From The Frontlines Of The COVID-19 Response – The Role Of Governance In Purchasing For The COVID-19 Response

Dr. Edwine Barasa

If men were angels, governance would not be necessary– James Madison

As countries continue to grapple with the COVID-19 pandemic, a key component of their response is how they purchase COVID-19 healthcare services. Purchasing here is used to refer to the transfer of pooled health funds to healthcare facilities in exchange of service provision to residents. Key questions whose answers provide a characterization of healthcare purchasing arrangements for COVID-19 services include; have countries guaranteed specified COVID-19 healthcare service entitlements to residents or specific patient groups and if so what are these services? What healthcare facilities have been engaged to provide these services? and what is the nature of the engagement of these healthcare facilities and how are they paid for provision of healthcare services for COVID-19 patients? The ideal is to structure these arrangements in ways that promote health system goals, that is, to purchase healthcare services strategically.

Strategic purchasing is critical because it provides the link between mobilizing resources to respond to the pandemic on the one hand, and the provision of healthcare services for patients with COVID-19 on the other. For instance, the specification of service entitlement determines whether and how COVID-19 patients access a service. For instance, private health insurance companies including in India and  Kenya will reimburse costs of illness but will not do so if the disease is declared a pandemic. Decisions about where to purchase COVID-19 healthcare services determine where COVID-19 patients can access healthcare services and this can in turn have an impact on access, equity, efficiency, and quality. For instance, the National hospital insurance fund (NHIF) in Kenya took a position that while it will reimburse COVID-19 costs, it will only do so in specific public healthcare facilities that have been designated by the government as COVID-19 treatment centers. This means that while Kenyans enrolled to the NHIF can access COVID-19 treatment services in either public or private healthcare services, they can only use their NHIF insurance cover to cater for these costs in a small sub-set of healthcare facilities, potentially constraining access. On the other hand, the South African government has agreed terms with the private sector to reimburse COVID-19 costs once the public sector capacity is exhausted. We have shown in Kenya as well as in South Africa, Ethiopia, Pakistan, and India that COVID-19 case management costs are substantially higher than routine healthcare costs. This means that unless purchasers align their reimbursement to healthcare facilities to these costs, healthcare facilities are likely to be disincentivised to provide good quality services to COVID-19 patients. 

The governance mechanisms that facilitate purchasing arrangements are equally important. Governance refers to the rules that distribute authorities, roles and responsibilities among actors and that shape the principal–agent interactions among them (Brinkerhoff and Bossert 2013). Applied to purchasing, this entails the rules, roles and responsibilities that define the relationship between purchasers, the government, healthcare providers, and citizens. Governance also encompasses accountability which refers to answerability of entities to internal and external stakeholders (Nxumalo et al.,2018).  Strong governance enhances strategic purchasing by, among others, promoting transparency and accountability for healthcare resources, strengthening monitoring to improve purchaser and healthcare provider performance, and improving role clarity and coordination among actors (William D. Savedoff and Pablo Gottret 2008, WHO 2019, and Greer et al 2016). While there are several important dimensions of governance for purchasing, I highlight the relevance of governance arrangements to purchasing for COVID-19 services along the following non-exhaustive dimensions; Regulation and supervision, coordination, and transparency and integrity.

The regulatory environment and supervisory arrangements for purchasers and providers should facilitate strategic purchasing goals. For instance, there should be clear legislation, policies and guidelines that articulate who the actors are, their roles, and the specific purchasing arrangements that apply. Applying this to COVID-19, countries need clear guidance that specify who will purchase COVID-19 services, what service entitlements COVID-19 patients have (benefit package), which healthcare facilities will provide these services, and how these services will be paid for. For instance, the US passed legislation in March to require private health plans to reimburse COVID-19 diagnostic testing with no out-of-pocket payments. In Germany, the costs of the COVID-19 tests are reimbursed by the Statutory Health Insurance when recommended by a doctor.  There is a sense in which several African countries have lacked clarity on 1) whether the government will pay for COVID-19 services such as testing, isolation and case management for citizens 2) who will carry out the purchasing function for COVID-19 services, and 3) how these services will be paid for. In Kenya for instance, this confusion early on the pandemic led to COVID-19 patients getting detained in public health facilities and isolation centers for non-payment of fees while the government insisted that these services were free in public facilities. There has also been confusion about the Kenyan governments position with regards to the role of private laboratories in providing COVID-19 testing. Even when regulations are developed, effective supervision to ensure compliance by actors is crucial. For example, even after the Kenyan government clarified that COVID-19 services in public facilities should be offered free of charge, there have been reports of public healthcare facilities continuing to ask for informal fees for patients to access COVID-19 testing or receive case management.

Alongside clear guidance and role clarity, the effective coordination of the roles of purchasing actors is also a crucial aspect of governance for purchasing. Coordination enhances coherence of actions across actors and promotes efficiency and effectiveness by minimizing duplication and fragmentation of actions. Epidemics are characterized by sudden and unanticipated onset that trigger rapid government response that is vulnerable to inadequate coordination. For instance, one of the challenges faced by Philippine’s COVID-19 response is fragmented and uncoordinated financing of inputs.

Transparency and integrity are another important dimension of governance for purchasing. Purchasers and providers should ensure that information on their operations and processes is available to those that make decisions, and to their other stakeholders, and the general public. Purchases should have systems that ensure integrity. These include anti-corruption and ethical conduct. A recurrent theme in the COVID-19 response is concern about the transparency over the use of resources mobilized for the response including purchasing. A survey of 56 countries reported incidences of corruption linked to COVID-19 resources across all the regions of the world. Specifically, the study reported a range of corrupt practices including fraud involving PPE and ventilators, existence of black markets, embezzlement of COVID-19 funds, and bribes to healthcare providers. For African countries that have scarce healthcare resources, losing these through corruption further cripples country capacity to respond to the pandemic.

In conclusion, alongside containment measures, health system responses to COVID-19 impact on broader health system resilience. Purchasing arrangements for COVID-19 services are a key aspect of health system resources and the governance mechanisms that facilitate these purchasing arrangements determine the extent to which purchasing is strategic. While there are several dimensions of governance for purchasing, I have discussed here 3 key ones- Regulation and supervision, coordination, and transparency and integrity- and highlighted their relevance to purchasing of COVID-19 services. As African countries ponder purchasing arrangements for COVID-19, it is imperative that they develop and implement accompanying governance arrangements that will enhance strategic purchasing.

Edwine Barasa is the director of the KEMRI-Wellcome Trust Nairobi Programme, and also heads the programme’s health economics research unit (HERU).

From The Frontlines Of The COVID-19 Response – The Role Of Governance In Purchasing For The COVID-19 Response

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