Galt&Taggart published a report on Georgia's Healthcare Sector. According to the document, demand on healthcare services in Georgia is largely driven by the rising prevalence of age-associated diseases and improved accessibility, supported by increased government spending.
State healthcare spending increased almost 3x times GEL 2.0bn over 2014-22. Increased government funding and development of private insurance
sector reduced share of out-of-pocket spending in total health expenditure by 15ppts to 51% over the same period. Out-of-pocket payments (mainly spent on medicines) are still high in Georgia compared to EU (16%) and peer EM countries in the region (36%). According to Vision for Developing the Healthcare System in Georgia, the government aims to reduce share out-of-pocket health expenditures to 30% by 2030.
The government implemented a new funding model of UHC - Diagnostic Related Grouping (DRG). DRG model determines reimbursement based on patient’s diagnosis and various other factors (e.g. age, gender, health complications, etc.).
The DRG model is expected to enhance efficiency and sustainability of healthcare system, increase transparency, create healthy competition between hospitals, boost consolidation and reduce market fragmentation.
"DRG model comes with its risks. If the incentives for cost reduction are too strong, without sufficient capacity of quality control, DRG can
lead to reduced quality of care. Furthermore, it can slow down the adoption and use of technological innovations and create deficiency
of certain medical services on the market.
The advantages of Diagnostic Related Grouping (DRG) are as follows: it Creates healthy competition between hospitals – new hospitals do not have unfair advantage in tariffs anymore; In medium and long term, increased profitability margins expected for the sector, due to increased government spending and sector consolidation. Dynamic pricing that follows costs in real time", - the document reads.
