Provider Purchasing and Contracting for Health Services_The Case

Favorable tax incentives are being offered to attract investors. Accordingly, it is envisaged
that the private sector will extend investment in specialized services that the government is
not able to offer. It is estimated that the country spends an average of US$3 to 6 million per
annum by referring patients to neighboring countries for specialized services. Thus, it is
envisaged that the private facilities will enter into contracts with the government for these
services.
9. Discussion, Conclusions, and Policy Implications
Discussion of the results
Following the reforms, the government adopted contracting-in as a policy strategy to enhance
the efficiency of resource use at various levels of the public health care system. According to
fund holders, the policy has improved the allocation of resources in the entire health system
as the Basic Health Care Package defined the services that are offered at each level of care.
Contracting-in has enabled the fund holders to contract with other public and mission
hospitals to supply the services they cannot supply. The guidelines for contracting-in are well
articulated by the principal purchaser. The study found that about 35 percent of resources in
the public health system flow through the contracting-in process at various levels of the
referral system.
The interviews revealed that the purchasing arrangement is riddled with uncertainty. Some
respondents observed that contracts between the providers and the Ministry of Health
resemble a loose memorandum of understanding with no penalties or strict, enforceable
obligations for either party. Some of the District Health Management Teams and hospitals
visited noted that contracts for 2007 were not signed by the Ministry of Health, contrary to
the regulations. Furthermore, they are not funded according to the agreed-upon budgets and
action plans. This failure by the principal to honor its obligations makes the relationship
between the contracting mechanism on one hand as well as the budgetary and action planning
development processes on the other a routine activity that has no policy consequences. This
finding reinforces the earlier findings by Masiye and colleagues (2006), who observed that
this undermines the role of the Ministry of Health as a purchaser.
According to the 2006 National Health Strategic Plan, the gradual increase in the number of
for-profit and not-for-profit private health service providers presents significant policy
implications with regard to their involvement in the delivery of public health services. Since
the initiation of the reforms in 1991, the government has embraced the faith-based health care
providers and they have been well integrated into the national health system. The
incorporation of mission hospitals into the formal national health system through the
memorandum of understanding with CHAZ, reinforced by contracting with mission hospitals,
has expanded enhanced health service delivery. CHAZ noted that this partnership has
improved the delivery of quality health care by the mission hospitals to the poor of the
poorest in rural and remote areas. As observed in the study, mission hospitals are mainly rural
and offer what is perceived to be holistic and the best quality of health care.
An important initial objective of the purchaser-provider split was the need to create and
develop a functional internal market within the public health sector. In addition, the internal
market was designed to strengthen the public-private partnership. From the analysis, there
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