Strategic purchasing, Purchasing, India, iHEA, RESYST, health systems, health financing

1. Is strategic purchasing feasible in publicly
funded health systems with integrated
purchasing and provision functions: A case
study of Tamil Nadu, India?
Professor Umakant Dash,
Dept. of HSS, IIT Madras, India
iHEA, Milan; Tuesday 14 July, 2015

2. Background
• Health is a shared responsibility between the centre and
the state (Implementation)
• Autonomy of the state government on provision of
health care (e.g. services to be provided, risk protection)
• Limited fiscal space
• Low utilization rate: perceived low quality, access, long
waiting time, unavailability of doctors
• High OOP
• Universal Health Coverage

3. Health system and fund flow

4. Actors in the PA framework

5. Findings: Purchaser-Government
• The integrated tax funded system of Tamil Nadu is progressing
towards strategic purchasing though the pace of the movement
is hindered by implementation challenges
• Aligning health strategy with the poverty reduction strategy
and medium-term expenditure framework, increasing fund
flow (Priority Sector)
• Ensure access (as per national norm) (PHCs, HSCs, Hospitals,
Tertiary Care)
• Well intended policies to improve geographical equity, risk
protection for the poor (CMCHIS: Chief Ministers Comprehensive
Health Insurance Scheme, MRMBS: Dr. Muthulakshmi Reddy Maternity
Benefit Scheme)

6. Purchaser-Government
• Issues/challenges:
• Limited fiscal space
• Stringent Public Finance Management Framework
• Factors (drive towards strategic purchasing):
• The political commitment
• Strong bureaucracy
• Progressive attitude of the public
• Continuity of programs

7. Findings: Purchaser-Provider
• Ensure adequate flow of funds, manpower and uninterrupted
supply of drugs and equipment, guidance, support, and
monitoring to health providers for health care service provision
• Centralized Procurement of drugs (TNMSC, an autonomous
entity mandated by law) to increase efficiency, reduce cost
because of bulk purchase and market power, ensure better
quality, avoid stock outs
• Enforcement of Quality Assurance Circles
• Mix of Public-Private Providers (CMCHI, vertical diseases)
• Flexi fund [PWS, untied fund, annual maintenance
grants(AMG)] to improve efficiency and quality of service

8. Purchaser-Provider
Challenges/Issues:
•Implementation challanges due to the use of line-item
budgets, shortage of manpower and requisite skill level
limits the ability of the purchaser to engage in strategic
purchasing
•Although the legislative reform environment is positive,
providers lack implementation capacity
•No appropriate incentives for performance and
penalties for non-performance

9. Findings: Purchaser-Citizens
• Though the purchaser is committed to
providing quality services that reflect people’s
needs and preferences, and formal mechanisms
are in place to facilitate accountability between
purchasers and citizens, many of the
mechanisms do not currently function in line
with government policy

10. Purchaser-Citizens
• Challenges/Issues:
• Weak regulation, poor community participation in
the decision-making process
• No Essential Health Package and needs are not
elicited from citizens
• Lack of frequent communication, technical support
and resources
• Resource allocation on the basis of utilization not
need-based

11. www.wpro.who.int/asia_pacific_observatory
http://resyst.lshtm.ac.uk
@RESYSTresearch
The research is a collaboration between RESYST and the Asia
Pacific Observatory on Health Systems and Policies.
RESYST is funded by UK aid from the UK Department
for International Development (DFID). However, the
views expressed do not necessarily reflect the
Department’s official policies.
More information: http://resyst.lshtm.ac.uk/research-projects/
multi-country-purchasing-study