(english version)

1. Strategic purchasing:
An emerging agenda in Africa for
Universal Health Coverage
30 September 2016
RabatInke Mathauer, MSc., PhD
Health Financing Policy Team
WHO, Geneva

2. What is purchasing?
It is the process of paying for services:
 relates to the relationship between purchaser and provider
 refers to the allocation of resources from the purchaser to
health service providers and concerns:
– Benefit package design: Which services and drugs to finance, and at
what level?
– Resource allocation and provider payment methods: how are
providers paid and at what rates?
– Selection of providers: from which types of providers?
 occurs in all countries and in all types of health financing
systems

3. Medicines: underuse of generics,
higher than necessary prices
Services: medical errors, sub-
optimal quality of care
Medicines: inappropriate or
ineffective use
Services: inappropriate hospital
size (low use of infrastructure)
Medicines: use of sub-standard
and counterfeit medicines
Services: inappropriate hospital
admissions and length of stay
Services and products:
oversupply and overuse of
equipment, investigations,
procedures
Health workers: inappropriate or
costly staff mix, unmotivated
workers
Interventions: inefficient mix or
inappropriate level of strategies
Leakages: waste, corruption,
fraud
Ten leading sources of inefficiency
Source: World Health Report (2010), Chapter 4
An estimated 20-40% of health resources are wasted

4. Medicines: underuse of generics,
higher than necessary prices
Services: medical errors, sub-
optimal quality of care
Medicines: inappropriate or
ineffective use
Services: inappropriate hospital
size (low use of infrastructure)
Medicines: use of sub-standard
and counterfeit medicines
Services: inappropriate hospital
admissions and length of stay
Services and products:
oversupply and overuse of
equipment, investigations,
procedures
Health workers: inappropriate or
costly staff mix, unmotivated
workers
Interventions: inefficient mix or
inappropriate level of strategies
Leakages: waste, corruption,
fraud
Ten leading sources of inefficiency
An estimated 20-40% of health resources are wasted
Some of these inefficiencies can
be addressed through
better purchasing,
others are to be addressed by
improved procurement.

5. Addressing efficiency requires several entry points
• Buying goods/supplies
and medicines
• Determining the type of
goods to buy
• Price and volume
negotations
• Paying service providers
o Provider payment
methods and rates
• Contracting with public
and private providers
Purchasing Procurement
Purchaser(s) Purchaser(s), hospitals
central procurement agency
Human resource
management
Infrastructure
planning
At stewardship level:

6. What is strategic purchasing?
• «Linking payments to information on performance and
health needs of the population»
• «Active, evidence-based engagement in defining the
service-mix and volume, selecting the provider-mix,
and deciding how to purchase»
through
– Payment methods and payment rates that create incentives for
providers to manage their expenditures and/or focus on
quantity or quality performance metrics
– (Selective) contracting, accreditation, performance monitoring

7. Moving from passive to strategic purchasing
 “Passive”
– resource allocation
using norms
– little/no selection of
providers
– little/no quality
monitoring
– price and quality taker
Passive Strategic
• “Strategic”
– payment systems that
create deliberate
incentives for efficiency
and quality
– selective contracting
– quality improvement and
rewards
– price and quality maker
Slide from WHO Advanced HF training, Tunis 2014

8. Align funding
and incentives
with promised
health services
Promote
quality in
service
delivery
Promote
accountability of
providers and
purchasers to the
population
Enhance
equitable
distribution
of resources
Manage
expenditure
growth &
promote
efficiency
Objectives for strategic purchasing

9. No progress towards UHC
without efficient spending
“more health for the money”
(WHO 2010, Ch. 4)
Align funding
and incentives
with promised
health services
Promote
quality in
service
delivery
Promote
accountability of
providers and
purchasers to the
population
Enhance
equitable
distribution
of resources
Manage
expenditure
growth &
promote
efficiency
Objectives for strategic purchasing
Countries “cannot simply
spend their way to UHC”
(Kutzin et al. 2016)

10. Closed-ended/
budget-neutral
provider
payment
Incentives
to limit high-
cost
services
Emphasis
on Primary
Care
Procurement:
e.g., negotiation
of drug prices
What does effective strategic
purchasing look like in practice?
Source: Japan-WB Partnership
Program on UHC 2014

11. But we often spend
without knowing what we buy
Would you support a system that purchases
– A very vaguely defined benefit package or a wide package that is
effectively not deliverable?
Would you support a system that purchases
– Ineffective services, ineffective drugs
– High volume of expensive diagnostic and curative services at the
expense of cost-effective public health measures and low cost
curative services?
Would you support a system that pays for
– Services without information on need and effectiveness
Many systems do the above to some extent!
Slide from WHO Advanced HF training, Tunis 2014

12. Current challenges
to moving towards strategic purchasing (1)
 Weak stewardship for reform in general, and weak or
absent governance of purchasing functions in
particular
 Unclear mandates of purchasing agencies and
inadequate levels of autonomy of providers and
purchasers;
 Piloting mode of reform efforts with insufficient
orientation towards institutionalization
– E.g., stand-alone performance-based financing mechanisms

13. Current challenges
to moving towards strategic purchasing (2)
 Existing public financial management regulations as a
hurdle to implementing more output-oriented payment
mechanisms;
 Inadequate generation and use of data related to
provider payment for wider system monitoring and for
informing decision-makers;
 Inadequate global information sharing on strategic
purchasing experience and best practices, what works and
does not work.

14. 2. Mixed provider
payment systems
4. Information
management
systems for effective
purchasing
Some key topics and issues we think
need more attention
3. Benefit package
design and
alignment with PPM
1. Governance
around the
purchasing function

15. 1. Governance around the purchasing functions
Need for
 clear mandates of purchasing agencies and adequate
levels of autonomy of providers and purchasers
 Coherent decision making structure (and division of labour
in decision-making) on purchasing aspects
 Oversight and accountability of purchasers, citizen
participation
 (Institutional) leadership to shift to more strategic
purchasing
 Ensuring effective purchasing market (e.g., single or
multiple) and institutional setup for purchasing (e.g.
purchaser-provider split)

16. 2. Mixed provider payment systems
 Seeing the ‘mixed’ in mixed provider payment systems
– Shifting from a messy mix to a coherent mix
 Finding a context-appropriate mix of provider payment
methods with aligned incentives
 Let’s not forget: Improving budget execution
 Integrating Performance Based Financing
mechanisms into the system

17. 3. Benefit package design and alignment with PPM
 Realising the principle of “whatever is promised, can
be delivered”
– based on a transparent process that determined which specific
health services are included and which ones are excluded
– People are aware of what is covered
 Finding the right specificity level in BP design
– Institutionalization of BP revision and role of HTA
 Focus on pricing and less on costing of BP (need to
be clear on the purpose of costing)
 Need to align BP and provider payment methods

18. 4. Information management systems
 Need for data and information to
– improve purchasing and provider payment
– improve planning to meet population needs
– monitor and evaluate
 Clarity in what data is needed and how to make use of
it
 Need to set up national, integrated (non-fragmented)
health information management systems

19. Thank you very much!
Questions? Comments!

20. Purchasers and
patients
Providers and
industry
Policy makers
“I’ve got a strange
feeling we’ve been
going round in
circles”
Source of slide: A. Maynard