Provider Competition and Reimbursement

The voucher system aims at initiating a provider competition for clients. By giving clients a choice of providers, OBA gives the consumer leverage in terms of the quality of health care services. Improvement in the quality of services provided is to be spurred by the competition developing between providers in winning more voucher clients and therefore a greater part of the reimbursements. Particularly public facilities are expected to improve their quality, and private facilities already fulfilling higher quality standards are to open access to their resources (further) to the poorer clients.

In this context, the voucher program‘s intent is to deflect excess utilization in public institutions by decreasing the number of normal deliveries by increasing utilization of private ones in order to make the latter affordable to poor women, i.e. voucher clients. A comprehensive and direct provider competition for quality requires providers to compete for the same group of people (a segregation of demand spoils competition). The subsidized vouchers broaden accessibility to reproductive healthcare: women can afford not only public or district hospitals where utilization is often restricted by transportation costs, forcing these women to deliver at home but have access to the full range of public and private facilities which qualify for the voucher program.
So far, the VMA has set different reimbursement levels for the two Safe Motherhood Services (normal delivery, caeserian section), the three kinds of Family Planning Services (basic including IUD, hormonal implants, and sterilization/vasectomy), and the three offered Sexual Violence Recovery Services (defilement, rape, special rape cases). The actual reimbursement rates are negotiated with each service provider individually based on the respective cost situation. Additional expense due to medical complications are covered by the VMA as long as they are documented adequately.

Overall, the participating providers‘ reception of the voucher program is clearly positive, independent of the type of facility: Private facilities with higher prices for medical services are able to treat poor people without experiencing major cost problems, and will be able to increase use of capacity. In contrast public facilities can reduce excess utilization. Facilities with low prices but substandard quality can use the surplus of the voucher reimbursement to invest in improvement of quality to later on attract more clients.

Public facilities have to learn to compete with private hospitals. In context with the OBA project, most of the public facilities had to calculate cost and price per case along with the VMA contract requirements for the first time. The professional assistance by the VMA is appreciated widely. The new per-case-calculation experience is regarded as being helpful for future resource allocation.