THE health and family welfare ministry contemplates outsourcing or contracting out the responsibility for delivering health care in the form of a package of basic services. The process of outsourcing must, however, be strategic. One example of such strategic purchasing of health care is currently in practice under the Urban Primary Health Care Service Delivery Project Phase II, sponsored by the local government, rural development and co-operatives ministry and the Asian Development Bank. There are three pertinent aspects relating to the strategic purchase of health care based on my own experience of strategic purchasing of health care in Bangladesh.
Contracting has myriad avenues, techniques and types, of which outsourcing is only one. Outsourcing, as noted above, means contracting out. Contracting in, by contrast, invites contracted parties to operate within the rules, conventions, acts and practices of the contracting organisation. While this may be implicit in the type of contract, to avoid difficulties down the line, as the partnership begins to function, the contractual conditions should make these distinctions clear from the outset. In contracting out, while contractual conditions prevail, the contracted party will maintain its own organisational rules, conventions and practices, which will be acceptable to the purchaser of care.
In either case, a thorough analysis must be undertaken to understand the efficacy and effectiveness of the purchaser鈥揷ontractor relationship, particularly the obligations, working styles, environments, organisational cultures and conventions, rules, practices and leadership and management styles of personnel and organisations on both sides. These considerations come in addition to the organisational and personal skills, experience and backgrounds of the contracted party. Clarity in these areas helps develop future interactions and conditions transparently and appreciably between the two parties.
It must also be emphasised that 鈥榮trategic purchasing,鈥� a term now widely used in the health sector, is only strategic insofar as procurement is efficient. Efficiency in this context means ensuring value for money: benefit maximisation by the purchaser of the service, as opposed to profit maximisation by the contractor. This balance requires astute planning and careful design of benefit packages, procurement or outsourcing terms and conditions and effective contract management, including review, assessment, monitoring and efficient payment modalities, among the many alternatives for the purchased services.
To be an efficient purchaser, it is vital to recognise that certain services deliver better returns, such as treatment of tuberculosis, nutritional care, vaccination, neonatal and maternal care, and the prevention of non-communicable diseases. Early warning signals of impending outbreaks, case identification and timely treatment reduce both transmission and duration of infections, thereby protecting others from becoming infected. This, in turn, enables them to preserve their energy for national, social, educational and economic development, contributing directly and indirectly to the national exchequer through taxes from their earnings. Prevention of ill-health also depends on people鈥檚 knowledge of how disease and malnutrition are caused and transmitted. These services are relatively inexpensive compared to treatment for chronic or malignant diseases, yet they offer significant returns in strategic purchasing. They should, therefore, receive priority in the benefit package.
Scoping of health services must likewise be undertaken strategically, identifying those that yield sound economic returns, such as internal rate of return, while also proving financially worthwhile. Economic returns must be assessed not only in monetary terms but also in light of personal satisfaction. Both nominal and inflationary market prices are important considerations when contemplating investment, alongside potential profits from alternative opportunities, such as bank interest. While monetisation of the economic aspects of a service is relatively straightforward, satisfaction from care, an important indicator of the benefit-to-cost ratio, cannot easily be expressed in monetary terms.
Some of these factors require a more hedonistic approach. Scoping should also analyse benefits by degree, unit and service complexity, requiring an understanding of the entire range and multifarious implications of the services to be purchased. This must be experiential and demand the foresight of a team of purchasers who understand the true market cost, price, value and need for services across various parameters and dimensions.
The health market is a distorted one, due to information asymmetry, which exists even among experts who may be deeply knowledgeable in one area of health but lack a full picture of the system as a whole. Scoping should, therefore, also explore the potential for long-term partnerships that create win鈥搘in outcomes for both purchaser and provider. This could take the form of a framework contract, which would require precise and timely purchasing and payment strategies, as well as effective monitoring of procurement timeliness. In competitive bidding, prospective bidders rarely propose innovative approaches, as it is difficult, if not impossible, to standardise their costs. It is equally important to note that overly stringent bid conditions can stifle innovation, though incentives may be made available to successful bidders. In long-term contracts, budgets may be reserved within the bidding process to encourage and remunerate innovation in service provision as relationships and mutual understanding mature.
Outsourcing, then, is essentially a partnership established when the public sector is unable, for various reasons, to provide certain services efficiently at a given time, while the private sector may be better positioned to do so in terms of skill, speed, quality and ease of operation. Before signing a contract, however, it must be ensured that the quality of care, measured against agreed indicators, can indeed be delivered and guaranteed by the contracted party. An equally important consideration is the price of quality, by degree and depth, offered. Moreover, the dimensions of coverage, both by headcount and service volume, must be kept in view. The combined price of quality and coverage as a package must be examined for different types, depths and degrees of health care. Alternative prices for equivalent quality and coverage must also be explored, alongside incremental costs for expanded quality and coverage unit by unit, to anticipate future needs.
Determining whether these represent the best choices, and which of them will yield dividends, how, and when, will be essential considerations for incremental care over time. Quality and coverage must both be subject to agile negotiation within contracts. The criteria for quality assessment, based on specific indicators, must be clearly established. Investment decisions should be underpinned by solid, valid and specific indicator-based data. Standard operating procedures should be developed for every service by degree and depth, with performance assessments determining compliance with contractual terms. These assessments must form the basis for both performance appraisal and payment. Experience shows that, rather than assessing individuals, it is more efficient to hold the contracted organisation as a whole responsible and accountable for contractual obligations. Purchasers must also possess the capacity to assess and monitor performance prior to authorising payment. The involvement of beneficiary representatives is recommended for enhanced transparency.
As noted earlier, the decision on the basic package of care is central to efficient and strategic purchasing. Human rights considerations must be paramount and this should translate into providing primary health care free to all citizens as a first step. Additional services may be considered subsequently, based on humanitarian grounds, such as expensive but potentially life-saving interventions. Such decisions should be guided by triage principles. For example, a young person with family responsibilities should receive priority in extended care added to the basic package. Other services may be included based on national and individual affordability, particularly where treatment contributes directly to the national economy.
Variability in the nature, type and degree of health problems must also be recognised. Strategic vision should naturally account for the distinction between costing and pricing care when procuring and paying for services. Contractual conditions must be established through smart negotiations with outsourced providers, who are themselves shrewd actors. Purchasers must keep in mind the long-term span of benefits and leverage these intelligently. In framework contracts, I would advocate the inclusion of health outcomes and the overall health status of the population as key indicators. Importantly, capacity-building among purchasers to enable effective strategic purchasing and contract management will be strongly warranted.
Epidemiological, demographic, economic, educational and topographical factors 鈥� collectively referred to as the 鈥榮ocial determinants of health鈥� 鈥� influence people鈥檚 attitudes and lifestyle practices. These determinants directly shape the health status and outcomes of individuals, families and societies. Variations in disease patterns and in the severity of illnesses are well recognised as correlating with these social determinants. They also generate significant differences between rural and urban areas, as well as in hard-to-reach parts of the country. Even within cities, slum and non-slum populations experience distinct exposures and vulnerabilities for the same conditions.
Consequently, a uniform approach to outsourcing health care cannot be applied. Specificity is required for particular locations and populations. Factors such as exposure potential to communicable and non-communicable diseases, levels of immunity, individual and national purchasing capacity for health care and the wider implications of that capacity must be considered when investing. Benefit packages should, therefore, be flexible enough to address variations in geography, topography and social determinants of health.
In conclusion, let me inform readers that, in the urban primary healthcare project mentioned earlier, marginal urban populations are identified through a scorecard comprising around a dozen relevant indices. Those who qualify are issued a 鈥榬ed card鈥�, which entitles them to access all types of services free of charge, including caesarean deliveries. During performance assessment, priority is given to evaluating the extent to which services were provided free of charge to red card holders. This model could be replicated on a national scale.
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Dr Abu Muhammad Zakir Hussain is chair of the Community Clinic Health Support Trust and a member of the health sector reforms commission.
