Strategic Purchasing

Strategic purchasing fundamentally aims to align funding and incentives with intended health services. This is achieved by linking the allocation of pooled funds to services / providers, at least in part, to information on population needs / priority interventions, or aspects of provider performance. Strategic purchasing also exists as a fundamental healthcare financing reform to accelerate progress towards Universal Health Coverage (UHC).

Strategic Purchasing is made up of three (3) aspects:

• What to buy? – Which services will respond to the needs of the target population, how will the benefit package be defined?
• From whom to buy? – Which providers, public and/or private, or combination thereof will be able to effectively deliver those services?
• How to buy? – How will providers be paid, at what rates, what are the contracting terms and how will compliance be monitored?

The Directorate is made up of the following:

1. Maintenance of the Accreditation and Contracting database
2. Reporting on Strategic Purchasing

Typically, a passive approach to healthcare financing has generally been adopted, where funding allocations are made primarily on the basis of historical expenditure, and independent of key factors relating to provider performance, population needs or priority health interventions. By incorporating the aforementioned factors into decisions relating to funding allocations, strategic, also referred to as active purchasing, makes provision to enhance equity in the distribution of resources, increase efficiency, manage expenditure growth and promote quality in health care service delivery.

It is important to note however that strategic purchasing does not require a radical shift but rather a continuum from passive to active purchasing through the expansion of critical factors considered in the allocation of funds for healthcare services.  

Strategic Purchasing Concepts

Strategic / Active Purchasing Definition

The alignment of resources with at least in part, to information on provider performance and the health needs of the population they serve, with the aim of realising effiency gains, increasing equitable distribution of resources, and managing expenditure growth. 

Pillars of Strategic Purchasing

1. Population needs -Assess population epidemiological profile, demographics and community factors.
2. Benefits package - Determine package of service to meet identified needs, service priorities and existing treatment protocols.
3. Service delivery model - Determine the service platform, providers and referral pathways for the service to be delivered.
4. Costing of services - Determine the appropriate funding model and consider relevant methods for reimbursement.
5. Outcomes based measures - Establish relevant performance metrics, consider linking of payments to performance and results. 

Contact Details:

For any queries, suggestions and comments:

Strategic Purchasing Unit

E-mail: Strategic.Purchasing@westerncape.gov.za

Michael Edward Manning

E-mail: Michael.Manning@westerncape.gov.za 

Cell: +27 84 200 1269

Muhammad Ali Moosajee 

E-mail: Muhammad.Moosajee@westerncape.gov.za 

Cell: +27 84 612 0391