a: There are a few different capacities that are needed: (i) The procurement (or recruitment) of private sector services is a specialized skill but one that can be learned.
Benjamin Loevinsohn: a: There are a few different capacities that are needed:
(i) The procurement (or recruitment) of private sector services is a specialized skill but one that can be learned. Each financier, whether government, donor, other development partner, etc., has different rules that govern the procurement process and these need to be understood well. The contracting toolkit (available as a pdf file on this website) talks about some of the basics. My sense is that people tend to mystify procurement and make it more complicated than it should be. Don’t be intimidated!
(ii) Monitoring and evaluating private provider performance is really central to the success of contracting and requires a number of sources of information to be in place and the skilled people who can interpret the results. The sources of information include: (a) monitoring field visits; (b) HMIS; (c) health facility surveys; and (d) household surveys. These sources of information have to be used and there need to be discussions with contractors who are performing poorly.
(iii) Financial management and prompt disbursement. The payer needs to ensure prompt payment of the contractors (say NGOs) because delays can lead to gap in services. The contract management group needs to be able to understand the financial reports that contractors send them. However, it’s really important that, wherever possible, lump-sum contracts are used because otherwise contract management units can spend a huge amount of time focused on looking at inputs. Lump-sum contracts also maximize flexibility and innovation.
On the question of where these capacities should reside: There needs to be a unit that manages contracts that is properly staffed and supported. Whether this should be in the MOH or another part of the purchaser’s organization is hard to know. It does make sense to have third parties actually carrying out the health facility and household surveys to ensure independent and hopefully neutral assessment.
b: It’s difficult to measure these capacities really, but an important indicator is the promptness of payment to contractors.
c: Most countries have these skills, although they may not reside in the Ministry of Health or even in the government. They may require that (local) consultants are hired with special expertise in the three basic areas described above. There is also the opportunity to train the purchaser’s staff.
Overall, I would say that contract management is a challenging area that deserves considerable attention. However, it is not a show-stopper. Even in countries that managed contracts poorly, contractors, particularly NGOs, were still able to make progress. Also, the fact that even countries with little contracting capacity at the beginning, such as Afghanistan and Cambodia, were able to develop these skills and do a reasonable job of contract management shows that it’s possible to do this in difficult circumstances.
Date: 30 Nov 1999
Given in this interview: Contracting for Health Services
