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Box C

Definition of “Strategic Purchasing”

Strategic purchasing was discussed in OHKF’s 2018 policy paper as an effective financing
lever that can inform the allocation of resources throughout the health system, leading to a
more cost-effective provision of healthcare services whilst maximising population health
(OHKF, 2018). It is an iterative process also known as “active purchasing”, cyclical in
nature involving needs assessment, planning and monitoring, and consistently evaluated in a
system-wide manner characteristic of the active process. Recognised by the WHO as an
effective financing lever in achieving UHC, the strategic purchasing process entails six core
decisions to be made for implementation, including “whether to provide or purchase”,
“who to purchase the targeted services” , “for whom to purchase services”,
“what services to purchase”, “from whom to purchase services”, and “how to purchase”
that is considered across macro-, meso- and micro- levels of the health system.

• Who to purchase
Determine
interventions and • For whom to • What to monitor
purchase
services based on To provide or • What to purchase • How to monitor
population needs, purchase • How to resolve
priorities and • From whom to disputes
purchase
cost-effectiveness
• How to purchase

Strategic Purchasing Decisions
Whether to The Government should decide whether it would provide health services
provide or themselves or purchase services from other provider organisations.
purchase

Who to purchase The Government should identify an appropriate purchaser that is equipped to
focus on the type and level of health services of interest and define its role in the
health system.
For whom to When designing a strategic purchasing-oriented programme, the purchaser
purchase should identify a target group with needs that would benefit from the purchasing
programme.
What to purchase The Government should assess what service gaps exist in the health system and
which health goals may be met through the services purchased.
From whom to The purchaser should carefully select service providers based on their capacity,
purchase availability, accessibility, and the appropriateness of the services they provide
relative to the population health goals set out by the Government.
How to purchase To draw participation in the purchasing programme, the purchaser should utilise
demand-side and supply-side instruments, contractual terms and agreements,
and provider payment mechanisms that effectively incentivise providers to meet
system health goals.

Source: WHO, 2000

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