Provider Purchasing and Contracting for Health Services_The Case

Paying the providers
Health care providers were funded through the SWAp mechanism. In addition, health centers
and hospitals supplemented their income through cost sharing and cost-recovery user fees. 5
Hospitals also received funding through the purchase of beds by lower level facilities that
referred patients to them. According to the guidelines, the hospital boards negotiated with the
district boards on how much of their grants the districts should allocate to the hospitals
providing for the purchase of beds. The negotiations were limited within 20–40 percent of a
board’s operations grant.
Bypass fees were imposed on patients who self-referred. In cases where the patient did not
pay the fees, the referral institution could claim the revenues arising from such from the
respective District Health Management Team under the contractual agreement.
Disbursement of funds
Once the contracts were signed, the Ministry of Health released funds to the Central Board of
Health on a monthly basis, while basket funds were released on a quarterly basis. In turn, the
Central Board of Health released fund to district and hospital boards on a monthly basis in
accordance with the contracts signed. Both the basket funds and government funds were
supposed to be released at the same time; however, in practice, the releases occurred at
different times.
Contracting among public providers
The three-tier referral system discussed earlier provided the framework for contracting
among public health care providers with the decentralized units as implementing agents. As
noted earlier, each level of care had a clearly articulated or defined package of health care for
the target population.
First-level referral system: The district boards were fund holders responsible for providing
primary health services as well as the first-level referral services. They also served as
gatekeepers in the purchasing and provider contracting system, by providing the entry point
for the patient and determining the required services for attention and reference based on
individual cases. For contractual purposes, they were authorized to purchase services on
behalf of the catchment populations. Services at the district level could be purchased for a
variety of reasons such as the following:
• Insufficient capacity or supply in the respective District Health Board. This could be
provided by another District Health Board.
• Lack of a respective district facility, in which case a corresponding District Health
Board and/or secondary or tertiary facility, depending on different factors, could be
contracted for specific services
• Lack of expected services, in which case, for nonclinical services, other supplies
could be contracted to provide the service
5 Cost sharing is also referred to as low-cost sections of the providers. Patients meet a small proportion of the
treatment costs. Cost recovery exists mostly in hospitals. Some sections of the hospital operate on private sector
principles and charge full treatment costs. The services in the high-cost section are expected to be efficient with
availability of medical personnel and drugs and supplied at all times.
37