66. Referral Hospitals

Functions and Benefits

The functions of referral hospitals may broadly be categorized into (a) the direct clinical services provided to individual patients within the hospital and the community and (b) a set of broader functions only indirectly related to patient care.

Range of Clinical Services Provided

The primary function of the referral hospital is to provide complex clinical care to patients referred from lower levels; however, no agreed international definition exists of which specific services should be provided in secondary or tertiary hospitals in developing countries. The exact range of services offered tends to vary substantially, even between tertiary hospitals within the same country, as much because of historical accident as deliberate design.

In South Africa, the National Department of Health is attempting to improve the quality and accessibility of referral hospital services through development plans that will try to ensure that hospitals at each level move toward providing a comprehensive set of clinical services (National Department of Health, South Africa 2003). The department has developed a target template of services (table 66.2) for regional (secondary) hospitals, tertiary hospitals, and so-called national referral services (which will be offered at only a small number of the largest tertiary hospitals). Although certainly not directly applicable to all developing countries, the template does give a helpful picture of how services "build up" from one level of care to another, and it can be used as a starting point for considering the situation in different countries.

Clinical Services within the Community

Referral hospitals may perform a number of functions that provide population-level health benefits through direct involvement in public health interventions. Responding to the HIV/AIDS epidemic in Latin America and the Caribbean has heightened awareness about the important role of the hospital in reducing incidence and preventing disease outbreaks. For example, hospitals scaled up services to prevent mother-to-child transmission and initiated follow-up clinics for mothers and babies. In Barbados, the main hospital scaled up voluntary counseling and testing services to address the prevention of horizontal transmission from mothers to their partners, with positive outcomes. The program also served to increase access to obstetric services at the primary health care level because of the screening campaign initiated through the hospital's prevention of mother-to-child transmission program (Adomakoh, St. John, and Kumar 2002).

Referral hospitals often prove to be a highly effective focal point for disease-specific health promotion and education activities. Bermuda's diabetes education program serves all levels of care and provides a strong link between the primary, secondary, and tertiary health care levels. The program is centered in the main referral hospital and serves not only diagnosed patients but also families at risk. Overall, hospitals in the Caribbean are recognizing that central coordination of public health programs within hospitals can provide benefits by strengthening coordination with other services.

Valuing the Benefit of Clinical Services

Measuring the improvement in an individual's health status produced by the combined activities of a referral hospital, whether for patient care in the hospital or for population-based programs, would theoretically be possible, although practically and methodologically demanding. To our knowledge, such an effort has not been attempted at the referral hospital level, though two studies have attempted to proxy the effect of hospital interventions on health outcomes for small district hospitals, focusing on survival only (McCord and Chowdhury 2003; Snow and others 1994). Both studies indicate that district hospitals appear to have a significant positive effect on health outcomes.

Large numbers of patients receive care in referral hospitals, and most survive with their suffering alleviated, having gained substantial benefit from the care they receive. Therefore, the aggregate direct personal health benefits from referral hospital care will almost certainly be high. The question of whether referral hospital care is cost-effective relative to other interventions delivered at lower levels of care is less easy to answer in aggregate. By its nature, appropriate care in a referral hospital will tend to require more complex input mixes and higher skill levels and, hence, will be relatively expensive. Analysis of the costs and cost-effectiveness of individual interventions offered at different levels is tackled directly by the disease-specific chapters in this volume.

Wider Activities and Functions

Aside from direct patient care, referral hospitals serve other functions within the health system, some of which are offered within the facility, such as teaching and research, while others reach out to the lower levels of the health services, such as technical support and quality assurance.

Advice and Support to Lower Levels

The referral process does not simply entail transferring a patient from a lower to a higher level of care, nor does it end when a patient is discharged from a referral hospital. An effective referral system requires good communication and coordination between levels of care and support from higher to lower levels to help manage patients at the lowest level of care possible. Too often, personnel in referral hospitals adopt an insular and inward-looking perspective, focusing exclusively on the patients directly under their care. However, referral hospitals should offer significant support to personnel in lower-level facilities, and specialist staff members should ideally spend a significant portion of their time providing advice and support beyond the walls of their own hospital, either in person or through various modes of telecommunication. Even in poor countries, a steady improvement in communications infrastructure means that such support functions should become easier to provide over time. Key dimensions of this support function include the following:

• availability by telephone or e-mail to advise referring practitioners on whether referral is required

• specialist advice to the patient's local practitioner on post-discharge care

• specialist advice on the long-term management of chronic conditions

• specialist attendance at lower-level facilities to provide regular outreach clinics

• provision of expert diagnosis or consultation through telemedicine

• coordination of discharge planning between levels of care

• coordination of the development of and training in the use of shared care protocols and referral protocols

• provision of technology support by skilled technicians and scientists.

Quality Assurance and Quality Improvement

Referral hospitals can and do play a pivotal role in quality assurance and improvement. The most important mechanism for quality assurance and improvement is through the training that referral hospitals provide. The other key mechanism is through the setting of standards for treatment. For example, experts at referral hospitals should review evidence of effectiveness and cost-effectiveness applicable to the local context, determine the formularies to be used at each level of the health system, and develop and amend treatment protocols. Referral hospitals can improve the quality of peripheral services by giving advice, offering on-site training, providing clinical services alongside local practitioners, and monitoring the quality of the referrals they receive.

Education and Training

Many tertiary referral hospitals in developing countries are associated with universities and medical schools and may, therefore, also be regarded as teaching hospitals. Any country wishing to train its own doctors will need one or more teaching hospitals. The number of doctors a country needs will be influenced by its level of development, resources, and personnel structure. Many will aim for a ratio of at least 2 per 1,000 population, though most developing countries have 0.05 to 1.0 per 1,000 (Puzin 1996; WHOSIS 2004). If we assume a 40-year working life and loss through brain drain or other attrition of 20 percent, the number of doctors that must be produced each year is between 16 and 67 per 1 million population, resulting in 0.5 to 2.0 doctors per 1,000 population (box 66.1). A population of 40 million would, thus, need medical schools able to graduate between 640 and 2,680 doctors per year. Medical schools possess economies of scale, and although some extremely small schools train 50 or so students a year, agreement is widespread that a class size of about 150 to 200 is optimal (see, for example, Harden and Davis 1998). A country with fewer than 3 million population would really need to consider whether training doctors locally is justified on economic and other grounds, but for larger countries, the arguments for training doctors locally are strong, and a teaching hospital would, therefore, be required.

Basic generalist doctors should be trained in a range of facilities across all levels of care, reflecting the facilities in which they will work after graduation. Traditional approaches toward medical education have been widely criticized by educationalists and health planners for being dominated by training in tertiary settings by specialists. Not only is this setting inappropriate, but typical content and clinical experience do not reflect what the doctors will be doing or what they will need to know after qualification. Nevertheless, the university teaching hospital cannot be omitted from the basic training of doctors. If students and faculty were involved only in district-based services, they would miss many important advances in biomedical science and the care of complex problems (Husain 1996). Moreover, doctors need to know enough about what the various tertiary specialties do to be able to refer patients appropriately and to make personal career choices.

The training of specialists, of course, depends far more on the existence and proper functioning of referral hospitals. Again, a particular country will need to decide how many specialists it needs in which specialties and whether it should send its doctors abroad to specialize or train them internally. In developed countries, 60 to 90 percent of doctors are specialists, whereas in developing countries the range is wider (for example, 76 percent of Indian doctors are specialists, 45 percent are specialists in Tanzania, and 31 percent are specialists in Morocco). A World Health Organization expert workshop agreed on a figure of 50 percent (Puzin 1996). Therefore, a country of 40 million would aim to train approximately 300 to 1,300 specialists per year. On average, such training lasts four years. Thus, at any time the academic referral hospital system would need to supply 1,200 to 5,200 residents. A guideline many countries use requires a ratio of postgraduate specialist supervision of not more than two residents per qualified specialist. This ratio can be used to get some idea of the referral hospital capacity required to train specialists.

Although basic doctors could spend most of their training time in primary care and district hospital facilities, with limited exposure to tertiary care hospitals, the training of specialists—as well as of other specialized allied staff members such as nurses for intensive care or specialized psychiatry, physiotherapists specializing in back injuries or burns, and pharmacists specializing in oncology—can take place only in referral hospitals.

In recent years, continuing medical education has grown in importance as the need for professionals to continually update their knowledge and acquire new skills has been more clearly appreciated. The coordination and provision of appropriate continuing medical education depends heavily on the specialists and academics associated with referral and academic hospitals.

Management and Administration

Referral hospitals in many developing countries play important roles in providing managerial and administrative support to other elements of the health system. These roles may include managing laboratory services on behalf of the whole health system; serving as the location for drug and medical supply depots and distribution systems and managing procurement systems; hosting and managing health information systems, often including epidemiological surveillance systems; managing centralized transport fleets; and, on occasion, providing financial management, payroll, and human resource management services to other health units. Our intent is not to consider whether such arrangements are "right" or "wrong"—complex factors would have to be taken into account in every individual circumstance—but to note that making changes to the functioning of referral hospitals may have unintended consequences. For example, moving referral hospitals from funding based on a global budget to reimbursement systems based on patient activity may unintentionally cause hospitals to cease to provide these wider support functions if explicit alternative funding mechanisms are not established.

Research and Innovation

Referral hospitals tend to be where most health research is undertaken. Whereas in developed countries they may often be associated with the development of new technologies, in developing countries they are more often the site of research for the initial piloting and introduction of new technologies developed elsewhere and for the evaluation of their local suitability and field efficacy. Referral hospitals are also the vehicle for disseminating such technologies through the exposure of staff during training as well as through the role that referral hospitals frequently play in continuing professional education.

Research activities are vital in attracting and retaining specialist staff members who are required not just for the treatment of complex patients, but also for the training of new specialists. Research that is responsive to local conditions—that is, local disease burdens and technology constraints—fills a critical gap because researchers in developed countries and pharmaceutical companies do not generally pursue such research questions if they do not foresee sufficient returns to their investments.

Valuing the Indirect Contribution to the Health System

From the enumeration of the many roles of referral hospitals and their indirect effect on health through their contribution to the health system by way of supervision, administration, training, research, and quality improvement, it is immediately evident that these benefits cannot readily be translated into DALYs or any other metric to be used in a relative cost-benefit analysis.

Externalities and Intangible Benefits

The previous sections reviewed the various functions of referral hospitals within the health system, all of which contributed directly or indirectly to the health status of individuals. This section addresses other ways in which referral hospitals contribute to welfare and well-being, and comments on how they complicate the issue of valuing the contribution of referral hospitals in society.

Referral hospitals have a broader effect on overall societal welfare than can be captured by measures of health outcomes. Utility, or welfare, includes health as one of many important outcomes, such as financial security, risk alleviation, and psychological reassurance. However, as Hammer and Berman (1995) note, health policy is typically conducted as if it has a unidimensional objective—namely the maximization of health (DALY) outcomes. Determining the appropriate resource allocation to referral hospitals purely on the basis of the cost of generating health (DALYs) may, therefore, seriously underestimate the optimum level of resources, because such measures will fail to capture the full welfare gains from the availability of higher-level health services. An example will highlight the difference between valuing hospitals on the basis of their contribution to health status alone compared with including wider concepts of welfare in the valuation.

Renal failure leading to the need for dialysis is relatively rare, and certainly rare in comparison to many other infectious and chronic diseases in lower- or middle-income countries. Treatment is lifesaving, but must continue indefinitely (involving visits two or three times every week) and is, therefore, extremely expensive. In many cases, dialysis can be justified only if it is linked to a renal transplant program, which terminates the need for dialysis and frees the equipment for someone else. The proportion of the total population who will benefit from such a referral hospital program is small; therefore, the DALYs generated are low, and the program would not rank high among the priorities given a limited budget. However, every member of the population is at risk of renal failure and, if affected, would find that, in the absence of a publicly funded program, he or she would either die or face extremely high costs to secure treatment in the private sector or abroad.

Even in poor countries, patients' price elasticity of demand is low when faced with life-threatening illnesses, particularly when treatment can change the outcome. Studies on poverty have shown that a significant proportion of households that have become poor did so as a result of serious illness, which resulted in their liquidating assets to pay for health care (see, for example, Liu, Rao, and Hsiao 2003). Thus, people seek the peace of mind of knowing that they can obtain lifesaving treatment should they need it without the risk of incurring catastrophic costs of care. This additional welfare derives both from the financial security of not having to spend more than people can afford to save their lives and from the direct health benefits of treatment itself. The utility from the former (financial security) increases with the cost of the intervention required, whereas the utility derived from the latter (direct health benefits) is unrelated to the cost of the intervention. Paradoxically, one could, therefore, argue that the rarer a particular illness is—and the more costly the intervention required—the greater will be the welfare gain from public spending on that intervention.

This argument, of course, is likely to stand in direct contrast to the conclusions drawn from prioritization based on cost-effectiveness. For most individuals, willingness to pay is far less than the costs of the procedure to them; however, because the whole population benefits from the security of knowing that each individual would be entitled to referral hospital care should he or she need it, in the aggregate the welfare value generated by public provision or funding may be many times greater than the value of the DALYs generated directly for those few patients who do receive treatment. This literature review did not find evidence of studies on national willingness to pay for referral hospital care in developing countries, but this area could be of interest for future research.

In practice, too, the public—particularly an urban, middle-income public—expects the government to provide care of last resort for complex trauma or diseases, especially for natural and man-made disasters. Thus, even though referral hospitals may provide care to a small number of people, often with limited health benefits, politicians and the public alike may value and prioritize them simply because they meet the public's expectations for what the government must provide. In addition, politicians and the public often regard a country's ability to provide the kind of complex, high-tech care offered in a referral hospital as a measure of that country's level of development and sophistication, and it is a source of national pride. Whether economically rational or not, this nonhealth benefit appears to drive public choices to some extent.

Negative Impacts

The "negative" impact of referral hospitals is largely attributable to their potential to exert distortionary effects on the health system by diverting resources from peripheral areas and from lower levels of care (Fiedler, Schmidt, and Wight 1998; Filmer, Hammer, and Pritchett 1997) for the following reasons:

• Tertiary hospitals and specialists have a high political and public profile.

• Urban and political elites are more likely to use referral hospitals than rural primary care facilities or district hospitals.

• Harmful competition with lower levels of care may result from the maintenance of higher-level referral hospitals in many poor countries, lowering use of the former.

• Referral hospitals can be entry points for the introduction into the health system of inappropriate and unaffordable technologies.

• Skilled personnel frequently find referral hospitals far more attractive to work at than rural and district hospitals for such reasons as preferences for a metropolitan location, better hospital resources allowing for a more rewarding professional experience, and better opportunities for private practice (official or unofficial). However, given the huge problem of global migration of health workers from poor to rich countries (Bundred and Levitt 2000), one could argue that well-functioning referral hospitals might provide local health professionals with a good incentive to remain at home, whereas the absence of referral hospitals would increase the propensity of local professionals to emigrate.