Can strategic purchasing of health services from the private sector drive value for money? Evidence from the Results Based Financing programme in Malawi

1. 10/18/2018 1
Can strategic purchasing of health
services from the private sector
drive value for money?
Evidence from the Results Based
Financing programme in Malawi
Matthew Nviiri, Fannie Kachale, Corinne Grainger, Sarah Fox
12th October 2018

2. 2
4
districts
33 health
facilities
incl. 5
CHAM
Performance incentives for health
facility teams and DHMTs
60% individual rewards &
40% facility investment
Cash transfers to poor women to
cover cost of transportation and cost
of staying for 24 hours post-delivery
Minor investments in facility repairs
and equipment to guarantee
minimum service standards
1.Supply-
side
2.Demand-
side
3.
Infrastructure
Reduced
maternal and
neonatal
morbidity
and mortality
Strengthened
Health
System
Increased
uptake
and
quality of
maternal
and
neonatal
services
TARGET AREA PROJECT APPROACH RESULTS GOAL
Results based Financing for Maternal
Newborn Health (RBF4MNH): Approach

3. 3
The Policy Context - Malawi’s health
reform agenda
• Rolling out the decentralisation policy in health
sector – increased funding to districts + potential
for increased autonomy at health facilities
• Strengthening PPPs (i.e. SLAs with CHAM)
• Performance-based contracting with national
referral hospitals and health providers
• A focus on strategic purchasing of health services
• New PBF National Framework: RBF/PBF as
strategic purchasing

4. 4
Decision Space
=
Autonomy to invest
RBF rewards
Accountability
structures:
Verification,
Governance
structures
Institutional
Capacities:
Leadership, &
management
Conceptual framework
Adapted from Bossert & Mitchell 2011

5. 5
Methodology
Objectives: to investigate how autonomy to invest RBF rewards at the health facility
level drives health system improvements and value for money in CHAM vs. public
facilities in Malawi, by looking at:
1. Decision Space
3. Accountability Mechanisms
2. Institutional capacities
• What did facilities invest in and how were investment
decisions taken? Did this change over time?
• What were the contextual factors for decision-making?
• What was the level of leadership and management
skills?
• How strong was financial management?
• What reporting / oversight systems were in place?
• Whether/how client feedback was used
• 11 semi-structured interviews: 5 CHAM facilities (3 rural
hospitals, 2 health facilities), 3 District hospitals and 3
public health facilities
• 4 key informant interviews

6. 6
Key Findings
CHAM Public facilities
BEmONC
• Drugs & consumables
• Maintenance
• Utilities (water, elect, solar)
• Tangible investments: equipment &
minor infrastructure, solar
installation and parts
• Drugs & consumables
• Maintenance & repairs
• Utilities & bills (water, elect,
solar)
• Some examples of innovation
(i.e. hiring staff, infrast. works)
• Transport
CEmONC
• Drugs & consumables
• Fuel (ambulance + generators)
• Med and non-med equipment (solar
power, oxygen concentrator)
• Larger-scale infrastructure: staff
houses; maternity waiting shelter
• Drugs + IP materials + other
supplies
• Fuel (ambulances + generators)
• Med + non-med equipment
(photocopier, fridges)
• Hiring contract workers (nurses,
clinicians, post-op)
What facilities invested in:
RBF increased decision space across all facilities - differing ability to capitalise on this

7. 7
Key Findings cont.
Organisational capacities
CHAM Facilities Public Facilities
 Stronger leadership + management capacities
(but not everywhere)
 History of autonomous decision making
 Experience with local contracting
 Well-organised
 Stronger financial management (audited)
 Highly variable management capacities –
driven by individuals
 Little experience of autonomous decision
making at BEmONC level & fear of engaging
in private contracting (BEmONCS)
 Little financial management experience,
particularly at BEmONC level
Accountability Mechanisms
CHAM
• Stronger accountability (effective hub + spokes
governance structures)
• HACs do not participate in decision making for
RBF investments (but reporting back)
• Client exit questionnaires fed into decision
making on RBF investments
Public Facilities
• Weaker supervision by district (variable) +
some unintended consequences (diverting
funds to non-RBF facilities)
• HACs do not participate in decision making
for RBF investments (but reporting back)
• Client exit questionnaires fed into decision
making on RBF investments

8. 8
Some reflections
Decision Space:
− Not all facilities could capitalise on increased autonomy to invest
RBF funds to the same extent - mediated by organisational
capacities and accountability mechanisms (but also by context – i.e.
resource constraints)
− Focus on ‘fire fighting’ in public sector and short-term
investments. At Mchinji DH, RBF funds seen as ‘petty cash’ rather
than investment funds
− Increased decision space built capacities over time in the public
sector as well as at CHAM BEmONCs (learning by doing, learning by
example of CHAM)
− CHAM investments drove value for money: local contracting with
private sector organisations to build structures:
− Focus on longer-term investments (large equipment + infrast)
− Infrastructure investments were considerably faster and less costly
− But performance variable – better at rural hospitals than smaller facilities

9. 9
Zikomo

10. 10
Talking points slide 2 – RBF4MNH
• Funders G8 Muskoka funds from German &
Norwegian Governments specifically for MNH
• Timeline: 2012 – May 2018
• Innovative, combined approach incorporating
input- and output based approach and supply-side
and demand-side incentives to reflect complex
challenges facing Malawi’s health system
• Incentives used directly to purchase quality and
health system improvements (contrary to other
RBF designs)
• Options’ role in providing technical and
management assistance over two phases
• Presentation focus on investing facility rewards

11. 11
• Simply mention the key policy reforms for
Malawi’s health sector and say that RBF4MNH
was inline with these key reforms in terms of:
• RBF as strategic purchasing of health services
• Strengthening work of district health teams and
their oversight of health provision in the district
• Strengthening partnerships at district level between
district councils and district health teams
• Greater autonomy for health facilities – investing
rewards, dividing bonus payments
Talking points slide 3 - context

12. 12
Talking pts slide 4 – conceptual framework
1. Adapted framework from Bossert & Mitchell -
originally developed to look at decentralisation of
health services
2. Decision space = autonomy to take decisions
regarding RBF investments and rewards at the local
level
3. Research highlighted the different ways in which
CHAM and public facilities invested their rewards.
The framework provided a ‘lens’ to look at how
accountability mechanisms and institutional
capacities mediated the ability of facilities of different
types and at different levels to realise this decision
space (to take advantage of the RBF funding and
autonomy to decide how to invest funds)

13. 13
Example 1: increased decision space builds
capacities (learning by doing, learning by
example – i.e. public learning from CHAM), and
institutional capacities enable effective initiative
taking
Example 2: Accountability structures encourage
responsiveness to local priorities (i.e. HACs, or
CHAM mission hospital hub/spoke design) and
decision space enables investments which are
aligned with these priorities
Slide 4 cont. examples

14. 14
Talking points slide 5 - methodology
• ‘Quick & dirty’: to understand whether rationale for more in-depth
research.
• Some methodological challenges: small sample size; time
available for interviews by staff); difficulties to assess value for
money (comparing like with like); transferability of findings?
• Definitions:
• Strategic purchasing = “using information on provider
performance or population health needs to drive resource
allocation”
• VfM = maximising the impact of each pound spent to improve
poor people’s lives (DFID)
• RBF as strategic purchasing. Kutzin 2017 definition
“transforming stated national priorities or policies (e.g. free
MCH care) into reality through explicit resource allocation”
• Attempted to used other sources of programme data to triangulate
findings (performance data, lists of investments by HFs)

15. 15
CHAM
• Stronger accountability + better leadership and management
capacities (incl. financial mangmt) enabled facilities to invest
more strategically (for the longer-term) with greater VfM
(faster and lower-cost investments).
• Examples: Kapiri Maternity waiting shelter USD 21K vs. USD
50K and staff housing USD 65K for Umoyo housing vs 18 – 20K
at Mtendere) –
• But difficulty with comparing like-with-like so caution with
findings
Public
• Purchase of out of stock drugs and supplies keeps the system
functioning but is this value for money?
• District funds diverted to non-RBF facilities leaving BEmONCs
to use larger part of RBF funds on drugs/supplies
• In DHs, funds diverted to non-maternity so RBF funds again
used to purchase large quantities of drugs & supplies
Some talking points: slides 6/7/8

16. 16
• Pockets of innovation and leadership in public
sector show that more strategic decision mamking
is possible, but driven by individual managers (i.e.
building toilet and renovating staff housing at
Nsyaludzu or Katsekera purchasing a washing
machine)
• Such an approach rolled out in public sector would
need considerably strengthened accountability
mechanisms and investment:
• district: strengthened oversight (i.e. supportive
supervision) requiring more resources & support
(particularly re. role of district maintenance teams)
• local: strengthened role of HACs in investment
decisions
Some talking points: slides 6/7/8