Latvia

Health systems in transition
Latvia
were merged together in order to reduce geographical differences and diminish
administrative costs. It was decided that at least 200 000 people living in one
geographical area should be served by one regional (trans-municipal) institution.
The merge process met resistance from local governments, as they wanted to
maintain their leadership and control. However, the process resulted in six
transregional and two state funds being established, all governed by the SCHIA.
As of 1 January 2005 the eight funds were eliminated and their functions were
transferred to the SCHIA and its five territorial branches.
In 1994, priority was also given to an additional reform, involving the
introduction of a primary health care (PHC) system. The sickness funds
estimated the number and location of PHC practices that would be necessary
to cover the entire population. In 1998 the SCHIA founded the Primary Health
Care Support Fund, which, together with international assistance organizations,
funded the retraining of physicians as general practitioners (GP) as well as
setting up PHC practices. Every inhabitant of Latvia was to register with a
family physician. Family physicians began to be paid on the basis of a mixed
capitation system.
In the area of reimbursement systems for health care services, a number of
different approaches have been introduced, abandoned and changed since the
early 1990s. For a number of years, fee for service, capitation and capitation with
fund holding, diagnosis-related groups (DRG) and volume-based contracting
systems all existed at the same time, depending on the area of health care,
level of care and geographical area. More recently a unified payment system
has been adopted for providers throughout the country (Section 3.7 Payment
mechanisms).
Some health facilities have been privatized or partially privatized, leading to
the establishment of a wide variety of property ownership in the system. Since
the early 1990s such innovations as the purchaser–provider split and family
health care have been introduced as the basis for PHC. Private supplementary
insurance has also been introduced, initially offered by the Riga sickness fund,
in parallel with private insurers.
In addition, virtually every other aspect of the health care system has
been affected by the process of reforms, including the pharmaceutical sector,
public health, dentistry and others. As the above examples illustrate, Latvia is
experimenting with several innovative approaches to organization and financing
in health care. The reforms are an ongoing process, with rapid changes that are
influenced by a mix of changing political priorities of successive governments
and the learning process that comes from experience with novel approaches.
All of these are described in detail in the following chapters.
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