Contracting out of health services in developing countries.
Contracting out is emerging as a common policy issue in a number of developing countries. The theoretical case for contracting out suggests many advantages in combining public finance with private provision. However, practical difficulties such as those of ensuring that competition takes place between potential contractors, that competition leads to efficiency and that contracts and the process of contracting are effectively managed, suggest that such advantages may not always be realized. Most countries are likely only to contemplate restricted contracting of small-scale non-clinical services in the short term. Prerequisites of more extensive models appear to be the development of information systems and human resources to that end. Some urban areas of larger countries may have the existing preconditions for more successful large-scale contracting. (+info
Managing the health care market in developing countries: prospects and problems.
There is increasing interest in the prospects for managed market reforms in developing countries, stimulated by current reforms and policy debates in developed countries, and by perceptions of widespread public sector inefficiency in many countries. This review examines the prospects for such reforms in a developing country context, primarily by drawing on the arguments and evidence emerging from developed countries, with a specific focus on the provision of hospital services. The paper begins with a discussion of the current policy context of these reforms, and their main features. It argues that while current and proposed reforms vary in detail, most have in common the introduction of competition in the provision of health care, with the retention of a public monopoly of financing, and that this structure emerges from the dual goals of addressing current public sector inefficiencies while retaining the known equity and efficiency advantages of public health systems. The paper then explores the theoretical arguments and empirical evidence for and against these reforms, and examines their relevance for developing countries. Managed markets are argued to enhance both efficiency and equity. These arguments are analysed in terms of three distinct claims made by their proponents: that managed markets will promote increased provider competition, and hence, provider efficiency; that contractual relationships are more efficient than direct management; and that the benefits of managed markets will outweigh their costs. The analysis suggests that on all three issues, the theoretical arguments and empirical evidence remain ambiguous, and that this ambiguity is attributable in part to poor understanding of the behaviour of health sector agents within the market, and to the limited experience with these reforms. In the context of developing countries, the paper argues that most of the conditions required for successful implementation of these reforms are absent in all but a few, richer developing countries, and that the costs of these reforms, particularly in equity terms, are likely to pose substantial problems. Extensive managed market reforms are therefore unlikely to succeed, although limited introduction of particular elements of these reforms may be more successful. Developed country experience is useful in defining the conditions under which such limited reforms may succeed. There is an urgent need to evaluate the existing experience of different forms of contracting in developing countries, as well as to interpret emerging evidence from developed country reforms in the light of conditions in developing countries. (+info
The fall and rise of cost sharing in Kenya: the impact of phased implementation.
The combined effects of increasing demand for health services and declining real public resources have recently led many governments in the developing world to explore various health financing alternatives. Faced with a significant decline during the 1980s in its real per capita expenditures, the Kenya Ministry of Health (MOH) introduced a new cost sharing programme in December 1989. The programme was part of a comprehensive health financing strategy which also included social insurance, efficiency measures, and private sector development. Early implementation problems led to the suspension in September 1990 of the outpatient registration fee, the major revenue source at the time. In 1991, the Ministry initiated a programme of management improvement and gradual re-introduction of an outpatient fee, but this time as a treatment fee. The new programme was carried out in phases, beginning at the national and provincial levels and proceeding to the local level. The impact of these changes was assessed with national revenue collection reports, quality of care surveys in 6 purposively selected indicator districts, and time series analysis of monthly utilization in these same districts. In contrast to the significant fall in revenue experienced over the period of the initial programme, the later management improvements and fee adjustments resulted in steady increases in revenue. As a percentage of total non-staff expenditures, fiscal year 1993-1994 revenue is estimated to have been 37% at provincial general hospitals, 20% at smaller hospitals, and 21% at health centres. Roughly one third of total revenue is derived from national insurance claims. Quality of care measures, though in some respects improved with cost sharing, were in general somewhat mixed and inconsistent. The 1989 outpatient registration fee led to an average reduction in utilization of 27% at provincial hospitals, 45% at district hospitals, and 33% at health centres. In contrast, phased introduction of the outpatient treatment fee beginning in 1992, combined with somewhat broader exemptions, was associated with much smaller decreases in outpatient utilization. It is suggested that implementing user fees in phases by level of health facility is important to gain patient acceptance, to develop the requisite management systems, and to orient ministry staff to the new systems. (+info
The privatization of health care in three Latin American social security systems.
Most Latin American social security institutes are direct providers of medical care services to their beneficiaries. As many of the institutes have developed serious financial problems over the course of the last decade and a half, they have come under increasing attack for (a) exacerbating inequalities in access to and use of health care, (b) further heightening the geographic overconcentration of services, (c) focusing a disproportionate amount of resources on high technology, curative care to the near total exclusion of primary health care, and (d) being administratively top heavy and, more generally, inefficient. In the past few years, many Latin American countries have begun searching for methods to ameliorate these problems. This paper analyzes three recent efforts, all of which involve some degree of privatization: (1) El Salvador's partial privatization of specialty physician outpatient consultations, (2) Peru's minor surgery and its decentralized ambulatory care programme, and (3) Nicaragua's "administrative services only' approach wherein social security beneficiaries choose to join a certified public or private provider organization for one year, and, on behalf of the individual, social security pays the organization a fixed, annual, per capita fee to provide all health care for the enrollee. The paper also identifies political and technical considerations, as well as health care market characteristics that have shaped these efforts and that condition their likelihood of success, including: the size, composition, level of capacity utilization, degree of organization and geographic distribution of private sector resources; relative prices in the private vis-a-vis the public sector; and the size and nature of the private health insurance market. Other Latin American countries would do well to examine these factors and characteristics before embarking on efforts to reform their own social security health care delivery systems. (+info
To contract or not to contract? Issues for low and middle income countries.
Many low and middle income countries have inherited publicly funded and provided health services, often operating at relatively low levels of technical efficiency. Changing ideas about the management of the public sector, in particular stemming from new public management theory, are spreading to these countries, whether directly or via the recommendations of multilateral and bilateral aid agencies. Pronouncements of agencies such as the World Bank imply that competitive contracting with the private sector is likely to improve the efficiency of services provision. However, very little evidence is available on whether this is likely to be the case, and in what circumstances delivery of services through contracts with the private sector is likely to be preferable to direct provision by the public sector. This paper draws on evidence from five country case-studies of contractual arrangements, in Bombay, Papua New Guinea, South Africa, Thailand and Zimbabwe, done through collaborative research between the LSHTM Health Economics and Financing Programme and local researchers in each country. A common evaluative framework was applied in each country to selected, existing contractual arrangements. Services provided under contract and evaluated included catering, cleaning, security, diagnostic services and whole hospitals. Information is presented on the design of contracts, the process of agreeing contracts including the extent of competition, and the monitoring of contract performance. A variety of evidence, including information on the relative cost and quality of contracted out versus directly provided services in the case of South Africa, Thailand, and Bombay, is used to explore whether or not contracting out to the private sector represented a preferable means of service provision. This analysis, together with information on the capacity of the agency letting the contract, and on the wider environment including the level of development of the private sector, is used to identify which aspects of the contracting process and the context in which it takes place are important in influencing whether or not contracting with the private sector is a desirable means of service provision. (+info
Transformation of ministries of health in the era of health reform: the case of Colombia.
Ministries of health are being called upon to lead major health reforms; at the same time they must reform themselves to become more modern institutions and assume new and different functions and roles in the more dynamic reformed system. The literature on public administration and on health reform has recommended many processes of institutional reform and development, building on private sector management techniques, popularized by 'reinventing government' and 'total quality management'. More recently, thoughtful insights have emphasized improving public management through a focus on creating 'public value'; on political, as well as administrative, leadership; improving institutional performance through strengthening the 'task networks' of organizations needed to achieve strategic objectives; and creating a learning culture within the organization. This article applies these recent approaches to the specific needs of ministries of health in order to improve their capacity to lead major health reforms. This combined approach is then used to analyze and make recommendations to the Ministry of Health in Colombia where the authors were providing technical support for a major new health reform. (+info
Reform of health insurance in the Federation of Bosnia and Herzegovina.
The aim of this report is to provide an overview of the reform of health insurance in the Federation of Bosnia and Herzegovina (FBH). Health financing and resource allocation policies in the FBH are also summarized. Health financing should be ensured through three types of health insurance: compulsory, supplementary, and voluntary. The revenues for the compulsory health insurance will be ear-marked through payroll taxation. Facing the scarcity of resources, the Federation authorities have decided to raise the proportion of the payroll contribution as compared to the pre-war level and engage in various arrangements of cost-sharing and priority setting in health care. The resource allocation policy underlines two key parts of the health care reform: contracting mechanisms and payment systems. We also discuss the optimal correlation between solidarity and competition in the course of the ongoing reform of the health insurance in the Federation. The social function of a competent health system, where the well-being of the population is viewed as a sociological category of the overall society's concern, requires considerable subsidization. Incentive-based market mechanisms may be introduced into some of the segments of health care system but only under government-led control of the effects of such measures. (+info
Financing of dental health care in the Federation of Bosnia and Herzegovina.
Financing dental health care in the Federation of Bosnia and Herzegovina (FBH) over the last 10 years was analyzed with respect to time before the war, during the 1992-1995 war, and after the war. In the first period (until 1991) the system was centralized, well structured, financed through the communities of interest, and burdened with a lack of financial discipline and high inflation. By the end of 1991, all citizens in the territory of BH Federation had the right to dental health insurance and participated in the price of dental service with 10-50%. During the 1992-1995 war, insurance and financial institutions ceased their work until the establishment of civilian governing authorities. The system of dental services was legalized within the health system as its integral part, yet, because of insufficient financial support, the rights of the insured were not fulfilled. Following the Dayton Peace Agreement in 1995, two systems (Croat and Muslim) were in function in FBH, each based on different legal grounds, and dental care stagnated considerably. The 1997 FBH Law on Health Care and Health Insurance and the Law on the Privatization of companies introduced a unique health system, widening the sources of financing and categories of health insurance. The process of health care privatization has been legalized, but not yet implemented. Lack of definitions of ownership diminish foreign investments, and without foreign financial support the improvements will be slower than needs. The process of health care restructuring will thus directly depend on the solving the political crisis in the country. (+info