Private Wing Services in Public Hospitals

A Significant Contributor in the Retention of Medical Professionals in Ethiopia

In November 2011, the British Medical Journal published a research article entitled “The financial cost of doctors emigrating from sub-Saharan Africa: human capital analysis”. The research, which was conducted by a group of medical scientists under the leadership of Edward J. Mills (Prof.), chair of global health at the University of Ottawa, Canada, concluded that Sub-Saharan Africa has lost USD2 billion yearly because of the brain drain related to medical professionals.The study found that South Africa and Zimbabwe suffer the worst economic losses due to doctors emigrating, while Australia, Canada, Britain and the United States benefit the most from recruiting doctors trained abroad. Other countries included in the study were Ethiopia, Kenya, Malawi, Nigeria, Tanzania, Uganda and Zambia.

Brain drain is not unique to any country; it is a global problem. The issue is that it’s having a significant negative effect on most developing countries, although a few have coped successfully with the problem. Ethiopia is among those severely affected by the phenomenon.

Although finding reliable statistics on the emigration of doctors from Ethiopia has always been a challenge, there are reports that only one Ethiopian physician was working outside the country as recently as 1972. The political persecution and the Red Terror during the Dergue regime reversed the situation. It caused significant brain drain as highly skilled Ethiopians began to leave the country. While the reasons for the exodus have changed over time, it has continued to the present day. As a result, Ethiopia today has a large portion of its doctors overseas and continues to lose them to foreign countries for various reasons. This has contributed to the poor health situation in the country.

The migration of doctors in Ethiopia does not only happen from home to foreign countries; it also happens from public to private hospitals. This has in fact been a growing problem in the past two decades as private health establishments flourished following the liberal economic policy the country pursued since 1991.

Although there are several reasons why doctors from Ethiopia migrate to foreign lands, the reason they move from public to private hospitals within the country, is largely due to search for better pay.

“I have spent seven years of study in medical school and yet the reward for working in public hospitals is much less than the effort. One serves continuous long hours even night shifts but the salary is too small compared to other professions’’ says Selam Tesfaye, a medical doctor (MD) fresh graduate from Addis Ababa University, College of Health Sciences.

So many doctors share Selam’s opinion. Addis Ababa City Administration Health Bureau pays ETB3,414.00 gross salary for general practitioner (GP) at entry level, and following an assessment every two years, a GP might get a maximum of ETB5,328.00 gross salary after eight years. For specialists, the base salary is ETB5,328.00, while the highest possible pay is ETB6,999.00. Specialists would be entitled to ETB7,619 gross monthly salary, provided that they engage in scientific research and contribute in the discovery of new technology or research output. The City Administration also provides ETB2,000 for housing and professional allowances for general practitioners; the allowance for specialists is ETB3,000. More or less similar salary and benefit packages are applicable by the federal government as well.

These benefit packages have never satisfied the medical doctors or other health professionals as their friends in the private sector earn several folds what they do. There are anecdotal reports that some specialists in private hospitals earn as much as ETB30,000.

This has become a big headache for government officials as the situation prompted a large number of professionals in public hospitals to prioritize their part-time work in private hospitals.

For these, and a number of other reasons, the Ministry of Health launched successive health financing reform in 1998. One outcome of the reform was the establishment of private wing facilities inside the premises of public hospitals starting 2008.

The physicians get 80 to 85Pct of the revenue generated by the private wing services while the balance goes to the hospital. About 70Pct of the net revenue then goes to the MDs, nurses and laboratory technologists, while the remainder goes to administrative staff. “This programme is part of the financial incentive to retain physicians” once said Tedros Adhanom (PhD), former Minister of Health under whose leadership, the programme was started.

The primary objective of the private wing system was improving health workers’ retention, providing alternatives and choices to private health service users, and generating additional income for health facilities. To date, 33 out of the 123 Public Hospitals throughout the country have started the service.

“A physician can get as much as 200Pct increase in pay to one’s salary by working in the private wing” said Abraham Asnaqe (MD), the Medical Director at the Ras Desta Damitew Memorial Hospital Private Wing Services.
High payment in the private hospitals is one of the pulling factors for physicians to leave public hospitals. For example a GP in Addis General Hospital gets net ETB12,000.00, and a specialist gets ETB15,000.00 net. This used to be twice the salary paid in public hospitals, but now, this has become a thing of the past.

A large number of health workers believe that the salary boost which came following the commencement of private wing services has significantly contributed to the retention of workers in hospitals. These attitudes or perceptions are reflected in a survey conducted by the Ministry of Health.

The private wing has helped a large number of patients benefit from rarely accessible high level medical services. Particularly, emergency services are better available in the private wings of most public hospitals. “I brought my father here [the private wing], because he did not get the chance to see a doctor in the public one,” said a woman who requested to stay anonymous at the St. Paul Hospital in Addis Ababa. “I would rather pay more than risk seeing my father die waiting.”

Although the system has significantly contributed to the retention of health workers due to the resulting pay boost, particularly to those highly trained specialists, there are complaints coming from an array of angles regarding a recent change in the tax system.

When the programme became operational, physicians were paying only 2Pct withholding tax. However, recently, a system has been installed requiring the physicians’ basic salary to be added to the pay they get working in the private wing. This has made their combined income to be taxed by the amended income tax regulation of the country. As a result, most workers now pay 35Pct of their increased income as most of them already earn above ETB5000, this is the nation’s threshold monthly income that is taxed the highest ratio: 35Pct.

Mitiku Chemeda (MD), a specialist physician at the Ras Desta Damitew Memorial Hospital said ‘‘We have been benefiting from working in private wing particularly when the income tax rate was 2Pct; however, recently, the benefit has significantly declined due to the increase of the tax.”

This new introduction of increased tax on pay has caused a serious problem. Some hospitals have even stopped part of their usual services, case in point being the Tikur Anbessa Specialized Hospital.

“The Private Wing surgery section in our hospital has stopped because of problems related to finance. We will start the service if the regulation is amended. Until then we continue giving critical services one cannot get from other Hospitals” said Mahlet Yigeremu (MD), Dean of the School of Medicine at AAU and CEO of the Hospital.
Some hospitals are also considering to close the private wing if the tax controversy is not resolved soon.

The Ministry of Health is aware of the consequence of the recent tax controversy surrounding the matter. “We are aware that the new tax system takes a huge part of doctors’ pay” Alemayehu Berhanu (MD), Deputy Director of the Medical Services Directorate at the Ministry of Health said. He concludes that nothing can be done about the matter as it is based on the law of the country.

If these tax issues are not solved, professionals working in the public hospitals will look for way out to get better benefits, and this will negate the main objective the programme sets out to achieve in the first place. EBR

2nd Year . November 2013 . No9