Turkey's health sector indicators improving under the government's Health Transformation Programme

Great strides have been made in Turkey’s health care sector since 2003, when the government launched its far-reaching Health Transformation Programme (HTP). The HTP eventually led to the establishment of universal health insurance, while opening services and private hospitals to the majority of Turks. Improvements in patient satisfaction and health indicators have been steady, with infant and maternal mortality declining while life expectancy rises.

Ratios of hospital beds, doctors and nurses to patients remain low by European standards. There are also concerns that the national health insurance system lacks the necessary support for long-term sustainability, as the import-dependent pharmaceuticals market has shown tremendous growth in recent years, while patient numbers and hospital visits continue to rise. The private sector offers some solutions: public-private partnerships will see the number of doctors and hospital beds rise, and patient care improve, while rapid expansion in medical tourism will bolster revenues and help the sector mature. As Turkey builds more facilities, 2015 should see a continuation of the positive trends that have already brought investors, professionals and new patients flocking.

Strategy

The Ministry of Health (MoH) oversees all health policy, implementation of national strategies and direct provision of health care services in the country. It is also the sole provider of preventative health care services through a network of facilities, providing primary, secondary and specialised in- and out-patient services. The Strategic Plan of the MoH, which covered the period from 2010 to 2014, was reformulated under the legislative changes made in line with the HTP, and the new Strategic Plan, running from 2013 to 2017, features tenets of Health 2020, the new European health policy, and also reflects principles outlined in the Tallinn Charter.

Health Transformation Programme

In 2003 the government embarked on a major reform initiative, the HTP, which rapidly expanded health insurance coverage and access to health care services for all citizens, particularly the low-income segment. It also led to the establishment of a family physician scheme and, most importantly, a universal health insurance system, Genel Sa ğlık Sigortası (GSS), which combined several social security systems under one umbrella, the Social Security Institute (SSI). In December 2014 the number of those insured under the GSS scheme stood at 11.4m, up from 9.3m in 2008.

The programme has also led to quantifiable health care improvements, with increases in services, staff and facilities leading to greater patient satisfaction. Similarly to EU member countries, emergency health care services are also now being coordinated by 112 emergency call centres in major metropolitan areas, with plans to expand to villages and rural areas, bringing Turkey closer to European levels of health care services. “Turkey has lifted its health sector remarkably in just 10 years. As a public citizen I can say it has been a 100% improvement,” Hayati Odaba şı, general manager of Türkiye Hastanesi, in Istanbul, told OBG.

Challenges

Under HTP reforms access to health care greatly increased, with an improvement in outcomes across all population segments, most notably in child and maternal health. Yet the sector still has plenty of room for improvement. A 2013 report from the OECD highlighted several challenges, recommending Turkey develop robust systems to standardise and monitor the quality of care, encourage continuous professional development, incorporate patient views, loosen the governance structure to allow flexible, localised health response and raise staff numbers.

Recent years have seen substantial expansion in government spending, although the proportion of health care spending to GDP remains low. According to the Turkish Statistical Institute (TurkStat), health expenditure reached TL68.6bn (€24.2bn) in 2011, growing to TL74.2bn (€26.1bn) in 2012 and TL84.4bn (€29.7bn) in 2013. The proportion of total health expenditure to GDP was 5.6% in 2010, 5.3% 2011, 5.2% in 2012 and 5.4% in 2013. While this is still below the 2012 OECD average of 9.3%, it is a positive step in the government’s plan to bring Turkey’s health care system onto a par with other OECD nations. As of 2012 public funding comprised 77% of all health care expenditure, according to TurkStat.

SSI

Prior to the HTP, Turkey’s health care system was financed through five separate health insurance schemes, which were brought under one umbrella with the creation of the SSI in 2007.

The SSI now acts as a monopsony on the purchasing side of health care services, with employees and employers making payments to the system, and patients receiving free hospital treatment and government reimbursement for health care costs. Annual public health expenditure per capita grew by 281% between 2002 and 2012, reaching $435 per person, up from $114 in 2002, according to MoH data.

Financial risk protection has also improved significantly; the share of households with catastrophic health expenditure was cut in half between 2000 and 2008, in part due to the expansion of health insurance coverage, which grew from 69.7% in 2002 to 99.5% in 2011. The percentage of people paying for medicine and therapy out-of-pocket decreased to 11% in 2011, from 32% in 2003, with significant discounts in medicine and hospital costs improving access and equity across the country. As a result, the MoH reported an increase in general satisfaction with the health sector, which grew from 40% in 2003 to 75% in 2012. However, some stakeholders are concerned about the system’s long-term viability. “Sustainability is the key. The government has reduced payments for pharmaceutical products and not raised the price for service provision in recent years, and these challenges must be addressed. Complementary private health insurance, for example, is much cheaper than current private health care policies,” Hasan Ku secretary-general at Acıbadem University, told OBG.

Indicators

Health indicators in Turkey have shown considerable improvement since the implementation of the HTP, with life expectancy reaching 75 in 2012 according to the World Bank, compared to 71 in 2002, a year before the programme’s launch.

Other significant health indicators are now on a par with many European nations. Infant mortality stood at 7 per 1000 live births in 2012, down from 32 in 2002, while maternal mortality dropped from 64 per 100,000 live births to 15. Rising immunisation rates and expansion of immunisation programmes contributed to this decline, according to the World Health Organisation (WHO), with the rate of full vaccination coverage increasing from 78% in 2002 to 97% in 2011.

While basic health indicators have shown improvement, Turkey, like many other nations, has seen an increase in the incidence of lifestyle-related diseases, including cardiovascular and tobacco-related diseases, diabetes and hypertension. TurkStat reported that circulatory diseases and malignant neoplasms, including many heart diseases, accounted for 59% of all deaths in Turkey in 2012, with 38% caused by circulatory diseases and 21% by malignant neoplasms, while the MoH reported that the prevalence of hypertension, diabetes, cancer and cardiovascular disease stood at 13.2%, 6.8%, 0.6% and 4.4%, respectively.

Smoking Ban

Tobacco use has been of particular concern. In 2012 the Ministry of Labour and Social Security announced that the annual cost of smoking to Turkey’s economy was TL2.8bn (€986m), while additional expenses of TL7bn (€2.46bn) were attributed to tobacco-related diseases.

The current government has worked to reduce tobacco usage, extending a ban on smoking in public places to shopping malls, indoor cafés and bars in 2009. In January 2013 the government made it illegal to use hookahs in cafés, bars or restaurants, and in November 2013 announced plans to introduce smoking areas at outdoor cafés, as well as bans on smoking in public and private sector service vehicles.

These programmes have seen considerable success; according to the Tobacco and Alcohol Market Regulatory Authority, the number of cigarettes consumed in Turkey dropped from 107.8bn in 2008 to 91.7bn in 2013, a 15% decline. Tobacco use among adults dropped to 27.1% in 2012, compared to 31.3% in 2008, according to the MoH. The government is also working to reduce and prevent chronic diseases, establishing programmes including the Cardiovascular Diseases Prevention and Control Programme, and the Diabetes Prevention and Control Programme.

Mental Health

Mental health facilities have historically been underdeveloped in Turkey. Under the HTP, new policies and programmes have been introduced to mental health, and in 2011 a community-based model was implemented to replace psychiatric hospitals, with the MoH announcing plans to increase the number of community mental health centres across Turkey to 240 by 2015, up from 50 in 2011.

However, 4% of Turks over 15 years old suffered from severe depression and other mental illness as of 2012, according to MoH data. With the World Bank reporting that 67% of the population – or about 50m people – are between 15 and 64 years old, the number of citizens suffering from mental illness stands at a minimum of 2m, meaning there is much room for expansion of mental health services.

Public Hospitals

The HTP has led to a rise in the number of hospital beds in Turkey. The MoH reported that the total number stood at 202,031 in 2013, up from 165,465 a decade earlier. The sector has also drastically expanded in terms of staff numbers, with the HTP introducing a new financing system for public hospitals in 2004 that has increased the number of medical professionals in public hospitals.

Public hospitals are financed from two sources: a line-item budget allocated by the Ministry of Finance, used mainly for base staff salaries and comprising under 20% of funding; and revolving funds financed by the SSI, which account for the remainder. Before the HTP was implemented, all budget execution decisions of public hospitals had to be approved by the MoH, with a high degree of centralisation restricting the use of revolving SSI funds for operating costs.

After the advent of the HTP, the MoH’s role focused more on stewardship, with a performance-based supplementary payment system (P4P) introduced in 2004 to provide public hospitals with increased freedom over revolving fund management. Under the P4P scheme, 40% of SSI revenues can be distributed as supplementary payments to hospital staff. The scheme is intended to help hospitals address staff shortages by boosting physicians’ wages, with doctors now paid bonuses according to points they collect throughout the month from outpatient physical exams, inpatient procedures, tests and diagnoses. This has contributed to a rise in staffing levels: the number of health professionals in Turkey – including physicians, midwives, pharmacists and dentists – reached 735,159 in 2013, up from 409,371 in 2003. The number of nurses rose to 139,544 in 2013, up from 74,483 a decade earlier, and the number of physicians increased to 133,775, up from 94,466, according to TurkStat.

Despite these gains, Turkey still has some of the lowest ratios of doctors, nurses and hospital beds per capita among OECD countries. It had 1.7 physicians per 1000 people in 2012, compared to the 2011 OECD average of 3.2. Similarly, there were only 2.49 nurses and midwives per 1000 people in 2012, much lower than the average figure among OECD countries of 8.7. There were 2.64 hospital beds per 1000 people in 2013, a little over half the OECD average of 4.8, and well below the WHO European region average of 6.

Private Hospitals

Private hospitals are also expanding to meet demand. Regulations passed in the 2000s capped medical fees and physician numbers at private facilities, and introduced strict licensing requirements, but the sector has grown nonetheless. Large private health groups – including Universal Hospitals Group, Acibadem Healthcare Group, Medicana Health Group and Medical Park – have entered the market in recent years, expanding outside Istanbul.

The number of private hospitals in Turkey increased by nearly 100% between 2002 and 2012 to 541. Private hospitals comprised 36% of all hospitals in 2012, compared to 23% in 2002. The proportion of private hospital beds has shown similarly dramatic growth, increasing from 12,387 beds, or just 8% of the total, to 35,767, or 18% of the total, in 2012.

The government has been working with the private sector to expand the public health offering, and in 2013 announced that it had awarded contracts worth a total of TL15.7bn (€5.5bn) for the construction of 15 hospitals and a health centre. Firms including Turkey’s Akfen, Rönesans In şaat, Gama Holding, Kayı Inşaat, Dia, Emsas, Yıldızlar, Turkerler and YDA, along with Italy’s Astaldi, have benefitted, with Emsas awarded a TL2.2bn (€775m) project for a new hospital in Istanbul, Dia awarded a TL1.9bn (€669m) contract for a hospital in Ankara, and a consortium including Astaldi and Turkerler awarded a contract worth TL1.8bn (€634m).

Pharmaceuticals

Turkey is one of the world’s fastest-growing pharmaceuticals markets. Domestic demand drives the industry. The Pharmaceuticals and Medical Devices Institution of Turkey reports that consumption of pharmaceuticals increased from 1.48bn boxes in 2007 to 1.89bn boxes in 2012, and Deloitte’s 2014 Global Life Sciences Outlook reported that pharmaceutical sales are set to grow by 8.8% between 2013 and 2017, to reach a total volume of around $19bn. However, the industry is heavily dependent on imports. Pharmaceutical imports accounted for 10% of Turkey’s 2012 account deficit. The domestic industry exported just $600m worth of medicine in 2012, with its total value rising at $4.1bn in 2012.

According to MoH statistics, generic drugs accounted for 36% of all pharmaceutical expenditures in 2012, up from 32% in 2007, with 53% of pharmaceuticals consumed in Turkey falling under the generic label. The country’s generic drug industry holds great potential, with the SSI often choosing to reimburse generic drugs over costlier brand-name products. Yet even in the generics industry, stakeholders have cited low government expenditures as the biggest growth inhibitor. “Price legislation is a difficult challenge. Some companies have withdrawn products because it is too expensive to import,” Dr. Tuanna Unay, medical director at Pensa Pharma, told OBG.

The majority of pharmaceuticals in Turkey are imported, and purchased in euros. The SSI reimburses pharmaceuticals using a euro rate that has been pegged at 1.95 to the lira for four years, but the lira’s recent depreciation has left the exchange rate at €1:TL2.9 as of April 2015. Under the government’s set rate, drug firms are losing up to 20% of revenues to currency fluctuation, according to the Pharmaceuticals Manufacturers Association of Turkey.

Medical Tourism

Turkey is aggressively expanding and promoting its offering as a worldwide medical tourism destination, with significant growth seen in the segment in recent years. The country is running a multi-pronged health tourism strategy designed to attract more foreign visitors to a variety of segments, including medical, spa, and health care for elderly and disabled people. Foreigners come to the country for medical care in dentistry, optometry, orthopedics, plastic surgery and hair restoration, and with Turkey having more than 1600 thermal springs, alternative medical tourism is also gaining popularity.

In 2014, 496,000 foreigners received treatment in Turkish hospitals, according to Invest in Turkey, a 570% rise from 74,000 patients in 2008. The Turkish Healthcare Tourism Development Council announced that foreign visitors spent $4.6bn on health care in Turkey in 2013, drawn by high-quality facilities and services, multilingual staff, and its position at the crossroads of Europe, Asia and the Middle East. The country’s rapid growth in medical tourism led Deloitte to list it as one of the top 10 global health care destinations in its 2014 Global Life Sciences Outlook report.

In 2012 the government introduced several legislative changes, including tax legislation offering a 50% deduction for health institutions serving foreign patients, in an effort to increase investment in new private facilities. It also announced in June 2013 that it will subsidise advertising activities of health institutions abroad, and plans to introduce tax-free health care zones specifically tailored for foreign patients, with the MoH aiming to increase the number of medical tourists to 2m by 2023.

Outlook

There is no doubt that the HTP has been a great success, with macroeconomic indicators – including infant and maternal mortality, tobacco usage, and numbers of nurses, physicians and hospital beds – improving across the board. Rapidly rising demand for pharmaceuticals, and increasing patient numbers and hospital visits, have raised questions about the sustainability of the GSS scheme. Yet the government has demonstrated its commitment to overcoming these obstacles through increased spending, public-private partnerships in the hospital segment and the expansion of medical tourism. These activities will continue to bolster revenues and drive growth in 2015 and beyond, with foreign and domestic patients alike set to benefit from Turkey’s increasingly sophisticated, efficient and effective health care system.