Context and scope
The financial crisis that hit the global economy in 2007 was unprecedented in the post war era. It quickly transformed into an economic crisis which saw European Union real Gross Domestic Product (GDP) shrink by 4.3 per cent in 2009, the sharpest contraction in its history [
1]
a. Some countries are experiencing persistent extreme austerity and have needed bailouts from international financial authorities to manage their spiralling deficits and debt [
2]. In general the crisis has created a difficult environment for health systems globally as available resources are constrained or shrink and services are overburdened often leaving the vulnerable at particular risk [
3]. Austerity easily leads to fewer services, poorer access and more financial burden on households at exactly the wrong time.
The purpose of this paper is to develop a framework for assessing the resilience of health systems in terms of how they have adjusted to economic crisis. The focus of the paper is health system performance under austerity rather than on how the health system impacts the economy. The latter is important as the health system is a major employer particularly in rural areas, but this concern lies largely outside the scope of the article. Key questions relate to how well the health system has continued to function in the face of austerity and how well the vulnerable have been protected. It has particular relevance for the current European context or where scarcity is pronounced and economic sovereignty threatened. The term resilience has been drawn from the study of socio-ecological systems where fragility, survival and appropriate management of critical situations are a key topic of research [
4]. Resilience can be understood as the capacity of a system to absorb change but continue to retain essentially the same identity and function [
4].
Ireland will be used as a case study to assess the usefulness of this framework and what it can show us about health system performance in time for crisis. As a small open economy, Ireland was particularly exposed to and affected by the global economic and financial crisis. Further, domestic mismanagement of the Irish economy worsened the situation. Years of access to cheap credit and minimum government oversight in Ireland saw the development of an unsustainable property bubble. This contributed to an internal banking collapse. The bank guarantee scheme announced in September 2008 coupled banking and sovereign debt in Ireland and placed massive strain on the State’s finances. Further, taxation policy which had focussed on indirect taxes proved disastrous for government revenues in the recession [
5]. In late 2010 the government was forced to accept an EU/IMF/ECB bailout totalling €85 billion [
6]. The NESC (National Economic and Social Council) in 2009 has described Ireland as undergoing a five-fold crisis, i.e. a combination of a banking crisis, public finance crisis, an economic crisis, a social crisis and a 'reputational’ crisis [
7]. The severe nature of Ireland’s crisis provides a useful test for the resilience approach.
Health policy in a time of crisis
Parry and Humphries and Stuckler et al. emphasise the importance of government intervention to mitigate the impact of economic contraction [
3,
8]. More specifically, Musgrove argues that a good health policy, or change in existing health policy, would maintain (or even extend) services most essential to health due to the 'fluctuation of need’ from the private sector to the public sector [
9]. More generally, healthcare spending should be counter-cyclical to cope with the substitution of private for public healthcare services in times of crises [
9]. The World Bank echoes these sentiments arguing that 'the fundamental objective of health policy during a crisis is to maintain/improve access to essential services by the population, and especially the poor and vulnerable’ [
10]. In addition preserving health sector spending and employment may provide economic benefits.
However, this counter-cyclical funding is rarely the case. Musgrove notes the absence of a 'counter-cyclical commitment’ when analysing the policy response of several Latin American and Caribbean countries following the 1980’s debt crisis, which were partly related to the conditionalities associated with IMF/WB loans [
9]. The World Bank, examining evidence of previous financial crises in Argentina, Indonesia, Thailand and the Russian Federation, highlight the 'pro-cyclical declines’ in health spending [
10]. Total, public and out-of-pocket health spending all decreased in per capita terms in all these countries, taking many years to reach pre-crisis levels.
Nevertheless, stakeholder power and expectations which tend to preserve the status quo are weakened in a recession which can give scope for radical reform of a health system and this can give scope for change [
8,
11].
Resilience and evaluating system performance
There are several frameworks for assessing health system performance (such as World Health Organisation [
12]; McPake & Kutzin [
13]). Nevertheless, the core features or values of these tend to overlap and relate to allocative efficiency (maximising the impact of health promoting interventions across a broad range of activities), technical efficiency (optimal combination of resources in any
one activity to produce maximum output at minimum cost), equity (fairness of financing and access, especially for the most vulnerable) and acceptability/responsiveness to stakeholders [
14]. Such criteria are important to use in reviewing health system performance at any time, whether in recession or not. Nevertheless in a time of economic contraction, when past and present taxation and regulatory policies create conditions of scarcity, some additional factors assume more importance, such as sustainability.
The issue of sustainability of a system is of paramount concern, particularly when finance is scarce. Indeed, a standard measure of health system performance is financial sustainability. There are two prevailing definitions. The first discusses the financing of the health sector in relation to its dependency on
external resources [
15]. Of major concern here is the flow of foreign donor funds into the health system or the degree of debt that countries are accruing to finance health. The second definition is concerned with the sufficiency, predictability and regularity of sources of finances in the health sector [
13]. Such an interpretation of financial sustainability is less concerned with the source of funds for financing a health sector, and more interested in a steady future flow of finances. These definitions are a helpful starting point in determining when there are key problems with financing and also can highlight trends in sustainability. They do not however offer any insights into managing the problem and understanding the implications, causalities and dimensions of a loss of financial sustainability.
Broader approaches to health system sustainability are needed. “A health service is considered sustainable when operated by an organizational system with the long-term ability to mobilize and allocate sufficient resources for activities that meet individual or public health needs.” [
16]. This definition focuses on two aspects: the ability to raise sufficient funds over the long-term and the ability to use these resources in a way that meets needs. Most definitions focus on these elements of sufficiency of resource generation and effectiveness in use [
17‐
19]. Nevertheless, other definitions also focus on the capacity and commitment of government, as it is government which mobilises the majority of resources (or facilitates their mobilisation), develops policy and allocates resources [
20‐
22]. Hence an appropriate analysis of sustainability needs also to focus on the governance of a health system and its ability to respond to resource shortages, alongside the capacity of the system to mobilise resources and deploy them effectively.
As noted earlier, the study of socio-ecological systems examines the concept of
resilience. This can be defined as “the capacity of a system to absorb disturbance and reorganise while undergoing change so as to still retain essentially the same function, structure, identity and feedbacks” [
4]. There are two further concepts that deal with governance of the system and echo some of the concerns outlined in the analysis of sustainability.
Adaptability is the capacity of actors in the system to influence or manage resilience so that the system does not shift away from its core function and structure. Relatedly,
transformability is the capacity of actors to create a fundamentally new system when conditions make the existing system untenable. There is then a key tension in government between adaptability and transformability or between: “maintaining the resilience of a desired current configuration in the face of … shocks and simultaneously building a capacity for transformability, should it be needed” [
4].
The above concepts provide useful insights into the factors which affect performance and decision-making when circumstances change and the ability of a system to cope with change. However this needs to be applied more precisely to the health system and to the economic contraction. In this case resilience might be better understood as the capacity of a health system to deal with economic contraction and reorganize so as to retain essentially the same policies and functions.
Given the need to preserve funding but also to manage scarcity and to consider transformation, there may helpfully be three forms of resilience:
-
Financial resilience: the protection of funds for health care, and particularly that of the vulnerable, in the face of economic contraction.
-
Adaptive resilience: the ability of government and providers to manage the system with fewer resources, through efficiencies, while not sacrificing key priorities, benefits, access or entitlements.
-
Transformatory resilience: the ability or capacity of government to design and implement desirable and realistic reform when the current organisation, structures and strategies are no longer feasible.
It is possible that there may be overlaps or tensions between these forms of resilience. For instance, some types of adaptive resilience might be close to transformation. Alternatively, focussing too much on efficiency gains might divert capacity away from transformation. Another possible dynamic could be that the three forms of resilience represent a sequence of strategic response e.g. government’s first seek to protect funding, then to make efficiencies and finally attempt to overhaul the system in the face of prolonged resource shortages.