Thai Contracting Case

1. Thai Contracting Case Siripen Supakankunti Chantal Herberholz Faculty of Economics

2. Thailand: Per Capita GDP Data source: NESDB web site (accessed on June 18, 2010)

3. Population Characteristics Source: Health Policy in Thailand, MoPH, 2009

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

5. Hospital Beds(By agency and region, 2005) Source: Thailand Health Profile 2005-2007, MoPH, Wibulpolprasert (ed.), 2008

6. Bed-occupancy rates(By agency, 2003-2005) Source: Thailand Health Profile 2005-2007, MoPH, Wibulpolprasert (ed.), 2008

7. Health ManpowerProportion of doctors by region, 2005 Source: Thailand Health Profile 2005-2007, MoPH, Wibulpolprasert (ed.), 2008

8. Public Health Insurance Schemes Source: Universal Health Care Coverage Through Pluralistic Approaches, Sakunphanit, 2006

9. Public Health Insurance Schemes Source: Universal Health Care Coverage Through Pluralistic Approaches, Sakunphanit, 2006)

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

11. Harding-Montagu-Preker Framework: Overview Assessment Strategy Goal Focus • Distribution (equity) • Efficiency • Quality of Care • PHSA • Gather available information • Identify additional needs • In-depth studies Private Sector Grow Harness • Activities • Hospitals • PHC • Diagnostic labs • Producers / Distributors • Ownership • For-profit corporate • For-profit small business • Non-profit charitable • Formal/ Informal Convert Restrict PublicSector Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003.

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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?

21. 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

22. 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

23. 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?