Payment Arrangements for Private Healthcare Purchasing Under Publicly Funded Systems in Low- and Middle-Income Countries: Issues and Implications

Abstract

This paper examines private healthcare purchasing under publicly financed health systems in low-and middle-income countries (LMICs) to argue that the payment methods and rates applied to private and public health providers need careful attention to ensure equity, efficiency and quality in healthcare service provision. Specifically, public purchasers should develop a clear mechanism to establish justifiable payment rates for the purchase of private health services under publicly funded systems, using cost information and appropriate engagement with private health providers. In order to determine the validity of payment arrangements with private providers, clarification of the shared roles and responsibilities of public and private healthcare providers is required, including specification of types of services to be delivered by public and private providers, and the services for which public providers receive government budget and salaries above payments for other publicly funded services. In addition, carefully designed payment methods should include incentives to encourage healthcare providers to deliver efficient, equitable and quality health services, which requires consideration of how the healthcare purchasing market is structured. Furthermore, governments should establish sound legal frameworks to ensure that public purchasers establish 'strategic' payment arrangements with healthcare providers and that healthcare providers are able to respond to the incentives sent by the payment arrangements. To deepen understanding of public purchasing of private healthcare services and gain further insight in the LMIC context, in-depth empirical studies are necessary on the payment methods and rates used by public purchasers in a range of settings and the implications of payment arrangements on efficiency, equity and quality in healthcare service provision.

Health Financing in Sub-Saharan Africa: From Analytical Frameworks to Empirical Evaluation

“…Finally, countries in SSA that have introduced health insurance to make healthcare more accessible to their populations face several design challenges. Some of these insurance systems lack a sound legal framework that ensures payment arrangements assist public purchasers to strategically purchase services from private providers [ 29 ]. With budgets stretched in many countries in SSA, such a legal framework will ensure that appropriate laws are enacted to hold actors in the insurance sector accountable.…”

“…The final two papers review the health financing literature to highlight critical issues relating to strategic purchasing and health insurance coverage. Honda and Obse [ 29 ] examine private healthcare purchasing under publicly financed health systems in LMICs. They argue that the payment methods and rates applied to private and public health providers need careful attention to ensure equity, efficiency and quality in healthcare provision.…”

Factors for Consideration When Setting Prices for Private Healthcare Providers Operating in Public Systems: A Comparison of France and Japan

“…1 Private healthcare purchasing can operate under different types of publicly-funded health financing models including: (1) mandatory health insurance systems that purchase healthcare services from public and private healthcare providers; and (2) tax-based systems that contract selected private healthcare providers alongside publicly-funded healthcare services. 3 The optimal structure of the purchasing arrangements with private healthcare providers should encourage private providers to contribute to the objectives of the publicly-funded system when providing services and to improving the health system's performance. 4 Payment rates are an important lever in healthcare purchasing arrangements and can impact on efficiency, equity, and quality in healthcare service delivery by sending incentive signals to providers that can change their behavior.…”