Competitive Voucher Schemes for Health

1. Anna Gorter Julienne McKay Competitive Voucher Schemes for Health Instituto CentroAmericano de la Salud – ICAS How can private providers be engaged in serving the poor? 6th World Congress on Health Economics – iHEA – July 9, 2007

2. Outline of presentation • What are competitive voucher schemes • Strengths of competitive vouchers in developing countries • Comparison of vouchers with: • franchising programmes • subsidized health insurance • Conclusion, can vouchers be used to engage private providers in serving the poor?

3. Why engage private providers through competitive vouchers? • Market failure to serve certain poor, marginalised and / or vulnerable populations, • even if services are associated with positive externalities, e.g. HIV/AIDS services for sex workers • Search for alternative approaches – engagement of private providers through competitive vouchers • 1995 - 1998 voucher trial with sex workers in Managua successful • Development of more schemes in Nicaragua

4. SUBSIDIES Eg. Tax revenue or donation PROVIDER ORGANIZATION Eg. MoH, Social Security, other. PAYMENT ORGANIZATION Eg. Voucher Agency RIGHT TO SUBSIDY Eg.Vouchers, capitation payment, fee subsidies INPUTS Eg. Salaries, Drugs, etc Payments PROVIDERS USERS Invoice for Subsidies on Goods and /or services Free or subsidized services Redemption of the right for subsidy Co-payments USERS PROVIDERS SUPPLY SIDE FINANCING DEMAND SIDE FINANCING

5. Competitive vouchers in other sectors • Education (US, Europe, LA, Netherlands) • Employment (Argentina, US, Netherlands) • Training (LA, Kenya, Zimbabwe, USA) • Elderly care (Spain) • Housing (USA) • Pension (Bolivia) • Welfare (UK, USA)

6. Competitive voucher scheme in health Voucher agency Voucher $ M&E reports Training plus performance monitoring $ Voucher recipients Donor/ Government Voucher Service Providers (compete for vouchers) Voucher

7. Some examples of vouchers

8. Strengths of competitive vouchers • Targeting of population sub-groups • Encourage use of specific services • Can increase operating efficiency • Can improve service standards / quality • Payment for services actually provided • Possible to pay only incremental cost • Facilitates monitoring and evaluation

9. Targeting Of identifiable groups ‘at risk’ / in need: • Marginalised groups • drug-addicts, sex workers, streetkids • Groups who fear stigmatization • MSM, or people with TB, Leprosy, AIDS • Vulnerable groups, e.g. because of age, gender, behaviour or poverty • Adolescents, young people • Clients of sex workers • Poor pregnant women

10. Encourage use (incl. of services with positive externalities) When demand is limited by barriers to access (cost, lack of knowledge, stigma..) • Vouchers inform about services and guide users to where services can be obtained • Remove cost barriers (incl. eg transport costs) • Power of choice increases client satisfaction • Encourages use and positive experience leads to repeat use • ‘Worth of mouth’ recommendation to others

11. Nicaraguan schemes target those most at risk or underserved & encourage use • STI-HIV-AIDS prevention & treatment • sex workers and their clients • men who have sex with men • Sexual & Reproductive Health care • poor adolescents and young people • Cervical Cancer screening and treatment • older women in rural and remote areas

12. Other schemes target and encourage use of safe motherhood services Providing safe motherhood services through vouchers to reduce maternal mortality (MDG5): • Indonesia: services delivered by private midwifes to poor rural women • Kenya: services delivered by public, private & mission providers to poor women • India / Gujarat: private gynaecologists provide services to poor women from remote areas • India / Uttar Pradesh, private nursing homes provide maternal care to poor women

13. Vouchers can increase efficiency & service standards • Increased utilization of private sector resources • Reduced input costs • Competition between participating providers (private, NGO/mission, public) : • Reduced price • Increased service quality • Increased clients satisfaction

14. When do vouchers increase efficiency / standards most? • Providers with excess capacity, increased utilization gives economies of scale • Strong competition between providers (more than one provider available) • Where contracts specify ‘best practice’ service package /‘social’ protocols & staff required to undergo training • only cost-effective services are provided • medical supplies are procured centrally • vouchers are distributed by third parties

15. Potential drawbacks of vouchers • High start-up costs • Set-up is complex, needs highly trained staff at the start, ‘devil in the detail’ • Not feasible: cost of services is variable or unpredictable; need for services difficult to verify • May be susceptible to abuse (black market, collusion between providers and distributors..) • Program development takes time Once established easy to run and to scale-up, and costs go down

16. Vouchers facilitate monitoring and evaluation Mechanics of a scheme incorporate: • Regular monitoring of provider performance against contract specifications • Interviews with redeemers, ‘mystery patients’ • Medical record review • Tracking redemption rates / follow-up consultations • Providers report to voucher agency • Voucher agency reports to donor/Government Program impact assessed by tracking voucher use and linking changes to health outcomes

17. Impact of treatment rounds on STI prevalence in sex workers voucher scheme in Nicaragua (long periods between treatment rounds – high bounce back of STIs) 35% 30% 25% Measured STI Prevalence 20% 15% 10% 5% 0% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Round McKay et al, AJPH 2006;96:7-9

18. Effect of voucher scheme GujaratOver 40,000 Institutional Deliveries in 5 pilot districts, Jan 2006 – March 2007 Dr. A Singh, Voucher Workshop April 2007, Gurgaon, India

19. Comparison of vouchers with franchise and insurance

20. Combining vouchers with a franchise

21. Vouchers useful in engaging private providers to serve the poor? Vouchers are complex to set up, more experience is needed. They are highly successful in targeting needy populations and encouraging them to use priority health services. Great potential in eg.: - HIV/AIDS prevention in groups most at risk - Reduction of maternal mortality in poor women Voucher schemes have been successful, also because they could tap into private sector resources and engage private providers in serving needy populations with health care services they had been unable to obtain before.

22. Conclusion Vouchers can be a good way to target public subsidies to specific populations and encourage them to use priority health services provided by private providers. Use of vouchers in conjunction with franchising may generate stronger returns, however not much practical experience exists and experiments on a small scale are needed.