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5.4.1 Health system strategic purchasing

5.4.1.1 Governance

At the macro-level, the role of strategic purchasing is to act as a financing lever in
governance and leadership of the overarching health system functions. A key governance
function is the formulation of strategic goals, which are generated by a strategic planning
process that should be anchored by the health systems objective of transforming to a
primary care-led, integrated, person-centred system. The strategic planning process should
be informed by a population health needs assessment in conjunction with an
evaluation of the healthcare delivery system, population health care
access, equity, and affordability. The evaluation involves identifying gaps in
healthcare service types and mix in the public and private provider systems. How these gaps
may be bridged within and between public and private providers to meet the population
health needs should also be considered. An assessment of the capacity and capabilities of
the public and private sectors and their potential for development will inform the delineation
of a strategic role of the private sector in the transformed system. This decision will have
implications on whether the Government should “make” (commission) the services in the
public sector or “buy” (purchase) from private providers. Information systems are required to
capture data that is then analysed to provide intelligence to inform the policy formulation
process and in decision-making for setting strategic goals and priorities.

The goals, objectives, and priorities emanating from the strategic planning process will inform
purchasing decisions of the types and configurations of healthcare that need to be
purchased equitably for which population groups and from whom, in the integrated
healthcare delivery system in order to enable the formulation of strategic plans. To enable the
implementation of strategic plans, programmes, and purchasing, appropriate policy
instruments will need to be designed, including creating resources, regulations, and
necessary legal instruments. Decisions of who to purchase will depend on the governance
structure, purchasing capacity, and operations. Co-ordination of principal purchasing agents,
commissioned providers, and purchasing agents is critical for cost-effective resource
allocation. Coordination requires governance of the health system to have the capacity and
mechanism to strategically allocate resources to these organisations to avoid unnecessary
duplication of resources and to optimise their impact in integrating healthcare. Structures
to enable collaboration between the agents will also be necessary for better alignment of
their roles.

5.4.1.2 Policy parameters

Different levels of commissioning or purchasing will be operational at all levels of the health
system, although they may not be recognised as such and this needs to be re-examined in
the context of strategic goals. An initial step is to analyse the authority delegated to budget
holders for allocation of resources and the accountability in the effect of the disbursement on
outputs and outcomes. Policy parameters will need to be defined for purchasing agents for
service mix and types, and for configuration arrangements of public-private provision needed
to bridge the gaps in healthcare delivery to enable integrated care. Policy guidance and
authorisation will also be needed for decisions on what, from whom, and how to purchase,
as well as the choice of demand- and supply- side purchasing instruments and payment
mechanisms together with any affordable co-payments that may be levied. The Government
should also support innovations in payment methods that encourage people-centredness,
improve patient experience, and increase value in care. As an example, NHS introduced
personal health budgets (PHBs) which provide money for patients to purchase personalised
care. This gives disabled people and people with long-term conditions more choice, control
and flexibility over their healthcare to support their health and well-being needs (NHS, 2014).
Deliberations and agreements with stakeholders will generate better understanding of
responsibilities and expectations on performance and facilitate collaboration.

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