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based on prior financial contribution or payment. Such a consideration is based upon
population needs, national health priorities and cost-effectiveness. The question of
from whom to buy refers to the healthcare providers engaging in the services required,
applying criteria in the decision making process to determine which providers should be
selected. Strategic purchasing first considers whether to commission (“make”) from the
public sector or to buy from the private sector, choosing service providers based on
capacity, capability, availability, quality, efficiency, and equity (Box 2.1). Finally, the question
pertaining to how such services will be bought revolves around determining an
instrument from either demand- or supply-side mechanisms, an appropriate provider
payment method and the contractual obligations in place that purchasers can use to assess
provider performance.

Box 2.1

How to implement strategic purchasing?

Strategic purchasing plans follow a series of decisions that guide
policymakers in determining how to identify population health needs,
services needed, priorities, and cost-effectiveness measures.
Policymakers must determine whether they will make the available services
through the public sector or buy them from the private sector. Afterwards,
they must determine the type and scope of services and decide the
purchasing party, beneficiaries, specific services, providers, quantity, and
payment schemes. The services must be monitored and assessed for
effectiveness. While the decision-making process follows a set order,
strategic purchasing demands that the process be cyclical and consistently
evaluated in a system-wide manner characteristic of the active process.

Strategic Purchasing Decisions

• Who to purchase
Determine
interventions and • For whom to • What to monitor
purchase
services based on To provide or • What to purchase • How to monitor
population needs, purchase • How to resolve
priorities and • From whom to disputes
purchase
cost-effectiveness
• How to purchase

Most health systems do not use fully passive nor active purchasing, though countries at all
income levels are adapting to become more strategic in their purchasing decisions (Klasa et
al., 2018). While countries have yet to implement a strategic purchasing plan that is fully
aligned with the ideals set forth, including those by the WHO, progress made towards strategic
purchasing in many countries have shown positive outcomes and benefits for health systems
and population health. Such progress is especially notable in low to middle-income countries,

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