Seven years after the launch of the General Healthcare System (GeSY), the World Health Organization (WHO) is urging Cyprus to rethink how healthcare funding is allocated.
A report produced by the WHO and the European Observatory on Health Systems and Policies, titled Strengthening primary health care and reducing the overuse of low-value specialist care: Policy options for Cyprus, concludes that GeSY's financial incentives encourage excessive use of specialist services. It also finds that the way the Health Insurance Organisation (HIO) sets its budgets, relying heavily on historical expenditure, risks perpetuating provider-induced demand rather than directing resources to where health needs are greatest.
The findings do not challenge the reform itself. On the contrary, the WHO acknowledges that GeSY has expanded access to healthcare and reduced financial barriers to treatment. However, it warns that the system's current structure is creating distortions that affect efficiency, quality of care and long-term sustainability.
The cost of distortions
One of the report's central findings concerns how GeSY allocates resources.
According to the WHO, the HIO relies significantly on historical spending patterns when determining budgets. In practice, expenditure recorded in previous years becomes a key reference point for future funding.
The organisation warns that when budgets are based largely on past spending, the system risks continuing to finance practices that may not reflect the actual healthcare needs of the population.
For example, if a specialty records unusually high numbers of visits or procedures because of distorted incentives, the resulting increase in expenditure may subsequently be reflected in future budgets. In this way, overprovision is not corrected but risks becoming embedded in the funding model itself.
The report links this directly to GeSY's payment mechanisms.
It argues that current reimbursement arrangements are not always aligned with delivering the right care, at the right time and at the appropriate level. In some instances, they create incentives for greater volumes of specialist care without necessarily producing better outcomes for patients.
For that reason, the WHO says the discussion should not focus solely on how much money is spent on healthcare, but also on where those resources are directed and what results they achieve.
GeSY's vicious cycle
The report argues that the distortions identified within GeSY are not occurring by chance.
Instead, it describes a cycle in which one weakness reinforces another, preventing primary healthcare from assuming the central role originally envisaged by the reform.
According to the WHO, the first issue is that the personal doctor has not fully developed into the system's primary gateway and coordinator of patient care.
Although this role sits at the heart of GeSY's philosophy, the report finds that it remains weakened, making referrals to specialist care more common.
This, in turn, reinforces a second distortion.
Many beneficiaries continue to place greater trust in specialists, viewing them as the safer or more effective option. The WHO notes, however, that this is not simply a matter of patient attitudes. It is also influenced by the way the healthcare system is organised and by the incentives it creates.
As a result, patient pathways within GeSY are often unclear.
It is not always obvious which cases should be handled by a personal doctor, when referral to a specialist is genuinely required or when care should return to the primary healthcare setting.
When these boundaries are blurred, referral becomes the easier option and primary care gradually loses its coordinating function.
The WHO says this creates a vicious cycle: personal doctors become weaker gatekeepers, patients increasingly seek specialist care and the system generates more specialist services than are necessarily required.
Combined with existing financial incentives and funding mechanisms, this cycle contributes directly to the distortions identified in the report.
WHO's prescription for reform
The report goes beyond identifying shortcomings and sets out a detailed package of recommendations.
The WHO argues that the most effective reforms should focus on how the system is organised, financed and monitored, rather than relying solely on efforts to change patient behaviour.
It recommends:
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Changing the remuneration model for personal doctors, so that incentives are tied more closely to quality of care, prevention, chronic disease management and patient outcomes.
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Adopting a more strategic approach to purchasing healthcare services, with funding guided by the actual health needs of the population rather than historical spending patterns.
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Linking budgets and contracts to performance, ensuring that funding rewards measurable benefits for patients rather than simply higher volumes of visits and procedures.
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Monitoring provider behaviour more systematically, including unusually high referral rates, repeat consultations, medical procedures and significant differences between doctors in the same specialty.
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Applying referral rules more consistently, allowing personal doctors to function as genuine gatekeepers while ensuring specialists are used for cases that require their expertise.
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Encouraging the development of group practices, enabling personal doctors and other healthcare professionals to work together and provide more integrated and continuous care.
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Reducing frequent changes of personal doctor, helping to build stronger doctor-patient relationships and improve continuity of care.
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Developing shared decision-making tools, so that patients better understand when specialist care is necessary, the risks and benefits of different options and when primary care is sufficient.
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Reviewing co-payments for direct access to specialists without a referral, to determine whether the current system discourages unnecessary bypassing of personal doctors or simply creates a faster route for those able to pay.
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Conducting a comprehensive assessment of the population's health needs, ensuring that GeSY's planning, contracts and resource allocation are based on disease patterns, demographics, regional inequalities and genuine gaps in healthcare provision across Cyprus.
