Professional Documents
Culture Documents
“Passive” Strategic
• resource allocation using norms • payment systems that create
• little/no selectivity of providers deliberate incentives
• little/no quality monitoring • selective contracting
• price and quality taker • quality improvement and rewards
• price and quality maker
• choose payment methods and payment rates that create incentives for
providers to provide needed services
• link the transfer of funds to providers, at least in part, to information on
aspects of their performance or the health needs of the population they
serve
Source: WHO
The “Traditional” Provider Payment
Landscape
• Each provider payment
mechanism
• has strengths and weaknesses
• differs in administrative complexity,
nature of provider incentives, and
implications for improving quality,
efficiency, responsiveness, and
equity.
• Rarely do providers receive only
one form: co-existence of a
multiple and hybrid payment
mechanisms, adding to
complexity.
Source: Chu & Tandon: How to Purchase?
Key challenges to moving towards
strategic purchasing
Source: WHO
Outline
1
Introduction to strategic purchasing
2
Strategic purchasing and PFM
3
Strategic purchasing for integrated care
PFM plays a critical role in supporting (or not)
reforms aimed at strategic purchasing
• Public funds are the cornerstone of
sustainable financing
• Many health financing reforms have PFM
implications or need support of PFM
systems
• Rules and regulations stipulated by PFM
impact health financing reforms
• Oftentimes, dialogue and understanding
between the health sector and ministry of
finance is insufficient
PFM: “institutions,
policies and processes
that govern the use of
public funds”
Source: Cashin et al 2017
Unique characteristics of the health sector
can create tension with the PFM system
→ Education sector - Need/ demand can be predicted more easily (number of students
per years, inputs needed)
Source: World Bank
PFM challenges for health financing and
strategic purchasing
Revenue raising Pooling Purchasing
- Unpredictable health sector budget ceilings - Fragmented input budgets - Budgeting by health facility and inputs
(e.g., salaries/ commodities/ rather than by services
- Fragmented revenue sources for the capital); donors
health sector (not reflected in - Different purchasing arrangements and
consolidated health budget) - Fragmented revenue accounting for different revenue
streams (e.g., insurance streams
- Budget allocations that are separate schemes)
from policy objectives and planning - Lack of provider autonomy to respond to
- Provider-based budgets incentives created by strategic purchasing
- In-year budget adjustments by the ministry
of finance that take place outside of the - Fiscal decentralization - Obstacles to contracting the private sector
formal priority-setting process
- Pooling across time (carry- - Government procurement rules that limit
- Budget classification by inputs rather over budgets) flexibility
than by programs or services
- Delays in release of funds
- Diverging budget classification
- Poor information systems and
Source: Cashin et al 2017
monitoring capacity
Line-item budgets
• No flexibility in how to use funds to respond to patient/population needs
• Prioritizes accounting for money spent over actual health outcomes
• Encourage risk aversion – providers may be penalized for using funds in
innovative ways
• Ultimately they may lead to under-execution of funds
Misalignments through fragmentation
Misalignment
in pooling
Misalignment
in revenue
raising
Misalignment in
purchasing Source: WHO
Reality can be far more complex
Mixed signals to providers
• Allows for organizing budgets around health services (e.g. essential services package; primary health care) instead
individual spending units (e.g. health facilities) or narrow vertical programs (e.g. HIV/AIDS)
Program- • Performance-based budgeting builds on PBB by incorporating explicit goals/targets, creating opportunity to link
budget allocations with measurable results
based • More flexibility by setting spending levels and controls at program level without compromising financial controls
budgeting • Program managers empowered to reallocate funds as needs change → efficiency gains can be re-invested in the
program instead of being lost to budget cuts the next year
• Movement towards PBB is widespread, but country experience has been mixed across sectors
→ Some reforms for SP through PFM others need larger scale reforms
→ Key is to make incremental changes
Outline
1
Introduction to strategic purchasing
2
Strategic purchasing and PFM
3
Strategic purchasing for integrated care
Outline
• Rising prevalence of NCDs and other chronic
conditions
• Providers constituting a
“delivery group” assume
financial risk for the cost of
services for defined episode as
well as costs associated with
preventable complications.
Source: OECD, 2016
Population-based
payments
• Providers constituting a
“delivery group” assume all
financial risk for provision of
care.
• Makes payments completely
people-centric as opposed to
being provider- centric.
Population-Based Payments:
Accountable Care Organizations (ACOs)
➢ACOs are voluntary network of multiple providers, including
primary health care, hospitals, and sometimes specialists and
others.
➢ACOs bear financial risk for provision of all or the vast majority
of health care services needed by a defined population.
➢ACOs are rewarded or penalized on how much their total costs
per patient compare with historical references and, hence, are
incentivized in effect like that of a population-based payment
system.
➢They are permitted to keep part of the savings they generate
relative to historical references provided they meet specific
quality criteria.
Conclusion: There is No Single “Best”
Way to Pay for Integrated Care