Category: Uncategorized

Strategic Purchasing (SP) in healthcare refers to a purchasing system that efficiently addresses ‘what’ to buy, ‘how’ to buy, and ‘from whom’ to buy to achieve the best possible health outcomes. This can include the purchasing of healthcare services, equipment, medicines, healthcare support services, and more. Through strategic purchasing, countries can allocate their resources for healthcare efficiently, particularly when facing constraints. This includes Indonesia, a country with a huge population yet limited healthcare resources.

Indonesia, a country with a rapidly-developing economy and a 270+ million population, faces challenges in ensuring its resources are spent efficiently for healthcare. In 2019, the government spent $120 on health per capita per year, far below its neighbouring countries, such as Singapore ($2.632) and Malaysia ($436) [source]. The limited spending, and therefore resources, puts a strain on healthcare and therefore lags the improvement of health outcomes, such as maternal mortality.

There are huge challenges associated with efficiency when managing the Indonesian health system. Indonesia is home to 33 different provinces, with a total of 17,000 scattered inhabited islands. Some of these areas are very remote and hard to reach. Decentralisation, which is the distribution of central and government authority on financing and other public service delivery, was created to ensure that health purchasing is achieved equitably. However, this decentralisation leaves a significant gap in efficiency for healthcare.

To centralise the purchasing of healthcare, Indonesia launched a national health insurance system In 2014, Indonesia established its single-payer national health insurance called the JKN (Jaminan Kesehatan Nasional). The JKN ensures all services are covered for its 200+ million users through collective fund-raising, pooling, and purchasing of services. However, there was a longstanding and projected deficit from JKN between 2014-2019, which was corrected in 2020 when JKN’s financial audit reported a surplus. Nonetheless, the sustainability of JKN remains in question due to a lack of monitoring schemes for its performance, including cost control and quality control.

Strategic purchasing is a tool that can assist Indonesia in simplifying the complex nature of its health system, therefore generating efficiency. Through strategic purchasing, services can be purchased in alignment with Indonesia’s health mission. For example, financing schemes can be rearranged and contracted in such a way as to give more incentives to healthcare providers to do services that yield the most benefit. The alignment of purchasing can also be geared towards a reward system that motivates healthcare agents to provide services efficiently. A specific performance-based payment, for example, can reward hospitals through increased reimbursement once services are 100% delivered or if agreed indicators indicate 100% success.

Strategic purchasing can help stakeholders in managing complex diseases, such as Tuberculosis (TB). There is increased catchment associated with new public health approaches in TB, such as active case finding. However, there is no incentive associated with the intervention to the provider. Through strategic purchasing, incentives can be raised for providers to apply a cost-effective public health approach not only to increase catchment and outcome but also can yield savings in the long term. Funds saved as a result can be efficiently allocated for other health priorities.

Despite the potential benefits, strategic purchasing can be a daunting task to implement. The complexity of the health system might be challenging for stakeholders trying to apply strategic purchasing. Indonesia currently has multiple health purchasers, which creates confusion when it comes to paying for healthcare. The National Health Insurance Agency (BPJS Kesehatan), the mandated healthcare purchaser, does not hold a strategic role in purchasing healthcare. A significant portion of purchasing is also executed by the Ministry of Health (MOH), whose task is to purchase public health services that overlap with ‘individual’ health services.

In Indonesia, the allocation of healthcare services is generally directed towards two means:(1)  individual health service (per patient, such as outpatient clinical service), and (2) public health service (targeted to the population, such as vaccination). The overlap between the two often causes over- and under-spending. Medicine for some infectious diseases, including HIV, is covered by the MOH through top-down funding, which is prone to stock-out since it relies heavily on central planning. Moreover, some portion of purchasing is also conducted by regional governments (i.e., provincial and district health offices), which often have little capacity to execute strategic purchasing through their regional budget provision.

Strategic purchasing is a worthwhile approach if done right. Through effective evidence-based policymaking, strategic purchasing can inform countries to reorient health systems to meet effective resource allocation. In Indonesia, where efficiency is key to sustainable healthcare delivery, and where resources are scarce, the role of strategic purchasing is pivotal. Through the SEARCH (South-East Asia Regional Collaborative for Health) network, we aim to establish evidence and engage key stakeholders and practitioners in Southeast Asia to enhance the capacity of strategic purchasing for healthcare.

Author: Ryan Rachmad Nugraha, Center for Population, Family and Health, University of Antwerp

ASEAN health systems have been hit hard by COVID-19 – especially countries with already-constrained resource bases. Even before the pandemic, Lao PDR and Myanmar spent less than USD 100 per person a year on healthcare; Indonesia, the Philippines, Vietnam and Cambodia spent less than 200.

Southeast Asia also has high out-of-pocket (OOP) spending on health, with 8 out of 10 countries having an OOP ratio of over 30% of total health spending. In order to maximise health system efficiency and ensure that populations are adequately covered, governments must make the right decisions on where to allocate resources.

Over the course of a two-year project (2022-2023), the SEARCH (Southeast Asia Regional Collaborative for Health) network is working to build capacity for strategic health purchasing in ASEAN – supporting countries to set priorities, maximise cost-efficiency and deliver stronger health outcomes. SEARCH is a regional learning network housed at the Saw Swee Hock School of Public Health, National University of Singapore (NUS) and supported by the Bill & Melinda Gates Foundation. SEARCH aims to enhance knowledge and capacity for Universal Health Coverage (UHC) in Southeast Asia.

The first step of the project – the Southeast Asia Strategic Health Purchasing Registry – is now complete and will be shared at a launch event on February 17th.

In healthcare, purchasing refers to the process of allocating funds to health service providers to obtain goods and services on behalf of an identified group (RESYST 2014). This could include medicines and vaccines; medical equipment and consumables; healthcare services (e.g. surgeries and consultations); or healthcare support services (e.g. facilities management, hospital laundry, ambulances).

There are two types of purchasing: passive purchasing and strategic purchasing.

In passive purchasing, a health service provider is offered a predetermined budget or simply reimbursed for the bills that they produce. This leads to a poorly-defined package of services and low system efficiency.

Strategic purchasing involves a continuous effort to maximise the efficiency of purchasing decisions within a set budget. This is achieved by actively allocating budgets: data on the health needs of a population, health service provider performance and other factors is used to inform decisions on resource allocation.

Strategic purchasing involves three core questions:

WHAT TO PURCHASE? This involves specifying the services, interventions or medicines that are to be purchased.
FROM WHOM TO PURCHASE? This involves selecting the providers from whom services will be purchased.
HOW TO PURCHASE? This involves designing appropriate provider payment methods, and designing incentives & contractual obligations to improve provider performance.

Through strategic purchasing, a set health budget can be translated into better coverage for a population. This produces health system efficiency gains and even contributes to improved health outcomes.

Strategic purchasing can ‘stretch the dollar’ of a country’s healthcare budget. In resource-constrained contexts, it is an important building block to cost-efficient primary care services and ultimately, to UHC. Strategic purchasing is therefore a tool to support health systems strengthening in the region.

The objectives of SEARCH’s strategic health purchasing project are two-fold:

1) To produce up-to-date knowledge on healthcare financing and health purchasing initiatives in ASEAN;

2) To convene a regional network of individuals, organisations, researchers and Ministries involved in the strategic purchasing space.

As part of the first objective, the research team has surveyed the landscape of strategic purchasing in ASEAN through a Strategic Purchasing Registry. The Registry is openly accessible from February 17th 2023, and will enable cross-country comparisons of health purchasing systems in ASEAN. Building on the knowledge gathered for this Registry, the research team is developing policy recommendations at the national and regional level to be shared in a policy report later this year.

For the second objective, we seek to become a point of gathering for experts in healthcare financing and strategic purchasing. Relevant stakeholders are being engaged through interviews, informal discussions, webinars, roundtables and other events. This will facilitate networking, capacity-building and information exchange, seeking to overcome the currently-limited levels of regional collaboration on public health in ASEAN.

Author: Capucine Barcellona, Saw Swee Hock School of Public Health, National University of Singapore