Can Strategic Health Purchasing Reduce Inefficiency and Corruption in the Health Sector? The Case of Nigeria

ABSTRACT Despite limited government budgets for health in many sub-Saharan African countries, some countries have improved health outcomes at low cost by being strategic in allocating and spending available resources. Strategic health purchasing is receiving increasing attention as a way to improve health system performance within financial constraints. Health purchasing, one of the health financing functions of health systems, is the transfer of pooled funds to health providers to deliver covered services. Strategic health purchasing uses evidence and information about population health needs and health provider performance to make decisions about which health services should have priority for public funding, which providers will provide these services, and how and how much providers will be paid to deliver those services. Strategic purchasing has enabled some countries to make progress on health sector goals while improving efficiency, equity, transparency, and accountability. However, when countries have high levels of corruption and low levels of accountability, as in Nigeria, strategic purchasing may be less effective and more money for health may not yield the expected public health benefits. This commentary uses the Strategic Health Purchasing Progress Tracking Framework developed by the Strategic Purchasing Africa Resource Center (SPARC) and its technical partners to examine health purchasing functions in Nigeria’s main health financing schemes, how corruption affects the effectiveness of health purchasing in Nigeria, and opportunities to use strategic purchasing as a tool to address corruption in health financing by improving the transparency and accountability of health resource allocation and use.


Introduction
Many sub-Saharan African countries with poorly funded health sectors, including Nigeria, are concerned about making better and more efficient use of funding allocated to health care. 1,2 This includes more strategic purchasing of health services for greater public health benefit. Health purchasing, one of the health financing functions of health systems, is the transfer of pooled funds to health providers to deliver covered services. Strategic health purchasing uses evidence and information about population health needs and health provider performance to make decisions about which health services should have priority for public funding, which providers will provide these services, and how and how much providers will be paid to deliver those services. [3][4][5][6][7][8] Strategic health purchasing has enabled some countries to make progress on health sector goals while improving efficiency, equity, transparency, and accountability.
However, when countries have high levels of corruption and low levels of accountability, as in Nigeria, strategic purchasing may be less effective and more money for health may not yield the expected public health benefits.
In Nigeria, government allocations to the health sector are low, making up only 16% of current health expenditure and less than 4% of the total government budget in 2019. 6 Out-of-pocket spending for health care in Nigeria is 76% of current health expenditure, with the remaining 24% from government and external sources. 6 Resource mobilization, pooling, and purchasing mechanisms are inefficient and inequitable, which limits the potential to improve health outcomes. 1,7 Raguin and Girard note that the health system in Nigeria has changed dramatically in recent years, which calls for new mechanisms to meet health needs, ensure equity, and address other issues. 8 Corruption is widely seen as having a negative impact on health care in Nigeria, gaining increased attention in the literature and especially in health financing studies. 9,10 Vian advanced a now-popular theory on health sector corruption that opportunities for health sector corruption are rife in contexts where beliefs, attitudes, norms, and individual discretion are generally not checked by institutionalized accountability and transparency measures. 11 This theory also suggests that health sector corruption is widespread when citizens have no role in holding organizations accountable and ensuring that rules are enforced and organizations lose control over individuals. 11 Vian's theory aligns with most literature on health sector corruption. [12][13][14] In Nigeria, corruption is widely taken to mean actions and inactions on the part of public and private persons that compromise efficient use and distribution of resources, particularly public resources. 15 The Nigerian literature on corruption tends not to use subtler terms as a substitute, as often happens elsewhere for reasons of political correctness and to sound academically circumspect. 12,15,16 Using the word itself shows honesty about the ways that corruption is manifested and, possibly, interest in promoting change. When Nigerians elected a president from the opposition party with an anti-corruption agenda in 2015, their choice also signaled a readiness for change. 17 One major adverse effect of corruption in low-and middle-income countries such as Nigeria is the suboptimal use of available resources to achieve global health goals. 18 In recognition of this and amid the global push to increase health funding and access to health services, African ministers of finance and health issued the Tunis Declaration on Value for Money, Sustainability and Accountability in the Health Sector in 2012. 19 It included 10 recommendations, of which the most pertinent to this commentary are number 6, "Lay out the path to universal health coverage for each country, in particular establishing mechanisms to ensure equitable access to essential health services including social health insurance while ensuring effective safety nets to protect vulnerable individuals, households and communities," and number 7, "Improve efficiency in health systems, including equitable access to skilled health workers and the introduction of measures such as results based financing and incentives to enhance transparency and performance and reduce wastage." 19 This commentary uses the Strategic Health Purchasing Progress Tracking Framework developed by the Strategic Purchasing Africa Resource Center (SPARC) and its technical partners to examine health purchasing functions in Nigeria's main health financing schemes, 20 how corruption impacts the effectiveness of health purchasing in Nigeria, and opportunities to use strategic purchasing as a tool to address corruption in health financing by improving the transparency and accountability of health resource allocation and use.

The Case for Strategic Health Purchasing
It is possible to achieve good health outcomes at low cost ("more health for the money") if the health system is efficient and accountable. 4,9 Attributes of such health systems include good governance, the ability to innovate and adapt to resource limitations, and capacity to respond to population needs and build resilience into health systems in the face of political unrest, economic crises, and natural disasters. 9 Many health systems can achieve good health outcomes at low cost if they are strategic in allocating and spending available resources. Examples in Africa of countries allocating a considerable share of the government budget to health include Rwanda, Botswana, South Africa, Ethiopia, Gambia, Zambia, Togo, Madagascar, and Malawi. 21,22 These countries may not be the richest on the continent in terms of per capita income or gross domestic product, but they prioritize health care. In contrast, over the past five years, Nigeria's average allocation to health care has not exceeded 5%. This raises the question of how best to harness limited government funding to improve the health of the Nigerian people.
Strategic health purchasing can be defined as the efficient allocation of resources to health care based on the performance of health care providers, the health needs of the population, the need to foster inclusivity, and the overall management of health expenditure. 23 Purchasing health care services involves specifying benefit entitlements, accrediting service providers, contracting with providers, selecting provider payment mechanisms, and determining contractual arrangements. 5,24 Strategic health purchasing focuses on making the best use of health resources to provide quality health services to the covered population, optimize the productivity of providers, and protect individuals from financial risks. It can be achieved through an efficient health insurance system or improved budgeting and optimal allocation of government budgets derived from general tax revenue.
According to Etiaba et al., strategic health purchasing is receiving increased attention as a way to improve health system performance because it ensures that only needed services are purchased-services that are essential for achieving health-related Sustainable Development Goal targets and other national priorities-and it helps identify services that show good value for money. 24,25 At the same time, more money for health does not translate to better health outcomes if the funds are not efficiently and strategically deployed, or is marred by corruption and low levels of accountability.

Using Strategic Health Purchasing to Address Corruption
Low allocation of public funds to health care is both a symptom and a cause of corruption. Corruption is recognized in Nigeria as widespread and is often seen as insurmountable. 26 Corruption within the health system has been identified as a serious problem that hampers efforts to strengthen the health system and improve health outcomes. 7 A recent study identified 49 corrupt practices that are most prevalent in the Nigerian health system and health financing corruption was ranked among the top five. 26 Strategic health purchasing has the potential to help address corruption in health systems in sub-Saharan Africa, and especially in Nigeria, by improving transparency, efficiency, and accountability. On the flip side, corruption can undermine the effectiveness of strategic purchasing if its policies and strategies are not well articulated and implemented.
To explore the relationship between corruption and strategic purchasing, we use the Strategic Health Purchasing Progress Tracking Framework to describe and assess purchasing arrangements. 20 Proven frameworks such as this one can help determine whether available health resources are being used to purchase services that will yield maximum health benefits to citizens in an equitable, efficient, accountable, and transparent manner. 20 The framework focuses on governance arrangements and four core purchasing functions: benefits specification, contracting arrangements, provider payment, and performance monitoring. Optimal implementation of these functions leads to health care services being purchased in the most accountable, efficient, and equitable manner, which could help counter corrupt practices. However, if these processes guided by strategic purchasing must yield results, then they must be implemented in a manner that is transparent and free of corruption.

Governance and Financial Management
Health purchasers, which in Nigeria are often government agencies or private intermediaries acting on their behalf, such as health maintenance organizations (HMOs), are responsible for efficiently managing pooled health revenue and expenditure in accountable ways. This includes determining benefit packages based on available resources, ensuring that the purchaser has sufficient funds to purchase the services in the package, and paying providers on time to deliver the services.
Lack of accountability in Nigeria's public financial management system limits the ability to trace and account for funds all the way through the system, beginning with allocations to the health sector. A 2018 audited report stated that about 3.8 billion NGN (7.6 million USD) that should be allocated to the health sector in Nigeria cannot be accounted for. 27 Reports of diversion of funds, procurement irregularities, informal payments, mismanagement of health insurance packages, and overall imbalance between health spending and health financing needs are common. 7,16,28 The funds that reach health purchasers through the Formal Sector Social Health Insurance Programme (FSSHIP) under the Nigerian government's National Health Insurance Scheme (NHIS) do not always reach providers. FSSHIP sometimes withholds funds that should be transferred to providers to pay for services. 24 In 2017, providers called out HMOs, which are the third-party payers for FSSHIP, for being heavily in debt to them even though HMOs had received 411 billion NGN (822 million USD) since the official launch of NHIS in 2005. 1 Cases of weak management of donor funds have also been reported. Donors are increasingly concerned about the mismanagement of their funds in Nigeria and may pull out, leaving the country to be forced to rely on budgetary allocations and, perhaps, public-private partnership arrangements. 29,30

Benefits Specification
The services covered by health financing, the standards set for those services, and the associated cost-sharing policies are cornerstones of strategic purchasing. If the services in the benefit package are not available or are poor in quality, trust in the system is undermined. Some beneficiaries in Nigeria have complained of not being able to access covered services or receiving poor-quality services from providers, 7 while others have said they do not have a voice in determining which services are included in the benefit package. Getting feedback from communities on their experiences with accessing services they are entitled to is essential to ensure accountability within strategic purchasing.

Contracting Arrangements
When the benefit package is specified, purchasers identify and enter into contracts with providers to deliver those services to the covered population. Fair and transparent contracting contributes to the credibility of contracts and their effectiveness as a tool to guide provider behavior and ensure that quality services are delivered. A report by Transparency International showed that providers are often paid bribes to receive contracts in countries such as Nigeria. Political connections and social and kinship ties also have pervasive influence in the awarding of contracts for health services. 24 Tainted processes of selecting and contracting with providers compromise the legitimacy and therefore the power of strategic purchasing.

Provider Payment
Provider payment is a key tool in strategic purchasing for creating incentives for providers to act in the public interest. For incentives to be credible, both purchasers and providers must trust the other side to meet its obligations. A study on purchaser-provider relations in Nigeria showed a strained relationship between purchasers and providers characterized by uncertainty and distrust. 24 Providers are dissatisfied with long delays in payments and payment rates, which are set without negotiation. They also perceive that they are underpaid for delivering services in the package, and they consequently request additional payments from patients. 24 Channels for beneficiaries to provide timely feedback to the purchaser are lacking, which leads providers to make discretionary decisions and exercise information asymmetry over the health services they deliver to end users.

Performance Monitoring
Performance monitoring is not broadly implemented in Nigeria to ensure accountability in health purchasing. NHIS is reportedly interested only in monitoring service coverage and health spending, placing lower priority on the performance of HMOs and providers. 24 Purchasers are not formally or stringently monitored, leading them to be brazen in their practices. 31 One study reported that the activities of HMOs in Nigeria had not been examined in more than 13 years. 31 Also lacking are an overall accountability framework, routine quality assurance indicators, collection of quality data with feedback to providers, community engagement, and accountability mechanisms. 28 Lack of performance monitoring of purchasers and providers across the three tiers of health governance in Nigeria has been shown to weaken the performance of the Basic Health Care Provision Fund (BHCPF), which is overseen by the National Primary Health Care Development Agency (NPHCDA) and the Federal Ministry of Health. 28 The normalization of kickbacks and donor-funded workshops that pay people to participate, combined with the lack of performance monitoring, has reinforced a culture of no accountability.

What More Can Be Done?
Corruption has become pronounced across the health financing functions in Nigeria and elsewhere in sub-Saharan Africa, especially the functions related to strategic health purchasing. 12,26 Conversations about accountability and addressing corruption have become almost inseparable from conversations about strategic health purchasing in Nigeria. When the functions and implementation of strategic health purchasing are strengthened, corruption can in turn be addressed.
This review has revealed some key areas for policy reform that could both strengthen strategic purchasing and address corruption: 1) improving overall financial management, 2) focusing resources on the most vulnerable, 3) making contracting and provider payment more transparent and credible, and 4) effectively engaging beneficiaries to monitor the performance of purchasers and providers and ensure accountability.

Improving Overall Financial Management
Interventions to ensure effective financial management, which is part of good governance in strategic purchasing, can be government driven or grassroots driven. Government-driven interventions can focus, for example, on partnering with civil society organizations and donors to set up independent monitoring teams to ensure the optimal deployment of financial resources (especially donor resources), openness in public disbursement of funds, and encouraging state and local governments to use strategic health purchasing, while making financial reports publicly available. 32 At the grassroots level, civil society groups can work with motivated and interested community members to actively follow government revenue and spending on health.

Focusing Resources on the Most Vulnerable
Focusing on priority population groups is one way to maximize allocated health sector resources, 33 such as by ensuring that services in the benefit package reach and reflect the needs of the most vulnerable people. Unfortunately, Nigeria's health system is inequitable, providing more and higher-quality services to the well off. 34 In Nigeria, as in many countries in sub-Saharan Africa, low-income households in rural areas are poorly covered by NHIS because they can barely afford premiums. 34 In the absence of a concerted effort to better reach disadvantaged groups, such inequities are likely to continue. This means that coverage schemes and strategic purchasing within them should focus on the most vulnerable and move upward to the least vulnerable. 35 It is the more reason the scheme must be free of corruption, as this is a vital means of providing quality and affordable healthcare to deprived groups.

Making Contracting and Provider Payment More Transparent and Credible
Transparent and credible contracts are a tool for both strategic purchasing and mitigating corruption. An open contracting system is needed in Nigeria, where information on the services to be provided under provider contracts is in public domain and provider selection and accreditation are objectively implemented and transparently communicated. For contracts to be credible, sanctions for noncompliance should be specified in the contract and objectively enforced. The causes of delays in payment to providers should be understood and addressed, especially where funds have been approved for disbursement by the government but payments have not been made. 2,16 The terms of contracts between purchasers and providers should be made available to the public.
Payment to providers, and the third-party HMOs that manage those funds, should be better linked to service outputs and provider performance. At the very least, HMOs within FSSHIP should be paid based on the number of enrollees allocated to them, and there must be an accountability framework to report allocated resources to the enrollees. 7 Reforms in provider payment mechanisms can also emphasize efficiency through use of digital technologies and automation, which will help reduce corruption, limit human interference, and increase adherence to contracting terms.

Effectively Engaging Beneficiaries
The role of beneficiaries and communities in ensuring accountability, for both strategic purchasing and to address corruption, should be strengthened. The importance of feedback from communities on their experience accessing services they are entitled to is essential to ensure accountability within strategic purchasing. 7 Community structures, when well informed, can be used to provide input on the benefit package and provide oversight and monitoring of disbursed funds.

Conclusions and Recommendations
Sub-Saharan African countries such as Nigeria must increase their health spending to achieve universal health coverage (UHC) goals over the longer term. 18 In the meantime, they should use strategic health purchasing to make the most of existing resources. 23 Reducing fragmentation in the health financing system and consolidating purchasing functions within fewer schemes may be needed to reduce inefficiency and to purchase services more strategically. 36 But corruption is also a key factor that limits the power of strategic purchasing to improve efficiency and achieve other UHC goals. Therefore, while advancing strategic health purchasing as a measure to address corruption in health financing, mainstreaming anticorruption as an integral component of health financing schemes must not be neglected.
There are steps Nigeria and other sub-Saharan countries can take to both improve strategic health purchasing and decrease corruption to improve accountability and efficiency in the health sector. To implement these measures, they will need to strengthen the capacity of purchasers, decision makers, and providers and include more community input and oversight into the operations of the general tax revenue system that supports health budgets and social health insurance schemes. A culture/system that promotes interdependent checks among the actors in these schemes should be encouraged to facilitate monitoring and self-enforced anticorruption. Such reforms can reduce costs, improve coverage, and reduce corruption along the value chain. The link between strategic health purchasing and quality of care should be enhanced by integrating existing quality improvement strategies with provider payment methods.