The role of contractual arrangements in improving health sector ...

DISCUSSION
Lebanon
This Report has reviewed the contracting arrangements in health engaged by the different
public organizations in Lebanon. Contracting for health services, both hospitalization and
ambulatory care, dominates public–private contracting in the health sector and serves over 80%
of the Lebanese population. Hospitalization gets the lion share of contracting.
There are several features and limitations which are common to all contracting
arrangements for health services: each agency carries out its own contracting, but the nature of
contracts is remarkably similar across agencies; agencies contract with a large number of
providers, well beyond the needs of the contracting agencies, thus limiting the possibility of
effective oversight and monitoring; there are political influences on the contracting process; the
private sector has more manoeuvring power within current contractual arrangements than the
public agency; contracts have no emphasis on performance or outcomes; contracts are not
designed, and thus are unable, to limit the escalation of health care costs.
We have already discussed the strengths and weaknesses of the different contracting
arrangements of the Ministry of Public Health. As for publicly funded insurance schemes, it may
be instructive to discuss limitations common to contractual arrangements for both ambulatory
care and hospitalization. These arrangements reflect a historical development whose time is past,
as is well recognized by the financing agencies themselves. There are many limitations in the
current situation. Contracts are neither strong nor clear in terms of quality of care or liabilities.
Contracting with a very large number of service providers offers beneficiaries choice, although
not necessarily quality service. The financing agencies have little leverage over the contracted
parties. Different agencies have common interests, contract with the same providers, and use the
same contracting mechanisms. However, agencies do not seem capable or willing to combine
efforts to improve their bargaining positions or improve the contracting mechanisms. For
example, with regard to hospitalization, several simple measures are likely to make an impact:
unification of pay schedules across the different financing agencies; introduction of flat rates for
all hospitalizations, medical and surgical, or preferred providers judged on both quality and
costs, or selection of sites for certain types of hospitalizations. Attempts are under way to unify
pay schedules (especially for surgical procedures), but this has proved difficult for various
political reasons. With regard to ambulatory care, changes that are seen as most urgent include:
listing preferred providers; gate-keeping through primary care physicians; introducing methods
of risk sharing by providers; instituting health information systems; and documenting health care
outcomes. As with the Ministry of Public Health scheme, many worry about the public–private
cash transfers that current arrangements provide without the anticipated returns for citizens.
The current fragmentation of health care financing in Lebanon is a recognized obstacle.
However, contracting need not be so fragmented. All public agencies contract with the same
providers using the same arrangements. Unification of contracting, for example through the
creation of a central contracting body which contracts with providers on behalf of the different
agencies, can minimize costs and improve effectiveness and bargaining power. Additionally this
170