Thai Contracting Case

Siripen SupakankuntiChantal Herberholz

Faculty of Economics

Thailand: Per Capita GDP

Per Capita GDP

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Year

TH

B

Nominal Real

Data source: NESDB web site (accessed on June 18, 2010)

Population Characteristics

Source: Health Policy in Thailand, MoPH, 2009

Burden of Disease

Source: Thailand Health Profile 2005-2007, MoPH, Wibulpolprasert (ed.), 2008

Hospital Beds(By agency and region, 2005)

Source: Thailand Health Profile 2005-2007, MoPH,

Wibulpolprasert (ed.), 2008

Bed-occupancy rates(By agency, 2003-2005)

Source: Thailand Health Profile 2005-2007, MoPH,

Wibulpolprasert (ed.), 2008

Health ManpowerProportion of doctors by region, 2005

Source: Thailand Health Profile 2005-2007, MoPH,

Wibulpolprasert (ed.), 2008

Public Health Insurance Schemes

Source: Universal Health Care Coverage Through Pluralistic Approaches, Sakunphanit, 2006

Public Health Insurance Schemes

Source: Universal Health Care Coverage Through Pluralistic Approaches, Sakunphanit, 2006)

Health ExpendituresSource of spending 1980 1990 2000 2005

Public sector

MoPH 17.76 12.95 21.02 19.75

Other ministries 8.73 3.64 2.07 1.40

CSMBS 2.61 3.44 5.69 6.66

SOEBS 0.44 0.58 0.54 0.86

WCS 0.40 0.35 0.42 0.35

SSS 0 0 3.21 4.04

Total 29.94 20.96 32.95 33.06

Private sector

Private health insurance 0.88 1.12 2.43 3.19

Households and employers 67.75 77.77 64.60 63.57

Total 68.63 78.89 67.03 66.76

Other

I nternational financial aid 1.44 0.15 0.02 0.18

Total (%) 100 100 100 100

Overall health expenditure (THB million) 34,916 111,635 172,671 224,213

in % of GDP 3.82 5.74 6.09 6.14

Population (million) 46.45 56.34 61.77 62.20

Per capita expenditure 752 1,981 2,795 3,605

Data source: Thailand Health Profile 2005-2007, MoPH, Wibulpolprasert (ed.), 2008

Harding-Montagu-Preker Framework: Overview

•Distribution(equity)

•Efficiency

•Quality of Care

Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003.

PHSA•Gather available

information

•Identify additional needs

•In-depth studies

PHSA•Gather available

information

•Identify additional needs

•In-depth studies

Activities• Hospitals• PHC• Diagnostic labs• Producers / Distributors

Ownership• For-profit corporate • For-profit small business• Non-profit charitable

Formal/ Informal

Activities• Hospitals• PHC• Diagnostic labs• Producers / Distributors

Ownership• For-profit corporate • For-profit small business• Non-profit charitable

Formal/ Informal

Grow

Harness

Convert

StrategyStrategyAssessmentAssessmentGoalGoal FocusFocus

Private

Sector

Private

Sector

PublicSectorPublicSector

Restrict

Policy Tools

• Goal: Improve quality of care• Instrument selected: Contracting• Contracting options employed:

– Procurement of drugs and food– Lease or rental agreements for capital-

intensive equipment– Contracting-in

• Drug stores• Administration

– Contracting-out• Clinical laboratory services• Selected hospital services

3 Models

• Model I: Rural model– Initiator: public sector – Goals:

• To increase availability of operating rooms • To increase availability of beds for postoperative

recovery of patients – Selection of provider: based on personal relations– Target group:

• CSMBS-insured patients– Elective

• Patients who pay OOP – Elective

3 Models

• Rural model (continued)– Services:

• Operating rooms• Hospital inpatient care (simple illness types)

– Payment strategy:• Patients register at private hospital

– Operations» Private hospital pays public doctors a doctor

fee– Inpatient care

» DRG (MoF) or FFS – Bed

» Fixed rate • Subject to administrative provisions of insurance

scheme and agreement between the parties– Problem: regulatory framework– Implementation: pending

3 Models

• Model II: Urban model– Initiator: public sector – Goals: to increase availability of beds for

postoperative recovery of patients and chronic care

– Selection of providers: NHSO recommendation•Private hospital A

– Interested; located in different zone•Private hospital B

– Denied; UCS capitation too low•Private hospital C

– Not feasible; too small– Target group:

•UCS-insured patients– Elective

3 Models

• Urban model (continued)– Services:

• Hospital inpatient care – Selected illness types

– Payment strategy: •Patients register at public hospital

– NHSO pays fixed rate for inpatient service to private hospital

•Subject to administrative provisions of insurance scheme

– Problems: •Lack of support at public hospital due to

negative impact on payment mechanism•Liability•Regulatory framework

– Implementation: pending

3 Models

• Model III: Urban model with university teaching hospital– Public teaching hospital:

•1,500 beds (common ward and private beds)

•Mostly CSMBS patients•High average occupancy

– Private hospital:•550 beds•Mostly OOP patients or patients covered

by private health insurance• Initially low average occupancy

3 Models

• Urban model with university teaching hospital (continued)– Initiator: public sector – Goals: to increase availability of beds for

postoperative recovery of patients– Selection of provider: based on personal

relations– Target group:

• CSMBS-insured patients– Elective

– Services: • hospital inpatient care (10 beds)• Selected illness types

3 Models

• Urban model with university teaching hospital (continued)– Payment strategy:

• Patient registers at public hospital– Inpatient care

» DRG (MoF)» Medication sent from public to private hospital

– Bed – Example:» Private hospital charges public hospital 3,000

baht; usually sells for 5,000 baht» Patient pays 3,500 baht for bed at private

hospital» Patient can reimburse 800 baht from MoF; co-

payment 2,700 baht• Subject to administrative provisions of

insurance scheme and agreement between the parties

3 Models

• Urban model with university teaching hospital (continued)– Negotiations:

•Started 4 years ago; 3 phases– Phase I

» Private hospital reserved 10 beds, but these were not all used by public hospital

– Phase II» Private hospitals did not reserve 10

beds, but sold these elsewhere – Phase III

» MoU signed» Private hospital reserves 10 beds

•Transaction costs?

3 Models

• Urban model with university teaching hospital (continued)– Liability:

• Private hospital responsible for stabilizing patient in case of emergency

• Patient and responsibility subsequently transferred back to public hospital

– Problems: • Lack of responsibility and accountability at

public hospital• Lack of marketing skills at public hospital• Regulatory framework

Concluding remarks

• There is no “one-size-fits-all” approach– All 3 models come with different features

• Involving all stakeholders matters for successful hospital contracting– Public and private providers– Health insurers– Regulator– Consumers

• Hospital contracting can be a powerful tool for harnessing the private sector

Discussion

• What do you think about contracting with private hospitals as a way to solve bed shortages at public hospitals?

• What are the risks transferred to the private hospital under the 3 models?

• Can you identify any action items to achieve a more effective solution?