Strategic Contracting for Health Systems and Services

Eric de Roodenbeke

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351487986
• Edition: 1
• Topic: Medicine
• Subtopic: Public Health, Administration & Care

Until the start of the new century, efforts to strengthen health systems focused solely on the public sector and health programs overseen by public bodies. The private sector was sidelined in certain countries and even banned in others. At the same time, some private-sector stakeholders readily adapted themselves to this special situation so as to avoid becoming part of a structured health system.This volume notes profound changes in health care around the world in two areas. The stakeholders involved in the health sector are increasing in number and diversifying as a result of the development of the private sector. They are also responding to a process of democratization and decentralization. These developments have been paralleled by greater functional differentiation. Various stakeholders are increasingly specializing in particular areas of the health system: service delivery, procurement, management, financing, and regulation.The interdependence of health stakeholders becomes more evident along with the increased complexity of delivery systems as these respond to changing demand. There is a compelling need to forge relationships. Such relationships are in fact emerging in developed countries and, more recently, in developing countries. They may be informal, but are increasingly organized and structured.

Part I

Chapter 1
Emergence of contracting in the health sector

Jean Perrot

Introduction

People’s health has improved considerably in the course of the twentieth century. Proof of this is the spectacular increase in life expectancy; barely half a century ago it was no more than 48 years whereas today the global average figure is 66 years. Numerous determinants have certainly contributed to this; broad sectors of the population have seen their income increase, better working conditions have made life less harsh and dangerous, food has become healthier and individual and collective hygiene have improved. Moreover, the higher level of education, especially that of women, has led to a better understanding of health issues. In addition, medical knowledge and practices as well as methods of treatment have made great strides in recent decades. Finally, the organization of health systems, which broadly developed during the nineteenth century, has made it possible to coordinate efforts, notably under the aegis of States favouring conventional universalism, in other words free access to all types of care for all.

Nonetheless, despite all these efforts, the performance of health systems is still very often unsatisfactory. As the World Health Report 2000 “Health Systems: Improving Performance”, points out “these failings result in very large numbers of preventable deaths and disabilities in each country; in unnecessary suffering; in injustice, inequality and denial of basic rights of individuals. The impact is most severe on the poor, who are driven deeper into poverty by lack of financial protection against ill-health”.¹

It is true that in recent years, health systems’ organization has undergone a considerable evolution. One factor which has unquestionably contributed to these changes has been the mitigation of rivalry between the public and private sectors in all spheres of economic, social and political life. In an effort to make up for the inadequate performance of their health systems, most countries have undertaken reforms. Political decision-makers have several choices: deconcentration allows more authority to be vested in local Ministry of Health officials; administrative decentralization is a means of transferring responsibility for health to a local authority; autonomy for public providers is designed to endow health facilities with self-government, within the public sector, based on legal status; separation of funding bodies from service providers allows the introduction of competition between providers, whether public or private; the broadening of the range of possibilities for health financing, through risk pooling and insurance mechanisms, makes possible the emergence of an actor charged by its members with negotiating access to care; privatization, at least in the conventional sense, involves transfer of ownership from the public to the private sector; development of the private sector is a strategy option for political decision-makers wishing to withdraw from the provision or funding of health services.

The institutional reshuffles described above do not always yield the expected outcomes. The different actors continue to operate in isolation without seeking appropriate synergies. Moreover, the organization of health care provision still relies largely on hierarchical power, in other words on a vertical commandment method that does not favour a collaborative approach.

There is a new way of getting around these inconveniences. The actors can try to break away from their isolation and establish concerted activities in order to better respond to the needs and demands of communities. The relationships that they establish can rely on different modalities: coordination; exchange of information, and elaboration of joint principles of intervention (joint declarations, charters, etc.).These moral commitments have however their limits. In order to overcome these limits, these relationships are increasingly based on contractual arrangements which formalize the understanding between the mutually engaging actors.

The first section of this chapter will highlight the fact that the long lasting compartmentalization of health systems into private and public sectors no longer reflects the reality; the diversification of actors and functions in health systems inevitably leads to interactions. The concrete forms of these interactions and the difficulties in establishing them will need to be examined. The second section will focus on the fact that the actors are becoming increasingly aware of the evolutions in management methods. These two sections will lead us to the main point of this chapter: Contacting has not come out of nowhere; it is the consequence of different evolutions that have occurred, at an uneven global pace, in all the current societies.

1. Institutional Evolutions In Health Systems

1.1 The rationale underlying public sector - private sector compartmentalization

Until the end of the 1970s, in many developing countries the organization of health systems was relatively simple and could be summarized as follows. It involved two actors: on the one hand, a public system that was entirely organized by the central State which enacted laws, norms and regulations, laid down health policy and ran health facilities that were financed by public revenue and public assistance, and on the other a private system, either for-profit or run by the churches, and which operated independently and in complete autarky.² As a rule these two worlds live in separate worlds. In line with the then prevailing welfare state rationale, most of these countries opted for a free and State-run health service. It is true that during the period the different private sectors developed, although in a compartmentalized fashion and almost without the State knowing.

This welfare state philosophy came to an end at the beginning of the 1980s.The Governments of the developing countries found themselves forced to address profound financial crises as a result of which virtually all of them introduced restrictions and/or reforms. The situation of the public facilities deteriorated inexorably. States long endeavoured to resist the deterioration and they would not or could not admit their failure. Shortages gradually and insidiously became the norm. There were even those who claimed they will manage the shortage: whatever the case, on learns to deal with it and to “muddle through”.

A more manifest desire for “active privatisation” (to use J. Muschell’s expression)³ then emerged; this evolution was characterized by Governments, often urged on by development partners, encouraging the emergence of private actors. However, In the developing countries, transfer of ownership, in the strict sense of privatization, was still the exception. In these countries the privatization mainly manifested itself through the expansion of NGO operated health facilities (in particular non-denominational NGOs) and through the development of private clinics and private practice.

Nevertheless, both these periods were heavily marked by rigid compartmentalization of the efforts of health actors, with each of them setting up its activities in its own separate universe. Neither of them knew, or occasionally even wanted to know, what the other was doing. But at the same time, as each of them wanted to extend its sphere of influence, we also witnessed rivalry or clashes: installation of a new public health centre in the vicinity of an existing private centre; failure of a private practitioner to refer patients to the public hospital, etc. The consequences in terms of inefficacy within the health system could be dramatic for populations.

1.2 Recent trends

For some ten years now, it has been possible to observe a marked evolution in the organization of health systems. This is no doubt largely attributable to the disappearance of the public–private ideological confrontation. We have witnessed far-reaching reshuffles which have taken two directions. On the one hand, the number of actors involved in health has increased and become more diversified under the dual pull of private sector development and of democratization and decentralization, fostering the emergence of a civil society and of structured and responsible local authorities. On the other hand, this trend has gone hand in hand with sharper separation of roles; the different actors have increasingly specialized in a particular health system function (provision, procurement of services, management, financing and regulation, ...).

The diversification of actors

A situation in which the public sector, represented solely by the Ministry of Health, and the private sector, whether for profit or denominational, ignore or clash with one another to provide health services is increasingly remote from reality.

Internal institutional arrangements⁴

Historically, it has to be borne in mind that such reshufflings have taken place within the health system and among the sector’s actors. Thus, recent years have been marked by two far-reaching changes which have resulted from the diversification of the ways in which public services are managed:

• Deconcentration: the heavily centralized administration which has long prevailed is gradually being replaced by a deconcentrated administration to which authority is delegated. Deconcentration within the health sector has essentially developed through the health districts. If it is to be effective, this system as a whole requires a certain degree of autonomy. It receives this via an action of deconcentration in which the central authority delegates some of its responsibilities to the health district. This new institutional arrangement obviously permits more effective management as it takes better into account the local circumstances. However, such autonomy is considerably limited if it the administrative unit does not have a proper legal personality, which alone will enable it fully to participate in contractual relations with its partners.
• Autonomy: while understanding that a health services production unit operating along traditional administrative management lines acts as a check on the efficacy of such facilities, but at the same time appreciating the undesirability of privatizing the facility or entrusting its management to a private institution, the Ministry of Health may opt to endow it with a status that permits greater autonomy. While remaining part of the public sector, the health facility possesses legal personality to perform a public service mission together with administrative and financial autonomy. There are two essential elements to this status: i) the public establishment is able to exercise all the rights attached to legal personality, in particular the right to sign contracts (for its day-to-day running it need no longer follow the conventional administrative channels and is able directly to contract service providers: contracts for maintenance services, for catering or for laundry services), and ii) autonomy does not signify independence: the public establishment is subject to supervision and to the stewardship of the State (or a local authority). This autonomous status currently extends to various types of health service: first and foremost to hospitals, but also to agencies responsible for procurement and distribution of medicines and to training schools. The autonomy conferred by the status of a legal person (under public law) may nevertheless be limited by the very substance of its statutes and internal regulations, for example: The personnel of a public establishment are generally national or local civil servants; this means that the civil service salary scale applies directly to them. Likewise, the establishment of posts, transfers and the replacement of staff are decided by the civil service, leaving little leeway for the public establishment to develop a suitable human resources policy. The budget is heavily dependent on appropriations from the State; this means that in a developing country, only a small part of a hospital’s budget is covered by payments from patients and is heavily dependent on State grants. In all cases in which this liberty is tightly restricted, there is a risk that autonomy will be a mere illusion and that the central State will continue to exert the full sway of its authority. In order to mitigate this, it is important to limit, via the statutes and internal regulations of the new corporate entity, the possibility for the State to intervene on an ad-hoc basis in the day-to-day running of the public establishment. This autonomous status may also be considered for the administrative function at the local level. As in the case of the regional hospital agencies in France or the Health Authorities in England, district or regional agencies are set up; although they possess public status, they enjoy greater managerial authority. These entities nevertheless possess legal personality and a board of management.⁵ Autonomy should allow them the possibility not only to take responsibility for day-to-day management, but also to decide on their policy.

The interference of partners outside the health sector: external Institutional arrangements

The diversification of actors in health systems has also involved the integration of stakeholders that previously were operating outside the health sector.

• Populations [communities]: during the first half of the twentieth century, modern me...

Table of contents

• Cover Page
• Strategic Contracting for Health Systems and Services
• Copyright Page
• Strategic Contracting for Health Systems and Services
• FOREWORD
• INTRODUCTION
• PART I
• PART II
• PART III
• PART IV
• PART V
• PART VI
• CONCLUSION
• TO LEARN MORE…