (LSMS, 2003)

31

information on the households’ characteristics. It contains information on 1,782 households that were interviewed in the whole survey. This panel includes detailed information on the incomes and the expenditures of the households, dwelling and other utilities, etc.

We first take a look at the frequency of the visits and the informal payments (labeled as “gifts”) for each of the health services. Table 10 gives an overview of the health visits occurred at each of the levels of health care by the occurrence of the informal payments. The differences observed in the number of the visits between different providers of health care come also from the fact that the interviewees were asked to recall the visits done over different time space. Hence, the outpatient and the private doctor visits are collected for the past 4 weeks, while the dentist and the hospital visits are collected for the past 12 months. The table shows that 28% of the patients in the outpatient care have paid an informal gift. These numbers go to 60% for the hospital care, 16% for the private doctor, and only 1% for the dentist care. Once again the most interesting figures are those for the private doctors and dentists (which as we have mentioned are almost all private owned). The low number of informal payments for dentical care suggests that these payments are enforced by the way the public system operates.

Table 10. Health visits, frequency and types of gifts Outpatient Visits Hospitals Visits (last 4 weeks) (last 12 months)

Private Doctor Visits (last 4 weeks)

Dentist Visits (last 12 months)

nr

317

174

21

11

%

28%

60%

16%

1%

nr

829

118

114

1,563

%

72%

40%

84%

99%

nr

105

74

5

6

%

9%

25%

4%

0%

nr

212

100

11

5

%

18%

34%

8%

0%

1,146

292

135

1,574

has paid gifts

has not paid gifts

explicitly requested gift

voluntary gift

Total

Source: Own calculations based on LSMS data 2003

32

If we observe the number of visits that each of these persons have we can observe that out of 292 people that have declared to have been in the hospital in the past year, most of them have stayed for les than 15 days, and almost 60 % of them have declared to have paid an informal “gift”to the medical staff.

Graph 3. Log of gifts for in-patient care

0

0

20

10

Frequency 40

Frequency

20

60

30

80

Graph 2. Days spent in hospital

0

50

100 150 days in hospital in last 12 months

200

4

6 8 10 Log of informal amount paid for inpatient

12

The amount of the informal gift paid is captured by another variable which is displayed in the graph 2. For the purpose of our future analysis we have calculated the natural logarithm of the amount paid and have displayed it in the below histogram.

As we have mentioned, in the individual panel we are interested in the information on the demographic characteristics such as age and sex of the individuals, but also on other variables like, health insurance, self health rating, illness, and the education. Health insurance indicates whether the person has health insurance or not, the illness variable indicates whether the individual suffers from chronic illness or disability, and the self health rating is represented by a categorical variable which takes five values (from very good to very poor).

The variables we are interested in the household panel are the urbanization variable and the income variable. Because we need to merge these two datasets we first estimate the income per capita equal to household income divided by the household size and also take the natural log of this variable. Graph 4 gives a histogram of the logarithm of the per capita income which we will use for estimating our models.

33

0

500

Frequency

1000

1500

Graph4. Logarithm of per capita income

0

5

10 Log of per capita income

15

4.2. The Model and the Results In order to look at the determinants of the informal payments we estimate a couple of equations that characterize the probability of payments and the amount paid. Due to the low prevalence of the informal payments in private doctors and dentist care we could not estimate the equations on these services (though we suspect that findings would have been more interesting if we compared the public with the private care). A probit function indicates whether an informal payment (Inf) has occurred:

Inf = αX + ν

(1)

Where: 1 Inf =  0

ifα ' X + ν > 0 otherwise

(2)

For the cases when we will try to determine the amount given we estimate the equations taking the logarithm of the payments; ln_ Inf = β ' X + µ

(3)

In addition we also test for the motivations behind the informal payments. For this we a binary variable derived by the question to whether these informal payments have been explicitly requested or voluntary given. We do this by estimating the results for both the inpatient and outpatient care using a probit model (see also Table 12). 34

The results of the probit regressions are in Table 11. The control variables we take are age, sex, urban/rural, the natural logarithm of the per capita income, having health insurance or not, having a chronic illness or not, health rating5, level of education (primary, secondary, tertiary), type of hospital (public hospital or public maternity hospital), number of days spent in hospital (or number of visits in the outpatient health care).

Table 11. Informal gifts paid for inpatient and outpatient care Inpatient Service

Sex of the individual Age of the individual Urban/Rural Log of income per capita Has health insurance War invalid health insurance

Outpatient Service

coef

coef

-0.170

-0.012

(0.287)

(0.138)

0.007

-0.008**

(0.007)

(0.004)

0.122

0.415***

(0.300)

(0.158)

0.206**

0.051

(0.087)

(0.053)

0.060

0.171

(0.313)

(0.155)

-1.096 (1.357)

Invalid health insurance Health rating Chronic illness Primary education Secondary education Tertiary education Days in hospital in last 12 months

0.750

-0.942*

(0.986)

(0.562)

-0.408**

-0.074

(0.164)

(0.087)

-0.067

-0.503***

(0.378)

(0.190)

0.895***

0.210

(0.323)

(0.167)

0.950**

0.229

(0.447)

(0.229)

0.634

0.056

(0.739)

(0.398)

0.000 (0.006)

Public hospital

1.656* (0.887)

Public Maternity hospital

1.258 (0.964)

Number of visits in the outpatient sector

0.023 (0.019)

Constant

Number of obs LR chi2(15) Prob > chi2 Pseudo R2

-2.421

-1.174

(1.734)

(0.760)

292 31.16 0.0084 0.0791

1133 27.39 0.0068 0.0204

Note: *p F R-squared

-0.184

1.040

(3.245)

(0.861)

292 2.4 0.0028 0.1152

1146 2.66 0.0011 0.0296

Note: *p chi2 Pseudo R2

172 27.74 0.0233 0.118

315 16.31 0.1776 0.0407

Note: *p