Thai Contracting Case Siripen Supakankunti Chantal Herberholz Faculty of Economics

Thailand: Per Capita GDP 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 , MoPH, Wibulpolprasert (ed.), 2008

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

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

Health Manpower Proportion of doctors by region, 2005 Source: Thailand Health Profile , 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 Expenditures Data source: Thailand Health Profile , 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, 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 Strategy Assessment Goal Focus Private Sector Public Sector 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?