The purchasing function of health financing is gaining increasing attention and traction in global health systems and universal health coverage (UHC) debates, which have, in the past, focused predominantly on revenue collection and pooling. This is highlighted by a recent workshop convened by the World Health Organisation on strategic purchasing. In the blog, I summarize seven key messages from the workshop that are likely to feature in future discussions on strategic purchasing.

Purchasing refers to the process by which funds are allocated to healthcare providers to obtain services on behalf of identified groups. The World Health Organization defines strategic purchasing as a continuous search for the best ways to maximize health system performance, by deciding which interventions should be purchased, how, and from whom.

1. Multiple purchasers and funding flows present challenges to healthcare facilities

Purchasing is typically considered from the point of view of the purchaser. However, by looking at purchasing arrangements from the perspective of healthcare facilities, a complex picture of multiple purchasers and funding flows emerges. Multiple funding flows can result in healthcare providers being required to simultaneously manage several contractual arrangements, types and rates of payment mechanisms. This is important because types of funding mechanisms (e.g. fee-for-service or capitation) can affect healthcare providers behavior. Examining and harmonizing the signals that multiple funding flows send to facilities is a critical issue in strategic purchasing.

2. Priority-setting is often neglected in benefit package design

A key responsibility of healthcare purchasers is in deciding what to include in the benefit package for health. However, decisions about priority setting are often neglected in this process. It is especially important to ensure that priority-setting processes are inclusive and fair, and include the views of the public. To achieve this, there must be opportunities for dialogue between and with communities when deciding on what services to prioritise.  

3. Better representation of informal workers is needed on the governance boards of purchasers

The governance boards of many purchasing organisations, such as social health insurers, include representatives from the government, employers (e.g. an umbrella employer association) and employees (labor unions). However, in most low and middle income countries, a significant proportion of the population work in the informal sector. They do not belong to the labor unions, and do not have formal employers to represent them on such boards.

4. Poor accountability of non-government purchasing organisations

Another governance issue that was highlighted is the perennial problem regarding oversight of purchasers that are separate entities from the Ministry of Health (MOH), such as social health insurers. Whilst on paper social health insurers are accountable to MOH, the reality in many countries is that this accountability is extremely weak due to the fact that MOH do not have financial leverage over them. The questions therefore are how to use none-financial leverage to hold social health insurers to account, and who has the responsibility of stewarding the health sector towards a shared vision.

5. Harmonised information systems are required to gather data for strategic purchasing

Strategic purchasing cannot occur in the absence of good quality data. Often information systems are fragmented, presenting a partial view of the system. As we think about defragmenting resources and defragmenting risk pools, it is equally important to integrate and harmonize information systems. However, even as we seek to improve data systems, there is need to balance between high data requirements with what can be feasibly collected. An important starting point is to think about what questions to ask at each level of the system, and to focus on data for systems rather than data for individual schemes.

6. Results based financing (RBF) must be embedded and integrated within the wider health system

While it was appreciated that RBF can contribute to strategic purchasing and act as a catalyst for health system reform,  there is a need to ensure that RBF mechanisms are embedded and integrated within the wider health system. Of high priority is the need to move beyond piloting schemes to planning for scale up, local government adoption and ensuring their long-term sustainability.

7. The political nature of strategic purchasing

Strategic purchasing is not just a technical issue, but more so a political issue. It was observed that systems are not the way they are by accident, but rather by design. To understand strategic purchasing necessarily requires understanding the political economy forces that shape policy within different contexts.