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Governance: Crucial for improving health system purchasing

Dec 19, 2016

There is no single model of purchasing which can be applied to all health systems, writes Dr Rajmohan Panda, Senior Public Health Specialist, Public Health Foundation of India.

New Delhi: India currently spends only about 25 percent of its total health expenditure from government resources and thus a major proportion of health care expend is met by individuals seeking care resulting in high out-of-pocket expenditure. An alarming 63 million people are faced with poverty every year due to these catastrophic healthcare expenditures.

The government purchases just 30 percent of healthcare services, which is lowest among all BRIC countries. Despite that fact that there are several health insurance schemes across the country, till date only about 20 percent of the Indian population on an average are covered by some form of health insurance.

Current purchasing mechanisms including public procurement of drugs and consumables and buying selected services from the private sector for service delivery are poorly designed. These inefficiencies affect good health outcomes of the population. Such issues underlines an urgent need for major reforms in current purchasing mechanisms in the health care sector.Raising sufficient money for health is imperative, but just having the money alone will not ensure the delivery of good health services.

Similarly, removing financial barriers through prepayment and pooling mechanisms alone cannotimprove the access to good and appropriate health care services. The final requirement is to ensure efficient use of resources for delivering quality health services. Purchasing is the critical link between resources mobilized and the delivery of acceptable quality services. If done strategically, it can promote quality, efficiency, equity and responsiveness in health service provision thereby facilitating progress towards universal health coverage (UHC).

A core function of health care financing, purchasing is the process of allocating funds to obtain affordable and quality healthcare services on behalf of the population. All health systems including the Indian health system exercise some form of purchasing. When purchasing goes beyond the simple reimbursements of products and services and strategically addressed societal heath care needs, it can play a significant role in improving the performance of health systems. There is no single model of purchasing which can be applied to all health systems.

Different schemes and states in India have different needs and thus purchasing arrangements must be determined by their funding and provision. Strategic purchasing implies maximization of overall health gain from the available resources. It involves decisions on which interventions to be purchased, how, when and from whom.

These decisions are highly influenced by the governance and institutional structure of the health systems.Governance and leadership is critical, relevant to all of these components as well as to the interactions between them.

Governance in health systems is increasingly regarded as an important theme on the country’s development agenda. Governance involves setting strategic direction and objectives; making policies, laws, rules, regulations, or decisions and overseeing and making sure that the strategic goals and objectives are accomplished. It incorporates management which is concerned with implementing policies and decisions.

Good governance is determined by competently directing health system resources, effective policymaking, open information and active stakeholder participation. In simple terms, the general rules for good governance is to make information available, transparent and accountable.Good governance of health system enables sound management of medicines, information, human resources, and finances, which in turn creates conditions in which health providers can deliver high-quality health services.

A better understanding of successful strategies and practices in healthcare purchasing can define a strong regulatory and institutional framework that can be used to achieve goals of an ideal governance system in the country.

Strategic purchasing can help the country to move closer to the goals of UHCthrough the following actions:

1.  Institutionalising of Coherent decision making with active participation of all stakeholders

2.  Strong monitoring and supervision with robust data management systems in place

3.  Establishing comprehensive guidelines and protocols for purchasing agencies

4.  Enforcing clear criteria for selection of agencies and empanelment of hospitals

5.  Ensuring transparency and accountability withtransparency of information for general public:

6.  Improve grievance procedures through clearer regulations that assign responsibility: The partners should get a platform to voice their grievances which will increase their trust on the government. A committee should be formed at both, state and district level, to address complaints of the service providers and beneficiaries in a timely manner.

7.  Modernization and innovative technologies: Introduction of a functional and online Management Information System can help in tracking the drugs and its timely storage across various warehouses, contributing to strengthened and well-regulated procurement procedures.

The central question is no longer whether strengthening stewardship of purchasing is necessary but more on how to put it effectively in place. Formulating health policy is a key function of government stewardship but one that is either absent and or poorly implemented in many LMIC countries like India.

Thus its application to purchasing decisions is minimal. In the end policy makers must decide whether they prefer a more transparent and easy to implement systems than have complex and sophisticated systemsthat have greater potential but face more implementation and monitoring challenges.

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