A Better Medical Referral System Leads to Huge Cost Savings for the Palestinian People

In 2015, the Palestinian Ministry of Health has been saving an average of 10 million NIS (about US$2.6 million) per month by improving the health system’s processes for referring clients for specialized care to Israeli hospitals, thanks to technical support from the US Agency for International Development-funded Palestinian Health Capacity Project (PHCP), led by IntraHealth International. That represents a 34% decrease in the total cost of referrals to Israeli hospitals compared to the same time period in 2014, even though the number of referrals has increased. This also represents an annual savings of over $60 million (240m NIS, or 5m NIS monthly).

The Palestinian Ministry of Health provides health services to approximately 4.5 million people in the West Bank and Gaza. However, there are few tertiary-level hospitals (i.e., health facilities that provide advanced medical care) available in the area and access to specialists is limited. When clients need specialized care that’s not available in the public health system, the ministry refers these clients to private or NGO-managed hospitals in the West Bank, Gaza, or abroad. A significant portion is referred to Israeli hospitals.  

Referrals abroad are a challenge to plan, manage, and finance. In recent years, the number of referrals—and the costs—have skyrocketed. The ministry needed to bring the costs down but didn’t want to compromise the quality of care Palestinians were receiving.

That’s where IntraHealth International’s Palestinian Health Capacity Project came in. And the changes it has made are groundbreaking and effective.

“The referral costs were coming to 33 to 35 million shekels [$8-9 million per month] in 2013 and 2014,” said Minister of Health Dr. Jawad Awwad in a recent interview. “IntraHealth and USAID helped us regulate the situation, and we managed to reduce the monthly [referral bill] from Israel by 10 to 15 million shekels [$5 million].”

Previously, when a physician referred a client to an Israeli hospital, there was no consistent or systematic communication or sharing of financial information between the ministry and the referral hospital. It was not uncommon for a health worker to refer a client and never learn about the services provided or the cost of those services to the Palestinian Ministry of Health until the ministry received the report of how much money was withheld from their transfer payment from the Israeli Ministry of Finance.   

PHCP worked with the ministry to strengthen its internal and external communication and financial reconciliation mechanisms. For example, the ministry formalized communication through a dedicated email address for its Service Purchase Department, which is responsible for approving and monitoring referrals. An accurate electronic tracking system and structured communication are now providing better control over approvals. At every stage, there are clear processes that streamline referrals and allow for better follow-up.

The project is also working with the ministry to reconcile invoices against the approved referral services and to address any discrepancies that may arise. Every month, before final bills are collected and sent to the Ministry of Health and then to the Ministry of Finance, the project has helped the Ministry of Health gain access to the Israeli billing system to negotiate or discuss the invoices. In some instances, this new communication and clarity have shaved off millions of dollars from the bills.

PHCP also developed a health referrals web-based application to provide a secure interface between the ministry and referral institutions. The project successfully piloted the website with one private Palestinian hospital and will soon implement it with two Israeli Hospitals. This will allow information about authorizations, medical procedures, invoicing, and follow-up to be easily shared, replacing a burdensome, paper-based system. It will also minimize delays as all documents and information needed to analyze claims or make decisions will be at the fingertips of staff at both the ministry and the referral hospitals.

“After months of careful reform in the way that the Palestinian Authority manages referral requests, negotiates prices with referral hospitals, communicates with the hospitals where patients are referred, and follows up, we are today referring more cases, more procedures than before, at a lower cost and higher quality,” says Dr. Amira Hindi, director of the Services Purchase Department. “We are proud to be strengthening the system of medically necessary, timely, and cost-efficient medical referrals for our citizens.” 

IntraHealth's Palestinian Health Capacity Project is funded by the US Agency for International Development.