| Background and Significance：Over recent years, it has been a mainstream model of health service reform in manycountries to transform the role of the government as a basic health service producer into"enabling" roles, such as purchaser, promoter and regulator, through public procurement, underthe waves of public service administration reform and given the low cost-effectiveness and softconstraint of direct government investment. In China, the public purchase financing has drawnattention from the government and academia, particularly after the new medical reform in2009.However, at the pilot stage, this system is inevitably branded with signs of imitation ortransplanting, and past literatures focused on a single point in interpreting the practice whileneglected systemic and in-depth research on purchase result assessment, strategy design andsubsequent assurance, and lacked in-depth analysis and explanation at the principle levelcombined with empirical evidence. The failure to provide scientific and maneuverable theorybasis for government to promulgate purchase financing policies renders the existing purchasemechanism unsmooth and ineffective, resulting in low efficiency, poor quality and weakaccessibility in basic medical and health service. Besides, both practice and theoreticalresearches are limited to urban community health service and hospitalization service, whilerarely involving village health clinics, which are the most basic and most closely related tofarmers. Therefore, it is of significant practical and theoretical value to systematically study thepolicies on financing through public procurement for rural health clinics, smoothen thegovernment investment mechanism, optimize service efficiency and quality, and facilitatePareto optimization of resources, so as to promote sustainable development of the ruralgrassroots medical and health system and increase the accessibility of basic medical services torural residents. Research Methods：From the perspectives of economics and public policy studies, this study adoptsliterature research, normative research, empirical research and comparative research, amongothers. Based on a full understanding of the status quo in research on reform of publicprocurement financing at grassroots health institutions, such as rural health clinics, this paperanalyzes the characteristics of different practical models of public procurement financingdomestically and abroad, clarifies the stakes of all concerned parties and interactivemechanism using the Principal-agent Theory, and determines the logic of historical evolutionof health clinic financing systems by using the Institutional Evolution Theory and AgendaSetting Theory. Based on the practical data of Guizhou, this paper assesses the incentive andconstraint of the existing public procurement financing policies on health clinics by using theQuasi-experimental Case-control method, and analyzes the existing problems and rootcauses by using the Fishbone Diagram. Based on these, the paper carries out systematicdesign of the financing mechanism with a theoretical framework composed of the PolicyCycle Theory, Evidence-based Health Policy and Fishbone Countermeasures. Besides, wecreate the operation process for procurement financing with IDEF0technique, build theasymmetric information dynamic incentive and constraint model between the governmentand health clinic using the Game Theory, and finally analyze the feasibility of the strategyusing the SWOT-PEST theory.Purpose and Content：This study is intended to discuss the effective incentive and constraint mechanism ofpublic procurement financing policies for health clinics in impoverished areas, to providetheoretical and practical bases for the government to formulate compensation and financingstrategies for village health clinics and solve the financial bottlenecks in the development ofhealth clinics. The paper contains the following:(1) Study on the theories and practice of public procurement financing of grassrootshealth institutions. In this part, the paper analyzes the characteristics of different ways ofprocurement and models, and clarifies the stakes and interaction among all parties(purchaser, supplier and demander) based on entrusted agent theory. These will be followedby a summary of the practical experience abroad.(2) A study of the evolution of public financing policies of rural health clinics in China. In this part, we examine the evolution of the public financing policies of rural health clinicsin China from a vertical historical perspective and summarize historical lessons, alongsidethe evolution of rural economic and financial systems.(3) An assessment of the effect of the existing public procurement financing on ruralhealth clinics and problem diagnosis and cause identification. Based on the practical datafrom the24national impoverished counties of Guizhou Province, we assess the incentive oflocal public procurement financing policies on health clinic service, analyze the problemsaround three dimensions of the efficiency, quality and accessibility of the basic medical andhealth system, and track the root causes of the problems in terms of organizational system,resource allocation, payment mechanism and governance rules.(4) A systematic design of the public procurement financing policies and strategy ofvillage health clinics. To address performance issues such as the efficiency, quality andaccessibility of basic medical and health service, etc., we design a public procurementfinancing system strategy (organization, resources, payment, and regulation) in the interestof the demander and with positive incentive to the health clinic, and build the operatingprocess of public procurement financing and the asymmetric information dynamic incentiveconstraint model between the parties. Finally, we conduct SWOT-PEST analysis of thefeasibility of the policy strategy and the threats and challenges it is facing.Research Conclusions：(1) As a reform of the conventional service provision model of direct governmentinvestment, the public procurement financing of health institutions facilitates the formationof the supplier incentive and competition mechanism. This includes contract-based andvoucher-based approaches. In general, the independent relationship competition model ofcontract-based approach establishes an accountability mechanism with clear liabilities andbased on legal protection procedure between the transaction parties and better constrainsthe opportunistic behavior of the supplier and improves the efficiency and quality of publicprocurement. In public procurement financing, three entrusted agent game relationshipsexist, namely the entrust relationship between the government and the public, thecontract-based entrust between the government and supplier, and an extended serviceliability relationship based on public procurement between the supplier and the public. Theclients always influence the behavior of the agent based on a certain strategy mechanism for optimal attainment of their benefit goals. As indicated by practice abroad, for publicprocurement financing of health institutions, it is favorable to promote organic integrationof market competition mechanism and government macro control, emphasize on separationof service procurement and provision functions and the equal contractual relationshipbetween the buyer and seller, actively respond to the demand of the public for health rightsand reshape an incentive and compatibility mechanism toward the supplier.(2) In China, evolution of the mechanisms for rural health clinic public financing is aprocess where policy researchers, decision makers, stakeholders and media interact andcompete with one another under specific socioeconomic and political circumstances. This isalso a circulation evolution process of spiral ascendancy from balance to imbalance, and tobalance again, evolving from cooperatives, People’s Commune, and family contractors, and theagenda model evolves from mobilization to internal reference, and to the pressure model. Thewhole evolution process indicates an ideological shift from direct spending based onproduction factors to exploration of diverse forms of compensation (including publicprocurement financing); democratic decision-making and game equilibrium degree betweenand among stakeholders will help reduce the latency between health financing policies andsocioeconomic development and facilitate the sustainable development of the financing system.(3) The existing public procurement financing policies of Guizhou have shown apotential boost to the development of village health clinics. However, they are plagued byperformance problems like low efficiency, poor quality and weak accessibility of basicmedical and health services. The root lies in inappropriate policy design and absence ofauxiliary assurance mechanisms, specifically: In terms of organizational structure, ademocratic and smooth mechanism for the demander to express is absent; the purchaser isartificially alienated and located at a low integrated management level; the purchaser andseller are highly dependent; the service capability of the health clinic is congenitally weak,and a fair and orderly competitive environment is absent; in terms of resource allocation,priority is attached to hospitalization (major disease) rather than outpatient service, and tohigh levels rather than grassroots, and the service package is poorly representative; in termsof payment mechanism, unreasonable terms of payment and low prices weaken theincentive and constraint on the supplier; in terms of governance rules, deficit in the rule oflaw, the absence of rules and insufficient regulation cause service procurement performance to further deteriorate.(4) We have designed a mechanism strategy specific to the public procurement financingof rural health clinics, consisting of:①Organizational strategy. At the levels of village,township and county, the villager administration group, procurement supervisory board andperformance review committee are established; the three procurement entities of public health,basic medical service and poverty medical relief are horizontally integrated to the socialsecurity authority, and the management integration level is lifted to the provincial level; atwo-level structure should be clarified in townships, establish village doctors first diagnosedand two-way referral system, enhance the service capability of the health clinic and shape adiverse competitive landscape.②Resource allocation strategy. The procurement servicepackage is adjusted (including10categories of public health service and4categories of basicmedical service); the proportion of outpatient to hospitalization funds is lifted to3:7; theproportion of village-level outpatient reimbursement is increased to70%, and the ceiling of asingle transaction is adjusted to RMB15; the proportion of public health expenses of thevillage health clinic is lifted (to about50%).③Payment strategy. Through comprehensiveutilization of pre-payment and post-payment incentives, a performance-based compositepayment method consisting of capitation, fee for service, global budget and basic salary isestablished. The overall payment should be appropriately lifted to achieve external, internal andintrinsic fairness of compensation of village doctors.④Governance rules strategy. It isadvisable to establish a special legal system for health service public procurement financing,standardize the operating procedure and optimize governance monitoring based on the gameequilibrium point between the two parties of the contract.(5) As indicated by SWOT-PEST analysis of the public procurement financing strategyof village health clinics, this strategy meets the orientation and need of national healthreform development, the economic resources required for implementing the policy areavailable in reality, the strategy is recognized and accepted by stakeholders, and policyobjectives can be achieved with existing technology through efforts. Meanwhile, thisstrategy is also threatened and challenged by weak government regulation, limited marketcompetition and increasing transaction cost.(6) We have recommended policies for establishing and improving public procurementfinancing mechanism of rural health clinics in China. These include:①To transform the government’s function and role by discarding outdated ideology.②To integrate governmentprocurement departments and facilitate horizontal collaboration across departments.③Toestablish a three-level civil administration structure encompassing the village, township andcounty, and smoothen the channels for service users to express opinions.④To enhance thehealth clinic’s responsiveness to incentive and develop a diverse quasi-competitive market.⑤To optimize resource allocation and expand the coverage and capability of publicprocurement financing of health clinics.⑥Develop innovative payment strategy andimprove the overall performance of basic medical and health services.⑦To calculatereasonable costs and ensure effective use of procurement funds.⑧To strengthengovernance regulation (improve capability building of the procurement entity, establish adiverse and3D close-looped monitoring and constraint mechanism, establish a dynamic andphase-based performance review system, enhance repeated cooperation to build a trustassurance system among various parties and enhance health education to the public). |
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