A GUIDE TO CONTRACTING FOR HEALTH SERVICES DURING THE COVID-19 PANDEMIC Angelina Bambina / Shutterstock.com A GUIDE TO CONTRACTING FOR HEALTH SERVICES DURING THE COVID-19 PANDEMIC This is a conference copy A Guide to Contracting for Health Services During the COVID-19 Pandemic ISBN TBD (electronic version) ISBN TBD (print version) © World Health Organization 2020 Some rights reserved. This work is available under Third-party materials. If you wish to reuse material the Creative Commons Attribution-NonCommercial- from this work that is attributed to a third party, such ShareAlike 3.0 IGO licence (CC BY-NC-SA 3.0 IGO; https:// as tables, figures or images, it is your responsibility to creativecommons.org/licenses/by-nc-sa/3.0/igo). determine whether permission is needed for that reuse and to obtain permission from the copyright holder. 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To submit requests for commercial use and queries on rights and licensing, see http://www.who.int/about/ licensing. CONTENTS Acknowledgements iv Acronyms v Executive Summary vi INTRODUCTION 1 PURPOSE AND USE OF THE MANUAL 2 CONTRACTING FOR HEALTH SERVICES DURING 3 THE COVID-19 PANDEMIC: A STEP-BY-STEP GUIDE • Step 1: Define the contract • Step 2: Plan the procurement process • Step 3: Execute the procurement • Step 4: Monitor performance BUILDING BACK BETTER 21 iii ACKNOWLEDGEMENTS This document was developed by a team led by David Clarke (WHO) and Andrew Myburgh (IFC). The authors of this document are Mark Hellowell (University of Edinburgh), Andrew Myburgh (IFC), Gabrielle Appleford (Impact for Health), Pranav Mohan (IFC), David Clarke (WHO) and Barbara O’Hanlon (O’Hanlon Consulting). The authors would like to acknowledge: Charles Dalton (IFC) Aurélie Paviza (WHO) Katherine Jennings (Impact for Health) Andreas Seiter (World Bank) Sneha Kanneganti (GFF) Tryphine Zulu (Government Employees Medical Scheme RSA) Thant Zin (World Bank). iv ACRONYMS AFRO Regional Office for Africa EMRO Regional Office for the Eastern Mediterranean IFC International Finance Corporation LMIC Low- and middle-income countries RFP Request for Proposal PAHO Pan American Health Organisation PPD Public-Private Dialogue PSA Private Sector Assessments SEARO South-East Asia Regional Office WHO World Health Organization WPRO Regional Office for the Western Pacific v EXECUTIVE SUMMARY Government authorities seek to increase the capacity The guidance outlines a step-by-step process to of health systems to respond to COVID-19 while contract in an emergency setting organized according maintaining access to essential health services. to four steps: Drawing on private sector resources is critical as, in 1) Define the purpose and structure of the contract; many countries, it is a dominant provider of health services, including for the poor. One important tool 2) Plan the procurement process; for increasing capacity in this way is contracting. 3) Procure and sign the contract; and This primer offers a practical introduction to contracting the private sector in support of national COVID-19 4) Monitor the contractual relationship. responses. Its target audience is policymakers in low- The guidance concludes by suggesting that, through and middle-income countries (LMICs) that have, at this this process, authorities can institutionalise new time, limited experience of using contracts for health capacities, activities, and ways of working that will services but are expected to do so in the emergency strengthen current response efforts and help them conditions created by COVID-19. build back better - strengthening core health The guidance does not advocate for contracting system functions so that future emergencies as a solution for all countries. Policymakers should can be effectively tackled, and the momentum use the manual to inform their own decisions about behind long-term objectives, such as Universal whether to use this tool. If policymakers decide not Health Coverage (UHC), can be regained and to use contracting, there are several other options for accelerated. enhancing public-private sector coordination during the emergency. If they do choose to use contracting to contain and mitigate the adverse health impacts of the pandemic, they often need to act quickly. They may not have time to develop organisational capacities, deploy ‘normal’ competitive procurement processes, or enter into fully comprehensive contracts. Nor can authorities always rely on the market to respond flexibly. This guidance acknowledges these realities but seeks to ensure that, even in the emergency context, authorities can nonetheless (1) act lawfully, reasonably and with integrity (2) identify how the sub-optimal context gives rise to certain risks, and (3) formulate a comprehensive policy framework to mitigate these, and thus make a success of contracting in spite of the constraints they face. vi INTRODUCTION Governments are seeking to increase the capacity In the emergency conditions created by COVID-19, of health systems to respond to COVID-19 while public authorities can use contracts with the private maintaining access to essential health services. health sector to achieve important health system Drawing on private sector resources is critical. In objectives. Examples of these objectives include: many countries, the private sector is the dominant provider of health services, including for the poor(1). • Expanding access to COVID-19 testing and treatment, including for the poor and other It is estimated that the private sector provides 40 underserved groups; per cent of all health care in the PAHO, AFRO, and WPRO regions, 57 per cent in SEARO, and 62 per cent • Relieving pressure on public health sector in EMRO(2). facilities by having the private sector deliver essential health services not related to This situation highlights the importance of effective COVID-19, such as urgent surgeries, maternity governance of the private sector to optimize and services, or cancer treatments; coordinate the use of health system resources. One important tool for achieving this objective is • Leveraging additional capacity to fill public contracting. Contracts for health services establish sector capacity gaps, e.g. providing access to a legal agreement between a public authority and technological solutions such as tele-medicine, private sector entity, in which the latter undertakes to providing extra quarantine facilities, and deliver an agreed set of tasks, in a given location (or offering support services and ‘cold chain’ supply for a specified population), over a defined period of services for, and/or provision, of vaccination time. Contracting can be used by public authorities to programmes; and (a) purchase health services to increase a country’s response capacity and (b) regulate private sector • Aligning the operations of the private health entities by determining their activities such as the sector with national response strategies, quality and price of the services they provide. including ensuring that the private health sector complies with all relevant clinical, infection control and reporting standards. Countries – including some LMICs – already use contracts to address health system objectives. What do we mean by In LMICs, this work often focuses on informal “the private health sector”? agreements between the public sector and the For this manual, “the private health private (e.g. Memoranda of Understanding or social sector” includes all individuals and contracting). The COVID-19 situation and contracting organisations that are neither owned nor capacity gaps have generated significant demand from directly controlled by governments and governments for guidance on how to make better use are involved in the provision of health- of contracts to support the COVID-19 response. The related goods and services. This includes World Health Organizations (WHO) and International both for-profit and non-profit entities. Finance Corporation (IFC) have prepared this manual to meet this demand. 1 PURPOSE AND USE OF THE MANUAL This manual provides a practical introduction to During public health emergencies, authorities are contracting the private health sector to support required to act rapidly to contain and mitigate adverse national COVID-19 responses. It is aimed at health impacts. They do not have the time to develop policymakers in LMICs that have limited ‘expertise organisational capacities, run normal procurement from experience’ of using contracts for health processes, or enter into formal contracts, nor can services. However, the guidance has longer-term they rely on the market to respond in a flexible way to relevance and can be applied to the use of contracting the emergency. in any emergency context – one in which public health This guidance acknowledges these realities but seeks authorities are required to act rapidly and flexibly. to ensure that (1) authorities act lawfully, reasonably The guidance does not advocate for contracting and with integrity in all aspects of the contracting as a solution for all countries. Policymakers should process, (2) understand the risks of contracting use the manual to inform their own decisions about in a sub-optimal context; and (3) formulate a whether to enter into contracts, and to guide the comprehensive policy framework to mitigate the risks. effective use of contracts to meet their public health Examples of risk include: objectives. It should be noted that contracting is only one option for engaging with the private health sector • Contracts that are not comprehensive enough, leading to gaps in service delivery; (and other non-state actors) during the COVID-19 emergency. There are several other alternative ‘Tools • Delays in payments that can reduce the equity, of Governance’ that can be used to influence the quality and sustainability of services; behaviour of non-state actors (see box). • Awarding contracts to the ‘wrong’ (e.g. to unqualified, or inefficient) providers; • Poorly drafted contracts that are unenforceable; • Corruption and theft; and The private sector engagement ‘toolkit’ • Ineffective contract monitoring and dispute resolution mechanisms. Tools of Governance are instruments used by public authorities to influence the behaviour of individuals and organisations in the health sector. Other Tools of Governance(3) include Regulatory Tools (such as licensing, certification and accreditation); and Information Tools (focusing on information for both suppliers and consumers). The Contracting Tool – our focus in this manual - can be used in combination with all of these other instruments. 2 CONTRACTING FOR HEALTH SERVICES DURING THE COVID-19 PANDEMIC: A STEP-BY-STEP GUIDE In this section, we provide a step-by-step guide to the the terms the contractor must meet to become, and process of contracting in an emergency context – one remain, eligible for reimbursement under the relevant in which authorities need to act fast and flexibly in an scheme or programme. An example is a contract environment in which experience with contracting between a private laboratory and a national health is limited on both ‘sides’ of the market, public and insurance agency, public authority, or donor agency, private. which sets out the terms on which reimbursement will be provided (e.g. through the insurance scheme The contracting process is broken down into four or voucher programme) for testing services to the steps: specified beneficiaries (see India and the Phillippines 1. Define the purpose and structure of examples). Under contracts of this type, the contractor the contract; is subject to two important sources of performance pressure: 2. Plan the procurement process; • The need to meet specified quality standards 3. Procure and sign the contract; and (under an accreditation and/or empanelment process), to become, and to remain, eligible for 4. Monitor the contractual relationship. reimbursement; and For each step, we outline the main decisions to be • The incentive to attract service users, who taken, the risks inherent to these (especially in a health have choice over where to receive the services emergency context), and how they can be mitigated in covered under the relevant scheme, and thereby practice. receive reimbursement. Because of these features of the contracting STEP 1: DEFINE THE CONTRACT environment, the contract itself can be relatively ‘light touch’. It will focus on the prices the contractor can Contracts can take several different forms and can charge for its services to the authority and users (both be used to address a range of COVID-19 related of which are normally agreed through negotiations objectives. In Step 1, critical decisions are needed between the authority and a set of providers, and/or about: (a) the service area(s) to be targeted through industry representatives, at the national or regional the contract; and (b) the type of contract to be used. levels), outputs to be delivered, clinical and reporting standards to be observed, and arrangements for Types of contracts external monitoring. There are three main types of contracts used to deliver Entry contracts are primarily used in countries health services: entry contracts, service contracts, and in which the state of public-private relationships concessions. They are distinguished by three main have reached a mature stage, usually because they features: how contractual partners are selected; how are embedded in social/national health insurance service volumes and performance standards are structures (e.g., in India and the Philippines). For this defined; and how services are paid for. reason, this manual does not aim to provide detailed 1) Entry contracts. These are agreements that entitle guidance on contracts of this form – though we do the contractor to deliver a specified range of services draw from examples of such contracts where these to a specified group of beneficiaries, such as those provide insights across the different contracting enrolled in a social/ national health insurance scheme models, including those more commonly used in or voucher programme. The entry contract specifies LMIC contexts. 3 2) Service contracts. These are legal agreements in which the authority specifies the range of services to be provided by the contractor, to an identified India group of people (or catchment area), for a specified In India, the government used an period of time, at an agreed cost to the authority and/ established (checklist-based) process to or service users. For example, a contract between a empanel private laboratories to expand private hospital and the Ministry of Health, where the affordable access to COVID-19 testing Ministry pays the private hospital to provide patients under an entry contract model. Following with treatment for COVID-19. Unlike entry contracts, empanelment, laboratories sign a service contracts normally operate on an exclusive contract with a public authority under which they conduct tests and analysis for basis whereby service users have to go to a specific beneficiaries of the AB PM-JAY health provider – i.e., “users follow the money”, and do not insurance scheme (which covers circa allow for user choice over which facility to receive the 40 per cent of the population). They are service from. then reimbursed under the scheme on the basis of a national price list. The volume of outputs to be provided by the contractor (and paid for by the authority/users) can be determined by either (a) consumer demand or (b) the terms set out in the contract. • In the former case, payment is volume-based, meaning it is determined by the level of use of the Phillippines the services (so that there is a need to ensure some constrain on total service provision In the Philippines, the national health – thereby placing downward pressure on insurance program, PhilHealth, supplier-induced demand and the associated established reimbursement rates for risks to affordability and value for money for the COVID-19 testing based on procurement data of different consumables. Initially, authority). PhilHealth procured COVID-19 tests internationally and set the price at • In the latter case, payment is availability-based, $8,000 pesos (~$40/USD) per test meaning it is fixed, according to the extent that based on international prices. The press services are being made available to users (so reported, however, that individuals were that it is important to define, upfront, the level of paying out-of-pocket for a COVID-19 availability and take steps to ensure that private test in a private facility at $4,000 providers do not prioritise service delivery to pesos – half the price of the PhilHealth those that can pay directly or via private health reimbursement. Subsequently, Philippine legislators demanded PhilHealth review insurance – e.g. if these provide more lucrative their payment schedule to determine revenue streams compared to government if they were over-paying. Eventually, rates). PhilHealth reduced the reimbursement rate to $4,000 pesos as the government In either case, important aspects of service provision introduced a locally manufactured test - such as the clinical quality of services, and how this into the marketplace. will be measured - are defined in detail in the contract. This provides a powerful incentive for the contractor 4 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic to perform well with regard to service volumes and hospital, and the patients themselves pay the private the quality of output. However, because there is no laboratory out of their own pockets. element of ‘patient choice’ in contracts of this type Concessions are different to service and entry (unlike the typical case for an entry contract), the contracts because, in this case, payment is made by contract itself, and the arrangements for monitoring service users directly, and not by government. The it, are the only sources of performance pressure on the amount of payment can be regulated – but in many contractor. cases the regulation is informal (and may in practice Service contracts require carefully specified outputs, give contractors significant ‘price-setting’ power). As no quality standards, performance indicators, and public funds are provided, this form of contract is not the means of verifying that these are being met. well-placed to lower financial barriers to health care Therefore, service contracts can be long and detailed, access. Instead, the focus is on increasing availability and costly and complex to procure and monitor. of services that were previously absent, or insufficient, These requirements vary depending on the type of to meet the identified requirements of the COVID-19 response. Negotiation with bidders will tend to focus on considerations such as: England • The size of the fee (which the authority should seek to minimise to reduce the financial impact In England, service contracts with private on the targeted population(s)); hospitals, based on the average costs of production (this is in effect a cost-based • The volume of output (which the authority should contract), have covered: (1) inpatient seek to optimise in line with the identified respiratory care to COVID-19 patients; requirements of the response); and (2) urgent elective care services during the ‘surge’; (3) diagnostic capacity to maintain priority elective and cancer • The quality of output (which the authority should pathways; (4) inpatient non-elective ensure is compliant with national clinical and care supplement bed capacity; and reporting standards). (5) staffing for redeployment in public sector facilities. Ethiopia service. For example, a contract for specific laboratory tests would typically be far easier to specify than one In Ethiopia, the Federal Ministry of Health pre-selected (based on facility for hospital services. Where dedicated human and inspections) a subset of licensed financial resources are insufficient to perform these laboratories for contracting. Initial contracting activities effectively, this creates a number concession contracts focused on of risks for authorities, which need to be identified COVID-19 screening and referral, but and mitigated, as explained in subsequent sections. these have been expanded to include more complex services – such as sample 3) Concession contracts. These are formal collection, analysis, and reporting. This agreements in which the authority gives authorisation is a ‘user pays’ model. to a specific contractor to deliver a defined set of services to an identified group of users, for a specified period of time. An example is a contract between a Table 1 outlines the key features, and the advantages private laboratory and a public hospital where the and disadvantages (pros and cons), of the three types laboratory company provides tests to patients in the of contracts discussed in this section. Contracting for Health Ser vices During the COVID-19 Pandemic: A Step-by-Step Guide 5 TABLE 1: TYPES OF CONTRACTS USED TO DELIVER HEALTH SERVICES ENTRY SERVICE CONTRACTS CONTRACTS CONCESSIONS Contracts are entered into Contracts are allocated through Contracts are allocated through with providers that have been a competitive process - or, in competitive procurements - or, accredited and/ or empanelled, an emergency context, a pre- in an emergency context, a pre- due to their attributes/ capacities, qualification process focused on qualification process focused on METHOD FOR to serve a defined group of attributes/ capacities of bidders. attributes/ capacities of bidders. SELECTING patients (e.g. those enrolled in a [This may harness a pre-existing [This may harness a pre-existing specific social/national insurance accreditation or empanelment accreditation or empanelment CONTRACTORS scheme or are in receipt of process where one is in place.] process where one is in place.] vouchers). Specification of the range of Specification of the range of Specification of the range of services to be delivered (defined services to be delivered, service services to be delivered, clinical by benefits covered under volumes, clinical and reporting and reporting standards to be the insurance scheme and/ standards to be observed, observed, and the restrictions, if or the target of the voucher and the prices to be paid by any, applied to the user fees (i.e. DEFINITION OF programme), clinical and government (either on the basis they may be regulated or based THE CONTRACT reporting standards, and the of ‘usage’ or ‘availability’). on market prices). amount and structure of the fees to be paid. Government authority/ social Government authority (with user Service users (in form of ‘out of health insurance agency (with co-payments in some cases). pocket’ payments). user co-payments in some cases). SOURCE OF FINANCING Contract can be ‘light touch’ (as Strong focus on performance Comparatively simpler to contract accreditation / empanelment due to detailed contract (high from government perspective places a floor on providers’ level of certainty with regard to than service contracts e.g., capacities). service volumes and quality of contract specification and outputs). pricing. Strong incentives to ‘perform’ – i.e., to attract and sustain Services made available to Limited public funding is needed; demand from users. patients free at the point of use and, therefore, lower financial PROS (or at low prices). costs and financial risks for the Services made available to public authority. patients free at the point of use (or at low prices). Lack of detailed performance Contracts tend to be lengthy and Contracts may lack the detail criteria may lead to gaps or detailed – i.e. include volumes and to ensure they safeguard weaknesses in delivery. performance levels, to safeguard the interests of authorities the interests of authorities and and service users – therefore Quality relies on conditions service users. Hence, they are requiring strong monitoring and of ‘entry’, alongside service costly and complex to procure evaluation capacity. user choices – where these and negotiate. CONS are inadequate, performance Higher costs and risks for service pressure on provider(s) is limited/ Public funding is required – with users. inadequate. both costs and risks for the authority. Public/social insurance funding is required. 6 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic What to contract for Key questions to answer in relation to ‘what to buy’ are: In optimising the health system response to COVID-19, • What range and volume of COVID-19 services a range of service areas are important. Services areas and essential health services are needed?(4) in which there are often existing private health sector capacity, and are therefore potential candidates for • Who are the intended service beneficiaries/ users, and where are they located? contracting, include the following: • Testing (diagnostic services including pathology • How will a contract complement the public sector’s role in this service area/ locality? and radiology); • Treatment (primary care, hospitals, ICU care, • Do we have sufficient data to address the questions above? If not, how will such data be tele-medicine, ambulance services); (rapidly) sourced and analysed? • Isolation (e.g., quarantine centres/ private Table 2 provides more detail of the services that can hostelling); be targeted through contracting of the private health • Support services (e.g., warehousing and sector, and provides examples for the contract types logistics for medicines/ supplies/ personal outlined above. protection equipment (PPE), logistics for collection and transportation of testing samples; call centres, contact tracing, and quarantine/ isolation follow-up services); and • Vaccination (e.g., ‘cold chain’ supply services, distribution, and vaccination provision). TABLE 2. CRITICAL COVID-19 RELATED SERVICES AND CONTRACTING PROCESSES SERVICE AREAS EXAMPLES (PER CONTRACT TYPE) Diagnostics Entry contracts: Patients access testing (taking and analysis of samples) from private facilities, and they, or providers, are reimbursed • Testing services – fixed/ mobile facilities by the relevant social health insurance fund. • Generic pathology laboratory services Concessions: Patients access testing facilities and services providers • Radio-imaging/ ultrasonography are paid on a fixed fee per test basis. Service contracts: An authority pays a private laboratory to perform radio-imaging/ ultrasonography for a public patient. Contracting for Health Ser vices During the COVID-19 Pandemic: A Step-by-Step Guide 7 Primary care Service contracts: : An authority pays for home care services to be offered to specified recipients at low-cost. • Home care services – monitoring, supply of kits, vaccines, medicines, follow-up Concessions: Patients access standard care management services in certain locations or at home from pre-selected/ pre-qualified providers • Mobile services at government-approved rates. Hospital care Entry contracts: Patients access hospital care services from empanelled private hospitals, and they (or providers) are reimbursed • Inpatient respiratory care by the relevant social health insurance fund. • ICU and critical care Service contracts: An authority provides funding to private hospitals, • Urgent elective and cancer care during ‘surge’ who agree that defined inpatient and critical care is offered to referred • Staffing for re-deployment in public facilities patients for free or at low cost. …for HR services: An authority provides funding to private hospitals/ physician provider networks/ HR agencies, who agree to provide skilled doctors, nurses and paramedical staff on a fixed rate or lump-sum basis for a defined period of time …and for operations management of hospitals: An authority contracts with private hospitals or other healthcare providers to operate and manage field hospitals/ government hospitals for a fixed fee or revenue share basis. Concessions: An authority empanels private hospitals, which agree that defined inpatient and critical care will be offered to referred patients for free (or at low cost) and to private patients at pre-determined prices. Technology-enabled services Service contracts: An authority provides funding to tele-health service providers, who agree to offer a defined care package to specified • Tele-ICU services patient groups for free or at low cost…for tele-ICU services: An authority • Tele-medicine/ teleconsultation contracts with private hospitals or healthcare providers to provide tele- • Tele-radiology ICU services to a certain number of beds in government hospitals for a fixed per bed fee or revenue share basis. • Mobile services Concessions: An authority empanels private mobile health providers who agree to provide defined out-patient services to select patients for free or at low cost and are reimbursed the by the government. Private patients may be provided services at pre-determined rates or at market rates. Isolation capacity Service contracts: …for hotelling / quarantine facilities: An authority contracts with private service providers or hotels to manage quarantine • Hotelling/ quarantine centres in facilities on a per capita or per bed basis. This may also include provision hotels/ community centres of space including hotels or setting up of temporary quarantine facilities • Testing and handling services in public buildings, etc. in airports/ ports/ border areas Concessions: An authority contracts with private diagnostic service providers to offer testing services at borders, airports, railway stations, bus terminals on a fixed fee per test basis. 8 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic Support services Service contracts: …for logistics/ support services: An authority contracts with a private provider to provide transportation, • Logistics and warehousing services warehousing and distribution services for critical COVID-19-related for testing/vaccine supplies and other medical supplies, medical oxygen, PPE, blood supplies, vaccines, and/or medical equipment and supplies consumables. Other services such as procurement, transportation of • Transportation and distribution of COVID test samples, and specialised cold-chain services, may also be included. related supplies Payment may be based on per unit, value, consignment or weight or a combination of these. Similar contracts may occur for area sterilisation. • Local production of COVID related …for institutional support services: An authority contracts with multiple supplies private providers or consulting firms to provide a variety of services, such as data analytics, technical human resources, development and • Call centres, contact tracing, and operation of command centres including staffing and information quarantine follow-up technology backbone; technical and transaction and legal advisory services to facilitate contracting, training of government staff, etc. Payment may be based on a retainer or lump-sum basis. …for local manufacturing of COVID-19 related supplies: An authority contracts a local manufacturing company to produce critical medical supplies (e.g., PPEs, gloves, etc.) and equipment (e.g. ventilators). Payment can by per unit and/or specified volume. Vaccination Service Contracts: An authority contracts (a) a logistics company to provide cold-chain logistics and distribution services for vaccines, • Logistics, cold-chain, distribution and vaccination (b) a specialised cold-chain services company to use its dry ice-based services for vaccination logistics to distribute vaccines, (c) with private healthcare providers to provide vaccination services to a specified population, (d) with an operations research and data analytics company to create a database of, and enable prioritisation among, individuals eligible to receive the vaccine. Contracting for Health Ser vices During the COVID-19 Pandemic: A Step-by-Step Guide 9 Mitigating risks during Step 1 Similarly, financial capacity is often scarce - especially in an emergency context. It is important Step 1 has focused on selecting the ‘right’ contracting that the authority (a) has a clear forecast of what approach and targeting the ‘right’ service area(s). The the level of expenditures under the contract will be decisions made during this step include the following: across the full period of the contract, and (b) makes • Determine the legal basis for contracting with a cautious assessment of the affordability of this the private sector; level of expenditure. Failure to do so may result in unavoidable reductions in the allocation of resources • Select the appropriate contracting mechanism; to other essential health services. In addition, failures in budgetary planning may result in payment delays, • Establish the basis under which the contract will which threatens the sustainability of the contract and/ pay for services; and or the quality of outputs (e.g., if providers seek to • Estimate how much the contract will cost and preserve cash by ‘shading’ quality). Such delays also assess affordability. increase the likelihood of service providers seeking to levy direct payments (on a formal or informal basis) As Table 1 makes clear, different contract types offer from service users, raising financial barriers to access, a different balance of ‘pros’ and ‘cons’. Ultimately, undermining equity of access and financial protection. however, the appropriate type of contract depends on the core objectives set for it. For example, if the Taking these limitations of technical and financial objective is to address an absence or inadequacy of a capacity into account, it is important that the authority specific set of appropriate quality services – e.g., a lack of is able to: COVID-19 testing and/ or treatment services, in general • Recognise that the organisational context for or in a given locality - then a concession contract may the contracting process is suboptimal in key be appropriate. In contrast, if policymakers wish to respects; ensure that financial barriers to testing or treatment do not lead to underutilisation of critical services, then • Analyse the risks, for the authority and the an entry contract or service contract may address the objectives it has set for the contract, that are requirement. generated by current limitations in terms of technical and/or financial capacity; and However, the authority will also need a careful analysis of its technical and financial capacities, and whether • Carefully consider how these risks will be these are adequate to manage a more complex mitigated in practice. contracting mechanism. In most LMICs, technical capacity to enter into more sophisticated contracts Table 3 outlines the main challenges decision-makers is limited. Entering into such contracts requires skills face in Step 1, the risks these give rise to and strategies and knowledge to specify in a contract what is needed, for mitigating them. write a legally enforceable contract that captures how they should be provided, and to verify that these have been provided during implementation. Within a Ministry of Health, technical capacity may need to be supplemented by the assistance of other government departments/units, or supported by development partners. 10 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic TABLE 3. STEP 1: CHALLENGES, RISKS AND STRATEGIES FOR RISK MITIGATION CHALLENGE RISK MITIGATION The legal basis for contracting is The private sector may be unwilling to Before initiating the contracting process, uncertain incur the costs of setting up contracts the authority should evaluate the current and/or new/ expanded service delivery legal basis for public/private sector In some LMICs, governments do not have capacity until the legal basis for doing engagement, identify any gaps, and the legal authority to enter into contracts so is clear. This may cause a delay in formulate a plan for addressing these. for the provision of health services. In response and putting lives at risk. In a health emergency, the authority addition, private entities may not have may be able to obtain authorisation the legal authority to deliver the specific to enter into contracts with external services to be provided under a contract. parties for a defined period. (a good example of this is in South Africa where competition regulations were relaxed to accommodate this). The best type of contract is unclear The authority increases the risk that Where the authority’s objectives require the contract will be unsuccessful if it a specific type of contract (such as an For many LMIC governments, an entry or selects a mechanism that is not aligned entry or service contract), but it has service contract will often be the ‘best fit’ with its technical capacity and financial determined that it does not have the for their policy objectives. However, they resources. in-house capacities and resources may not have the technical or financial required to deploy this type of contract, resources to deploy complex contracting the needed capacities and resources mechanisms. will need to be accessed from external sources/agencies (e.g. other government unit, development partner, or private sector intermediary where it is clear no conflict of interest exists). The ‘right’ payment method needs to Paying on a fee-for-service basis can For an authority that is inexperienced be determined lead to excessive volumes of services with contracting, a common approach is provided/utilised, and/or make it difficult to begin with a fee-for-service payment Under many service contracts, the to ensure that there are sufficient funds method – but to set a cap for the total contractor is paid on a fee-for-service available to pay for the outputs delivered. amount of payments to be made, to basis. This means that total payment provide some mitigation of budget risk. is based on the volume of services Many authorities in LMICs do not have provided/utilised. Alternative approaches the data available to use payment With time and experience (supplemented, to fee-for-service include capitation methods such as capitation. This may perhaps, by the knowledge of other and global budgets/availability- lead to under- or over-payment. payers, e.g. private insurance funders, based payments, which are not where these exist), a move to alternative usage-based. payment approaches, including capitation, availability-based, DRG-based or fixed global budgets, is desirable from a fiscal and VfM perspective. How much the contract will cost, and Failures in budgetary planning for the If time permits, the authority can its impact on long-term budgets, are contract may result in disruption to other generate a ‘should cost’ model, based unclear health services funded by the authority. on an assessment of different providers’ costs to deliver the defined set of A common challenge is to ensure that the Contractors that are not being paid in services. This model may be developed authority has the budgetary space and full – and/or on a reasonable timeframe with the support of external entities, e.g. systems in place to pay for services on - may resort to ‘shade quality’ and/ private insurance companies, private time and in full over the contract period. or impose direct payments on service sector providers themselves, and/or users, at the expense of equity of access consultants with detailed knowledge and and financial protection. experience of the sector. Carefully monitor payments made under the contract (especially where these are usage-based and therefore difficult to forecast) to inform any revisions that need to be made, e.g. during contract renegotiation or renewal. Contracting for Health Ser vices During the COVID-19 Pandemic: A Step-by-Step Guide 11 STEP 2. PLAN THE PROCUREMENT A range of data sources can be consulted to address PROCESS these questions. For example, administrative records for facility licensing and registration, alongside Step 2 focuses on planning the procurement process health facility surveys, provide data on the ‘supply- – i.e. the sequence of actions required to select the side’ of the market - private sector capacity and contractor and establish the contract. geographical coverage. National Health Accounts, household expenditure surveys, the WHO Global The focus of the procurement planning process is on Health Expenditure Database and Private Sector two key issues: Assessments (PSAs)1 provide data on the ‘demand • What is the capacity of ‘the market’ to provide side’ - payment methods, prices paid, and user groups. the service(s) at the required level of quality and Analysis should focus on the opportunity for leveraging in the required timeframe; and existing provision for the COVID-19 response, • The structure of ‘the market’ and whether this, reshaping provision, or expanding provision - so that and the timeframe available for procurement, it is available to a larger proportion of the population, allows for a competitive bidding process - and, including the poor. Note that the capacity to provide if not, what measures will be put in place to specific services (such as testing, treatment, support safeguard value for money for the authority and services, and vaccination) may be created through the service users. contract, even if it does not exist now, i.e., at the time of analysis. For example, in the case of testing, a given Market capacity laboratory chain’s capacity to perform e.g., gene testing, molecular biology testing, antigen testing, and The authority may not have complete data on the serology, may imply that it has systems in place to carry capacity of the domestic private health sector in a out COVID-19 testing services – if it is encouraged given service area (see Table 2) (the initial focus, at and/or financed to do so under a contract. least, should be on the domestic market, as these are the providers most familiar with local conditions). Assessing eligibility However, the crisis situation may preclude the collection of new data – and it is therefore important In some contexts, existing regulatory processes, such to source what data exists on the following aspects: as empanelment or accreditation (which, in effect, set quality standards that service providers must meet • The scale and composition of the private sector to ‘pre-qualify’ for contracts, and/or reimbursement in the relevant service area(s) (e.g. numbers of under a social/ national health insurance or other facilities, equipment, beds, registered doctors, financing scheme). In such cases, and for entry and other health cadres); contracts, a new, contract-specific procurement process may be unnecessary. Instead, the authority’s • Geographical coverage and the urban/ rural split; requirements can be met by simply expanding the • Current approaches to revenue collection, and package to include health services from eligible prices charged; and providers. In the case of service contracts and concessions, these processes can also be leveraged to • The user groups for which they perform the assess the eligibility of specific providers for contracts. relevant services. The PSA approach was developed with support from USAID and the World Bank and has been running for several years. 1 As a result, PSAs are available for a large number of LMICs and/or specific jurisdictions. 12 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic • Does the business and/or facility have the capacity to achieve and sustain compliance with all quality/ clinical/ reporting standards relevant the Phillippines to the service? In the Philippines, PhilHealth used Competition in procurement its existing accreditation process to approve private provision of COVID-19 A key decision to make in Step 2 is whether a services. Once the Department of competitive selection process is feasible and desirable, Health approved COVID-19 guidelines, then PhilHealth-contracted private given the capacity of the market and the urgency of providers certified as ‘COVID-ready’. the identified objectives. Certification entailed the private facility be in current good standing (e.g. licensed Key advantages to a competitive process include: by Department of Health, accredited by PhilHealth) and inspected to ensure • Greater transparency, and therefore public trust COVID-19 compliance. Approval was in the process; and also dependent on facility level with all public and private facility levels 1, 2, • Greater pressure on service providers to ensure and 3 having undergone accreditation. that their pricing is aligned to the actual costs Level 1 facilities were accredited to of delivery (thereby reducing the scale of excess manage milder cases of COVID-19 profits); and to optimise the number of outputs while level 2 and 3 hospitals were and/or maximise the level of service quality. approved for treatment of complicated COVID-19 cases. A lack of such competitive pressure is likely to reduce value for money for the authority and service users. However, in many countries, the supply-side of the relevant market (e.g., diagnostics, primary care, However, where such processes are absent or hospital services, IT-enabled services, etc) may be inadequate, a new process for establishing eligibility concentrated and / or not yet fully developed. In may need to be introduced. Where a licensing such contexts, only a small number of providers may process exists, this can provide a useful starting have the capacities to fulfil the eligibility criteria set by point for determining who has the ‘right’ to bid. A the authority. In addition, during the crisis situation, given business and/or facility should be licensed the need for capacity to be deployed on an urgent (by all relevant national/ regional authorities) if it is timeframe may outweigh transparency and value for to perform the services under contract. However, money considerations that are paramount in more the authority may wish to ask a series of additional ‘normal’ times. However, this creates risks for the questions to ascertain capacity to meet the contract’s authority, which will require careful mitigation to objectives, including: protect the authority’s interests and safeguard the objectives of the contract. • Do all staff have current licenses with relevant professional bodies, and the capacity (now or after appropriate training) to perform the service? Contracting for Health Ser vices During the COVID-19 Pandemic: A Step-by-Step Guide 13 parties to ensure they have the equipment, staffing and quality systems in place to deliver the services. South Africa In addition, where possible, and consistent with the In South Africa, contracts were objectives of the COVID-19 response, it may be useful entered into with large private hospital to consider a phased approach, in which initial companies, on a non-competitive basis. contracts focus on relatively simple service areas while for Covid-19-related critical health later contracts include more complex outputs if and care services. There were no contract- only if observed pricing and quality outcomes support specific procurement processes, but, the value for money case for an extension. instead, agreements were made with a specific group of companies (the private hospitals market in South Africa is heavily concentrated – i.e. there are a small number of private hospital businesses that dominate market share) at the provincial level, with prices set for each specific service according to fixed Ethiopia tariff structures set at the national level. The prices were based on what public In Ethiopia, the Federal Ministry of authorities understood the average Health (FMoH) contracted with a small historical costs of each specific service number of licensed private laboratories to be. This was complicated by the fact to deliver COVID-19 testing services. The that individual clinicians (in clinical care, agreements initially focused on screening laboratory, radiology and physiotherapy) (i.e. asking a series of questions to operate as independent contractors to determine a person’s risk for COVID-19) the private hospital companies. Prices and referral of patients assessed to were therefore fixed according to a be at high risk of having the disease to five-part tariff for three levels of care: public sector laboratories. Once the ‘critical’, ‘ward’, and ‘palliative’. There is FMoH determined that contractors’ also a clause to deal with ‘carve-outs’ performance was satisfactory, they for specific services, such as dialysis, expanded the scope of contracts to and the complex management of include collection of COVID-19 samples, co-morbidities. analysis and, eventually, reporting. The FMoH monitored but did not regulate the fees charged to users by the contracted Mitigating risks during Step 2 laboratories. The first actions in Step 2 focus on (i) assessing the capacity of the private sector to address gaps in the availability of services critical to the COVID-19 response, and (ii) establishing eligibility criteria for pre- During Step 2, authorities must also determine the selection of businesses/facilities. In many contexts, process of selection (in particular, whether this will the data to support decision-making against these take place through a competitive process - or not). considerations is incomplete, or unreliable. In such The absence of competition does not mean that cases, there are clear risks to the authority and users contracting is inappropriate, but it does create risks that contractors will be unable to deliver the specified to transparency and value for money and may be range of outputs at the required level of quality and corrosive of the public trust on which an effective at a reasonable cost. Against this, however, there are response to the pandemic depends. Therefore, the also risks to inaction and delay – if these imply that the authority needs to take steps to ensure that prices, availability of services is inadequate. volumes and quality expectations are clearly set out, and can be benchmarked as the procurement process Before awarding contracts, authorities should conduct proceeds (see Table 4). due diligence checks on suppliers and associated 14 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic TABLE 4. STEP 2: CHALLENGES, RISKS AND STRATEGIES FOR RISK MITIGATION CHALLENGE RISK MITIGATION The market’s capacity to provide There is a risk to the authority and The authority may wish to conduct service(s) at the required level of service users if agreements are entered visits to facilities before entering into quality may be uncertain into with contractors that are unable to contracts, to establish the presence achieve or sustain the level of service of critical equipment, capacities and In some countries, only a small number quality required. But there are also risks competencies (perhaps in lieu of longer- of service providers may have achieved to inaction – if this means the availability term qualification processes). certification from a third party, such of services is reduced. as accreditation or an ISO, confirming the quality of services offered, and enabling eligibility. The structure of the market and the Where competition for contracts is absent The authority needs to generate pricing urgent timeframe may preclude or inadequate, there will be insufficient and quality benchmarks against which competitive bidding pressure on the service providers to: those offered by service providers can be assessed. In many LMICs, the supply-side of the 1. Ensure that the prices offered relevant market (e.g. diagnostics, primary are aligned to the actual costs of For pricing, the ‘should cost’ model (as care, hospital services, IT-enabled (technically efficient) delivery; and previously described in Table 3) can be services, isolation capacity, support useful. For quality, existing certification, services and vaccination) may be highly 2. Maximize the number of outputs quality assurance, empanelment or concentrated, at an immature stage of at the required level of technical accreditation processes can help to development, or non-existent such that quality. establish key benchmarks. In addition, only a small number of providers can when procuring directly from one or This lack of competitive or feasibly bid for the contract. a small number of service providers, market pressure may diminish authorities should provide clear value for money for the authority and documentation on how they considered service users. and managed conflicts of interest or bias In addition, the time pressures related in the procurement process. to the emergency may preclude competitive bidding. Before awarding contracts, authorities should conduct due diligence checks on suppliers and associated parties. In addition, it may be useful to consider a phased approach, in which initial contracts focus on simple service areas (e.g. screening and referral) with latter contracts including more complex outputs (e.g. testing and reporting) if the observed pricing and quality outcomes support the value for money case for this. After awarding contracts, it is important to keep a publicly accessible database of contracts for the public to view and address concerns around selection bias. Also, it is valuable to give the public the opportunity to rate the services provided by contractors as a means of collecting quality data that can be used by the authority both during and after the emergency. Contracting for Health Ser vices During the COVID-19 Pandemic: A Step-by-Step Guide 15 STEP 3. EXECUTE THE PROCUREMENT By Step 3, the authority has identified a single contractor (in a sole source procurement) or, preferably, What is the purpose and content of the RFP? a range of contractors (in a competitive procurement), that have met the eligibility criteria and are thereby The RFP is a document developed by the authority which provides details of the assessed as having the capacity to deliver required forthcoming contract. In general, the RFP outputs. In Step 3, the authority needs to: should include clear information on: • Ensure that its plans are ‘sense-checked’ by a) The objectives for the contract in terms the market and are informed by likely market of the COVID-19 response; responses; b) The scope, scale and location of • Adopt an approach to bid evaluation and services to be included; contractor selection that safeguards value c) Who the services are to be made for money – especially in contexts in which available to (i.e., service users); competition is absent or inadequate; and d) How contractors will be paid, on what • Ensure transparency while mitigating risks basis and schedule, and by whom; to value for money and service quality. e) Specific issues that contractors should include or address in the proposal; and In the case of a competitive procurement, the authority should consult all potential bidders/contractors f) Proposed evaluation criteria, output before issuing the Request for Proposals (RFP) as specification, key performance indicators, discussed in the box to the right. Consultations definition of terms and required bid structure. should be through open engagements and include as many potential bidders as possible. For example in South Africa, an RFP was advertised in all relevant ‘sense-checked’ by the full range of potential bidders media (newspapers, magazines, websites, etc) with a (noting, again, the importance of ensuring the range date set to explain the Terms of Reference in a Tender of bidders is as inclusive as possible, to avoid bias in Briefing Session where all potential bidders were the procurement process) before it is advertised. expected to attend in order to understand what the service delivery expectations were. The written Terms Key questions to address within this initial phase of the of Reference documents were sent out to potential PPD process are: bidders upon request - and only those that attend the Briefing session were eligible to submit a bid. • Are the authority’s objectives for the contract clear? Public private dialogue • Is delivery of the output specification achievable? Consultation is best achieved through an institutionalised process of public private dialogue • Is the proposed payment mechanism acceptable (PPD)(5). This process needs to be transparent, and to contractors - what level of risk is implied by open to all actual or potential bidders, to mitigate this, and what are the implications for bid prices? the possibility of (or appearance of) selection bias - • Are there ways of reducing risks, and thus prices, through, for example, individual preferences, personal through adjustment to the mechanism while connections or bribery/ corruption. The authority can maintaining value for money? use the PPD process to ensure that the draft RFP is 16 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic Bid evaluation and contractor selection Proposals should be evaluated by a committee that has no conflict of interest (CoI) with the contractor(s). The Phillippines A detailed CoI process is required. This should be documented, signed by all committee members, and In the Philippines, the government passed the “We Heal as One Act” archived for future reference to ensure that future which created the legal and regulatory questions on selection bias can be addressed. Where framework for PhilHealth to cover a potential conflict is declared, there should be a COVID-19 and obligated PhilHealth to documented process for adjudicating this. develop benefits for COVID-19 services. Reimbursement levels were based on Typically, in the case of a competitive procurement, treatment of diseases with symptoms a shortlist will be drawn up, and the bid that offers similar to those of COVID-19, for the best combination of low prices, high quality and example, complicated pneumonia for COVID-19 ICU treatment. PhilHealth security of supply – i.e. the ability to respond quickly then conducted cost studies to verify the and reliably2 - is selected. Negotiations at this (non- provisional rates and standardized these competitive) stage of the process should be limited. for public or private providers. While some ‘fine-tuning’ of contractual terms is permissible, negotiations should not lead to changes in the ‘substance’ of the contract (e.g., in output, quality standards, payment mechanisms or pricing • What will monitoring cost and how will the structures). budget for this be secured? Before contracts are signed, the authority should • What will be the payment mechanism? have resolved a number of key questions concerning the implementation of the contract, including: • How and by whom will disputes be mediated, arbitrated or settled? • How will performance be defined and monitored? Mitigating risks during Step 3 • Who will monitor performance? What access If competition during the procurement process is rights are needed to do this? absent or limited, there is no guarantee that prices will be reasonable and/ or that the level of quality/ scope of service volume committed to by bidders will be optimal. The authority will need to leverage its negotiating skills to maintain pressure on the bidder(s) to: India In India, a national price list (package • Ensure that bid prices approximate those rates) was developed from the federal outlined in the ‘should cost’ model (as described level under the national health insurance in Table 4); and/ or can be adjudicated to be scheme (PMJAY or Ayushman Bharat). ‘reasonable’ based on prices being charged States could use this, but many adjusted by private providers for similar services in the the price list. The price setting process was informal and not based on costing market; and models, “many states are calling around and finding out at what prices private • Ensure that the volume and quality of hospitals are willing to provide services.” services bidders commit to can be adjudicated to be ‘reasonable’ given the standards set down by the eligibility criteria and current practice in the health system. 2 If security of supply is not guaranteed upfront, this may lead to a more expensive procurement process with `government having to buy out of the agreed tender from suppliers who may have originally lost out on the bid based on price and quality criteria. Contracting for Health Ser vices During the COVID-19 Pandemic: A Step-by-Step Guide 17 In addition, authorities should provide clear documentation on how they considered and managed conflicts of interest or bias in the procurement process. These risks and mitigation strategies are summarised in Table 5. TABLE 5. STEP 3: CHALLENGES, RISKS AND STRATEGIES FOR RISK MITIGATION CHALLENGE RISK MITIGATION Potential contractors need to be Without consultation, the authority is: The authority can establish ad hoc but consulted to ‘sense-check’ the effective PPD processes to discuss authorities contracting plan 1. Unable to assess whether its individual contracts. The OECD has planned contract terms and prices/ produced detailed guidance on In many LMICs, existing relationships payment methods are acceptable establishing effective PPD structures(6). between public authorities and private to providers. sector actors are under-developed. Often In addition, a range of donors, including there is no institutionalised PPD process, 2. Uninformed about how the market the World Bank, IFC, USAID, and the in which consultation/engagement can will evaluate levels of risk (mostly a Global Financing Facility can provide occur. result of payment methods), and technical assistance on PPD approaches. the probable impact of this on bid prices. In all cases, open and well-advertised Tender Briefing Sessions are an important The authority may miss out on step in sense checking the ToR. opportunities to reduce risk, and thus prices, without compromising on service volumes or quality. Ensure that contracts are Many contracts leave out important Use a check list before a contract is comprehensive in specifying the requirements or are ambiguous as to signed to ensure that the authority’s authority’s main requirements how these should be achieved in practice. main requirements will be fulfilled at the required level of quality. In addition to the financial implications of service contracts, these are inherently complex agreements to define and implement, requiring, at a minimum, the range and quantities of services to be defined in detail. Ensure contract prices are Without well-informed cost estimates, At an early stage of the process, estimate ‘reasonable’ authorities run the risk of: the cost of providing the defined services. Costs can be estimated with reference In LMICs, authorities may not know the • Setting prices too low, making it to the ‘should cost’ model previously ‘true’ cost of delivering the targeted impossible for the contractor to described, and by examining: services. As a result, they may be unable sustainably offer the service; or to set or negotiate ‘reasonable’ contract • Prices currently charged by private prices (i.e. the payments to be made to • Setting prices too high, leading to sector providers in ‘the market’; and the contractor) for a set of services. over-payment, and reducing value for money for the authority • Prices charged to the government and users. for similar services (today, or in the past). Note that government can use the advantage of its market power to negotiate even lower than market prices - though volumes and payments above marginal costs have to be guaranteed in order for providers to remain viable 18 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic STEP 4. MONITOR PERFORMANCE During Step 3, the authority should have invested in the capacities needed to monitor the performance of the contractor(s) under the contract. By Step 4, India the contract has been signed, but the authority’s responsibilities to monitor performance are only just In India, contractual negotiations between the public and private sectors beginning. Monitoring is the authority’s main tool for on contract terms has not always motivating good performance. Therefore, the costs resulted in common interpretations on of monitoring – both in terms of budget, and the re- what the contract requires. For example, direction of senior staff to lead the process – should private providers have interpreted the be seen as a valuable investment and allocated contract, and the related government accordingly. reimbursements, to cover the patient’s occupation of a hospital bed and access Contract monitoring to clinical care – but not the provision of consumables (which are therefore being Most health services (diagnostics, primary care, charged for). In contrast, the government hospital services, even most support services and considered the contract was inclusive of all inputs. Such misunderstandings are vaccination programmes) are extremely complex. likely in the context of rapid contracting Therefore, writing a comprehensive contract – one that processes conducted in a health system covers how services should be delivered, and at what context in which experience with price, and in all circumstances, is not possible – even contracting is limited. for authorities with a lot of experience in contracting. In contexts where authorities have limited experience, the extent of contractual incompleteness is likely to be greater. Therefore, the monitoring arrangements to be put into effect in Step 4 need to be strong enough to (a) capture the effects of any contractual ambiguities on performance, and (b) enable ‘course correction’, Ethiopia and the need for re-negotiation, to ensure that In Ethiopia, given the ‘light’ touch for the contractor’s operations are fully aligned with a select number of private facilities the contract’s original objectives (see examples in to provide quality COVID-19 testing Table 6). services, the Federal Ministry of Health aggressively monitored these facilities Dispute resolution using a wide range of approaches including multiple inspections, random Underpinning most successful contracts are verification of lab analysis by the mechanisms to resolve disputes and ensure that the National Health Laboratory, and mystery clients to observe if the private parties deliver on what they agreed without recourse provider complied with quality standards to arbitration or – in extremis - court action, which and price caps. can be both extremely costly and disruptive. To avoid disputes in the first place, it is important to maintain open channels for communication to help clarify issues that could, if left unchecked, lead to a dispute. For example, some authorities schedule regular meetings with contractors to discuss how the contract is being implemented and agree on any needed changes. Contracting for Health Ser vices During the COVID-19 Pandemic: A Step-by-Step Guide 19 Paying the contractor(s) in full and on time This can be due to challenges of processing the claims, including the difficulty of ensuring that claims As noted earlier in this section, failures in budget are not a result of over servicing, or fraud. These risks planning may result in delays in payment, leading and mitigation strategies are summarised in Table 6. to reductions in the quantity or quality of services delivered. In addition, another reason for payment delays is the process of administering invoices. TABLE 6. STEP 4: CHALLENGES, RISKS AND STRATEGIES FOR RISK MITIGATION CHALLENGE RISK MITIGATION Contract terms are difficult to In the absence of a comprehensive The authority can invest in a robust operationalise contract, the service provider may not inspection regime during the contract’s have a strong incentive to deliver each implementation phase, including Most health services are relatively of the required services at the expected evaluation of outputs/outcomes (through complex. Therefore, writing a level of quality/cost. techniques such as visits by ‘mystery comprehensive contract – one that covers clients’ or independent validation of how services should be delivered, and at There is also the potential for financial test results). This can enable contracts what price, and in all circumstances, is liability to the government if it commits to be entered into without the need for not possible – even for authorities with a large payments to a private provider that long-running and resource-intensive lot of experience in contracting does not deliver services appropriately. certification/qualification processes, especially in countries where clinical quality accreditation systems are not widely followed. Capacity to monitor and evaluate is Without strong monitoring capacity, the The contracting authority can bring in limited authority lacks the means to motivate outside entities – specialist government performance under the contract (even if units, consultants, multilateral agencies, Authorities may have limited capacity the contract is well-defined). or donors – to provide expertise on to monitor performance, verify outputs contract monitoring and evaluation against critical contract goals/indicators A lack of conciliation, mediation and approaches. and enforce necessary revisions to arbitration procedures may lead contract terms, prices and conditions. to a breakdown in the relationship, These same experts can assist in dispute Authorities may be reluctant to invest in undermining performance. resolution (conciliation, mediation and new or enhanced capacities – or defer arbitration). such investments until too late in the contractual lifecycle. Trust is hard to achieve and sustain Where a procurement process is non- Without competition in the procurement competitive, this means that an important process, it is important that authorities In the emergency context, authorities mechanism for ensuring that processes document their procurement decisions need to balance the need to procure are fair, service providers are treated and actions fully, publish contract awards large volumes of services quickly, with equally, and there is transparency in in a timely manner, manage conflicts the risks associated with non-competitive contract award decisions, is absent. This of interest assiduously, and provide procurement. It will often be the case may lead to an erosion of public trust in transparency about project outputs and that the need to act quickly will lead to the system. outcomes, where possible. rapid procurement decisions that bypass normal rules and procedures. 20 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic BUILDING BACK BETTER Health emergencies represent a threat to long-term • It is important to define as clearly as possible health policy objectives, such as universal health – and place on record – the details of the coverage. However, they also present opportunities contract’s focus and content and (e.g., scope, for learning that may ultimately help policy makers eligibility, service volumes, minimum quality to reconfigure governance arrangements for health standards; and monitoring arrangements); systems, and accelerate the rate of progress towards their long-term objectives. One important lesson • Be pragmatic - start by contracting private providers with known (or easily verifiable) quality from the COVID-19 pandemic is this: countries with standards in place, e.g., those with current effective governance arrangements for contracting licensure and/or accreditation, before - if have been able to rapidly scale up their response capacity needs require this - moving to engage efforts, by leveraging the (often substantial) resources others in the market; of the private health sector. In contrast, countries with nascent, or emerging, governance arrangements for • Focus on improving data analytics for the contracting, have not been able to achieve scale-up planning of service needs, and to gain better on a necessarily urgent timescale. In most countries, insight about the private health sector and the process is underway, but it has taken more time, mechanisms for routine engagement of it, utilize and the capacity that exists in the private sector has public-private dialogue structures; and been left unutilised for long periods. • Where it is necessary to temporarily relax Overall, this experience suggests that, in their future procurement regulations and/or any other planning and strategies, governments should aspects of normal governance procedure, consider their ability to effectively contract make sure to establish even stronger/ stricter with the private health sector as a component monitoring mechanisms to ensure that quality of their strategies to strengthen core health and reporting standards are upheld. systems functions – which are, as “common goods for health” - fundamental to protecting and Successful implementation of these principles promoting health and well-being(7). depends on the will of policy makers to build a set of core contracting capacities – those needed For countries that are still developing the process to define, plan and execute an effective procurement for contracting with the private health sector, WHO process, to write a comprehensive contract, and to and the World Bank would emphasise the following monitor the performance of contractors. For countries key messages: with limited contracting experience, new, and perhaps unfamiliar activities will be needed - new data to be • Contracting is a tool that governments can use generated or collected, new structures for public-private to strengthen their responses to COVID-19 by dialogue to be established. Often, these activities will utilising and co-ordinating the resources of need to be achieved on an urgent timescale. This whole health systems, public and private; urgency may require established procedures to • It is challenging, but worthwhile, to leverage be relaxed, generating new risks - for the authority, resources and align activities and behaviours the private sector and service users. These risks with emergency response goals, in order to require diligent management – but the experience optimise the response; of several countries, including LMICs, shows that this is achievable. 21 In addition, through this process, authorities can develop – and should seek to institutionalise – new capacities, activities, and ways of working that will strengthen current response efforts and enhance their ability to tackle future emergencies. As we have demonstrated in the country examples outlined above, many governments had developed the core capacities for successful contracting before the pandemic struck. They were, as a result, well-placed to take a resource-based approach that included both public and private complements, by rapidly putting in place new contracts to strengthen access to, and utilisation of, relevant testing and treatment services. For others, for whom such capacities are now being strengthened, the pandemic creates an important opportunity to build back better, so that when the next COVID-19 wave, or indeed the next epidemic or pandemic hits, the range of services that can be contracted from the private health sector is known, the individuals and agencies with the contracting experience required are in place, and the dialogue structures – which are so critical to the process of mobilisation the private health sector for the response – are established and ready to be engaged. 22 A Guide to Contracting for Health Ser vices During the COVID-19 Pandemic REFERENCES 1. Grepin, K, 2016. Private Sector: An important but not dominant provider of key health services in low- and middle-income countries. Health Affairs 35, no.7:1214-1221 2. Montagu, D and Chakraborty, N. 2019, Private Sector Utilization: Insights from Standard Survey Data. Geneva: World Health Organization. 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